JobMaker could pay bosses to cut wages and jobs, warns Treasury

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Employers could sack experienced employees, replace them with workers earning just a third of the salary and get a taxpayer-funded grant to do it, previously secret Treasury documents have revealed.

Treasury’s own examples, obtained by the ABC using the Freedom of Information (FOI) process, show bosses could sack a full-time employee on $75,000 and replace him or her with three part-time staff on wages between $22,500 and $30,000, while remaining in front financially – thanks to the generous JobMaker hiring credit.

The $4 billion two-year scheme, revealed in the 2020 Budget, pays employers up to $200 a week for creating new jobs for people aged 16-to-29 years who are on JobSeeker, Youth Allowance or the Parenting Payment. (It is $100 a week for 30-to-35-year-olds).

Joan Hughes, in her early 60s, spent two years looking for work. After a lifetime of career advancement, she felt the burn of age discrimination.

“It just erodes your confidence,” she said.

“You start to question your own skills and attributes, and you just give up.”

JobMaker is intended to create new jobs – the ‘headcount’ of the business must increase – but the scheme immediately created concerns it would discriminate against older people in the jobs market.

“Sometimes I wonder about the inclusion of older people in our community,” Ms Hughes said. “When we’ve done the hard yards.”

Internal Treasury emails, talking points and an ‘issues register’ listing problems with the scheme go further, outlining how employers will benefit from axing high-wage jobs and suggesting the department will “need to confirm” if the scheme is even legal under laws that aim to prevent age discrimination.

Big promises

In his budget speech, the Treasurer claimed the $4 billion policy would “support” 450,000 jobs. Treasury has been forced to admitted that does not mean JobMaker will actually create that many new jobs.

The number of jobs likely to be created is a tenth of that, around 45,000, acting division head, JobKeeper Division at The Treasury, Philippa Brown, told the Economics Legislation Committee on Monday, November 2, 2020.

This means the best-case scenario for taxpayers is spending $89,000 for every unemployed person who finds a genuinely new job through the scheme.

“I think there will be some jobs created,” said Dr Elise Klein, senior lecturer at the Crawford School of Public Policy at the ANU.

“But I think there’ll be mass job displacement and churning and shifting the terms of jobs available, and that’s not a good thing in a labour market, where people already very precarious.”

Treasury documents note that “arrangements for claiming the Hiring Credit will require an employer to demonstrate both an increase in payroll and an increase in headcount” and that there are costs involved in getting rid of and hiring employees.

The document states the JobMaker credit “does not create an incentive for an employer to replace an older worker with several part-time workers.”

But the words are directly below a table that shows the opposite.

Treasury documents outline a hypothetical example where JobMaker helps an employer replace one full-time worker with three half-time ones at no extra cost.(Supplied: Treasury)

Treasury’s figures show a full-time worker on $75,000 a year could be replaced by three part-time employees. If the boss pays them $22,500 each, there is no JobMaker subsidy, but the employer is $7,500 a year ahead.

If the new part-time employees are paid more, such as $27,500 or $30,000 a year, the payroll increases by $7,500 and $15,000 respectively. But the JobMaker hiring credit pays bosses those amounts, meaning the employer is paying no more, but now has two extra workers and has increased the hours covered from 40 per week to 60 per week.

In response to questions about the table, a statement from Treasury contended that “any JobMaker Hiring Credit payments received by employers will, at most, only offset the increased payroll from the eligible additional new employees”, and that there was “no financial windfall” to employers if they replaced one full-time employee with three part-time employees.

Dr Klein said the point of the subsidy was to boost the number of young people hired, but the trade-off is that people over the age of 35 will miss out, even if they have the same skills and experience.

“From an employee perspective it sucks. It’s not a good situation for people to be in,” she said.

“It seems as though there is an incentive to move from full-time to part-time and to increase the precariousness of the workforce.

“This has been a longstanding concern about the Australian labour market and it seems that JobMaker is another contribution in that in that respect.”

‘Illustrative’ examples

The office of Treasurer Josh Frydenberg was invited to comment for this article.

In a statement, the Treasury Department said: “The examples in the document are for illustrative purposes to demonstrate different circumstances in which an employer would be entitled to receive a Hiring Credit.”

The Australian Unemployed Workers’ Union is concerned the scheme will exacerbate a key issue in the recovering economy: that jobs being created are largely part-time, casual or insecure.

“We’re very concerned that the way the schemes have been designed means that companies will be thinking about how they can transition existing or former employees out of their business, as JobKeeper winds down, and then have a very short gap until they enter the JobMaker scheme and begin hiring to replace those employees,” said Kristin O’Connell, spokesperson for the union.

“The design of the criteria that are supposed to prevent that from happening really don’t, once you start to look at the detail.”

Jobs not careers

The 2020 Budget is “all about jobs” but “career” doesn’t get a mention, as the government focuses on quantity over quality, writes Michael Janda. Read more  

JobKeeper once supported 3.5 million workers, and ends in March. The government has insisted it won’t be extended.

