Maintaining the Social Contract in the Face of Reform Maintaining the Social Contract in the Face of

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Transcript of Maintaining the Social Contract in the Face of Reform Maintaining the Social Contract in the Face of

  • Maintaining the Social Contract in the Face of Reform

    Deborah Cobb-Clark Melbourne Institute

    Pathways to Growth: The Reform Imperative Economic and Social Outlook Conference 2014

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    What is the social contract?

    “… persons’ moral and/or political obligations are dependent upon a contract or agreement among them to form society.” IEP (2014) And in Australia …?  Reciprocity (mutual obligations)  Equity & redistribution  Social inclusion  Risk sharing  Social justice  Intergenerational fairness

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    Overview

     Consider what an end to the “age of entitlement” might mean for the social contract;

     Argue that labour market initiatives (partnerships) targeting currently marginalised groups are key to maintaining the social contract;

     Focus specifically on the challenges of: – youth and their families; – those with mental health issues;

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    Setting the Stage

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    Social Exclusion by Age Group (2001 – 2012)

    Source: Brotherhood of St Laurence & Melbourne Institute, Social Exclusion Monitor Bulletin , October 2013, with update.

    0

    10

    20

    30

    40

    50

    60

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

    Pe rc

    en ta

    ge

    Under 15 years – all social exclusion 15 to 24 years – all social exclusion 25 to 49 years – all social exclusion 50 to 64 years – all social exclusion 65+ years – all social exclusion

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    How Households Get Their Income

    Source: OECD (2011), Divided We Stand: Why Inequality Keeps Rising, OECD Publishing. http://dx.doi.org/10.1787/9789264119536-en

    Wages Self- Employment Income

    Capital Income

    Government Transfers

    Taxes

    AUS 27% 7% 9% 62% -4%

    OECD-30 56% 11% 6% 45% -18%

    Bottom Quintile

    Wages Self- Employment Income

    Capital Income

    Government Transfers

    Taxes

    AUS 113% 10% 9% 1% -33%

    OECD-30 102% 18% 9% 8% -37%

    Top Quintile

  • www.melbourneinstitute.com Source: Youth in Focus Project -- Transgenerational Data Set – NOTE: Excluding FTB-A & Youth Allowance Student , New Strata

    Income Support by Receipt by Family Income Support History

    0

    0.1

    0.2

    0.3

    0.4

    0.5

    0.6

    0.7

    0.8

    1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

    Intensive IS

    IS Age 10+

    IS Mod: Age 6-10

    IS Age

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    Youth and their Families

  • www.melbourneinstitute.com Source: OECD calculations based on the OECD Short-Term Indicators Database

    OECD Youth Unemployment

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    Not in Employment, Education or Training

    Source: OECD (2014). Social policies for youth: Selected indicators on the situation of disadvantaged youth (NEET), http://www.oecd.org/els/soc/youth-social-indicators.htm

    Share of youth not in employment education or training (NEET) in % of all youth

    Percentage-point change in NEET rates, 2007-2011

    0 10 20 30 40 Netherlands Norway Denmark Germany Sweden Canada Luxembourg Belgium Slovenia Iceland United States United Kingdom Austria Slovak Republic France Portugal Finland Czech Republic Poland Australia Estonia Mexico Hungary Italy Ireland Chile Spain Greece OECD Average

    Inactive NEET rates Unemployed NEET rates

    -5 0 5 10 15

    Inactive NEET rates Unemployed NEET rates

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    Study & Employment by Family Income- Support History

    Data source: Cobb-Clark, D. & Gorgens, T (2014). Parents’ economic support of young-adult children: do socioeconomic circumstances matter?, Journal of Population Economics, 27 (2), 447-471 & Youth in Focus.

    0

    10

    20

    30

    40

    50

    60

    Age 18 Age 20 Age 18 Age 20 Age 18 Age 20

    No study, no work No study No work

    Pe rc

    en t

    None

    Moderate

    Extensive

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    Many young people are heavily reliant on their families to get by …

    and this will only intensify with proposed changes to working age payments.

