Yahoo Finance ‘JobTweaker’: What is it and how will it work?
A new plan has been proposed to amend the JobKeeper scheme so that the $130 million package can last longer and save more Australian jobs.
With states and territories lifting lockdown restrictions in varying degrees across this week, the focus has turned to the nation’s economic recovery – and bringing down the unemployment rate will have to be the first priority, according to Deloitte Access Economics.
Prime Minister Scott Morrison has already given indications that JobKeeper will not last the entire six months it has been set out for.
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But rather than cutting off the scheme entirely, it should be phased out, said economists Pradee Philip and Claire Atkinson, who have come up with a plan dubbed ‘JobTweaker’.
“For JobKeeper to stop abruptly, all it would have done is have kicked the unemployment can down the road,” the economists said.
“The aim is to save more jobs that can be saved, while recognising that there will be some we cannot save. Australians cannot keep a job that won’t earn its keep, but we can keep more if we tweak JobKeeper.”
It’s likely that the original $130 billion that was budgeted for JobKeeper won’t be entirely used up, either, with restrictions easing earlier than planned, so a phase-out like ‘JobTweaker’ would have “minimal impact on the budget bottom line”.
While a one-size-fits-all approach of JobKeeper may have been appropriate for the way into the ‘hibernation’ phase, businesses and industries will be opening up at different times at different speeds, the economists pointed out.
A risk of JobKeeper is that it will create ‘zombie firms’, which don’t fully recover but don’t go bankrupt either – but suddenly stopping all support would also slow recovery.
Deloitte’s ‘JobTweaker’ plan
JobKeeper will eventually have to go, the economists said. “It costs a lot, it may cause competitive problems between firms, and its relationship with JobSeeker with respect to incentives to work is complicated.
“So, Deloitte Access Economics advocates making it smaller, but for longer.”
Here’s how ‘JobTweaker’ could look:
1. Phase down JobKeeper in line with turnover, so that eventually JobKeeper recipients receive $0 when turnover levels go back to normal.
“As turnover increases with economic activity, the JobKeeper payment steps down from $1,500 per fortnight to $0 until turnover begins to return to the pre-COVID levels.
“Just like the turnover drop made them eligible forJobKeeper in the first place, a turnover recovery could make them ineligible.”
2. The payment could be lowered. The timeframe of JobKeeper could be extended for a number of fortnights while the $1,500 a fortnight figure could drop at designated intervals to $1,200, then $900, $600, $300 and eventually $0.
This would add eight weeks and another $20 billion to the cost, however, or “potentially just using up the already ‘unsubscribed’ amount”,
3. JobKeeper could become even more targeted. After September, JobKeeper could be replaced by a $600 per fortnight wage subsidy for about three months for specific businesses that fit narrower criteria and those that have been harder, the economists said, such as the air transport, food, accommodation, arts and recreation industries.
“Such a measure is estimated to cost around $1.5 billion – a much smaller share of the unsubscribed JobKeeper pie, but equally sustaining a much smaller share of the economy,” the economists said.
Either way, public policy will need to support Australians out of jobs due to the pandemic.
“Australia has some workers whose normal work life has been disrupted and they will look to return to their normal employment arrangement quickly during recovery. These workers have relied on supports like JobKeeper,” said Philip and Atkinson.
Meanwhile, other workers will face a reality where their skills have become redundant, and these workers need to be equipped with new skills to be ready for the post-coronavirus economy.
“There are business owners who are relying on temporary income and business supports during forced closures but will seek to reopen.
“And there are business owners who will not seek to reopen in recovery or will try and fail to. Their employees may get JobKeeper now but will be displaced eventually.”
“Deciding the fate of JobKeeper is no small thing, and no part of the economic recovery task is straightforward.”
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