Anti-Poverty Week rolled around again in mid-October. What’s changed? In 2019 I put to bed a book about the regulation of joblessness in twentieth-century Australia. For its cover image, I chose a photo of a mass of men queuing for sustenance payments at Sydney’s Circular Quay in 1931. It was an iconic image of Depression-era Australia, the nation—and the world—taken unawares by economic catastrophe and lacking the policy infrastructure to cope with it.
But it proved an image that couldn’t be consigned to history. Less than a year after the book’s publication Australia entered the COVID pandemic, and versions of a similar scene began appearing in our daily news: queues outside Centrelink, stretching around the block. It was an image the federal treasurer Josh Frydenberg described as ‘heartbreaking’.
In the first wave of Australia’s COVID pandemic, the enforced shutdown of key industries—hospitality, tourism, entertainment, non-essential retail—saw Australians’ hours of work plummet. Unemployment grew to 7.4 per cent, but given the number of people stood down and working zero hours, plus those who lost jobs and gave up the search for new work, what Treasury called the ‘effective unemployment rate’ rose to around 13 per cent. And underemployment—the number of people who wanted more hours than the part-time ones they had—climbed to 14 per cent.
The hardships associated with lockdown were real. Many intermittent casual workers lost their jobs with no compensation. Aged care and primary schooling became incredibly hard to navigate. But remarkably, poverty in Australia fell, as did income inequality. The household poverty rate of those on unemployment benefit dropped from 67 to 7 per cent.
It was as though, said one commentator, we’d had a recession but no one came.
The unexpected outcome was largely the result of key government decisions. The most important was to more or less double social security payments to the unemployed by way of a COVID supplement to the JobSeeker payment. With the full supplement being paid, the payment was at a wage-replacement ratio of around three-quarters of the national minimum wage. It saw Australia move from having one of the most abstemious wage-replacement rates for unemployed workers to having one of the more generous.
As well, there was an even more generous JobKeeper subsidy that put a $750 weekly wage floor under those workers whose hours had been cut in businesses affected by the pandemic.
So far, so good. But those two interventions had a limited life. By the time the second wave of the pandemic hit Australia’s two most populous states in 2021, both had been withdrawn. The full JobSeeker supplement ran until late September 2020. It was extended until 31 December 2020 at a reduced rate of $250, and again until the end of March 2021 at a rate of $150, then settled after that at $50 per fortnight.
Prior to COVID there had long been a push to raise the rate of the unemployment benefit. And not just from welfare advocates. Indexed to CPI since 1997, the benefit had been getting miserabler and miserabler. Most poverty lines are indexed by reference to community incomes, so a CPI-indexed unemployment benefit meant claimants were destined to sink further and further into poverty. The result was that going into the pandemic, JobSeeker—at $550 per fortnight—was already around 40 per cent below the poverty line. Under these indexation policies, some projections estimated that by 2050 an unemployed person would be receiving a payment less than 40 per cent of the amount received by a disability support pensioner, and equivalent to 11 per cent of the average male wage.
Frydenberg argued that the enhanced JobSeeker payment would allow claimants to buy groceries and pay the bills, a tacit admission that up until this point the existing dole payment had allowed nothing of the sort. Ten years earlier the OECD had reckoned that Australia’s unemployment benefit system needed a revamp, as the level of payment offered to the unemployed was manifestly too low. The former chair of John Howard’s now-defunct Fair Pay Commission agreed, as did a labour market economist who was a fellow commissioner. Having undertaken extensive hearings in the second half of 2019, in April 2020 a Senate Committee also recommended a raise to the rate. Such calls had been steadfastly rejected by the Coalition government and had failed to gain traction with the Labor Opposition. Now, after more than two and a half years in power, Labor has moderated some of the more punitive aspects of the ‘mutual obligation’ regime that attaches to JobSeeker payments, such as suspensions for missed appointments. But despite calls from its own Economic Inclusion Advisory Committee to raise the rate, the Albanese government has remained obstinately resistant to any meaningful increase in the real level of JobSeeker payments.
So how, in policy terms, did we get from here to there and back again? Why did a Coalition government ostensibly committed to austerity and the punitive regulation of jobless people so quickly find in itself the capacity to throw money at the unemployed and loosen mutual obligation requirements? The speed and apparent ease with which it did just that is remarkable. But also why, given the positive impact of the COVID supplement, was it so hastily snapped back, even as COVID conditions continued to affect the labour market?
