Recessions and employment

Recessions and employment

Persons, Employment changes at the beginning of a recessionFull and Part time (SA)

-400

-300

-200

-100

0

100

200

1 2 3 4 5 6 7 8 9 10Quarters

'00

0's

FT 80

PT 80

FT 91

PT 91

FT 09

PT 09

Source - Labour Force, ABS, 6202.0, Table 2, 1978-2009 (Monthly data to Sept 2009).

Female Full-time EmploymentMonths after Slowdown Starts - 1981 and 1990 Recession

-350

-300

-250

-200

-150

-100

-50

0

50

100

150

200

1 7 13 19 25 31 37 43 49 55

Months

Ch

ang

e in

'000

's

1990 Recession

1981 Recession

( ) Refers to 1981 Recession

-15.1%(-19.4%)

-10.0%(-13.0%)

-5.0%(-6.5%)

5.5%(6.5%)

10.0%(13.3%)

0%

Male Full-time EmploymentMonths after Slowdown Starts - 1981 and 1990 Recession

-350

-300

-250

-200

-150

-100

-50

0

50

100

150

200

1 7 13 19 25 31 37 43 49 55

Months

Ch

ang

e in

'000

's

1990 Recession

1981 Recession

-7.1%(-7.7%)

( ) Refers to 1981 recession

-4.7%(-5.2%)

-2.4%(-2.6%)

2.4%(2.6%)

4.7%(5.2%)

0%

Disappointments of the Boom

Males Employed Full-Time to Population 15-641978-2007

0.65

0.67

0.69

0.71

0.73

0.75

0.77

0.79

0.81

Apr-78 Apr-80 Apr-82 Apr-84 Apr-86 Apr-88 Apr-90 Apr-92 Apr-94 Apr-96 Apr-98 Apr-00 Apr-02 Apr-04 Apr-06

Years

Ra

tio

WA+QLD

Australia-(WA+QLD)

A

B

A

B

Source - Austats, ABS Website, Data Cube LM8, 1978-2007 (Monthly to Sept 2007).

Workforce Age, Income Support to Population by Sex, Percent1966-2008

0

5

10

15

20

25

30

1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009

Year

Pe

rce

nt

Females

Males


0

5

10

15

20

25

30

1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009

Year

Pe

rce

nt

Females

Males


0

5

10

15

20

25

30

1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009

Year

Pe

rce

nt

Females

Males

Total Income Support and Unemployment Payments Male

Workforce Age

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

Years

000,

s

Income Support

Unemployment Benefits

Total Income Support, Unemployed and Unemployed PartnersWorking Age

Females

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Years

000'

s

Total Income Support

Unemployed andunemployed partners

Change Newstart and Other Welfare Since 1988Males

-150.0

-100.0

-50.0

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

Years

00

0,s

Other Welfare

Newstart

Newstart and Other Welfare Change Since 1988

Females

-50.0

-

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Years

00

0's

Other welfare

Newstart

Australia, Males 15-64, Labour and Income Support to Population1966-2009

0.60

0.70

0.80

0.90

1.00

1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021 2026

Years

Ra

tio

B

Full time Employment A

Income Support B

Neither Full time Employment or Income Support

A

Trend Lines

The History of FaCS Income Support for the Female 1995 PPS and PPP Inflow January 1995 - June 2000

Proportion of Average Duration** Share of Total Income Support 1995 Inflow on Program Income Support

(percent) (years) (percent)

PPS PPP PPS PPP PPS PPP

Leave after One Spell 18.8 22.1 1.7 1.4 9.0 10.5 Continue on One Spell 22.5 9.2 5.0 5.0 31.2 15.6 Multiple Same spell type 16.2 26.3 3.1 2.3 13.7 20.3 Multiple Mixed spell types* 42.5 42.4 3.9 3.7 46.2 53.6

Total*** 100.0 100.0 3.6 2.9 100.0 100.0

Proportion of PPS who have a PPP Spell 31.0 Proportion of PPP who have a PPS Spell 32.5

* The more important other spell type is Newstart.** Duration is a mixture of complete and incomplete spells.*** The average potential time for income support is five years because the 1995 inflow extendsfrom January to December 1995. The end of the data window is June, 2000.

