Investment is the Key to creating jobs

In a crushing blow to job seekers the Reserve Bank has warned that it does not expect a sustained fall in the unemployment rate for another two years. This warning came the day after Australia posted its highest jobless rate in 12 years at 6.4%. The ABS data released 7 August shows that the level of unemployment in Tasmania was 7.5%.

How can we improve our efforts to help the unemployed find jobs especially the long term un-employed? A lot of lip service is given by law makers but the reality is that once unemployed for a period of time a stigma sets in and companies discriminate against the long-term unemployed and it becomes near impossible for the long-term unemployed to find steady work.

Today’s unemployment reflects the reality that there are simply not enough jobs to go around-businesses are not hiring enough.

Healthy economic growth creates jobs – businesses hire additional workers to produce enough goods and services to meet rising demands. The important role of Government is to provide a supportive environment. The oil that lubricates economic expansion is confidence. Government creates confidence when its policies are clear, consistent and concrete. Businesses can’t plan for growth if they don’t know what to expect and consumers won’t spend if they don’t believe the future will be safe and secure. The underlying role of Government is to create confidence, powering the economic growth needed to create jobs.

Lowering tax rates can stimulate the economy. During the Reagan years the top tax rate fell from 70% (those earning $108,000 +) to 28% (for anyone with an income of $18,500 or more). The corporate tax rate was also cut from 48% to 34%. “Reagonomics” was successful in ending the 1980 recession in America a time when unemployment was double digits. Lowering the corporate tax rate can induce multi-national corporations to pay more taxes in the country of operation instead of overseas. Payroll tax cuts are one of the most cost effective ways to increase jobs:- company savings could lead to reduced prices increasing demand which lead to increased labour hire or the savings could be used to immediately hire more labour.

Lack of sales is hampering hiring there is simply not enough demand for products. Companies are merging, manufacturing and plants are closing, businesses are failing- all leading to job losses. The challenge for policy makers is how to increase investment, increase consumer spending?

Cutting unemployment benefits will only hinder the current situation because at least benefits give people a chance to find employment and the unemployed are most likely to spend on basics like groceries, clothing and housing with those dollars flowing immediately into the economy – the busiest days at our major shopping centres such as Eastland’s are every second Thursday on benefits receipt day. Retailers and manufacturers can then at least maintain their own workforces if not increase them if demand warrants.

• Investment is needed in infrastructure to spur economic growth – the foundation for a high-productivity future.

• People must be kept in their jobs – not lose their jobs and add to unemployment rates

• The long-term unemployed must be helped to beat the odds and find work – public/private partnerships to create jobs (on-the-job training is needed).

• A subsidised employment program where people that cannot find positions in the regular labour market are placed in jobs and public funds are used to pay some or all of their wages. With the States administering the programme determining how the funds are allocated, who was eligible for subsidised employment, how the subsidies were paid out and how long individuals were eligible to get jobs through the programme. This programme was successfully used in the United States leading to increased employment and earnings for low-income individuals and essentially the long-term unemployed benefitted most of all. It is all about getting people reconnected – the long term unemployed reconnected with the labour market.

• The recruitment of young people into the workforce is vital to avert a skills crisis. Vocational training for the current unemployed especially young people is needed. Business needs to step forward and support young people as many young people are being overlooked.
• Create partnerships between community colleges and local businesses. Young people skilled confident and connected in professional services and large, medium and small businesses.
• Create a summer programme where youth get seasonal employment opportunities and directly connect with the local labour market gaining experience and training in soft and hard skills needed to access entry-level jobs.

• Provide tax breaks for businesses offering work experience opportunities so young people can get work-ready.

Growing acceptance of diminishing job creation makes businesses and consumers less willing to invest and lets politicians off the hook. Addressing Government deficit is an important concern but ‘the power of the purse” is needed now. Investment is needed in infrastructure to spur economic growth – the foundation for a high-productivity future.

There is evidence to suggest that local policies on unemployment are even more immediately effective than those drawn up nationally.

A mentoring scheme between Local Government and local businesses to help young people find their feet in the job market would seem like a good starting point. With transport costs adversely affecting young people, local jobs can be far more beneficial. Local Government policy and involvement that assists our young people get the best opportunities for work and training will go a long way in tackling the scourge of youth and long-term unemployment.

The one given being that the cost of inaction far outweighs the cost of action!

Some details about the writer:

Candidate for the forthcoming Clarence City Council elections October 2014

Currently working with Volunteering Tasmania
Former employee of 10 years with the Clarence City Council working in Asset Management, Corporate Governance and Finance
Former Eastern Shore Small Business Owner of 10 years
Debra holds a:-

Diploma of Business
Diploma of Business Management
Diploma of Human Resources
Graduate Diploma of Employment Relations
Completing Masters of Employment Relations 2014

Long-standing Board Member of Business East (advisory and consultancy for small business)
Director of the Tasmanian Racing Club ( membership and event management)
Executive of Soroptimist International (Hobart) – (Business women advocating human rights for women and girls)
Executive of Power talk International (promoting public speaking at local National & International level)
Member of Women’s Network Australia (supporting women in business)