Change to Centrelink dole is more than increase in minimum wage


People living on the dole are getting more pay rises than minimum wage and low-paid workers to compensate for surging inflation, despite unemployment plunging to a new 48 year low.

Employers are struggling to recruit staff with the jobless rate in June falling to an August 1974 low of 3.5 per cent, down sharply from 3.9 per cent in May, new Australian Bureau of Statistics data showed.

Last month, 88,400 new jobs were created including 52,900 full-time roles with Australia’s unemployment rate more than halving in just two years.

Despite that, Department of Social Services rules mean the unemployed are getting welfare increases twice a year linked to surging inflation, as more than two million workers on awards get pay increases that don’t keep up with inflation.

The JobSeeker unemployment benefit, of $642.70 a fortnight, is indexed to move with inflation twice a year, on March 20 and September 20.

The scheme means the dole could surge by 6.3 per cent in just six months, as opposed to a 4.6 per cent pay rise given to two million award wage workers on July 1.

Australians on the dole are getting more pay rises than minimum wage and low-paid workers to compensate for surging inflation despite unemployment plunging to a new 48-year low (pictured is a Sydney Centrelink queue in March 2020 at the start of the pandemic)

HOW THE DOLE INCREASES TWICE A YEAR 

The Department of Social Services increases JobSeeker, pensions and the Youth Allowance on March 20 and September 20 to reflect the consumer price index

The dole in March rose by $13.20 a fortnight to $642.70 to reflect headline inflation

This 2.1 per cent increase accounted for the consumer price index rising by 0.8 per cent in the September quarter and by another 1.3 per cent in the December quarter

The Centrelink benefit increases, every six months, are designed to reflect the two most recent quarterly consumer price index (CPI) numbers over a six-month block, with the number accounting for surging petrol prices.

The unemployed in March received a 2.1 per cent increase of $13.20 a fortnight to match the 0.8 and 1.3 per cent combined CPI rises during the September and December quarters.

The next increase due on September 20 will be tied to the June quarter consumer price index, due out on July 27, on top of the March quarter CPI.

The ANZ bank is forecasting a two per cent rise in the three months to June, following on from the 2.1 per cent increase in the three months to March.

This would see the unemployed receive another $26.35 a fortnight on top of their $642.70 a fortnight payment, or an increase of 4.1 per cent.

The $13.20 rise in March and a possible $26.35 increase in September means those on JobSeeker would have seen their welfare payment go up by $39.55 to $669.

Just four months ago, the dole was $629.50 a fortnight – but in just six months, they would have enjoyed a 6.3 per cent increase.

That increase is more generous than overall annual inflation, and is better than what minimum wage and award wage workers will get this year.

Employers are struggling to recruit staff with the jobless rate in June falling to an August 1974 low of 3.5 per cent, down sharply from 3.9 per cent in May (pictured is a Sydney waitress)

Employers are struggling to recruit staff with the jobless rate in June falling to an August 1974 low of 3.5 per cent, down sharply from 3.9 per cent in May (pictured is a Sydney waitress)

UNEMPLOYMENT ACROSS AUSTRALIA IN JUNE

NEW SOUTH WALES: record-low 3.3 per cent (down from 4 per cent)

VICTORIA: record-low 3.2 per cent (down from 3.7 per cent)

QUEENSLAND: 13-year low of 4 per cent (unchanged)

SOUTH AUSTRALIA: 4.3 per cent (down from 4.6 per cent)

WESTERN AUSTRALIA: 3.4 per cent (up from 3.1 per cent)

TASMANIA: 4.3 per cent (down from 4.5 per cent

NORTHERN TERRITORY: 3.7 per cent (down from 4.1 per cent)

AUSTRALIAN CAPITAL TERRITORY: 3.1 per cent (down from 3.3 per cent)

Headline inflation in the year to March surged by 5.1 per cent – the fastest CPI pace since 2001 – and ANZ is expecting the annual pace to surge to 6.3 per cent in the June quarter for the first time since 1990. 

ANZ is predicting it will reach 7.4 per cent by the end of the year, a level even more severe than Reserve Bank of Australia governor Philip Lowe’s forecast of a 7 per cent inflation rate.

That means many low-paid workers are struggling to keep up with cost of living expenses, with the Reserve Bank of Australia widely expected to keep raising rates in 2022 and early 2023.

Those on the minimum wage and awards only get a pay rise once a year, pending a June decision from the Fair Work Commission that comes into effect from July 1.

Tourism and hospitality workers on the minimum wage will have to wait until October 1 to get their 5.2 per cent pay increase, equating to $40 a week increase to $812.60.

This level was slightly above the 5.1 per cent inflation rate. 

More than two million Australians on awards on July 1 received a 4.6 per cent pay rise if they earned more than $869.60 a week, getting $40 more a week.

CommSec senior economist Ryan Felsman said the 3.5 per cent jobless rate for June – the lowest since August 1974 – was below the 4 per cent level considered to be full employment where a tight labour market triggered sharp pay increases.

Last month, 88,400 jobs were created including 52,900 full-time jobs (pictured are Qantas baggage handlers at Sydney International Airport)

Last month, 88,400 jobs were created including 52,900 full-time jobs (pictured are Qantas baggage handlers at Sydney International Airport)

‘Employers are keen to lock-in permanent staff on higher wages, given acute skills shortages,’ he said.

So far, however, the wage price index in the year to March grew by just 2.4 per cent – well below the long-term average of 3 per cent.

Westpac senior economist Justin Smirk is expecting the jobless rate to fall to 3.2 per cent this year.

‘A lot will depend on how much further participation can rise and the resulting supply of suitable labour,’ he said.

In 2022, an average of 51,200 jobs have been created every month – more than twice the pre-pandemic level of 20,000. 

A record 480,100 positions for all skill levels were available in May, marking a 29.7 per cent increase compared with a year earlier, ABS data showed.

The $13.20 rise in March and a possible $26.35 increase in September means those on JobSeeker would have seen their welfare payment go up by $39.55 to $669 (pictured, Centrelink queues in Melbourne)

The $13.20 rise in March and a possible $26.35 increase in September means those on JobSeeker would have seen their welfare payment go up by $39.55 to $669 (pictured, Centrelink queues in Melbourne)

When it came to skilled vacancies in June, 303,434 positions were advertised online – the highest number since April 2008, National Skills Commission data showed.

During the start of the pandemic in March 2020, the unemployed received a $550 boost to JobSeeker, known as the coronavirus supplement, on top of the then unemployment benefit of $565.70 a fortnight for a single person with no children.

This occurred as Covid shutdowns caused unemployment to surge from 5.2 per cent to a 22-year high of 7.4 per cent in just three months.

Back then, Australia was grappling with deflation, with prices shrinking by 1.9 per cent in the June quarter of 2020. 

The annual dole payment of $16,710 a year could increase to $17,394 but even with this generous increase, to reflect high inflation, unemployment benefits are still less than half the new minimum wage of $42,255 a year. 

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