Why Scott Morrison must not wean off the job-keeper programme?

When Job-seeker program was announced in March 2020 my first reaction was, “despite the Governments best intentions, this might backfire. Why would someone work when they can get money, sitting idle at home”? Wouldn’t it be better if the money had been routed through the businesses? Wouldn’t that ensure continuity in business operations, jobs, productivity and employee/employer relationship?  My apprehension came true the very next morning as one of my delivery drivers didn’t show up to work. With no response to our numerous calls our urgent deliveries were left in limbo. He quit immediately with a lame excuse. This followed by the dominoes effect and many more exiting the work force could be seen. Thankfully a few days later the Job-keeper programme was announced and a possible rampant damage was contained at an early stage.

How did Job-keeper program announced in March benefit the businesses?

Kudos to Scott Morrison for taking a quick decision and announcing much needed Job-keeper programme. We as business operators actually bragged world-wide how our Government had a long sighted approach and has lent us an unconditional backing. Besides macro economic support, the immediate business support was as follows:

• It was a confidence booster for the businesses in time of crisis.

• It has ensured continued employer/employee relationship (at least till September) even though many of the staff’s working hours have been reduced.

• It has resulted into lesser dent to the overall economy and GDP of the country as compared to what it could have been had the businesses shut down completely. Business owners are continuing the operations as much as possible.

• The Job-keeper payment is passed on to the employees in the form of salary with the tax deducted at source. Hence it contributes to our countries overall national income and GDP.

• At the time of crisis when businesses know they have backing, they did not fire their staff. Some of them have actually hired or are in the process of hiring new staff.

  
  

What is the flaw in the programme?

The programme has been based purely on the criteria of turnover comparison. Most of the businesses have been working in the past to increase their sales by injecting more capital or employing more people. So, they actually got punished for working for the growth of their company and employment generation for the country simply because their turnover did not fall significantly. To my understanding, the correct criteria should have been ratio of expenses vs turnover.

Why should the Job-keeper programme not be weaned off?

• If discontinued, already rising unemployment shall suddenly see a spurt after the September.

• The GDP and National income will start falling as many businesses will be shut as soon as the job-keeper is weaned off or discontinued.

• Continuing job-keeper programme will not incur any additional burden on the Government. Whatever money is spent on the job-keeper, it will be equated by the saving on the spending on reduced numbers of job-seekers. Also the upside is that the former will ensure productive workforce as compared to idle sitting job seeking individuals.

  
  

What should the Government do for future?

• Form an advisory body of the representatives of SME businesses along with its economic think-tank to analyse the ground reality and suggest the possible solutions of the businesses.

• An all-out efforts should be made to shift the outlay from job-seeker to the job-keeper even if it has to be done at the cost of deficit financing. The Government should strengthen the SMEs further for them to create additional jobs. The inflation resulting from deficit financing can be taken care of at a later stage.

• The Government must apply a more realistic criteria of offering job-keeper payments

• Apart from job-keeper payment Government should start Job-creator subsidy to encourage the businesses to employ new staff to drift the later from job-seeker stream.

• Offer free or subsidised up-gradation of skill sets of the employees through the businesses.

• Expedite the direct Government to businesses direct loans as recently announced.

• Run an effective publicity campaign to aware masses of the Government’s support for businesses.