Reforming Social Security: Improving Incentives and Capabilities

Abstract:     
Over the last decade, Australian social security for people of workforce age has incorporated, in an unduly purist form, neoliberal concepts of contested markets for labourmarket services, individualisation of responsibility/risk for remaining on welfare, a 'job first' approach to exiting from welfare, and the combined pressure of deregulation of the labourmarket and welfare sanctions for breach of 'mutual obligations' to pressure people to return to work. This paper argues that such one-dimensional approaches have added to the economic disincentives for workforce participation, bear harshly on vulnerable populations such as sole parents and the disabled, have a poor record of generating lasting labourforce participation, and are ethically problematic on the basis of a return to 'blaming the victim'. Despite shortcomings of the 'capacity' literature, it is argued that the state owes a moral obligation to develop the human capital of welfare clients, in ways respectful both of their dignity and their rights, consistent with a social citizenship model.

Keywords: Welfare reform, social capital, third way, social investment

JEL Classifications: K10, K31, I30, I38

Accepted Paper Series