Wage subsidy could be employment life raft

A COVID-19 wage subsidy program could help prevent in excess of two million Australian workers from becoming long-term unemployed and provide a life raft for thousands of businesses devastated by the crisis.

The Director of Flinders University’s Australian Industrial Transformation Institute Professor John Spoehr contends that without wage support the unemployment rate will continue to rise sharply.

“It could reach 15% or possibly higher if the health crisis is not brought under control in the next six months,” Professor Spoehr says.

“Australians need to be reassured that they will not be plunged into poverty and despair – a formula for hopelessness and depression. We know from extensive research that deep economic crises have their own incredibly negative impacts on health and wellbeing.

Professor Spoehr says it is vital that the federal government takes extraordinary measures to support Australian workers and businesses during this unprecedented health and economic crisis.

“To its credit the Federal Government has expanded access and increased benefit levels for income support payments to workers, including casuals, contractors, and gig workers, but this is insufficient given the extraordinary magnitude of the crisis. The focus needs to be on keeping people employed and businesses intact so that we are better placed to rebound when the crisis is eventually over.

“The Australian government needs to immediately implement a large-scale wage subsidy scheme, similar to those adopted in other nations such as UK, Denmark, New Zealand, the Netherlands, South Korea, and Ireland.

“This involves government directly paying employers (for a limited period of time) a majority portion of wages –  between 70 and 90% –  to cover the wages of workers who would otherwise be stood down from their positions.

“The measure should also apply to contractors and self-employed people,” Professor Spoehr says.

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Australian Industrial Transformation Institute

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