CEDA - The Making of an Agile Workforce: Australia Adjusting Series
- Assistant Minister for Employment
It is a pleasure to be here today for the first in the CEDA series on ‘Australia Adjusting’.
I would like to congratulate CEDA for the Australia Adjusting: Optimising National Prosperity report.
It is a significant piece of work and serves as an excellent backdrop for our discussion today.
Its themes of economic flexibility, capacity to innovate and developing Australia’s human capital are well chosen.
These three elements are key to improving Australia’s productivity into the future.
I was delighted to be invited to speak on a topic that is essential for our country’s economic and social prosperity - namely, the making of an agile workforce.
As the Assistant Minister for Employment, it is my job to ensure that more people are in work and able to reap the personal and financial benefits of work.
Part of my remit is to help people strengthen their attachment to the workforce, especially those who may have had limited or broken working lives.
This is challenging work but something that I care about deeply.
I agree with CEDA that more can be done to engage people whose skills are under-utilised if we are to maximise the true value of Australia’s human capital.
As a country, we simply cannot afford – financially or socially – to leave people out of the workforce.
Our future depends on having as many people as possible participating in the workforce and making a positive contribution to our country.
But getting people into work is only half of the equation.
We need an ongoing dialogue in this country to help workers prepare for and adapt to change throughout their working lives.
Agility has a number of elements – it involves the ability to identify opportunity, a willingness to change quickly, and flexibility in skill and attitude.
Being agile – especially by cultivating new skills - protects people from unemployment.
As Phillip Bullock comments in Australia Adjusting - ‘workers with low skills are vulnerable to churn between employment and unemployment’ and that ‘low skills increasingly pose a barrier to participation and job security’ (page 154).
I would like to see individual workers, as well as firms, thinking differently about how they invest in themselves so that they are more agile into the future.
Today I will outline the Government’s employment policies and discuss the challenges and opportunities ahead as we adjust to changing demographics, industry transformations, and global competitiveness.
An economy in transition
Let me start with the big picture.
Over the past three decades, Australia has experienced significant social, economic and industrial change which has markedly altered the composition and capabilities of our labour force.
For example, female participation in the workforce increased from 44 per cent in 1978 to 59 per cent in 2013.
In that same period, the proportion of people in part-time work doubled from 15 to 30 per cent.
We are also staying in work longer – with the proportion of people aged over 65 in the workforce more than doubling in the past 20 years to about 12 per cent.
Our workforce is becoming more highly skilled, with the proportion of people aged 15 to 64 holding post-school qualifications rising from 40 per cent to more than 50 per cent in the past decade alone.
The industries we work in, the types of jobs we do and the basis on which we’re employed have all changed profoundly.
Australia’s focus has shifted from agriculture and manufacturing to the services sector.
For example, about 8 per cent of today’s workforce is employed in manufacturing – way down from the 25 per cent of the 1960s.
Today, more than three-quarters of the workforce is in the services sector.
The growth industries now – and for the next decade at least - will be in health care, social assistance, retail and construction.
Against this backdrop, there is the pressure of our population ageing.
The Inter-Generational Report – first delivered under the Howard Government – has served as a large wake-up call for our country.
Last week my colleague - the Assistant Minister for Social Services, Mitch Fifield - outlined at a CEDA event some of the benefits of population ageing.
He highlighted the potential for older Australians to continue to contribute to society in a variety of ways – as workers, volunteers and as carers.
Minister Fifield also talked about the need for careful planning to ensure that efficient and effective services are available into the future.
Today, I would like just like to outline the impact of population ageing on our future productivity and the challenges and opportunities it will provide.
In the next forty years, the proportion of people aged over 65 years is expected to increase to from 13 per cent to 23 per cent.
And the number of people of working-age is expected to fall seven per cent to 60 per cent.
Today we have five people of traditional working age for every person aged 65 and over.
By 2050, it will be only 2.7 people in the workforce for every person aged 65 and over.
This means we will see a vast increase in demand for government services and relatively fewer people in the workforce to pay for them.
This is why increasing workforce participation is essential.
We cannot have young people missing out on work during their formative years – as we are seeing in some European countries.
Nor can we have middle-aged people being left to drift into unemployment for a decade or more before retirement.
We need policies that encourage a lifelong attachment to the labour force and help people to adapt as old industries close and new opportunities emerge.
As the size of our working age labour force shrinks relative to the number of people in retirement – I think it is important that business also thinks about who will be in that labour pool in the future.
Businesses that have strategies in place for working with people from a range of backgrounds – and have pragmatic and efficient skills development programmes in place – are likely to have a competitive advantage.
We are not alone in dealing with changes of this magnitude.
Around the world economies have struggled - and continue to struggle - with the scale and pace of change.
Australia’s leadership this year of the G20 provides the opportunity to reinvigorate the discussion on these issues – especially with regard to job creation and trade.
I would like to take a minute to outline the Government’s plans to better position Australia to deal with change – especially as it relates to workforce participation and employment.
As you know, the Government has inherited a difficult Budget context.
The Government has to deal with $123 billion in projected deficits and $667 billion in forecast debt.
It is essential to the future of this country that we get our public finances back under control.
If we do not have the right fiscal and economic settings to support business and jobs growth then we will see more people in the unemployment queue.
