Younger workers will suffer an 8 per cent hit to wages as the pandemic destroys companies and jobs, according to a Treasury forecast – that’s if young people can find a job.
Treasurer Josh Frydenberg hopes tax cuts will create jobs and will prevent a new generation being smashed by unemployment.
Treasury research states that people entering into the workforce are expected to earn 8 per cent less in their first year in work and 3.5 per cent less after five years, as a result of the Covid-19 regulations.
The Greens want more spending on JobSeeker rather than faster income tax cuts.
The government last year legislated income tax cuts worth $158 billion over a decade and is expected to bring forward the benefits in Tuesday’s budget.
The Grattan Institute has warned some of the tax cuts could end up being saved by those on higher incomes.
Young people’s real incomes have fallen by an average of 1.6pc per year for 15-24-year-olds since 2008, and 0.7 per cent for 25-34-year-olds.
In contrast, real incomes for over-65s have almost doubled since the turn of the century.
The Productivity Commission states stagnant wages for young people have been the main problem, due to an oversupply of workers and undersupply of well-paid jobs.
The Commission said incomes of Australia’s youth were effectively the same in 2018 as they were in 2001 — they have gone nowhere this century.
In the 1980s recession, it took six years to get unemployment below 6 per cent, which is where it started. In the 90s recession, it took 10 years to get unemployment below 6 per cent, where it started.