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COTA

Submission to the Senate Community Affairs Legislation Committee

Social Services Legislation Amendment (Welfare Reform) Bill 2017

22 August 2017

Introduction

Thank you for the opportunity to provide a brief comment on the Social Services Legislation Amendment (Welfare Reform) Bill 2017, now before the Senate Community Affairs Legislation Committee.

While the Bill contains many important issues, COTA Australia is addressing only the provisions relating to changes to the Activity Test for older jobseekers receiving Newstart Allowance.

Changes to the Activity Test for Jobseekers aged 55-59

The proposed amendments to the Social Security Act will require Newstart recipients aged 55-59 to satisfy the activity test through at least 30 hours per fortnight of paid work or a combination of paid work and approved voluntary work, at least 15 hours of which must be in paid work. Newstart recipients in that age group are currently taken to satisfy the activity test if they are engaged in at least 30 hours per fortnight of approved voluntary work, or paid work (including self-employment), or a combination of these.

The current arrangement acknowledges the great difficulty for many people in finding a job over the age of 55, particularly for people who have become long-term unemployed. The rationale is that in undertaking a significant amount of voluntary work the jobseeker is retaining, refreshing and potentially (but not always) learning new work-related skills; maintaining job-readiness; maintaining self-esteem; and making an important community contribution.

However, COTA agrees that in today's society, age 55 is and should be still prime working age, and indeed the years between 55 and 70 are of critical importance to many mature Australians plans for funding their later retirement years, especially for those who do not have significant superannuation balances or other assets.

Regrettably we still live in a society in which at least a significant minority of the workforce experience age discrimination, that evidence suggests starts to find expression even earlier than 55. That does lead to people in their 50s being more susceptible to being made redundant, targeted with "voluntary separation" packages, denied skill and knowledge development opportunities, etc. Once unemployed many find it much more difficult to re-enter employment than younger people.

An unintended consequence of the different activity test applied to Newstart recipients over 55 years can be to consolidate the effect of age discrimination. As the National Employment Services Association has stated, volunteering can "become an alternative destination to employment".

COTA receives anecdotal reports that unemployed people over 55 are often told by agencies in the jobactive network that their age will be a barrier in finding employment and in relation to specific jobs in which they are interested. It is of course illegal for employers to discriminate against applicants on the basis of their age, nevertheless it happens regularly, and in parts of the workforce, systematically.

In our submission to the Australian Law Reform Commissions' ‘Grey Areas' inquiry in July 2012 COTA Australia said: "The relaxation of the job seeking requirement and replacing it with the capacity to do voluntary work instead could be seen to be discouraging older people from trying to re-enter the paid workforce. It is an implicit acknowledgement of age discrimination and that older people will not be able to get a job. This is not the message COTA believes we should have."

COTA hears regularly from members and the older general public about exhaustive but unsuccessful attempts to regain lost employment in later life. In these stories it is not uncommon to hear that in addition to the sheer lack of jobs available, the person received very little support looking for work. Even when trying to engage closely with the jobactive network, older people sometimes report that staff lack the skills, knowledge or will to provide them with the right kind of support to find employment.

The obstacles and barriers to greater mature age workforce participation are deeply embedded in our culture and attitudes, laws and regulations, and labour market structures and work practices. The severity of the problem was highlighted by the Australian Human Rights Commission in its Willing to Work Inquiry in 2015-16.

The Inquiry found that while mature-age people have a lower unemployment rate than younger people, they tend to have greater difficulty finding subsequent employment when they do become unemployed. The Departments of Employment, Human Services and Social Services have told this Inquiry that as of April this year the average duration of employment for people aged 55-64 was 80 weeks, compared to 45 weeks for all people. It also noted that 48.2% of discouraged job seekers were aged over 55. COTA suspects that this is an underestimate.

