Division
Andrew Leigh We are now in the greatest economic downturn that Australia has seen since the Great Depression. Research from the Australian Treasury has revealed just how damaging this can be, particularly to young Australians. That research has looked at the so-called scarring effect, the long-term effect, of graduating in the teeth of a recession. I know this effect well, having finished high school in 1990 and seen some of my classmates who searched for work utterly unable to find it at that time. We know now that there are 13 jobseekers for every job vacancy, so this problem is particularly acute. The research conducted by Daniel Andrews of the Australian Treasury—now at the OECD—titled _The career effect of labour market conditions of entry_ found that a person who enters the labour market for the first time during a recession is more likely to be unemployed and more likely to be unemployed for longer. When they do find a job—if they do—they are more likely to work at a low-productivity firm and are less likely to switch firms, thereby missing out on the wage gains that come from that. Their estimate is that somebody who enters the workforce in a year in which youth unemployment is five percentage points higher suffers an eight per cent hit to their earnings in the first year and a 3.5 per cent hit to their earnings in the fifth year. The scarring effect lasts a full decade. We know that in Australia right now we are seeing significant adverse effects right across the labour market. We've seen a downturn in hours of some 20 per cent and the effective unemployment rate, the Treasurer tells us, will go to 13 per cent. The difference between those is JobKeeper, a wage subsidy scheme urged on the government, after they initially dragged their heels, by Labor. Labor recognises the value of wage subsidy schemes and maintaining the connection between employer and employee. Its value has been shown in Australia, as it has overseas. But JobKeeper is far from perfect. Let
House of Representatives, 2020-08-26. affirmative: ayes 44, noes 31.
Question
Andrew Leigh We are now in the greatest economic downturn that Australia has seen since the Great Depression. Research from the Australian Treasury has revealed just how damaging this can be, particularly to young Australians. That research has looked at the so-called scarring effect, the long-term effect, of graduating in the teeth of a recession. I know this effect well, having finished high school in 1990 and seen some of my classmates who searched for work utterly unable to find it at that time. We know now that there are 13 jobseekers for every job vacancy, so this problem is particularly acute. The research conducted by Daniel Andrews of the Australian Treasury—now at the OECD—titled _The career effect of labour market conditions of entry_ found that a person who enters the labour market for the first time during a recession is more likely to be unemployed and more likely to be unemployed for longer. When they do find a job—if they do—they are more likely to work at a low-productivity firm and are less likely to switch firms, thereby missing out on the wage gains that come from that. Their estimate is that somebody who enters the workforce in a year in which youth unemployment is five percentage points higher suffers an eight per cent hit to their earnings in the first year and a 3.5 per cent hit to their earnings in the fifth year. The scarring effect lasts a full decade. We know that in Australia right now we are seeing significant adverse effects right across the labour market. We've seen a downturn in hours of some 20 per cent and the effective unemployment rate, the Treasurer tells us, will go to 13 per cent. The difference between those is JobKeeper, a wage subsidy scheme urged on the government, after they initially dragged their heels, by Labor. Labor recognises the value of wage subsidy schemes and maintaining the connection between employer and employee. Its value has been shown in Australia, as it has overseas. But JobKeeper is far from perfect. Let
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