*
‘Unemployed people are like pens’, said Pauline, the Job Centre officer assigned to retrain benefit claimants, in the British dark comedy series The League of Gentlemen. ‘If they don’t work, you shake them. If they still don’t work, you chuck them out’. Her metaphor sums up an influential view that had been put forward some years earlier by American commentator Laurence Mead: that what the unemployed need is a mix of ‘help and hassle’.
In the international social policy community this approach goes under the title of ‘activation’, or ‘activating’ the unemployed. It’s a policy paradigm that nearly every developed country has signed up to since the early 1990s, to a greater or lesser degree. And as Mead and Pauline’s insights suggest, there are at least two logics at play here: what we might call the ‘behavioural logic’ and what we can call the ‘deterrent’ or ‘disutility logic’. The behavioural effect comes from the fact that activation mandates certain behaviour—job search, training, drawing up a ‘job plan’ and so on—that, ideally, we reckon will lead to getting a job. Supposedly, ‘activation’ might also inculcate ‘good habits’ or discipline or traits that are valued in the current labour market. But there’s also the disutility effect: if we make being on the dole so burdensome and make applicants jump through so many hoops, they’ll find the whole process so soul-destroying that they’ll think twice about applying, or it will increase their incentive to find some sort of paid work that gets them off the dole, or it will increase their chances of ‘tripping up’ in a way that sees their benefit suspended by way of sanction.
To some extent, we can characterise welfare states according to the relative importance given to these two logics. What’s prioritised: the help or the hassle, the shaking or the throwing out? Generally, comparative welfare state theorists would argue that Scandinavian welfare states favour the help over the hassle, while Anglophone countries—Australia included—tend towards the hassle. Another way scholars point to this variation is to draw the distinction between ‘soft’ and ‘hard’ activation.
But there’s probably a third logic in play that helps explain these developments in Australia, which I’ll call the political logic of activation. Governments think there are sufficient numbers of people out there who wake in the middle of the night, bolt upright, in a cold sweat, terrified by the thought that someone, somewhere, on the dole might be momentarily enjoying themselves. And governments seek to reassure those people that they will never let that happen.
Sometimes the three logics run together, each egging the others on. Sometimes they stand in contradiction: policies expressly designed to make life unpleasant for the unemployed might do nothing to help them get a job. ‘Work for the Dole’ is the case in point. Some might argue that it aims to build discipline, a work ethic and self-esteem, but the program not only doesn’t increase the chances of finding work, it decreases the likelihood of doing so—presumably by suppressing actual job search activity. But defenders of the scheme, and of ‘mutual obligation’ more generally, don’t necessarily have a problem with this. They are upfront in recognising the scheme is all about hassle, and not about help.
*
COVID put all these logics under the microscope, or at least made them seem less than logical. Let’s start with that political logic: that deep suspicion of—or, more often, downright hostility to—those daring to claim unemployment benefit.
It used to manifest itself in the Australian term ‘dole bludger’. That’s a term that predates any political program for ‘activating’ the unemployed. It emerged as a supposed pathology of our full employment economy.
Australia’s federal system of unemployment benefits came into force on 1 July 1945. Like already existing pensions and benefits, it was non-contributory, flat-rate and mean-tested against household income. The legislation required that a claimant for unemployment benefit be ‘capable of undertaking and willing to undertake work which, in the opinion of the Director-General, is suitable to be undertaken by that person’ and had ‘taken reasonable steps to obtain such work’. The Act also allowed for the postponement or cancellation of benefit if a claimant had become ‘voluntarily unemployed without good reason’, had become ‘unemployed by reason of misconduct’, or had ‘failed or refused without good and sufficient reason to accept an offer of employment which the Director-General considers to be suitable’. What’s more, the government could mandate that claimants undertake medical tests; training programs and so on.
‘Suitable work’ was always given a fairly broad meaning in Australia compared with some countries. People have generally had to accept any job they were qualified for, even if it meant working outside their normal trade and at less than their usual pay and skill levels, as long as the work met award standards (whether this requirement was always enforced is another matter). And from the scheme’s instigation, there was the expectation that single adult men would be willing to move from one place to another in order to accept work. This resonated with a particular set of concerns that governments had at the time: Australia was coming out of the Second World War with a commitment to a full employment economy, a shift from a wartime to a peacetime labour market, and a planned national works program that required workers—and potential workers—to be mobile both occupationally and geographically. The conditions attached to receiving unemployment benefit—be willing to accept a job, any job, stick with it, and don’t cause trouble—were suited to precisely these purposes.
