Discussion paper
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JobMatcher: real unemployment insurance 912.12 KB

Australia doesn’t have true unemployment insurance. Not really. Instead what we have is a fairly meagre form of permanent welfare—not too high to prevent recipients from accepting whatever work they can get, but not high enough to ensure a dignified standard of living. With its universal, flat, and very low rate, our one-size-fits-all unemployment benefit fits nobody well. By lumping together the short- and long-term unemployed into one system, the government is left hamstrung—forced into a trade-off between living standards and work incentives.

It’s hard to believe that today Australians receive very little protection from income risk due to unemployment. A significant portion of people live paycheck-to-paycheck. And for many, the only source of debt finance is a high-interest credit card. The private market for unemployment insurance is virtually non-existent, with super funds refusing to cover it and only a small handful of insurers offering it under restrictive terms and at high prices. It’s hard to imagine a stronger case for government intervention.

This paper argues that Australia should introduce real unemployment insurance, called ‘JobMatcher’, which would:

  • top up the existing benefit to 70% of the individual’s former wage for the first six months;
  • be capped at $35,000 and limited to a cumulative six months every two years; and
  • be fully funded by a 1% JobMatcher Premium administered like the Medicare Levy.
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