A Case for Public Sector Job Creation Schemes

Abstract

It is recognised that for efficiency and equity reasons that governments need to implement active labour market programs (LMP). Such programs can help to improve the matching of labour supply and demand, reduce wage inflation pressures generated where labour markets are subject to supply shortages and bottlenecks, assist disadvantaged labour market participants obtain employment, help reduce poverty and income inequalities generated by the persistence of long-term unemployment, and they can raise overall productivity levels and living standards. What is at issue is not the need for LMP, but the type and mix of LMP required in Australia. The government has embarked upon a substantially supply side orientated LMP aimed at improving the employment prospects of the unemployed. On the demand side this has been augmented by a private sector wage subsidy program (JOBSTART). Such a mix of LMP is inappropriate for addressing the labour market problems associated with a recession. The government should, as a matter of urgency, consider the immediate introduction of a public sector job creation scheme (PSJCS). The advantages of such a program include its potential to directly address the problem of long-term unemployment (LTU), assist disadvantaged communities and provide an effective work experience support for the plethora of supply side LMP. Such a program could be effectively delivered by utilising the existing administrative structures of the CES and local government.