1995 UB and DSP InflowProportion on Income Support, Males 15-64

0

10

20

30

40

50

60

70

80

90

100

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5

Years since Entry Date

Per

cen

t

DISABILITY

UNEMPLOYMENT

Policy induced substitution

1981 and 1991 Recessions GDP and F/T Employ.

0.90.920.940.960.98

11.021.041.061.08

1 2 3 4 5 6 7 8 9 10 11 12

Quarters Since the Beginning of the Recessions

1981 GDP

1990 GDP

1981 F/T Employ.

1990 F/T Employ.

Male and Female DSP Recipients

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

Thou

sand

s

Male

Female

DSP ratios Female/Male by Age

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

Age group 45-49Age group 50-59Age group 25-45Age group 60-64

Partners of Income Support Recipients, DSP and CarersFemales

0.0

100.0

200.0

300.0

400.0

500.0

600.0

Years

00

0,s

Partners of IncomeSupport Recipients

DSP Recipients andCarer Payments

Total Full Age Part Age Full Age Part AgePension* Pension* Pension* Pension*

Age Pension Inflow - 492 236 256 48 52

No Previous Welfare 106 14 92 13 87 Previous Welfare 386 224 162 58 42




* Two months into the Age Pension.

Number Percent

PercentNumber

Table 2a Male Age Pensioner 2005 Inflow for 65 year olds ('00's)

Table 2b Female Age Pensioner 2004 Inflow for 62 year olds ('00's)

Aggregate time spent on Welfare Before the Age Pensionby Sex

0

10

20

30

40

50

60

70

80

90

100

0 1 2 3 4 5 6 7 8 9 10 11

Years

Pe

rce

nt 2004 Female 62 year old Inflow

2005 Male 65 year old Inflow

For those who had a Previous Welfare History, What benefit were they on Immediately before the Age Pension

Males Females

Disability 60 30Mature Age Allowance 20 5Unemployment Benefit 7 6Other 8 7Senior Health Card 5 1Partner Allowance 26Widow 15Wifes Age Pension 11

100 100

* 2004 Female 62 year old inflow, 2005 Male 65 year old inflow.

by Sex*, Percent

Age 1996-97 2000-01 2004-05

60 46 0 061 7 61 062 5 7 6863-65 13 13 1866+ 29 19 14Total 100 100 100

Percent of Total Female Age Pensioners

Year

Table 1b Female Age Pensioner Inflows

Male Income Support, 15-64, and Age Pension 64 plus000's

0

200

400

600

800

1000

1200

1400

1970 1975 1980 1985 1990 1995 2000 2005

Year

000'

s

Over 64

!5 to 64 years




* Two months into the Age Pension.

PercentNumber

Table 2 Male Age Pensioner 2005 Inflow for 65 year olds ('00's)

Proportion of Men 15-64 Not in Full Time Employment1978-2016

0.13

0.18

0.23

0.28

0.33

0.38

0.43

Series1

Newstart and Other Welfare RecipientsChange since 1988

-200.0

-

200.0

400.0

600.0

800.0

000'

s

Newstart

Welfare recipients -newstart

Allowances and Pensions Real Terms

0

5000

10000

15000

20000

25000

Years

$s

Pension Couple

Allowance Couple

Pension Single

Allowance Single

So what are the bottom lines?Shouldn’t we be spending more time thinkingabout what is going on in this twenty years?The state is paying for only about half of thereduction of full time work?When are we talking about when we saywe all need to work harder because the population is ageing?

Time off

Male and Female DSP and Female DSP + Carers and Wives

Pensions1965-2004

0

50

100

150

200

250

300

350

400

450

500

Th

ou

sa

nd

s

Female DSP 15-64

Female DSP+Wives +Carers

Male DSP

Few of my male friends have taken twenty years off? So many men somewhere must be taking more than twenty

Why are we focusing on adding two years toretirement age over the next fifteen or so years? Absolutely trivial.

What is all this part time work about? Nota recession response!

Males Seeking Full Time Work and DSP Recipients 1978-2007

0

100

200

300

400

500

600

Th

ou

san

ds

Males seeking full time work

Male DSP recipients

Australia, Females - 15-64, Labour and Welfare Income Support1966-2008

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Years

Ra

tio

FT E / Pop

A + (ABS FT U)/Pop

A + IS /Pop

A

C

B

A

C

B

Persons, Workforce Age, Income Support Recipients, 1960-2008Projections if 1990-2000 is repeated

0

500

1000

1500

2000

2500

3000

3500

1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Year

'00

0's

Total

Unemployed

Table 1

Appeared as PPS in 1996-1998 with youngest child 13 to less than 16

What welfare payment do they access after PPS?

