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The Coalition has announced a wage credit worth up to $200 a week per employee if businesses hire young people.
The jobmaker hiring credit will cost $4bn over three years to support the employment of 450,000 people aged 35 and younger.
The measure was welcomed by employers but there are already concerns about what an incentive to hire one cohort of people at risk of unemployment will do to others who miss out.
Why do it?
Youth unemployment is now 14.3%, more than double the general rate of unemployment (6.8%).
Young people also suffered the biggest spike in unemployment during the global financial crisis, and even before the Covid-19 recession were more than twice as likely to be unemployed.
Who gets it?
From 7 October 2020, eligible employers will be able to claim $200 a week for each additional employee they hire aged 16 to 29 and $100 a week for those aged 30 to 35.
New jobs created until 6 October 2021 will attract the jobmaker hiring credit for up to 12 months from the date the new position is created.
Government agencies, sovereign entities (including wholly owned foreign resident subsidiaries) and companies claiming jobkeeper are ineligible.
Related: Budget’s jobmaker hiring credit will pay businesses $200 a week to employ young Australians
To be eligible, the employee must have received jobseeker, youth allowance (other), or parenting payment for at least one of the previous three months at the time of hiring, but must not be receiving other wage subsidies such as apprenticeship funding.
Employees must work at least 20 paid hours a week on average and the credit can only be claimed by one employer for each eligible employee.
Unlike the jobkeeper wage subsidy, which must be passed on to the employee regardless of their hours worked, the employer keeps the hiring credit and pays employees only for hours worked.
What safeguards are there?
Employers will claim the jobmaker hiring credit quarterly in arrears from 1 February 2021 by reporting to the Australian Taxation Office that they are eligible every quarter.
The main safeguards are to ensure that the hiring credit creates a genuine job:
The business’s total employee headcount must be greater than on 30 September 2020; and
The payroll of the business must be greater in the reporting period compared with the three months to 30 September 2020.
So, for example, an employer could not lay off a full-time worker and hire two part-time workers on lower wages to claim credits because, although their headcount has increased, their payroll has not.
The amount of the hiring credit claim cannot exceed the amount of the increase in payroll for the reporting period. The baseline of 30 September 2020 will be adjusted in the second year of the program.
Are there any concerns about it?
The Australian Council of Trade Unions president, Michele O’Neil, said the ACTU was concerned the program “incentivises business to employ people in casual part-time and insecure jobs” because a company could double their subsidy by hiring two workers on 20 hours each instead of one full-time employee.
“There are not enough safeguards [for] older or existing workers,” O’Neil told Guardian Australia.
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“Even though the government says the overall headcount has to increase, if you let go two current full-time employees then you employed five casual and part-time, your overall headcount goes up.”
O’Neil said 3.5 million workers will lose jobkeeper payments at the end of March and “many are facing unemployment at that point, with no program to help them get a job or keep a job” because they are too old to qualify.
Labor’s shadow treasurer, Jim Chalmers, has already begun to attack the government about the 928,000 unemployed people who are not eligible for hiring credits because they are 36 and over.
O’Neil also questioned the one-month period on jobseeker before an employee qualifies, arguing it would disadvantage workers coming off the jobkeeper payment and discouraged jobseekers who had stopped looking for work, who are more likely to be women.
What did employers say?
Employer groups including the Australian Industry Group, Australian Chamber of Commerce and Industry and the Business Council of Australia all welcomed the credit:
These are measures targeted to younger Australians that we know from experience are among the most at risk in the wake of an economic downturn. The economic, social and human benefits of these measures are incalculable; they hold out a supporting hand to many young Australians. – AiGroup chief executive, Innes Wilox.
The wage subsidies are hugely important because it means that a business will hire a young person, get that extra incentive to put somebody on. – BCA chief executive, Jennifer Westacott.
Employer groups reject the idea businesses would put off existing workers to take up the subsidy.
But even they privately admit that incentives for one at-risk group (young people) will come at the expense of the work prospects of others, including people with a disability or aged over 55.
What does the government say?
On Wednesday Scott Morrison told Sydney’s 2GB radio the government wanted to encourage businesses to “bring forward their hiring decisions” and so would “partner with them” by providing subsidies.
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The prime minister said the government had targeted young people because of the importance of ensuring they were not dependent on welfare for life – an “enormous waste of human potential”.
Morrison denied that the program discriminated against people with a disability because, provided they meet the age criterion, they were also eligible.
In question time, Josh Frydenberg pointed to existing programs to help other at-risk groups, such as the $10,000 restart payment to encourage businesses to hire employees who are 50 and older.
At the National Press Club, the treasurer said the “double-barrel test” of higher headcount and payroll would prevent older workers being sacked.
“We have seen with previous recessions and … in this recession that [young people] had been particularly hit hard and they don’t necessarily have the same experience or the skill sets that some of the senior workers have and so, therefore, giving them this helping hand now is very important,” he said.