New welfare program in Australia to pay employers to take on interns

Young unemployed Australians will be able to take part in government-funded internships aimed at bringing them into the workforce, it has been announced this week.

The PaTH plan—Prepare, Trial, Hire—was first introduced in the 2016 budget, with the government broadening the scheme this week to offer up to 10,000 internships.  The program will pay businesses (including large chains such as Bakers Delight and Coffee Club) $1,000 to take on Australian jobseekers aged between 15 and 24 as interns for a period of up to 12 weeks.

Although all those enrolled on the scheme will receive compulsory job skills training, participation in the internships will be voluntary. Those working as interns will receive $200 in addition to their fortnightly welfare payments.

The unveiling of the program comes against a backdrop of increasingly high youth unemployment in Australia, with a recent report finding that one in three young people are unemployed or underemployed. However, the plans have proved highly controversial, with the president of the Australian Council for Trade Unions, Ged Kearney, describing the announcement as a “kick in the guts” for working Australia, calling the scheme a “perverse incentive to not offer young people a job.”

Elsewhere, the Australian Labor Party argued that insufficient provision had been made to prevent businesses from replacing full-paid employees with cheaper interns, especially where doing so would allow them to avoid paying penalty rates for weekend shifts.

In his article Skills or jobs: Which comes first? Jesko Hentschel suggests that “While it is recognized that skills are required for jobs, it is also true that jobs enable the development of skills. Work experience can build both technical and social skills, and shaping skills ‘on the job’ carries sizable returns.”

However he also argues that such programs are not necessarily a solution to the underlying issues, and that “Pre-employment and on-the-job training alone are unlikely to solve a lack of dynamism in the jobs market.”

Read more articles from IZA World of Labor on youth unemployment.

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