Jan 16, 2013

Dole around the world: how does Australia stack up?

With the latest unemployment rate due to be announced tomorrow, a quick look around the world shows that Australia is not a terrible place to be unemployed, writes freelance journalist Sally Whyte.

Pressure is mounting on the federal government to hike Newstart payments to the unemployed. But an analysis of the unemployment benefits around the world shows Australia isn’t necessarily a terrible place to be out of work.

A single person in Australia who is “looking for paid work” (Centrelink’s euphemistic term for unemployment) is entitled to up to $492.60 a fortnight and could also qualify for $121 in rent assistance a fortnight.

Even the full Newstart allowance combined with rent assistance is $167.40 a week below the poverty line, which is updated quarterly by the Melbourne Institute of Applied Economic and Social Research. The most recent calculation of the Australian poverty line in October sets the minimum income at $474.20 per week including housing costs.

Australia is one of few countries where a person can remain on the dole indefinitely. Across the ditch in New Zealand the unemployed have to reapply after receiving the unemployment benefit for 12 months. A single person in New Zealand receives NZ$229.01 (A$182.74) weekly, A$127.12 less a fortnight than a job seeker on this side of the Tasman.

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Australia is also one of few countries among its peers that does not charge a specific tax to employees or employers to fund unemployment benefits. In the UK, Canada, Germany and the US, employees pay to be “insured” against unemployment.

In the UK, employees pay on average 12% of their income as part of their National Insurance Contribution to be entitled to state benefits. The UK’s Jobseeker Allowance is £71 (A$108.13) weekly — significantly less than Australia’s dole, but housing benefits in the UK are more generous. Rates of housing assistance are calculated depending on location and the living status of a person, but the maximum amount for a single person is 250 pounds (A$380.74) per week.

The Canadian Employment Insurance program is not funded by the government but by premiums paid by employees and employers. In a complicated system, Canadians are only entitled to the dole if they have paid the 1.83% tax when they were employed. Their benefit is calculated at 55% of a person’s average insurable income up to C$47,400, meaning an unemployed person could receive up to C$501 (A$481.88) weekly. The period of time that a person can spend receiving the payment depends on the rate of unemployment in their province.

Unemployed Germans have access to €374 (A$473.31) monthly, only if they have previously contributed to the employment insurance scheme. This is almost half the Australian benefit, but the costs of accommodation and heating (it is Germany after all) can be paid in full “if they are reasonable“.

Although jumping through hoops at Centrelink is notoriously time-consuming and confusing, it is nothing compared to the rabbit warren of payments, taxes and food stamps in the United States. The maximum amount paid weekly changes from state to state, from US$247 (A$233) in Louisiana to a possible US$979 (A$926.47) in Massachusetts. It is unclear how many of America’s unemployed receive the full benefits in their home state as rates of payment are calculated by a person’s previous wages and employment.

In most states unemployment insurance can be claimed for a maximum of 26 weeks. Not only does the dole payment fluctuate across borders, but the taxes paid to the system and the eligibility rules to receive a payment are also state based.

The $50 a week rise in Newstart proposed by the Greens would cost the government $7.4 billion between now and 2016-17 and would leave the unemployed on the payment around $100 below the poverty line. The prospect of living on $35 a day is daunting, but perhaps not as daunting as $26 a day in New Zealand or $15 a day in Canada and Germany …


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269 thoughts on “Dole around the world: how does Australia stack up?

  1. TristanC

    This is a good starting point,, but these raw figures need further analysis. Without factoring in purchasing power parity and drilling down into actual comparative housing and utilities assistance rates (not simply listing maximum entitlements), we are left none the wiser as to where our dole sits.

    More detailed analysis please Crikey.

  2. Apollo

    Thanks for an interesting article Sally.
    Here are some interesting survey results:

    Australia is the 2nd best place to be born in 2013 just behind Switzerland in 1st and above Norway in 3rd.

    Australia is rank 15th most expensive country to live in the world still behind Germany at 14th and way behind many of the OECD countries.

    Australians are the richest people, wealth per capita is double that of the Norwegians who is at 2nd place.