In the early 1970s, politicians of both sides began referring variously to claimants of the unemployment benefit as ‘loafers’, ‘drop-outs, no hopers and hippies’, ‘slackers’ and ‘work dodgers’. With employers clamouring for labour, the thought that the unemployed could draw benefit while not presenting for work was anathema.
The Department of Social Security manual was amended to stress that the ‘genuinely looking for work’ test ‘applies especially to: members of “Hippie” colonies; members of the “Surfie” element; new arrivals in the area whose apparent purpose other than to seek work’. Unemployment benefit would not generally be granted to young single persons falling into those categories.
Bill Hayden, the Social Security Minister in the Labor government elected at the end of 1972, took issue with what he saw as the unacceptable ‘coercion and repression’ involved in the administration of unemployment benefits. He narrowed the range of work types used for work testing. Claimants were not to be required to submit regular lists of employers approached, and unconventional dress and appearance were not in themselves a reason for disqualification from benefit, even though some employers might reject the claimant for that reason.
But a steep rise in measured unemployment after the oil shock of 1974 meant the ‘bludger’ remained on the political radar, although now for different reasons: as a drain on the welfare budget. Hayden’s liberalised work test was tightened by the new Fraser Coalition Government as unemployment escalated in the mid-1970s. This was probably an opportunistic attempt to restrict claimant numbers in a time of rising unemployment. By the second half of the 1980s, however, there was a more fundamental shift in the policy paradigm, and the idea of the ‘Active Society’ and ‘activating’ the unemployed emerged.
Activation would play out as mishmash of new liberal aspirations around labour force inclusion and the old illiberal preoccupation with punishing the poor and policing the jobless. So schemes like the Hawke government’s Jobs, Education and Training program, a voluntary scheme to provide intensive support for single mums wanting to re-enter the labour market and championed by second-wave feminist bureaucrats, would become a Trojan Horse for what under the Howard government became ‘mutual obligation’: increasingly harsh and compulsory requirements imposed on the unemployed. And from 2005 onwards, the Howard government simply moved many people who would previously have been eligible for the sole parents’ pension and disability support pension onto the catch-all working-age payment of ‘NewStart’. Activation now had both a more punitive cast and a wider reach.
But when COVID made it clear that large sectors of our labour market were, for public health reasons, going to be placed in an induced coma, much of the rhetoric about the genuineness of claimants’ unemployment became irrelevant.
As the number of JobSeeker claimants nearly doubled within two months, treasurer Josh Frydenberg proclaimed himself heartbroken at the queues outside Centrelink. These newly unemployed, he said in May 2020, found themselves jobless ‘through no fault of their own’—a phrase echoed by Scott Morrison and trade union leaders. The waiving of assets tests and waiting periods appeared designed to pander to this new cohort of apparently blameless claimants; the raising of the rate and the relaxation of mutual obligation requirements aimed at shielding them from the politically unpalatable reality of what life on JobSeeker was really like. The rhetoric was clearly one of deserving versus underserving poor. Many European social insurance schemes have this distinction built in: workers with a steady employment record have put more into the fund and so get more out, whereas those with a more chequered work histories have to rely on forms of mean and lean social assistance more akin to Australia’s unemployment benefit scheme. Australia’s flat-rate, non-contributory scheme couldn’t countenance such a differentiation. In the end, a public health crisis temporarily exonerated all the jobless of responsibility for their predicament.
*
COVID also saw the ‘behavioural’ and ‘disutility’ logics take a battering. Unemployment benefit was born as a conditional and coercive system, and we have proudly built on that tradition. But since the early 1990s, there have been at least three noteworthy developments.
First, the regime of conditionality and coercion that was a feature of the original system became clothed in a rhetoric of faux reciprocity. Claimants entered into ‘agreements’ or ‘plans’ with the government, setting out a series of ‘mutual obligations’—an increasingly onerous set of activities (job search, voluntary work, literacy or numeracy training, job search training, Work for the Dole) and administrative burdens.
