More working-age Australians relying on welfare despite low unemployment rate

Welfare levels of working-age Australians are higher than inherited by Labor after the 2022 election, as more people rely on JobSeeker payments despite historically low unemployment rates.

Treasurer Jim Chalmers speaks to media during a press conference at Parliament House in Canberra. Picture: Lukas Coch/AAP Images

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Welfare levels of working-age Australians under Anthony Albanese have exceeded post-pandemic cohorts inherited by Labor in 2022, as more people rely on JobSeeker and Youth Allowance payments despite the historically low unemployment rate.

Ahead of Tuesday’s budget, The Australian can reveal JobSeeker, Youth Allowance (Other) and Parenting Payment Single recipients at the end of January totalled about 1.282 million, which is higher than at the end of May 2022 when the Prime Minister entered office.

In a concerning trend for the Albanese government, the number of working-age Australians relying on welfare payments increased by 126,880 between September 2023 and January this year. Over the same period, single parenting payment recipients increased by almost 38,000.

Analysis of Department of Social Services data tracking duration of recipients accessing JobSeeker reveals 68,125 have been on the payment for more than 10 years, 123,215 for between five and 10 years, and 190,845 between two and five years.

 

The number of new entrants has risen over the past year, with 321,325 recipients receiving JobSeeker payments for under one year, and 155,190 recipients on JobSeeker between one and two years.

Senior government sources have raised concerns about the ­rise in Youth Allowance (Other) payment recipients, which have _increased from 71,805 to 94,535 in the 16 months to January.

At the end of May 2022, combined JobSeeker, Youth Allowance (Other) and Parenting Payment Single recipients totalled just over 1.2 million.

In September 2023, the Albanese government reclassified 65,000 JobSeeker recipients under the Parenting Payment Single category after extending eligibility to single principal carers with a youngest dependent child under 14 years, up from eight years.

While the job market has displayed remarkable resilience, economists are increasingly wary it could be weakening after Australian Bureau of Statistics job data on Thursday showed almost 53,000 workers lost their jobs in February and the participation rate – which measures the share of working Australians in work or looking for a job – fell sharply.

Bumper job growth in government-aligned sectors, including education, the public service and the care economy explains much of the recent strength in employment, but under-the-hood private sector job creation has been much weaker.

Approximately one in every four jobs created in 2024 was in the private sector, ABS figures show. Should the ballooning growth in government-backed jobs slow, it risks exposing a much weaker underlying trend in the labour market.

With unemployment hovering near historic lows in the past 12 months, Jim Chalmers on Thursday said “while there are still challenges in our economy and people are still under pressure, we still have the lowest average unemployment of any government in the last 50 years”.

The Treasurer and Employment Minister Murray Watt acknowledged “some expected softening in the labour market” and that fewer older workers returned to work in February, which “contributed to the slight fall in employment this month, with higher levels of retirement in recent months”.

Dr Chalmers has come under pressure in recent weeks from the Greens, social services advocates and charity groups to dramatically lift welfare spending in the pre-election budget.

The government, which has twice bumped up Commonwealth Rent Assistance and provided modest JobSeeker rate increases, is expected to reject the vast bulk of recommendations made by its hand-picked economic inclusion advisory committee, chaired by former deputy Labor leader Jenny Macklin.

The committee, whose members include ACTU secretary Sally McManus and Australian Council of Social Service chief executive Cassandra Goldie, last week recommended the government “substantially increase the base rates of JobSeeker and related working-age payments”.

The committee’s report referenced research claiming that lifting JobSeeker to 90 per cent of the $1047-a-fortnight Age Pension would see a return to society of $1.24 for every $1 invested.

“The research found that such an increase would create long-run benefits to Australia from a healthier and more ­productive workforce, and decreased spending on government services worth $71.8m, estimated for a representative group of 20,000 JobSeeker recipients,” it says.

The report also recommended changing the indexation for JobSeeker – which has risen by 12 per cent to $778 a fortnight since 2023 – from being solely linked to inflation.

The Greens have written to the Treasurer urging him “to raise the rate of income support above the poverty line in next week’s budget”.