Issue Brief 10 / 1996

Analysis of the geography of unemployment-related benefits and Community Development Employment Projects (CDEP) scheme employment yields several insights into Indigenous labour market activity. By examining both together it is possible to estimate the proportion of the Indigenous labour force that depends on some form of government assistance.

Welfare dependence

Geography affects the number of Indigenous workers who are dependent on government assistance.

• For Australia as a whole, 38 per cent of the Indigenous labour force was either receiving assistance from the Aboriginal and Torres Strait Islander Commission's (ATSIC's) 'work-for-the-dole' CDEP scheme employment or Department of Social Security's (DSS's) unemployment-related benefits.
• In remote Australia, over 50 per cent of the labour force receive some form of unemployment-related assistance from either ATSIC or DSS in most of the Northern Territory, Cape York Peninsula, the Western Desert, the Kimberleys, north-west New South Wales and the Nullarbor (see map).

Source: 1991 Census.

Clearly, the Indigenous labour force in remote areas is more dependent on government assistance because of limited access to mainstream employment. Geographic analysis reveals that the CDEP scheme employment appears to provide a direct substitute for employment demand in areas where employment is deficient.

The role of the CDEP scheme

The multi-faceted nature of the scheme means that CDEP scheme employment addresses several needs in the community. It cannot be considered as just another source of unemployment-related welfare. Many of the scheme participants are drawn from outside the labour force rather than from the pool of Indigenous unemployed. Indeed, the size of the displacement of unemployment-related benefits by the CDEP scheme is not large. A 10 percentage point increase in CDEP scheme employment only leads to a 3.6 percentage point reduction in unemployment-related benefits. If CDEP scheme employment was a perfect substitute for unemployment-related benefits, then the proportion receiving these DSS benefits would be reduced by 10 percentage points. This provides statistical confirmation that the CDEP scheme should be considered as a 'workfare' rather than a welfare scheme.

The growth of the CDEP scheme has complicated the analysis of Indigenous unemployment. Scheme participation affects both the number of DSS clients on unemployment-related benefits and the extent to which these clients are unemployed for long periods.

Labour market issues

The lack of a significant relationship between local employment demand and Indigenous unemployment (shown with multivariate statistical analysis) indicates that the Indigenous and non-Indigenous labour markets are largely separate, with little substitution between the two types of labour. The results confirm that:

• Indigenous employment and unemployment outcomes are largely insulated from the mainstream labour market.
• There is a high level of industrial and occupational mismatch between Indigenous workers and labour demand.
• Education provides significant protection against being unemployed. That is, the influence of education is significant, irrespective of the level of employment demand in the local area or the number of communities participating in the CDEP scheme.

Policy implications

To reduce the dependence of the Indigenous labour force on government assistance, education and training must be sensitive to the skills required by local employers in regional Australia. Future policy also needs to address the mobility of Indigenous workers across regions, industries and occupations.

Method and Data

The bulk of the analysis uses several maps to shed light on how local employment demand affects Indigenous unemployment and welfare outcomes. However, multivariate regression analysis of ATSIC regional data from DSS, the National Aboriginal and Torres Strait Islander Survey (NATSIS) and the 1991 Census provide a greater insight into processes underlying the CDEP scheme projects and the Indigenous unemployment rate.

J.C. Altman and B. Hunter.

This Issue Brief summarised CAEPR Discussion Paper No. 112, 'The geographic distribution of unemployment-related benefits and CDEP scheme employment' by J.C. Altman and B. Hunter published in October 1996. It was prepared by Boyd Hunter, assisted by Linda Roach and Melissa Lucashenko, and edited by Maureen MacKenzie-Taylor.