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    Parental Support by Family Income-Support History

    Data source: Cobb-Clark, D. & Gorgens, T (2014). Parents’ economic support of young-adult children: do socioeconomic circumstances matter?, Journal of Population Economics, 27 (2), 447-471 & Youth in Focus.

    $0

    $2,000

    $4,000

    $6,000

    $8,000

    $10,000

    $12,000

    $14,000

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    None Moderate Extensive None Moderate Extensive

    Age 18 Age 20

    Co-residence

    Financial Gift

    Median

    90th Percentile

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    Homelessness

    Source: Scutella R., Johnson, G., Moschion, J., Tseng, Y & Wooden, M. (2012). Journeys home research report No.1: Wave 1 findings.

    Age at which first became homeless:

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    Those with Mental Health Issues

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    Disability Support Pension Recipients (2001-2013)

    Data source: Department of Social Services (2013). Characteristics of disability support pension recipients.

    32.5% 33.3% 33.7% 34.0% 33.9% 33.6% 31.9% 31.1% 30.0% 29.2% 28.2% 27.3% 26.1%

    22.6% 23.7% 24.7% 25.4% 26.2% 26.8% 27.3% 27.6% 28.2% 28.7% 29.5% 30.3% 31.2%

    10.1% 10.2% 10.5%

    10.7% 11.0% 11.3% 11.2% 11.2% 11.4% 11.6% 11.8% 12.0% 12.4%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

    DSP Recipients by top 3 primary medical conditions - June 2001 to June 2013

    Musculo-skeletal & connective tissue Psychological/psychiatric intellectual/learning

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    Employment of those with MH Disorder (OECD)

    Source: OECD (2012). Sick on the job? Myths and realities about mental health and work. http://dx.doi.org/10.1787/9789264124523-en

    http://dx.doi.org/10.1787/9789264124523-en

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    Unemployment of those with MH Disorder (OECD)

    Source: OECD (2012). Sick on the job? Myths and realities about mental health and work. http://dx.doi.org/10.1787/9789264124523-en

    http://dx.doi.org/10.1787/9789264124523-en

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    Income of those with MH Disorder (OECD)

    Source: OECD (2012). Sick on the job? Myths and realities about mental health and work. http://dx.doi.org/10.1787/9789264124523-en

    http://dx.doi.org/10.1787/9789264124523-en

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    How do we maintain the social contract in the face of current reforms?

    Improve access to the labour market and employment opportunities for groups with reduced access to the social safety net.

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    Reduce the LM barriers for youth;  Penalty rates;  Apprenticeships/vocational training;  School to work transitions;  Programs to provide workplace experience;

    Recognize that not all youths will have family support and build in safe-guards;

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    Understand that … “mental health is a new priority challenge for the labour market” (OECD 2012)

     More focus on common mental health issues;  Identify mental health issues among the unemployed as

    well as disabled;  Strengthen the activation elements of the disability

    system and make work pay;  Develop partnerships with employers to help people find

    work;  Co-ordinate employment and mental health services;

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     Australian Bureau of Statistics (2014). Labour Force, Australia, cat. 6202.0.  Brotherhood of St Laurence (2014). On the treadmill: Young and long-term

    unemployed in Australia.  Cobb-Clark, D. & Gorgens, T. (2014). Parents’ economic support of young-

    adult children: Do socioeconomic circumstances matter?, Journal of Population Economics, 27 (2), 447-471.

     Department of Social Services (2013). Characteristics of disability support pension recipients.

     OECD (2014). Social policies for youth: Selected indicators on the situation of disadvantaged youth (NEET), http://www.oecd.org/els/soc/youth-social- indicators.htm

     OECD (2013). Latest labour market developments and the OECD youth action plan. Presented at OECD High Level Parliamentary Seminar.

     OECD (2011). Divided We Stand: Why Inequality Keeps Rising, OECD Publishing. http://dx.d