Thursday, September 24, 2009

The “Not As Lucky As We Thought” Country

It comes as something of a surprise to be told that, according to figures from the OECD, unemployed people in Australia are the poorest in the developed world. According to the figures, 55% of unemployed Australians are officially poor, as compared to the OECD average of 37%. Poverty is defined by the so called Henderson line, which is calculated according to family and employment status, and is currently set at $405.52 per week for a single person. The payment available on the unemployment benefit, known these days as Newstart Allowance, is $228 a week, plus rent assistance up to a maximum of $55.90 a week if you qualify. That leaves a single unemployed person with no dependents almost $120 a week below the poverty line.

There is also a significant gap between unemployment benefits and the age pension which has just become even wider because of the long awaited increase to pensions. The rise in the pension was long overdue and quite literally the least the government could do to address the very real problem of pensioners being condemned to live in poverty. It could be argued that pensioners still deserve more than the $30 odd a week extra that they are now receiving, but for people on unemployment payments there is no comfort at all.

Now, it has been argued many times that pensions are meant to be a permanent income for people who will not be returning to work, while unemployment benefits are not. Unemployment benefits are intended to be a short term measure to provide support for people between jobs. People are not supposed to live on unemployment forever. For that reason there is some justification for not paying as much to unemployed people as we do to pensioners, but that approach overlooks two very important things. First, even at the increased rate the pension is not exactly a bonanza and is not in itself a relevant yardstick. Secondly, the reality is that there are significant numbers of unemployed people who will not be finding jobs anytime soon.

The current economic climate has seen a 30% increase in the number of people relying on the unemployment benefit, and all the expectations are that unemployment figures will continue to rise for the next year. There are regional areas with large numbers of long term unemployed who cannot hope to find a job where there are simply not enough jobs available. There are thousands of people over 50 who may never work again because the jobs they once held are now going to younger people or perhaps don’t even exist anymore. Older people in particular are trapped in the twilight zone of making applications for non-existent jobs for years to come until they reach pension age.

The case for increasing the level of support for unemployed people is overwhelming. It simply isn’t possible to survive in the hi-tech, high rent world which exists today on the level of payment currently available. That’s not to say that people should be able to enjoy a life of comfort and ease at the taxpayers’ expense, but at least they should be able to pay the rent. The fact that unemployed people in Australia are worse off than in any other OECD country, is a clear warning sign that something is wrong. It seems that Australia is turning out to be the “not as lucky as we thought” country.

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