Budget 2016: More work needed on government’s youth internship program

One of the main positive proposals in this year’s Budget was a package of measures aimed at addressing youth unemployment, including an internship and wage subsidy measure known as the Youth Jobs PaTH program and an expansion of the New Enterprise Incentive Scheme (NEIS).

While the National Welfare Rights Network welcomes some aspects of this package, especially the use of wage subsidies and scaling back of the ineffective Work for the Dole scheme, it has become clear since the Budget that much of the detail remains to be worked out, including critical issues such as the employment status and protections against abuse of the scheme by employers.

Key aspects of this package of measures are:

• Job seekers who are the most “job ready” (stream A) will only be required to participate in Work for the Dole after 12 months, instead of 6 months, which will save close to $500 million over the forward estimates;[1]
• The Youth Jobs PaTH program, under which job seekers under 25 who have been participating in employment services for 6 months or more can volunteer for an internship placement of 15 to 25 hours per week for 4 to 12 weeks, after 6 weeks intensive training in work skills, and receive an additional payment of $200/fortnight on top of their income support payment;[2]
• Wage subsidies for employers who employ participants in the internship program or any job seeker under 25 participating in employment services for 6 months or more;[3] and
• Expansion of the NEIS scheme to support self-employment by young people and expand the number of places in the scheme.[4]

The National Welfare Rights Network welcomes aspects of this package.  In particular, the scaling back of Work for the Dole is welcome, given studies have shown the scheme has only a small impact on employment outcomes for participants.[5]  Conversely, the expansion of the NEIS scheme is positive, given past positive evaluations of its impact.[6]  The National Welfare Rights Network has also long supported wage subsidies as an effective measure to improve employment prospects for disadvantaged job seekers.

However it is clear that many details of the scheme remain to be worked out and there is a need for safeguards to ensure, for example, that the internship program is not used to displace existing workers or that interns are not churned through the program to take advantage of subsidies.  The Australian Council of Social Services has issued a media release setting out a useful set of guiding principles to ensure the program benefits young job seekers, including raising payments or capping hours to ensure that participants receive at least the equivalent of the minimum or applicable training wage.

The National Welfare Rights Network also remains concerned that harmful cuts to support for young job seekers proposed by the Government apparently remain on the table, including reducing income support for under 25s by raising the minimum age at which young job seekers move from youth payments to Newstart Allowance and imposing a 4 week waiting period for payments.  Given the vulnerability of young people to the general health of the economy and labour market, it is vital that income support remain adequate for young job seekers who struggle to find work through no fault of their own.