JobKeeper 2.0 ­­– why a wage subsidy is essential to saving jobs

Published: 27/07/2021
Category: Economic recovery
Published: 27/07/2021
Category: Economic recovery

With more than half the country back in lockdown, Australian Unions are calling for an immediate reinstatement of the JobKeeper program to support workers at risk of losing their jobs.

The JobKeeper program was a union won wage subsidy designed to support workers and businesses during the COVID-19 crisis. It helped millions of workers stay employed despite the devasting economic impacts of the pandemic.

Unfortunately, the Morrison Government ended JobKeeper prematurely in March 2021, despite the COVID-19 crisis being far from over.

Now, as the pandemic continues to spread in Australia and millions are again subject to lockdowns required to stop the spread of the virus, workers are once again facing an unfair share of the economic fall-out.

For many, their savings have been drained, their super raided, and their annual and personal leave entitlements have been used up. 

But instead of simply reinstating an updated JobKeeper that protects all workers, including those in casual jobs, the arts, and universities while preventing the corporate rorts that we saw with the original JobKeeper, the Morrison Government has offered up a mess of inadequate half-measures and welfare payments that do nothing to protect the jobs of working Australians.

Wage subsidies save jobs

Australian Unions are calling for the reinstatement of an updated JobKeeper because wage subsidies protect job security – it’s as simple as that.

Unlike a welfare payment, a wage subsidy is paid through an employer’s payroll system, so employers can only receive payments for as long as a worker remains employed. This serves to keep existing staff in their jobs – and in Australia and across the world, it worked.

Throughout the OECD, in countries like the UK, Denmark, New Zealand and Germany, wage subsidies were the most preferred and effective job retention strategy during the worst of the pandemic

In Australia, the eventual introduction of a wage subsidy proved to be a job-saving life raft. According to research published by the Reserve Bank of Australia (RBA), JobKeeper stopped 700,00 jobs from being lost in the first half of 2020.

But under the Morrison Government’s new scheme of separate payments to employers and employees, there is no requirement to keep on existing employees. At best, employers would be required to maintain overall headcount and how this will be enforced is unclear.

Without a wage subsidy, workers will continue to lose their jobs while their employer still receives financial support from taxpayers.

Wage subsidies keep things simple

Under JobKeeper, workers were paid as they normally were, through their employer’s payroll.

It kept things simple and sped up access to the payments because to qualify for support, employers had to make claims for their entire workforce.

Now, workers are having to go it alone, navigating a complicated, underfunded, and overwhelmed welfare system.

According to reports, Services Australia already has a backlog of 71,000 claims causing long delays for money urgently needed. Centrelink has been systematically understaffed by the Liberal Government, leaving hardworking public servants struggling to deal with the overwhelming need for assistance.

It also places unnecessary burdens on individuals trying to make claims, such as ongoing reporting requirements and working out tax obligations previously automated through payrolls.

Morrison must act now to correct his failures

The rolling lockdowns across Australia are a direct result of the failures of the Morrison Government. And while the PM may have finally apologised for the botched vaccine rollout, sorry won’t pay the bills. 

Affected workers desperately need adequate financial support from the Government, particularly those who work in the hardest-hit sectors like hospitality, retail, and aviation.

Workers need a wage subsidy they can rely on, not an overcomplicated system of welfare payments that do nothing to protect jobs. 

Scott Morrison must urgently reinstate an updated JobKeeper 2.0.

Scott Morrison must urgently reinstate JobKeeper

JobKeeper 2.0 ­­– why a wage subsidy is essential to saving jobs

JobKeeper 2.0 ­­– why a wage subsidy is essential to saving jobs