Comparing the cost effectiveness of Australia's Work for the Dole with the UK's New Deal for Young People

This report compares Australian and UK government approaches to active labour market programs for unemployed young people. Both Australia and the UK have adopted a policy of mutual obligation where eligibility to receive unemployment benefits is conditioned upon participation in a specific program. In 1997, the Work for the Dole program was introduced in Australia and targeted people aged between 18-24 years old who have been in receipt of unemployment benefits for a period of six months. At the same time, the UK government introduced the New Deal for Young People, a scheme with a range of initiatives designed to help prepare young people for the labour market. The author examines the net impact each program had on outflow rates from welfare benefits to assess their cost effectiveness. Accounting for the direct costs of each program with respect to changes in benefits payable, there is evidence to suggest that the UK approach was a more economically effective solution from a medium and long-term perspective. The author argues that the long-term benefits in the form of reduced welfare dependency will outweigh the initial costs associated with implementing a more effective labour market program. Show less