Why unemployment benefits need to be increased

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9 December 2010

Since 1996 Newstart for a single person has fallen from around 54 per cent to 45 per cent of the after-tax minimum wage, writes Peter Whiteford in Inside Story. It isn’t enough to live on



ONE of the more surprising newspaper stories of recent times was Peter Martin’s article of 15 November, OECD Takes Aim at Labor Policies, which reported that the latest OECD Economic Survey of Australia had declared that Australia’s unemployment benefits are too low. I can’t recall the OECD ever before saying that a country’s unemployment benefits weren’t generous enough – and I worked there for eight years.

According to the OECD, the current level of the Newstart Allowance has “raised concerns about its adequacy” as an income support payment. “Unlike most OECD countries,” says the report, “Australia provides a flat (non-earnings related) means-tested allowance to meet social risks such as unemployment, which may be paid for an unlimited period… The resulting net replacement rate is below the OECD average for the initial stage of unemployment.” In fact, for a single person at the average wage losing their job, Australian benefits are about the lowest in the OECD…

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Photo: Andrew Jeffrey

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