Placing more stringent activity test demands on older unemployed workers does not in itself change the labour market in which older people find themselves, both in regard to the overall numbers of jobs available and their comparative chance of gaining them. The reality is that continuing age discrimination in the workforce and an overall lack of appropriate jobs means many older unemployed people find it very difficult, if not impossible, to get work no matter how much job search activity they undertake.

COTA has long argued that tackling mature unemployment requires a multi-pronged and faceted approach, ranging from a macro level attack on age discrimination (as we have done with other social issues) to a range of programs to support job seekers, including early intervention before or immediately after a mature age person becomes unemployed, rather than waiting for them to become ‘long term unemployed'.

The government argues that the shift in the activity test requirements reflects the reality of people living and working longer and an incrementally increasing Age Pension eligibility age. The change is also described as recognising that older unemployed people are in fact jobseekers, they should not be treated as if they are in the too hard basket and they should receive proper job search support. The key question is whether this will happen.

Of relevance to this we note that the three Departments' submission says that: "Mature age job seekers affected by this measure will be assisted to find work both by existing programs such as the Restart wage subsidy program and the Government's $110 million Mature Age Job Seeker Package that was announced in the 2017-18 Budget.

"The Restart wage subsidy, which offers employers up to $10,000 over six months for hiring mature age job seekers, has assisted more than 12,000 mature age people into a job.

"The Mature Age Job Seeker Package includes three measures: the development and implementation of the new Career Transition Assistance Program, the expansion of the National Work Experience Program (NWEP) and the introduction of the new Pathway to Work Pilots.

"The Career Transition Assistance Program will assist mature aged job seekers aged 50 years and over to reskill and identify opportunities in new industries and occupations. The program will be a short, intensive course consisting of skills assessments, exploration of suitable occupations, research of local labour markets and learning resilience strategies. This will be followed by digital literacy training where appropriate to build IT skills.

"The expansion of the NWEP will offer more short term work experience opportunities to people looking for work. The NWEP will give mature age job seekers more opportunity to develop new skills and experience. Evidence shows that the NWEP is effective at leading to employment, with around 50 per cent of participants in a job within three months of participating.

"The Pathway to Work Pilots will connect job seekers, including mature age job seekers, with jobs. The pilots will prepare and train participants for vacancies in specific growth industries or infrastructure projects.

Our 2012 submission to the ALRC ‘Grey Matters" Inquiry concluded that changing the volunteer provision back to a work requirement "should not occur until we have seen improvements in employer attitudes to older people and greater success rates in placing them in employment." The impact of the 2017 Budget measures will take time to seen and assessed. The measures are welcome but the on historical experience the need they are designed to address has proved somewhat intractable. It is not unreasonable to ask that demonstrating improvements in employment opportunities available to older workers should come at least concurrently with changes to the activity test. It is understandable that some people will view the new requirements as punitive, because as they frequently tell us, if they could get an appropriate job they would grab it with both hands.

These are crucially important issues, and the question is whether changing the activity test to place more work age requirements on older unemployed people ‘puts the cart before the horse'? Put another way, will the government ensure that the new activity test will NOT be punitive if its other measures do not shift employment prospects for older people.

We note that the changes proposed for older Newstart recipients are accompanied in the Budget announcement by the caveat that their implementation by jobactive providers must take account of local labour market and individual circumstances. This is a welcome reality test.

Conclusion

The issue we have canvassed in this brief submission is whether the increased job search requirements of the proposed activity test changes will be sufficiently matched by government programs that we will see a real impact on the employment prospects.

We acknowledge and welcome that the government's measures in the last Budget potentially put in place the most comprehensive set of employment support measures for mature age workers that has ever been in place. Some are of a modest nature so it would be good to have a commitment that if well utilized they will be extended, not cut off when they reach their funding envelope.

It is also important that government guarantee that mature age job seekers genuinely seeking employment not be penalized by the new measures. At the same time we do not support a reversion to a system that dismisses mature age unemployed people as only fit for voluntary work, or past 60, for no work at all.

We would be pleased to discuss this matter further with your Committee.

Download a copy of the submission

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