Number Percent

One PPS Only 97 10

PPS and NIS* 155 16

PPS and at least one spell on UB 405 43

PPS and at least one spell on DSP 68 7

PPS and at least one spell on UB and DSP 137 15

PPS and at least one spell on Other IS* 79 8

Total 941 100

* NIS is family payment or LIC

** Other IS is AP, Carer, Sickness and Widow

Table 1

Number Percent

One PPS Only 97 10PPS and NIS*155 16PPS and at least one spell on UB405 43PPS and at least one spell on DSP68 7PPS and at least one spell on UB and DSP137 15PPS and at least one spell on Other IS*79 8

Total 941 100

* NIS is family payment or LIC** Other IS is AP, Carer, Sickness and Widow

Appeared as PPS in 1996-1998 with youngest child 13 to less than 16What welfare payment do they access after PPS?

Proportion of Men 15-64 Not in Full Time Employment1978-2016

0.13

0.18

0.23

0.28

0.33

0.38

0.43

Series1

Aggregate time spent on Welfare Before the Age Pensionby Sex

0

10

20

30

40

50

60

70

80

90

100

0 1 2 3 4 5 6 7 8 9 10 11

Years

Pe

rce

nt

2004 Female 62 year old Inflow

2005 Male 65 year old Inflow

Figure 1 Australia, Males - 15-64, Labour and Welfare Income Support1966-2008

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Years

Ra

tio

FT E / Pop

A + (ABS FT U)/Pop

A + IS /Pop

Mean 66-75 of CA

C

B

A

C

B

D

D

GDP and Full Time Employment over Two Cycles - Beginning Sept 1981 and Mar 1990

0.920.971.021.071.121.171.221.271.321.37

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37

Quarters since recession begins

GDP 81 recession

GDP 91 recession

FT Employ 81 recession

FT Employ 91 recession

Females 15-64Average Years Worked and Average Years on Government Income Support

1966-2007

10.0

14.0

18.0

22.0

26.0

30.0

34.0

38.0

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Year

Ye

ars

Wo

rke

d o

ver

Lif

eti

me

FEMALE TOTAL EMPLOYED

FEMALE FULL-TIME

FEMALE GOVERNMENT INCOME

Total Income Support, Unemployed and Unemployed PartnersWorking Age

Females

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Years

000'

s

Total Income Support

Unemployed andunemployed partners

Australia, Males 15-64, Employed Full-time by Skill Level , change from 1996 1997-2007

-200

-100

0

100

200

300

400

500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Years

'00

0's

Definition - Skilled - Managers and Administrators, professionals, associate professionals, advanced clerical and service workers.Less Skilled - Tradespersons and related workers, Intermediate and elementary clerical, transport and service workers, Labourers.Source - Austats, ABS Website, Data Cube e13, August, 1996-2007 (Labour Force Survey).

Skilled

Unskilled

Unskilled - Males Employed Full-time, change from 1996 1997-2008

-30

-10

10

30

50

70

90

110

130

150

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Years

'00

0's

Definition - Skilled - Managers and Administrators, professionals, associate professionals, advanced clerical and service workers.Less Skilled - Tradespersons and related workers, Intermediate and elementary clerical, transport and service workers, Labourers.Source - Austats, ABS Website, Data Cube e13, August, 1996-2008 (Labour Force Survey).

QLD

NSW

Females Employed Full-Time to Population 15-641978-2007

0.27

0.29

0.31

0.33

0.35

0.37

0.39


Years

Ra

tio

WA+QLD

Australia-(WA+QLD)

A

B

A

B


Person Total EmploymentMonths after Slowdown Starts - 1981 and 1990 Recession

-300

-200

-100

0

100

200

300

400

500

600

700

1 7 13 19 25 31 37 43 49 55 61

Months

Ch

ang

e in

'000

's

1990 Recession

1981 Recession

Months after Slowdown Starts - 1990 Recession

-700

-600

-500

-400

-300

-200

-100

0

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37

Months

Ch

ang

e in

'000

's

Total Employment Loss

Total Employment Loss and Participation Rate Reduction

GDP Growth1970-2010 - Percentage Change

-2

0

2

4

6

8

10

1970 1975 1980 1985 1990 1995 2000 2005 2010

Years

Per

cen

t

Emerging and developing economies

Advanced Economies

Source: World Economic (WEO) Update, Global Economic Slump Challenges Policies, 28th January 2009, IMF.

