The Abbott government’s new scheme to compel the unemployed to apply for 40 jobs per month will add a minimum of six work hours per month in added costs to businesses, analysis by Crikey has shown. For businesses that are actually advertising vacancies, that cost will skyrocket, potentially to dozens of hours per month — crippling the ability of small businesses to conduct their principal activities.

The figure varies according to the potential amount of time each employer is likely to spend considering applications, and how many businesses not currently receiving advertised vacancies will receive and process applications. Were one to consider only those businesses actually advertising vacancies, the costs rise dramatically, especially for small and micro-businesses.

Crikey conducted the analysis based on the recent report that job-seekers may be fined or have their benefits cut off for sending out mass or spam applications, and will need to prove that they are seeking individual work. The situation is particularly dire in high-unemployment states, such as Tasmania, home state of the champion of the scheme, Senator Eric Abetz.

Australia currently has around 830,000 people currently receiving unemployment benefit, which would suggest a raw figure of 33.2 million job applications being made per month under the new scheme.

However, a yet-to-be specified number of people will be exempt from this requirement because they are undergoing training and there will be a certain amount of non-fulfilment — so let’s bang this down to a mere 25 million applications. Let’s now assume that people send these far and wide — full letter and CV applications as required by the new conditions — to all employers.

There are around 2 million registered businesses in Australia, but many of these are sole proprietors billing as companies or multiple shell companies around a single real business. Let’s assume 1 million employment entities. By this absurdly abstract raw count, every business would receive 25 extra applications per month.

If we assume that every application will be taken seriously — and that is surely part of the social contract the government is proposing — then every application will take, say, 20 minutes to process, or 8.3 hours a month, a full working day. Assuming these are being handled by an HR staffer on $50,000, that would be $200/month, or $50/week in extra business costs.

But of course, these things won’t fall equally. Many of these applications from minimally qualified applicants with little work experience will go to the entry-level service sector, dominated by small (under 19 employees) and micro (under four employees) businesses.

Let’s look at Tasmania, with the highest unemployment rate. The state has 18,500 unemployed looking for full-time work, who would generate 740,000 applications per month. It has around 25,000 businesses in the service sector — but assuming sole traders and shells, we can bust that down to 15,000 companies. Since small businesses employ 45% of the overall workforce, let’s say they’ll receive 300,000 of these applications (in reality, it will likely be more).

Thus by this reckoning, every operating small business in Tasmania — whether it has advertised or not — will receive an average of 20 job applications per month, generating, by the implied social contract, 400 minutes, or 6.67 hours of extra work per month. That is less than the nationwide business average, but we’re talking about companies with one or two employees. Even if they don’t spend a great deal of time on these applications — and many, being decent people, will give them a read — the actual task of processing them will chew up time in a business day.

But the position gets terrifying when you limit this process to companies that are actually advertising vacancies. Seek.com.au currently has 78 vacancies in various service and unskilled sectors for the whole of Tasmania. Let’s multiply that by three for other sources — local papers, word of mouth, milk bar windows — and assume that those 234 vacancies receive two-thirds, 67%, of the applications. That is half a million applications per month for 234 jobs, or 2136 applications per job.

Note that even if we radically reduce this in favour of the government’s scheme — halve the number of unemployed actually receiving the dole, halve the number applying for these jobs, keep the generous job number the same — then we get 500 applications per job per month. Each application considered properly would add 10,000 minutes, or 167 hours, per month to staffing duties.

Even what will actually happen — staff giving a cursory glance to see if applicants are eligible, furiously clearing inboxes, chucking letters, hustling people off the phone — can be costed at, say, three minutes an application, or 1500 minutes, or 25 hours, per month. To go to the very basement of simply fending off job-seekers, let’s average a minute per application, or 500 minutes — and we’re back to 8.3 hours a month again, simply to deal with an extra imposition that the government has placed on a small business.

Yes, there’s a lot of assumptions in here. But none of them are unreasonable assumptions, and in every case, we’ve adjusted in the government’s favour.

What it shows is several things: first, the scheme won’t work if it assumes that every application will be taken seriously — and thus, it’s a cynical betrayal of the unemployed, especially as multiple rejections or non-responses is a key factor in grinding people down into hopelessness. Second, the scheme works against a basic principle of HR, which is that you design a job ad to discourage those people who simply aren’t qualified for applying — a successful ad is one in which everyone who applies could potentially move to the interview stage. Third, it is far more costly — even crippling — to small business, as compared to big business, many of which have HR departments with spare capacity. Fourth, that effect is magnified for areas with high unemployment due to the structural effects of peripheralisation, such as Tasmania, rather than some imagined work-shyness of the local populace.

Genius, really. You couldn’t get a more-rusted on sector of Liberal voters than small business proprietors, but Senator Erica and the rest seem determined to pry them loose. Hitherto, they had nowhere to go. Now, somewhere up in Coolum, Clive Palmer is riding the T-Rex and laughing his nads off.

*With additional research by Karen Palenzuela

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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