    Australians are the happiest in the world, most content with their lives. Although one of last year’s survey also found Australians felt more insecure about their financial situations than the Spaniards. Schizo I’d say.

  3. Apollo

    If someone could come up with a blend of policies, taking the best part of our current system and the best part of the user pay dole system to formulate a new one, it will be good. I don’t think a fully user paid system is good. A student who has just finished school or uni would not have paid any employment insurance. We also need to accept some inefficiency in the welfare system as sometimes people get lost for a while and take sometimes to get up and take care of themselves, just like we accept the inefficiency of our democratic system.

  4. Jimmy

    Other things not taken into account in our “Dole payments” are health care cards – which give access to medical treatment but discounts on Energy, Vehicle Rego etc and FTB payments.

    While it is difficult to live on the dole it can be done (plenty of people do it) and it is only intended to be a safety net so of course your lifestyle wil change after losing your job which is why those who say you can only exist on the dole not live are right but they miss the point.

    Interesting points Apollo.

  5. Ashar

    Can I put forward another interpretation, of this comparison with overseas unemployment benefits. That it sucks to be on employment benefit here in Australia, but it sucks more to be on unemployment benefits (if you can manage it) overseas.

    One thing we seem to talk little about in unemployment figures, is how nation-states run their economies with the expectations of there being unemployed and desiring an unemployment figure not of 0% (full employment) but instead somewhere around 4%.

    How do when then approach our commitment to those who “must” be unemployed by that economic desire? I find the limiting of unemployment benefits problematic because what happens when an otherwise unemployable person looses financial aid? They have to get necessities from somewhere? Do they turn to crime?

    Our unemployment benefits are not always forever either, just see our homeless people’s stories for the complexities of the situation. The amount of people who are long term unemployed is fairly tiny, even with a very lengthy period of available benefits (ie a negligible drain), so it makes me wonder what people are actually getting at when they demand we get tougher on welfare?

  6. Ryan Ratcliffe

    i actually live on the dole. obviously you can live on the dole but it is about what affect living on it has on your ability to get a job. I pay my bills my 220 pw rent and it leaves me with about 60 dollars a week for food. I havnt bought clothes for over 2 years i cant afford to go out or eat out. Like many people on newstart allowance i have a medical condition that makes it hard for to keep employed but i don’t qualify for the disabily payments.
    Its very easy to say look you have it slightly better then other people. Its very hard to live on the newstart allowance!

  7. Apollo

    Thanks Jimmy, yeah the healthcare card people always forget to mention.

    Raising the dole by $50 across the board is a bad idea, the people who say the number of long term welfare recipients is small don’t get that poverty is also generational, many grow up repeating the same cycle as their parents and live on the dole. This is an easy breeding ground for more ignorant Westies (I’m not saying that all westies and unemployed people are ignorant), my Irish friend does not like Australian at all after a few accounters with the ockers, she went back to Ireland long before her visa expired. I do agree with Ashar though that unemployment target should be 4%

    Raising rent assitance depending on the cost of the location might have some merit but it’s open for more rorts and become costly, there are plenty of rorts in the current sytem already, unless the government pay directly into the landlords’ accounts and it will also show up it their tax papers.

    The skill training programs that Centrelink provides should be available for inexperienced people who have just finished school or uni within 3 months intead of waiting for so long to be eligible.

    Some people had mental trauma and can’t even be a kitchen hand. Case managers need to know people’s aptitude and don’t waste time sending them to employers unnecessarily, they can plant trees, mow lawns or do piece work like disable people. I have a nephew who got addicted to computer games and dropped out of uni. He lived on the dole for a few years being lazy. When Centrelink pushed him and he was genuine at looking for work because he was not interested in going back to uni, he appl.i.ed for positions beyond his reach. He is naive as an 8 year old and does not have strong social skill but he apply for jobs like car salesman. Eventually, it was one of our little grand niece who pushed him to go back to uni by giving him a lecture and an ultimatum.

    Gotta feed my pets, back in a bit..