Some Notes on DSP Duration

• Take males on DSP at August 1996, aged between 20 and 53 years

• Remember this is not inflow so they were on DSP before 1996

• Average age in 1996 is 42 years

• How long are they on DSP over the next 11 years?

• 70 per cent are there for more than 10.9 of the eleven years

• Average stay about 10 years• The average age is now 53 so on average another

12 years to go before the age pension• Why is disability so permanent?• Will denying access make a difference• Note that the age group chosen for this analysis

says this is not really a pre-retirement group• There were 160,000 males in the 20-53 DSP group

• NewStart males selected at August 1996

• There are 461,000

• Average age 30 years

• Remember the sample is the stock so they could have been there since 1990?

• 30 per cent, 138,000 spend more than five of the next eleven years on NewStart – some may have gone to another program

• Where are the interesting forcasting and policy reform pressure pointsThe dominant role of the male labour market.

• The importance of employment growth asymmetry over the cycle.

• The long duration of Income Support• Program substitution

– The leakage from unemployment benefits to disability payments.

– Policy Induced substitution in female income support

• The startling changes in the world economic outlook

• The amazing Policy Responses

• Confusion about some of the things we do and do not know about policy impacts

• The focus is on two and a half million people of work force age who now receive welfare payments for their livelihood.

• Welfare recipients as a ratio of those employed,

– 1970, one in fourteen

– Today, one in four – There has been a four fold increase

– Tomorrow one in three?

• I am not discussing family payments• The focus is on those of workforce age

• So where are we at with respect to income support?

• Complete failure of programs or the economic recovery to make significant inroads into this long term group

• Why is there such a high failure rate to meet needs of the long term people?

• Perhaps the best we can do?• Australia really needs a systematic academic program of

work on these programs – public service too close to politicians to be adequate researchers in this area (not public servants fault – just the way the world works).

• Note that most Newstart long term stayers have left Nestart for some short periods – jobs? breachs? training programs.

• Add male DSP and Newstart then 35 per cent of the 1996 stock of Income Support Recipients spend ten of the next eleven years on income support – 230,000 males

How the male welfare market operates

• The importance of disability payments and their relationship to unemployment

• And the recent declines in welfare numbers

Australia1960-2008

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

Dec-60

Dec-63

Dec-66

Dec-69

Dec-72

Dec-75

Dec-78

Dec-81

Dec-84

Dec-87

Dec-90

Dec-93

Dec-96

Dec-99

Dec-02

Dec-05

Dec-08

Years

Ra

tio

Annual Change in Disposable Income

Savings Ratio

Australia1960-2008

-0.05

0.00

0.05

0.10

0.15

0.20

0.25

Dec-60

Dec-63

Dec-66

Dec-69

Dec-72

Dec-75

Dec-78

Dec-81

Dec-84

Dec-87

Dec-90

Dec-93

Dec-96

Dec-99

Dec-02

Dec-05

Dec-08

Years

Ra

tio

Annual Change in Disposable Income

Savings Ratio

Australia, Household Debt to Disposable Income, Percent1977(M)-2008(D)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Mar-77 Mar-80 Mar-83 Mar-86 Mar-89 Mar-92 Mar-95 Mar-98 Mar-01 Mar-04 Mar-07

Years

Pe

rce

nt

• Two examples of program substitution

• The Long duration when you take multiple spells into account

Males Seeking Full-Time Work to Population 15-641978-2007

0.69

0.71

0.73

0.75

0.77

0.79

0.81

0.83

0.85


Years

Ra

tio

WA+QLD

Australia-(WA+QLD)

A

B

A

B


• Remember 461,000 NewStart Males at August 1996

• At June 2007, eleven years later, at the peak of the boom

• 147,000 are receiving income support, approximately 32 per cent of the 1996 group

• Of which just over half are DSP - 83,000













Persons, Workforce Age, Income Support Recipients, 1960-2008Projections if 1990-2000 is repeated

0

500

1000

1500

2000

2500

3000

3500

1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016

Year

'00

0's

Total

Unemployed

»The End

The Questions

• What has been the role of the labour market in producing this large increase?

