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‘JobTaker’: Huge problem with hiring credit scheme

Lucy Dean
·5-min read
Waiter packing up cafe or restaurant chairs
Image: Getty

The Government’s JobMaker scheme has passed Parliament, with workers up to 35 years old now eligible for wage subsidies.

The scheme passed without the amendments proposed by Labor, the Greens and independents Jacqui Lambie and Rex Patrick to ensure older workers weren’t fired to make way for cheaper, younger workers.

And while Treasurer Josh Frydenberg said protections for older workers will remain in place under the Fair Work Act, the Australian Council of Trade Unions president Michele O’Neil said the unamended scheme will only create insecure work and displace workers.

“By opposing these amendments the Government has made it clear that the aspects of the bill which will risk the jobs, hours and pay of working people are not bugs but features. This legislation is designed to allow businesses to bring in more insecure workers,” O’Neil said.

“This scheme does nothing to protect or support the jobs of workers over the age of 35.”

Under the scheme, workers aged 16 to 29 will receive subsidies of $200 per week, paid to employers who take them on, while workers up to 35 will receive $100 subsidies.

Workers must have been receiving Youth Allowance, Parenting Payment or JobSeeker for at least one of the last three months to be eligible. The credit will not be available to firms that fail to increase their headcount or payroll.

Older workers’ employment security

The Australian Council of Social Services (ACOSS) also raised concerns about the scheme.

ACOSS CEO Dr Cassandra Goldie noted that while the scheme offers hope to younger Australians who are dealing with a 10.2 per cent unemployment rate, it risks older workers’ employment security.

“It’s clear that young people have been disproportionately impacted by unemployment in this pandemic,” Goldie said.

“However, there are people of all ages who will struggle to get back into employment, including older people suffering discrimination, people with disability, and people with caring responsibilities.”

Speaking prior to the successful passage of the JobMaker legislation, Goldie said the scheme needed to include those older than 35 who had been unemployed for a year or longer.

Will it cause distorted labour practices?

The Australian Manufacturing Workers Union also raised concerns the scheme would distort labour hire practices.

It said that as the scheme didn’t factor in business size or profitability, labour hire firms with few workers could use the credit to take on more staff before pitching cheaper labour to employers to reduce other permanent staff.

AMWU national secretary Steve Murphy said the scheme puts workers at risk of being sacked and replaced by labour hire, and called for labour hire firms to be excluded from the subsidy.

Under a scenario outlined in its submission to the Government on the scheme, a labour hire firm dubbed “Jim’s Labour Hire” let go all of its workers during the peak of Covid-19. However, now eligible for JobMaker, it could take on more workers and farm them out to other businesses.

A hypothetical food manufacturing business with 80 full-time workers on a $6 million payroll could take on 160 casuals from “Jim’s Labour Hire” for 12 months, cutting its wage bill to $4.8 million.

"The new workers won’t have sick leave or annual leave and the savings may be greater still if [the manufacturing business] has an agreement that pays their workers above the award rate," the union added in its submission.

Concerns of job ads targeting JobMaker candidates

It comes after reports of companies already tailoring their job advertisements to younger people.

“This is a newly created role under the JobMaker program and as such candidates will be expected to demonstrate eligibility with the JobMaker provisions," one advertisement reportedly read.

"Please confirm your age is between 16y and 35y."

Another job ad reportedly said successful applicants will be eligible for JobMaker and must be 16 to 29 and have received income support.

These ads aren’t illegal, the Australian Age Discrimination Act has said, as the JobMaker credit explicitly encourages businesses to hire younger workers.

“The JobMaker Hiring Credit falls within the exemptions from this general prohibition [against age discrimination]," it said.

"Individual circumstances will vary, and employers should seek their own legal advice as to how the law will apply to them."

Labor employment spokesperson Brendan O’Connor said the scheme was “grossly unfair” and will fail to deliver jobs.

Treasury analysis found that while the scheme is promoted as delivering 450,000 jobs, only 45,000 will be “genuinely additional”.

Frydenberg defends the scheme

However, Frydenberg said the broader framework of Australian employment law will keep current workers safe.

“You can’t have a contrived scheme, the Fair Work Act applies and there is a requirement of additionality, namely to both the payroll and to the headcount of a business when they take on a person,” he told Sunrise on Thursday.

And, he added that the unemployment rate for Australians 35 to 44 is significantly lower at 4.7 per cent than the jobless rate younger people face.

According to a report from fund manager Fidelity, the unemployment rate for Australians aged 15 to 24 is even higher than the 10.2 per cent quoted for those aged 15 to 34.

“Arguably, the unemployment rate is not reflecting the true devastation that Covid-19 has had on Australia’s 15-24 year old workforce, given a large proportion are employed in the heavily impacted food service, retail, hospitality, and tourism sectors,” said Fidelity International cross asset specialist Anthony Doyle earlier this year.

He said the youth unemployment rate was likely closer to 26.8 per cent.

One Nation Senator Pauline Hanson said she changed her mind about the JobMaker scheme after comparing the different unemployment rates between younger and older Australians, and decided the scheme was a good thing for workers.

“[This is] a big win for the job prospects of hundreds of thousands of young Australians,” Frydenberg said.

“We recognise that the pandemic has hit young people really hard… what we want to do is get younger people in work and to keep them in work.”

Prime Minister Scott Morrison has also defended the scheme, saying the Restart wage subsidy – which targets workers older than 50 – has helped 50,000 older Australians into work.

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