  8. Jimmy

    Ryan – ” Its very hard to live on the newstart allowance!” It’s supposed to be to encourage you to get a job, if you could live on newstart while still eating out and hitting the clubs on a Saturday night then many people (not saying you) would say why work!

    Apollo – “Raising rent assitance depending on the cost of the location might have some merit but it’s open for more rorts and become costly,” Yeah it’s like the woman the Age had on the front page a few weeks back saying she was struggling on the doles while paying something like $400 a week rent in North Fitzroy because she liked the lifestyle.

  9. Apollo

    Western society tend to have more depression and mental illness. Some of it might be due to a culture of vanity celebrity obsessed and body image driven or some high expectation of a person to be perfect or successful, in addition at school or work place often occur. The society structure also has become fragmented and less communal, causing more disconnectedness and isolation.

    We need a de-fragmentation program for long term unemployed people. Make it compulsory for Social Work students to run practical, four sessions per year with unemployed people. It could be holding weekend BBQ, camping, affordable gourmet cooking class, brewer class for those who like to drink (responsible people hopefully), writing, painting, football, yoga etc. The unemployed only need to make an effort by putting $3 for the occasion and the government will fund the rest. Make sure proper receipts are provided and no fraud. The students can get some money for petrol.
    One problem I find annoying is that people complain about people without degree holding high managerial positions whereas they who have attained degrees and masters are stuck unemployed. Life is about experience, people can leave school early and work hard, become managers and business owners. Stop the insane snobbery that you have a degree and somehow you’re better and should not do ‘menial’ jobs. Australia is quite egalitarian. If you have the attitude and do whatever it takes to support yourselves, willing to take less skilled, less paid jobs to look after yourselves and build up experience rather than rely on the dole then in the future the employers will much more likely to employ you than people who think they are entitled and have been long term unemployed.

    Targeted approach and identify the individual’s need is more sensible. It may cost more in the short term, but it will save money in the long run and build a better society. There are too many ockers in Australia already, we should not increase their number.

  10. Saugoof

    I’m one of the “lucky” people who got to experience being on the dole in two countries, Switzerland and Australia. And before anyone jumps to conclusions about me just being a dole bludger, these were just unlucky circumstances (employer’s company going under in a recession, etc.).

    Anyway, this gives me a unique chance to compare the systems. Switzerland has always taken the approach that being out of work means you’ve been unlucky rather than being lazy scum, so unemployment benefits are extraordinarily generous. For the first six (I think) months that you’re on unemployment benefits, you receive 80% of your last salary. After that runs out you get shifted to social security where you do get far, far less though.

    This meant that for the three months I was on the dole in Switzerland, life went on without too much of a disruption. I didn’t just have to sit on the couch for fear of spending any money if I went outside or did anything at all. With not being constantly preoccupied with money worries, this actually made searching for another job relatively easy.

    By contrast, when I was on the dole in Australia I started out full of enthusiasm of landing a new job. When that didn’t materialise in the first couple of weeks my savings started running out I had to economise and I ended up leaving the house as little as possible. After two or three months I even had to scale back on job applications. This was in the pre-internet days where you had to send in a physical CV, and getting those printed or photocopied was just too expensive. So I’d only apply to the few jobs where I felt that I’d have a very good chance. Similarly any jobs that looked out of the way were off limits because getting a train ticket there meant my food budget for the day was gone.

    Eventually, after several months with no prospects I had to ask my parents for help. That allowed me to get off the dole and onto the even lower paying Ausstudy, and then get back to uni. Still, there is a happy ending and doing well at uni meant that eventually I ended up in a very high-paying job. But those needlessly tough months on the dole in Australia I do not wish upon anyone else!

    There is one other thing that rarely gets mentioned in the whole Newstart debate. The money that you receive ends up being pumped straight into the local economy. It’s not like you’re hoarding this under a mattress. It’s not a particularly efficient way, but it is an injection of funds into the economy. The effect that this has is that in a country like Switzerland where the dole payment is very high, people still keep spending money during an economic downturn. So the effects of it are far less severe than in Australia where any downturn can quickly spiral into a recession because people stop spending money.

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