• Why was the recent economic boom not more effective in reducing welfare numbers?

• What is likely to happen over the next few years?

• What might governments do?

Key issues from the macro history

• The long slide 1970-1981 and the role of attitudes to work and income? Where are we trying to get back to in terms of the employment/welfare mix.

• Is there a full employment level of welfare? This question is important and has never been addressed!!!

• The emloyment growth non-symmetry of the recessions. No clear theory of this behaviour either.

• The employment weakness of the recent boom.

Total Income Support and Unemployment Payments Male

Workforce Age

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

Years

000,

s

Income Support

Unemployment Benefits

The Female Story

Female Full-Time to Population, Ratio1990(June)-2009(Feb)

0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio


0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

• Employment weakness of the recent boom

Male Part-Time to Population, Ratio1990(June)-2009(Feb)

0.05

0.06

0.07

0.08

0.09

0.10

0.11

0.12

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

Male Part-Time to Population, Ratio1990(June)-2009(Feb)

0.05

0.06

0.07

0.08

0.09

0.10

0.11

0.12

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

Male and Female Welfare Recipients

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

Years

000'

s

Female welfare recipients

Male welfarerecipients

Where is the economy going?

• Stress again the importance of the male labour market as an explanation of welfare incidence

• Remind you of the original two pictures

Figure 1 Australia, Males - 15-64, Labour and Welfare Income Support1966-2008

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Years

Ra

tio

FT E / Pop

A + (ABS FT U)/Pop

A + IS /Pop

Mean 66-75 of CA

C

B

A

C

B

D

D

The Recession What is different this time around?

• Recession is not government induced in response to inflation

• Special sort of monetary squeeze quite different from other recessions

• World wide – globalization has tied us all closer together - so all affected

• Recession being sold as the worst since the 1930s• Australia was about to have a mild recession

perhaps but now largely out of our hands

Some Forecasting Information

or more accurately

Forecasting Fun

• Australian labour market forecasts seem wrong?

• Employment falls appear trivial for a major recession and trivial for the output forecasts

• Unemployment forecasts appear too low

• We are putting a great deal of weight on the stimulus packages and the initial state of the economy – banking and building- to avoid a serious downturn.

• Now suppose we go through a 1991 recession or something similar, but a little milder, what might the welfare state look like

• The following is a very rough projection primarily to focus our minds on the issues

• This is an underestimate because there is no population adjustment

• This is an overestimate because the recession unlikely to be as bad as 1991 and a slightly more stringent different welfare regime in place

The Fifty Year History and Changing Role of Income Support

The role of the labour market

Increasing program substitution

Increasing duration

Role of recent policy changes

Piecemeal tightening in a fairly benign environment – Remove the young

– Lengthen the starting period

– Reduce the income support of individuals relative to wages

– Reduce the income support of partners in terms of access

– Tighten disability access

– Tighten lone parent payment access

• Policy working and effectiveness was accelerating but very slow impact and very reliant and labour market growth continuing.

• What about the future labour market?

• Some simple labour dynamics of a recession

Males 15-64Average Years Worked and Average Years on Government Income Support

1966-2007

30

32

34

36

38

40

42

44

46

48

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Year

Ye

ars

Wo

rke

d o

ver

Lif

eti

me MALE GOVERNMENT INCOME

MALE FULL-TIME

MALE TOTAL EMPLOYED

• Women’s Income Support not directly related to the women’s labour market

• Women’s welfare uptake primarily related to the male labour market

• Women’s income support the outcome of caring and partnering (or not partnering, PPS) with male income support recipients.

Program substitution in the welfare system

• Disability Pensions

• Carer Pensions

• Partnering payments

• Men have offset tightening mutual obligations by going on to DSP.

