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The following OECD assessment and recommendations summarise chapter 2 of the Economic survey of Australia 2008 published on 10 October 2008.
Labour supply should be raised further…
Chronic skills shortages in combination with supply pressures from an ageing population imply that Australia cannot afford to exclude potential workers from the labour market. Further policy action to improve incentives to work should be pursued as part of a broader strategy to improve participation outcomes. The greatest disincentives affect women with families and lone parents, disability benefit recipients and older workers. Much scope remains, in particular, to raise participation rates of women and lone parents through improved financial incentives and better child-care facilities. The structure of Child Care Benefit should be changed to reflect the age-related cost profile of child-care provision. The benefit should also be made more conditional on employment or job search, while recognising competing policy priorities such as improving the educational outcomes for the most disadvantaged children. The introduction of a paid parental leave scheme would bring Australia in line with international practice and bring potential benefits in terms of a reduced length of breaks after child-birth and increased chances for women to return to their pre-birth job. To reduce reliance on disability pensions, the tighter eligibility and participation requirements that apply to entrants to this scheme since July 2006 should be extended to the stock of all recipients. To this end, further investment in placement services will be required. Also, disability benefit recipients should not be discouraged from searching for a job by the fear of losing their pension entitlement if, after finding work temporarily, they lose it again. The development of a national strategy is currently under way that will address the barriers faced by people with disabilities in gaining and keeping employment. Regarding older workers, incentives for early retirement should be reduced by gradually aligning the eligibility age for superannuation (currently 55, but to be increased to 60 by 2025) with that of the Age Pension (age 65).
Lone parent employment rate is low in international comparisons
Per cent, 2006 1
1. Or latest year available: 2001 for Canada, Germany, Italy and Japan; 2005 for France and the United States. See chart 3.7 in the Babies and Bosses synthesis for detailed notes.
Source: OECD (2007), Babies and Bosses: Reconciling Work and Family Life, A Synthesis of Findings for OECD Countries, OECD Publishing.
… with immigration being an important contributor
Immigration remains an important contributor to labour supply, alleviating skills shortages. As many immigrants are highly skilled, the adequate use of immigrants’ human capital is of key importance. Over-qualification is a problem, particularly for immigrants from non-English speaking countries. Improving further the assessment and recognition process of overseas skills through, for example, a reduction in the complexity of the current regime and, where practicable, a better alignment of the assessments with occupational requirements, appear important in this regard. In addition, scope exists to increase the responsiveness of temporary migration, especially with regard to the 457 visa scheme, as recognised by the government. Historically low unemployment rates and Australia’s demographic trends will increase demands for rising immigration and the government supports higher immigration levels. Further increasing inward migration requires a comprehensive strategy for population growth. The strategy should deal with housing, the tax and welfare system, education, infrastructure, water and environmental issues. An additional challenge is to attract immigrants to non-urban areas where they are most needed.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Australia 2008 is available from:
For further information please contact the Australia Desk at the OECD Economics Department at firstname.lastname@example.org. The OECD Secretariat's report was prepared by Claude Giorno and Vassiliki Koutsogeorgopoulou under the supervision of Peter Hoeller. Research assistance was provided by Desne Erb.