And none of us want that.
Instead we need to focus on getting the most out of our human capital through policies that promote workforce participation.
In reading the Australia Adjusting report, I was struck by the comments of Dr Vince FitzGerald who noted that while Australia has had relatively high levels of workforce participation, there are segments of the community where skill development and participation are poor (page 30).
Dr FitzGerald goes on to suggest that to maximise employability we need to focus resources on those segments and be more flexible and responsive to the needs of employers, particularly small and medium enterprises.
Well I couldn’t agree more.
Since becoming the Assistant Minister for Employment, I have heard from countless sources how our publicly funded employment service – Jobs Services Australia – has become mired in red-tape and complexity and is no longer meeting the needs of job seekers or employers.
The current contract for Jobs Services Australia expires in June 2015 and I have been giving considerable thought to how the system can be improved so more people are in work sooner.
While the Government is still considering options, the following principles are informing its design.
Firstly, as employers are the generators of jobs it is essential that the new system is focused on their needs.
I have heard from employers that they want job candidates to be better prepared in terms of their skills and work-readiness.
Employers also need better post-placement support to help some job seekers - such as those who have been out of work for an extended period - adjust to the rhythms and demands of a new job.
Job seekers have told me of their frustration of being offered training for training’s sake and not the sort of training that actually leads to a job.
Training should be better targeted to preparing people for actual jobs and more directly linked to the needs of employers.
The Government is also keen to keep people active and engaged with their community while looking for work.
We intend to establish a new Work for the Dole programme that helps people to develop and maintain the sorts of skills and attitudes that employers need while they are looking for work.
While the Government is focussed on the needs of employers and job seekers – we must also provide the right sort of policy settings that allow our employment services to perform to their best.
As you would be aware, the Government is committed to eliminating one billion dollars worth of red-tape each year.
Excessive red and green tape is a drain on productivity and reduces the resources that firms have to innovate and prepare for the future.
In my portfolio area, Job Services Australia providers have told me that their staff can be spending up to fifty per cent of their time on red-tape.
This is too much effort directed to the wrong tasks.
To date, I have announced two rounds of red-tape reductions that will save providers up to $23 million in costs each year.
And there will be more red tape reforms to come as part of the new contracts.
In addition to overhauling the Jobs Services Australia system, the Government has also introduced new measures designed to encourage certain groups of job seekers into the workforce.
As you would be aware, youth unemployment in Australia is currently at 12.9 per cent – more than double the adult unemployment rate.
That is too many young people on welfare instead of in work.
To encourage young people to take up a job, the Government has introduced a new Job Commitment Bonus.
Young job seekers aged 18-30, who have been on welfare for 12 months or more, will be eligible for a bonus payment of $2,500 if they get a job and stick with it for 12 months.
These same job seekers can receive a further $4,000 if they stay off welfare and in a job for an extra 12 months.
This is a new way of providing encouragement to those job seekers who may find it difficult to commit to the world of work.
It recognises that commitment and perseverance are the foundation skills on which agility is later built.
There was another comment by Phillip Bullock in the CEDA report that also resonated with me.
He said ‘regional clusters of low skills are of particular concern in the case of young people with outcomes for youth in both education and work highly influenced by where young people live’ (page 154).
Living in an area where there are no jobs is one of the factors that drives inter-generational joblessness and long-term welfare dependency.
Young people do not learn the skills they need for work in such environments.
To help break this cycle, the Government is introducing a new payment help job seekers – especially young job seekers - to move to where the jobs actually are.
The Relocation Assistance to Take up a Job programme allows job seekers who have been unemployed for 12 months or more, and in receipt of certain types of income support, to receive up to $3,000 if they move to a metropolitan area to take up a job or up to $6,000 if they move to a regional area to take up a job.
Further funding of up to $3,000 is available to help families with the extra costs of moving.
This measure is designed to help people – especially young people who may not be locked in to mortgages and family commitments – to be more mobile and to take up work opportunities wherever they may arise.
While the Government is committed to making sure young people are fully engaged in the world of work – not the world of welfare – we must also make sure that people in their middle years are better supported to adjust to change.
There are over 167,000 people aged over fifty years of age in the Jobs Services Australia system.
That is around 21 per cent of the total caseload.
To help older job seekers, the Government is introducing the Seniors Employment Incentive payment.
This payment of $3,250 is designed to encourage employers to take on older workers who have been on income support for six months or more.
It will particularly help those employers who take on older workers who may need to learn new skills – or freshen up old skills – as part of a new job.
The Government is committed to helping job seekers – both the young and the more mature – to stay attached to the workforce for longer.
And to be more agile throughout their working lives.
Ladies and gentlemen.
The reforms I have just outlined to promote workforce participation are important but they are nothing without our reforms to re-boot the economy and get the Budget back under control.
The key to building an agile workforce requires effort across a number of inter-related policy fronts – as the Adjusting Australia report rightly shows.
Like you, the Coalition Government wants an Australian labour force that is flexible and adaptive.
It requires effort from individuals, business and Government in tandem.
The Government is implementing a range of employment policies to help job seekers – especially those on the margins of the workforce – to more fully embrace work.
These measures will ensure that we are drawing on the full range of human capital that is available to our nation.
Thank you for your time today and I look forward to taking your questions a little later.