• Increase in retirement age of women and substitution to DSP

• Changes in welfare entitlements for partners and substitution to Carer payments and DSP

• Perhaps program substitution will become more difficult, not easy to make a judgement

Savings and Social Benefits over Net Household Income

-0.05

0

0.05

0.1

0.15

0.2

1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145 154 163 172 181 190 199

Begin Sept 50

Series1

Series2

Income Support Duration is long and probably becoming longer

• Income support is long and probably becoming longer

• In most programs the duration length is interrupted by program substitution or temporary exits

Male Full-Time to Population, Ratio1990(June)-2009(Feb)

0.65

0.68

0.70

0.73

0.75

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

Male Full-Time to Population, Ratio1990(June)-2009(Feb)

0.65

0.68

0.70

0.73

0.75

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

Males 15-64Average Years Worked and Average Years on Government Income Support

1966-2007

30

32

34

36

38

40

42

44

46

48

1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005

Year

Ye

ars

Wo

rke

d o

ver

Lif

eti

me MALE GOVERNMENT INCOME

MALE FULL-TIME

MALE TOTAL EMPLOYED

Some Policy Issues• Is a two tier system a good idea? How much

further should we go in terms of the income gap between the tiers?

• Should we move to three tiers – allowances, work force age pensions, age pension? How should we deliver an increase in the age pension?

• Reducing EMTR’s• Were PPS and DSP changes worthwhile?• Employment subsidies (EITC)• Duration limits (extending PPS reforms?)

I.Why have welfare numbers not

fallen more?

[a]Program substitution has offset

policy initiatives

[b]

In real terms allowances and pensions not fallen

[C] Demand has not impacted much

because of the nature of the current boom

Employment growth is still biased against full time employment of the

unskilled

2.The widening income gap between the Two Tiers-allowances and pensions

Should the current policy of widening the income gap between allowances and pensions and forcing more people onto low paying allowances be continued

• I will begin with a fifty year history of the welfare system, emphasizing the initial design features of the pre 1975 system

• Then move on to how the system has changed over the years, focusing on its current design and how it operates

• Lastly I offer comments on current policy issues

Allowances and Pensions Real Terms

0

5000

10000

15000

20000

25000

Years

$s

Pension Couple

Allowance Couple

Pension Single

Allowance Single

Comparing Pension and Allowance Income with One Child July 2008

0

50

100

150

200

250

300

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850

Private Weekly Income $

We

lfa

re W

eek

ly In

co

me

$

Allowance

Pension

• Was the PPS reform a good one?

• Was the DSP reform a good one?

• Implications of increasing the base rate of age pensions

• The gap between PPS (youngest child under 6) and old PPS (youngest child over six) will increase

• The gap between new DSP (15 hours) and old disability 15-30 hours will increase

• Should the pension category be split into two one for those of workforce age and one for the age pension

Radical Policies for Reducing welfare numbers that are beyond the pale

Employment subsidies – earned income tax credits

Minimum wage/allowance inter relationships

The End

A quick summary– Male labour market has been the key issue– Women being forced into the labour market and

being treated less like a family welfare system but women resisting with program substitution

– What will be the implications of the coming recession for change in the welfare system

– Relationship between income support for those of working age and those retired

Changes DSP Recipients and ABS Full-Time Unemployment

Disability ABS Unemployment

Men Women Total Men Women Total

1985-1995 135 69 204 19 29 48

1995-2005 83 137 220 -137 -44 -181

2005-2007 -9 24 15 -49 -22 -71

1985-2007 208 234 442 -167 -37 -204

Proposition two •There is a grossly inadequate understanding of the welfare system as a whole. Policy not sufficiently aware of program substitution.•Individuals move around different programs according to their stage of life and the conditions attached to each payment•Welfare is best thought of as a near permanent state for most individuals rather than a temporary state

Table 1

Disability Pensioners, Unemployment Beneficiaries

and those seeking Full time Employment (ABS)

Nov-07 000,s

Male Female Total

DSP 393 (8.0) 304 (11.5) 697 (9.1)

UB 289 (5.3) 193 (7.3) 482 (6.3)

LFS Unemploy 185 (3.7) 123 (4.6) 308 (4.0)

( ) per hundred full-time employed.


0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio


0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio


0.32

0.33

0.34

0.35

0.36

0.37

0.38

0.39

Jun-90

Jun-91

Jun-92

Jun-93

Jun-94

Jun-95

Jun-96

Jun-97

Jun-98

Jun-99

Jun-00

Jun-01

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Month

Ra

tio

Social Benefits/Household income gross and after Taxes

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

1 10 19 28 37 46 55 64 73 82 91 100 109 118 127 136 145 154 163 172 181 190

Begins Seopt 1959 ends Feb 2009

Series1

Series2

Documents

Recessions and employment