But the obligation was hardly mutual. The Howard government wound back spending on labour market programs. Its obligation became nothing more than the payment of benefit—and a benefit that was falling increasingly below the poverty line. But putting claimants’ obligations into a quasi-contractual form was meant to promote ‘responsibilisation’. That idea, gleaned from social work practice, was that a claimant’s obligations were thought to be more likely honoured if they had the appearance of being negotiated and agreed on. And claimants might also feel more responsible for the consequences that flowed from their failure to take those steps, with the rhetorical and psychological force of ‘agreement’ rendering any sanction more acceptable and legitimate, to both the jobseeker and the public at large. And sanction the government did, by way of suspension, reduction or cancellation of benefit. In the twelve months to September 2023, the ‘targeted compliance framework’ saw 70 per cent of claimants receive at least one suspension, with First Nations claimants, ex-offenders and the homeless overrepresented amongst those receiving multiple suspensions.
Secondly, as noted above, the Howard government’s welfare-to-work reforms saw increased numbers of sole parents and people with disabilities transferred to the JobSeeker payment, with its onerous obligation requirements and harsher means test. Whereas claimants of unemployment benefit were once a fairly discrete group that more or less tracked our statistical understandings of ‘unemployment’ (people without any work but looking for work), the unemployed are now a heterogeneous group of people involved in a range of activities—including casual paid work.
Finally, and crucially, assistance to the unemployed was no longer to be delivered by the Commonwealth Employment Service (CES), but by a privatised network of employment service providers. In effect, these non-government entities bid for the right to assist the unemployed into jobs, as well as to police claimants’ compliance with the increasing rodomontade of ‘activity’ requirements and menial administrative demands.
A group of academics who have tracked the evolution of private employment services since their inception in 1998 labelled their latest book Buying and Selling the Poor. That title in itself is a pretty unsparing and damning summation of the business model of employment services. It also suggests employment services have something like the same disassociated or abstract relation to actual labour markets as futures trading does to commodity markets.
Moving JobSeeker claimants into a system of privatised harassment partly stemmed from an old agenda to dismantle government agencies—the Department of Social Services and the CES—that had highly unionised and activist workforces. But the moment you tie unemployment policy to profit and loss, buying and selling, the system becomes one of commercial gaming. Payments to providers that are biased towards outcomes (placing the unemployed in work) lead to them churning relatively easy-to-place clients into short-term jobs. Payments based on intake lead to providers taking on hard-to-place clients but then ignoring or ‘parking’ them. And a payment structure that differentiates according to a jobseeker’s supposed level of disadvantage provides the incentive for service providers to expend their energy reclassifying clients to maximise payment and profit for the job service provider, rather than good outcomes for the JobSeeker client.
*
As a reading of public sector ‘reform’, Buying and Selling the Poor suggests a story of congenital failure when it comes to employment services, especially regarding the most disadvantaged jobseekers. While focusing on ‘high performing’ job agencies in an attempt to see what works when it comes to activation, the authors admit that the star rating system that classifies agencies presents a pretty low bar. ‘High performing’ here seems to mean ‘slightly less crap than the others’.
But another reading is that the reforms that have produced JobSeeker are in some ways highly functional. They’re about making sure welfare recipients operate as a proper reserve army of labour—a hungry cohort snapping at the heels of employed workers who might otherwise get too uppity. Since the late 1970s, a problem for corporate or government strategies intent on union-busting and driving down wages has been that the long-term unemployed don’t always function as an effective reserve army of labour. Their skills atrophy—or are presumed by employers to have atrophied, which is the same thing—and they can no longer exercise competitive pressure on other workers. One response to this is to periodically generate new reserve armies of the freshly unemployed through a series of rolling recessions. But the social—and electoral—costs of this, by the late 1980s, appeared too great. So the policy quest became how to bring the unemployed and other jobless back close enough to the labour market to exert that necessary competitive pressure. Economist Richard Layard, a key architect of ‘welfare to work’ policies in Britain, summed this up neatly: unemployment is necessary to ‘restrain wage pressure by providing employers with a pool of workers to fill vacancies’. Yet he thought long-term unemployment ‘to be largely useless’, as employers didn’t view the long-term unemployed as potential employees. So the aim of policy became to take the long-term unemployed and make them look the same as the short-term unemployed: job-ready and eager to front for employment. Hence the slew of labour market programs that reshuffled the queue of ‘job ready’ unemployed without doing anything to address the issue of actual job creation. And while ‘reserve army’ may sound distressingly Marxist, it’s exactly what Layard was referring to. Economists like to clothe the notion with the fancy term NAIRU: the non-accelerating inflation rate of unemployment. That is, just that right amount of jobless workers to keep employed workers running scared, deterring them from demanding a wage rise or making trouble, but not enough to cause the extreme social distress we’ve seen in major depressions. The problem is that no one seems to know what that NAIRU is, except in hindsight.
