Work for the dole is bad for you

February 4, 2004

Kerryn Williams

A damning report on the federal government's work-for-the-dole program has revealed "quite large significant adverse effects of participation" in the scheme.

The report, "Does 'Work for the Dole' Work?", was obtained by the Australian newspaper under freedom of information laws. An article on the report was published in the November 20 edition of the newspaper.

The report was commissioned by the federal Department of Family and Community Services (FACS) and prepared by two economists from the University of Melbourne. It analysed the pilot phase of the work-for-the-dole scheme, between November 1997 and June 1998.

The central conclusion of "Does 'Work for the Dole' Work?" is that work-for-the-dole participants are less likely to enter paid work than those who don't take part in the scheme. It found that the scheme's effects are "slightly more adverse for females than males" and that the program "has a significant adverse effect on labour market outcomes for participants in regions with above-median rates of unemployment".

A number of possible causes were identified in the report, in particular the stigma attached to participation in work for the dole, and the negative effect of the program on job seekers' time and ability to look for work.

The government has deemed the report irrelevant, because it is based on data from the scheme's pilot phase. It prefers research conducted by Ann Nevile, from the Australian National University, and John Nevile, from the University of NSW. Their report, "Work for the Dole: Obligation or Opportunity?", was released by federal minister for employment and workplace relations Kevin Andrews on November 18.

However, the Neviles' research hardly presents a glowing account of the scheme. It concludes: "In recent years, around one quarter of Work for the Dole participants are employed three months after leaving the program. Probably between 60 and 70 per cent of those who find jobs would have done so regardless of their participation in Work for the Dole."

There are numerous reasons why work for the dole does not help to solve unemployment. Participating in work for the dole for two to three days per week directly subtracts time that could be spent looking for paid work. "Working for the dole" is hardly an impressive entry on a person's resume.

But whether or not work for the dole improves or decreases an individual's chance of edging ahead of the hundreds (or even thousands) of other applicants for a particular job, it does not alter the fundamental problem — there are not enough jobs to go around.

In fact, work for the dole costs jobs by replacing paid positions. Last year, around 64,000 people participated in work for the dole. Employing them all on proper wages to do the same work would have made a serious dent in the unemployment figures. The latest edition (issue seven) of the government's What's Working? newsletter for work-for-the-dole participants notes that, "since the program started, participants have completed the equivalent of more than 38,000 years of work, which is a remarkable achievement".

It the same edition of What's Working?, the federal minister for employment services Mal Brough openly stated that work for the dole's principal aim is not to help the unemployed find work.

Anne and John Nevile put forward a number of recommendations that fail to address the fundamental problems of the work-for-the-dole scheme. They propose that participants, after working for the dole for 26 weeks, should be able to volunteer to work for six months in the for-profit sector. Two days of their wages each week would be covered by the federal government, with the remainder paid by the employer. This boils down to yet another government subsidy to business by providing the private sector with publicly funded free labour.

Work for the dole divides the working class by reinforcing the myth that the jobless are to blame for their lack of employment and must be expected to "give something back" in return for the pittance of an allowance they are paid.

Punitive measures are imposed on any unemployed person who is unable to strictly abide by their "mutual obligation" to the government. A range of offences, such as failing to declare accurate information or failing to attend a Centrelink interview, can incur a penalty. Penalties usually involve a period of reduced allowance, and in some cases the cancellation of allowances.

FACS released figures in 2001 that showed that "breach" penalties imposed on the unemployed jumped from 120,718 in 1997-98 to 346,078 in 2000-01, a 187% rise over three years. In 2000-01, 18% of unemployed persons receiving allowances incurred a penalty.

Widespread public criticism from welfare organisations put the government under pressure, and in 2001-02 the number of breach penalties declined. Since then, however, new rules have been introduced in a concerted "crackdown" on the unemployed.

The Australian Council of Social Services issued a paper in August 2001, "Breaching the Safety Net: the Harsh Impact of Social Security Penalties", which highlighted a range of problems with the breaching provisions, including the resulting financial hardship for individuals and families, the high incidence of penalties among the most vulnerable groups, unreasonable requirements placed on many unemployed people and the large number of administrative errors made by Centrelink.

A report in 2000, commissioned by FACS and researched by Dr Will Saunders from the Australian National University, found that national breach rates are 1.5 to two times higher for Indigenous Australians compared to non-Indigenous Australians.

Punishing the victims of a failing system is not a solution. But according to the January 15 ABC Online, federal treasurer Peter Costello claims the answer to unemployment lies with the government's industrial relations and welfare "reforms": "If you wanted to take the unemployment rate in Australia down more significantly you would have to get the government's measures through the Senate."

Contrary to Costello's point of view, further driving down workers' wages and conditions is not a solution to unemployment either. The real solution lies in the government taking responsibility for job creation. A massive injection of funds into the public sector to address the areas most in need — health, education and housing for a start — would create hundreds of thousands of new jobs.

In addition, a shorter working week should be introduced, with no loss of pay, to share the work around. Of the 30% of male workers in Australia working more than 50 hours per week, more than half would prefer to work less. It's in the interests of both employed and unemployed workers to abolish work for the dole and create jobs for all.

From Green Left Weekly, February 4, 2004.

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