Criticism Of Prime Minister Howard's Job Creation Strategies
'Job Creation Strategies Start Paying Dividends For Howard' The Courier-Mail 10/7/1999

THE Howard Government has more than one reason to be pleased with the surge in employment announced on Thursday.

Not only has the unemployment rate fallen to its lowest level since June 1990, but a major threat to its employment policies appears to have been averted, at least for now.

There must have been a huge sigh of relief in the office of Workplace Relations and Employment Minister Peter Reith, when employment figures showed growth of 62,000.

After four months of virtually no recorded employment growth, at last a sign that the Government's free market approach to job creation may still be working.

Ever since the McMahon government was thrown out of office in 1972, partially on the basis of the unemployment rate soaring from 1.5 percent to 2.5 percent, employment and unemployment have been the dominant lasting issues of Australian politics.

Unfortunately, no definitive solution has been found, but not for want of trying.

Both major political parties have widely traversed the policy landscape in their search for a key to lasting success in job creation. Regulation, wage freezes, subsidies, enterprise bargaining, training, reskilling and deregulation have all been tried.

At different times. Labor has moved significantly to the right and the Coalition to the left as the search has gone on.

At times, as during the Hawke era, there was really little difference between the employment policies of the major parties, but rarely has the gulf between them been as great as at present.

Labor, particularly under current employment spokesman Martin Ferguson, remains firmly wedded to the Interventionist policies of Working Nation.

These are essentially policies of spending very large amounts of public money on employment subsidies, training and reskilling. Such policies did appear to have some success in the early-to-mid 1990s, but follow-up studies have seriously questioned their longer-term effectiveness.

For its part, the Howard Government has based a substantial part of its Budget surplus on throwing out spending on Labor's employment programmes, while adopting a very different two-pronged employment policy of its own.

The first of those prongs has been to seek to remove what it sees as the shackles holding back employment growth.

As a consequence, the approach has been to deregulate wherever possible and to rely on the free market to deliver the desired job creation outcome.

The second prong has been to seek to force what it sees as a somewhat recalcitrant pool of unemployed persons back into whatever work is available, by adopting policies to make the lives of those reliant on unemployment benefits as uncomfortable as possible.

There can be little doubt that the results to date have been significantly less than the Government would have been hoping for.

Despite a booming economy, employment growth has lagged to the point where the Government must be very concerned that the free market alone is not going to deliver the solution.

Indeed, with very strong job vacancy growth and with business surveys reporting a strong demand for labour, many analysts have been beginning to suggest that the problem was that, despite a 7.5 percent unemployment rate, there is a significant mismatch between the skills that employers want and those of the available pool of unemployed.

Such a conclusion would be terribly uncomfortable for a Government that had made a virtue out of slashing expenditure on job skills training. Hence the very visible relief on Thursday. However, one good number out of the last five is hardly conclusive.

Rather, just as there is much to admire in the Government's determination to push ahead with further labour market deregulation, there must by now be a nagging doubt that the skills mismatch argument is more than just a theory.

While the totality of Labor's "back to the future" employment policies is almost certainly not the recipe we need for future success, its focus on training is one that the Government may well need to look at again.

It is difficult to see how the Government's past savage cutbacks on training expenditure and subsequent persistent restraint on education and training spending are going to help us build and renew the skills needed to cope with the rapidly changing demands of the modern economy.