Many new jobs since the late 1980s have been part-time and casual. The probability of leaving unemployment for full-time work has declined; the probability of leaving unemployment for part-time or casual work has increased. That’s not only due to the increase in the number of part-time and casual jobs in the labour market at large. It’s also due to the profile of the employment opportunities available to welfare participants being dominated by casual jobs, precisely because these jobs turn over more frequently than those in the primary sector.
The harassment directed at the unemployed exploits these conditions, ultimately subsidising the production of contingent work. Or, rather, it contributes to the regulation and reproduction of casualised labour markets, most obviously by constructing a continuously job-ready, pre-processed secure labour supply for insecure work. In the words of Jamie Peck and Nik Theodore, reflecting on US welfare-to-work programs, unemployment policy becomes central to how flexible labour markets work.
*
In many countries, the ‘welfare state’ refers as much to the provision of free government-run services as it does to the transfer of money. Australia does some of this free provision—things like government schools and public hospitals. But it also cleaves closely to what Peter Sloman calls the ‘Transfer State’. People’s need for GPs, childcare, rental housing and so on are met by cash payments that cover some or all of the cost of accessing these things in some sort of competitive market. This suits a labourist Left, preoccupied with the disposable income of working households, but also neo-classical economists concerned with the sanctity of sovereign consumers exercising choice in a market economy. Which is why calls for some sort of unconditional basic income (UBI) have, over the past fifty years, resonated as much with the libertarian Right as with the progressive Left.
The rapid uptick in the JobSeeker payment, together with the relaxation of mutual obligations and easing of means testing, gave us an inkling of what a UBI might be like. And despite the support of the libertarian Right, there’s no particular reason for the Left to be afraid of a UBI. British anti-poverty activist John Veit-Wilson said that if you ask any public health profession what is the first thing needed to secure good public health outcomes, they’d say ‘clean water’. In a market economy, he said, adequate incomes are simply the ‘clean water’ of any anti-poverty strategy. I’m tempted to say adequate income is the necessary but not sufficient condition of an anti-poverty strategy, but in the meantime, as the COVID JobSeeker supplement revealed, for many a liveable income will be a sufficient condition.
Yet of course, we didn’t end up with an enhanced JobSeeker payment, let alone anything approaching a UBI.
There was a lot of talk during COVID quoting Milton Friedman’s advice that proponents of neoliberal policies should never let a good crisis—actual or perceived—go to waste. It was an observation popularised by Naomi Klein’s exposition of neoliberalism, The Shock Doctrine. The response to crisis depends, said Friedman, on the ideas lying around. Well sure, but it works both ways. Historian Daniel Rodgers gave this a different spin. Yes, he noted in his book Atlantic Crossings, crises erode conventional wisdoms and ratchet up the value of policy ideas ‘waiting in the wings, already formed but not politically enactable’. He cites the Depression as the crisis that delivered social security, employment standards and collective bargaining legislation to the United States—ideas that had been thrashed out by a trans-Atlantic community of progressive scholars and activists engaged in a form of cross-national learning and discussion for decades.
With the crisis of COVID, the forces of capital in Australia moved quickly, adjusting awards and enterprise agreements to give bosses an unforeseen ‘flexibility’ to unilaterally change workers’ hours, duties, pay and work locations (most people focus on JobKeeper’s efficacy or otherwise as a form of income support and business bailout, but the money was always a quid pro quo for vastly increased managerial prerogative, the latter having received far less attention or analysis). But following on from Rodgers’s insight, the increase to JobSeeker also provided a politics of hope or possibility. As it happened, changes to awards and enterprise agreements were time-limited. The COVID supplement proved time-limited too. Labor’s first budget has resolutely put any welfare reform on hold.
Where to now? Imagine we had a crisis and nothing changed? Then again, perhaps business as usual is the crisis.