Employment and Unemployment of Indigenous Australians

1
Employment and Unemployment of Indigenous
Australians

• John Freebairn
• Melbourne Institute of Economic and Social
  Research

2
Outline

• Clearly a bad employment picture
• But, it is not difficult to find a few underlying
  causes
• And, reform strategies, while a political
  challenge, also are clear

3
Some Known Basic Facts on Indigenous Labour

• Low labour force participation rate at 64
• High unemployment rate of 20, and high
  underemployment rate
• Low rate of self-employment
• True for gender and by geography
• Underlying causes of
• Low skill base
• Poor health and high disability rates

4
Underlying Causes of Poor Indigenous Labour
Outcomes

• Low labour demand
• High labour costs relative to skills
• Flat to falling industry output growth
• Statistical discrimination
• Low labour supply
• High effective marginal tax rates
• CDEP
• Poor health and education
• Inflexible industrial relations system

5
Reforms to Increase Indigenous Employment

• A package of changes
• Lower minimum wages
• Increase skills and education
• Revise tax and social security systems
• Question CDEP
• Facilitate migration
• Lower aggregate unemployment
• Political challenge to implement, and relevant
  for other low skill Australians

6
More on the Lower Minimum Wage Argument

• Too high minimum wage relative to skills
• Key debate on the magnitude of the elasticity
• Importance of on-the-job training to acquisition
  of skills, and higher future wages
• Minimum wages as a poor form of support for low
  income families

7
Reforms to Increase Indigenous Employment

• A package of changes
• Lower minimum wages
• Increase skills and education
• Revise tax and social security systems
• Question CDEP
• Facilitate migration
• Lower aggregate unemployment
• Political challenge to implement, and relevant
  for other low skill Australians