“It’s almost like this system has been designed precisely to enable huge employers with large workforces to fracture their workforce: to get rid of older employees who might be costing them more money and replace them with younger workers, and putting these workers in a position where they have no security and can’t plan for the future.”

For older workers like Joan Hughes, it is another roadblock to finding employment. Now a chief executive in the not-for-profit sector, Ms Hughes said the ageing population meant older people would need employment for longer.

Woman sits at a desk, typing on a laptop
Joan Hughes says her friends who have been out of work have often seen their health deteriorate.(ABC News: John Gunn)

“I’ve seen so many of my older friends – once they give up work and they haven’t replaced it with something, whether that’s voluntary work or activity – their health really starts to decline,” she said.

“Work gives us that identity. It’s an economic issue of course, but it really does equate to health and wellbeing for older people.

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Total Comments: 12
  1. 1

    Just another LNP. Blunder and the fools will elect them for another term,hard to work it out.It may be the Murdoch press they believe.

    • 2

      Right on cue floss, your Labor bosses will be proud of you. Obviously you haven’t bothered to take time to read the article. Ask Rudd about Murdoch and why he is spreading lies about him.

  2. 5

    Obviously the people who have contributed to this article have never run a business with employees. Those workers who, it is claimed, will be sacked to save money are more than likely the reason that the business is running so successfully. Running a medium sized business is like managing a household in that employees become very close and are an integral part of any business. They work unsupervised, have contacts within the client base and are quite concerned that the business is successful as a successful business means job security. Yes, in theory all of this could happen but in reality a senior employee with years of experience will never be sacked in favour of a cheaper worker who will need to be trained.

    • 2

      Albert you absolutely correct. We have senior people employed and by golly no way would I replace them with younger part timers. I see many comments below where people are saying they have seen it happen. That may be so and unfortunately there are small businesses that operate with the short term in mind and short being the operative word. Any business small to medium worth its salt would not engage in what has been described in the article. At the same time I am sure it can happen.

    • 2

      And don’t forget that those same older workers have enough experience and knowledge to take action against the employer for unfair dismissal. And if they can show that they were not in fact made redundant (as may be claimed) but replaced by ‘cheaper’ employees, they are likely to win a far greater payout than the employer ‘gains’ in any Government sponsored job creation scheme.

  3. 2

    This has happened to me. Five experienced employees were “let go” to be replaced by five young, inexperienced casuals, who were easier to control. We went to the Industrial Relations Commission, and were awarded a small compensation, but they were unable to broker our reinstatement. I was 57. I never had a real job again. Age discrimination is still alive and well it seems.

    • 3

      I hear you patti….it’s happened to people on so many occasions,but we are told age can’t be use as an excuse not to employ someone…..absolute rubbish.I’ve seen with my own eyes working for a family business many years ago where 3 employees in their 50’s were put off over a period of 6mounths only to be replaced by a younger person in their 20’s….and i doubt anything has changed since then,if not even worse even more so if your applying for a job.

    • 2

      They will not use the term “too old” but will come back with lame excuses such as “overqualified, underqualified, not suitable for the job environment” and other such mongrel terms for not giving the job

    • 0

      Yes, unfair dismissal and IR is rubbish. The system is stacked and virtually impossible to challenge. A company only has to make minor (almost cosmetic) changes to side-step the legislation. When did you last see anyone other than top end exectutives with mates in politics challenge unfair dismissal and win?

    • 0

      Actually jamesg101472, I did and won!

  4. 0

    Accidental outcome, or design…
    Short term gain, long term pain.

  5. 0

    With so many managers (and politicians) playing a short-term game, you don’t have to be a rocket scientist to see the move will be to lose experienced workers and replace with lower cost workers. Basic logic: 1 worker covers approximately 8 hours, 3 workers cover approximately 24 hours so it can help the business and if it gets government subsidy, why wouldn’t the managers look at it.
    Sadly many of us have been laid off so cheaper, younger people can take our places, using all sorts of BS logic. Sometimes the companies come crawling back and want us to work some hours to help the business, although once we’ve gone, we often don’t want to re-engage.
    Many have gone through hundreds of job applications and received the ‘over-qualified’, ‘wouldn’t fit our young culture’, ‘not conversant with this or that technology’ (ignoring how many technology changes we’ve successfully handled), and just ‘someone else was a better match for our requirements’. I’ve even had some then ask if I was available to do a couple of days/weeks training of the person they have selected for the role.
    CES tries to push us into mindless jobs and training that is an insult, but some of us just find other options and our expertise is lost to the economy.
    And we have politicians that oversee the whole mess and come up with ways to give their wealthy mates handouts. It’s not about a few thousand for a mom and pop business, but hundreds of thousands for bigger employers. We saw it with JobKeeper and watch it happen with this new fiasco. Maybe treasury should give the ‘bonus’ to each older person laid off so younger cheaper staff can be hired and quadruple the amount by taking it off the politician’s generous super program and other perks.



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