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Fed: Long-term jobless lessons of '90s recession

By Stephen Johnson
24 Apr 2009 2:29 PM

CANBERRA, April 24 AAP - Even as Australia sinks into recession for the first time in 18 years, one statistic is still overlooked by the daily news cycle - long-term unemployment.

The Australian Bureau of Statistics defines long-term unemployment as someone of working age who has been out of a job for 12 months or more.

These are people employers are reluctant to hire.

Their long absence from the workplace means they lose skills - and hope.

During an economic downturn it's the newly unemployed who are often put back to work first as the long-term jobless - some suffering from mental health problems - are overlooked for the few jobs available.

Prime Minister Kevin Rudd, Treasurer Wayne Swan and Reserve Bank governor Glenn Stevens all acknowledged this week that Australia was in recession.

Mr Swan even admitted the jobless rate could hit double-digit figures, but sticking to tradition, he declined to leak details of the May 12 budget being worked out in very dire economic circumstances.

Australia's chief business, non-profit and welfare groups are calling on the Rudd government to bring in programs now to give the long-term unemployed work placements before the recession worsens.

They want this Labor administration to avoid repeating the mistake of the Keating government, which didn't unveil big measures to help the long-term unemployed until three years after the recession had ended.

If history repeats itself in 2009, the ranks of the long-term unemployed will climb as more bad economic news makes bosses shed workers.

Presently, Australia's 83,400 long-term jobless make up 0.7 per cent of the labour market. (The overall jobless rate is at a five-year high of 5.7 per cent.)

During the recessions of the early 1980s and 1990s, long-term unemployment rose above two per cent - as the overall unemployment rate climbed into the double digits - and actually worsened as the economy recovered.

Following the last severe economic downturn, it took another decade before long-term unemployment fell below where it was at the start of the 1990s recession.

Australian Council of Social Service (ACOSS) chief executive Clare Martin said the Rudd government needed to put in place programs now to help the long-term unemployed rather than waiting until the economy recovered.

"The lessons of the `91 recession have to be looked at closely," Ms Martin, former Labor chief minister of the Northern Territory, said.

David Thompson, chief executive of Jobs Australia, the peak body of the not-for-profit agencies, said the Keating government's job programs for the long-term unemployed would have been effective if they had been brought in during the 1990s recession, rather than after it.

"We need to go back to our experience in the previous recession - if you don't make sure they're engaged in the labour market, then they're going to stay there (unemployed) for a very long time," he said.

In mid 1994, six months after long-term unemployment rose to 3.7 per cent, the Keating government put out Working Nation, which saw taxpayers subsidise employers to give disheartened job seekers a year-long job placement.

Recipients had to have been on unemployment benefits for 18 months or more to qualify.

The Australian Council of Trade Unions this week proposed a similar idea, where the long-term unemployed would be given a six- to 12-month job placement if they have been on the dole for 18 months.

But unions want their "job compact" to be geared towards long-term jobless people under 25.

ACTU president Sharan Burrow said minimising youth unemployment must be a top priority so young people are not "left behind" by the global financial crisis.

Australian Chamber of Commerce and Industry chief executive Peter Anderson said while the ACTU idea was worthy of consideration, he pointed out that Keating's Working Nation plan was flawed because many long-term unemployed were often not given a job after the placement period ended.

"What we saw was people became dispirited as a consequence of losing their job at the end of the period of subsidy," he said.

Mr Anderson said new government programs to help the long-term unemployed needed to focus on training people for the kind of economy that would emerge after the recession was over.

"A recession brings about industry restructuring, and the old manufacturing model is inadequate," he said.

ACOSS wants the federal government to establish a six-month paid work experience program in the local government and non-profit sectors for the long-term unemployed.

Under the model, costed at $350 million for the next financial year, the long-term unemployed would be paid 80 per cent of the minimum wage.

Ms Martin said a similar Keating government training wage scheme for the long-term unemployed had started too late to be effective.

She said government policy for the long-term jobless needed to focus on people aged over 50, and suggested government tenders could be given to firms that gave work to older, unemployed Australians.

"The last thing you want to see is a man over 50 never working again," Ms Martin said.

With recession looming, the Rudd government announced in April that it would replace John Howard's Job Network with Job Services Australia.

The restructure saw 60 job placement agencies lose their contracts, not to mention 2,000 workers lose their positions - but Mr Thompson believed the government would change the system, which was designed in the skills shortage era before the global financial crisis hit.

Opposition employment spokesman Michael Keenan declined to put forward ideas for tackling long-term unemployment.

But he said the government's job agency changes, which saw employment placement specialists lose their contracts, would mean "corporate knowledge" about helping the long-term unemployed would be lost.