Work for the Dole leaves jobseekers worse off

One of the most significant welfare measures announced in the federal budget is the expansion of Work for the Dole. This will affect jobseekers aged 18-30 who will be forced to undertake placements of up to 25 hours a week for six months.

Work for the Dole workers receive only Centrelink payments and travel allowance for participating in the program. When working for the maximum number of hours, they will work for less than the minimum wage. Newstart recipients will be working for $10 an hour while Youth Allowance recipients will be working for $5 to $8 an hour. The minimum wage is $16.87 an hour.

One of the most common arguments for Work for the Dole is that it benefits job-seekers because it improves employment outcomes.

Jeff Borland and Yi-Ping Tseng recorded the experiences of 888 Newstart recipients aged 18-24 taking part in Work for the Dole. They found participants were no more likely to move off payments in the 12 months after finishing the program than a similar group of Centrelink recipients who did not participate. Their findings are consistent with international research suggesting programs like Work for the Dole do not improve employment outcomes.

As Borland argues, "the track record of those types of schemes in Australia and internationally is that they do not tend to have a very good record of assisting people to move into employment."

There are two reasons why Work for the Dole does not work. First, it does not increase the supply of jobs. Second, it does not do enough to build the skills of unemployed people, as there is usually very little formal training.

The study showed that six months after starting Work for the Dole, 71.4% of participants were still unemployed, compared to 59.1% of non-participants. This gap began to slowly shrink so that by 12 months, the difference between the two groups’ continued unemployment had narrowed from 12.3% to 10.3%.

After 12 months, participants had received payments an average of 2.2 fortnights longer than those who did not participate.

Many participants viewed their placements as work and so stopped or reduced their job searching. Naturally, people working part-time will have less time to look for work.

This would explain why Work for the Dole participants are less likely to secure employment during their Work for the Dole phase than similar non-participants — but it does not explain why Work for the Dole participants have never caught-up to similar non-participants in terms of their likelihood to find jobs, even long afterwards.

It might be the case that the stigmatising nature of Work for the Dole has a “scarring” effect, demoralising participants. It is also well-known that employers respond negatively towards Work for the Dole participants, many of whom avoid including Work for the Dole in their resumes.

Work for the Dole focuses exclusively on the supply rather than the demand side of the equation: it focuses on the attitudes, backgrounds, and skills of unemployed people, not on the demand for workers. Work for the Dole ignores the shortage of jobs, the fact that there are not enough for everyone who wants to work.

According to recent data, there is one job for every five jobseekers, up from one job for every 3.6 job-seekers two years ago. There have recently been very significant declines in available jobs in construction, manufacturing and mining. This ratio would be even worse if you included people who became discouraged and stopped searching.

People with major caring or parental responsibilities find it very difficult to find work that fits around their obligations. It has also been documented by a 2008 Federal Government survey that employers discriminate against single mothers, those with disabilities, older unemployed and long-term unemployed, even when they have recently had training.

Work for the Dole does nothing to address the shortage of paid work, the shortage of family-friendly work (or single-parent friendly work) or employer prejudices.

Australia has the lowest unemployment payments in the developed world, at $260 per week. Our unemployment benefits have not risen, in real terms, in 20 years. They are now so low even business groups like the Business Council of Australia think they should be raised.

Contrary to the claims of politicians and the media, if there is anyone not fulfilling its side of bargain, it is not unemployed people but governments that are guilty.

Work for the Dole represents a shift from welfare as a right to welfare as a privilege: something to be grateful for, to grovel for. With anti-government sentiment at high levels, this might be the perfect time to mount a ferocious campaign against this dismal policy.

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