Together with the Employment and Skills Summit and White Paper, the review of the RBA should put in place a new framework for managing the economy to achieve and then sustain full employment while containing inflation.
By full employment we mean that the economy is running at full capacity so that people who seek employment, more paid hours or more secure jobs can obtain them.
Over the last 50 years, full employment has taken a back seat to efforts to curb inflation using the blunt instruments of high interest rates and government spending cuts. That has come at a huge cost for millions of people cast out of employment and millions more unable to obtain the paid working hours they need to live decently. Over the last decade, wages and income support payments have stagnated.
Even now, there are 750,000 people on unemployment payments for over a year – many of whom are older workers, people with disabilities, or people caring for young children. Regrettably, many employers are still reluctant to give them a chance despite the many unfilled vacancies.
The Reserve Bank and the Government should give equal priority to reducing unemployment and inflation.
There is no doubt that this year’s sudden surge in inflation is a serious problem for governments and for people on the lowest incomes. Yet we should avoid falling back onto past policies such as steep increases in interest rates and large cuts to government that put jobs and incomes at risk.
Now is the time to find new ways to grow jobs while keeping inflation under control, and ACOSS hopes the Employment White Paper and RBA review can help chart that course.