If Only Solving Unemployment was that Simple

  • October 18th, 2016 at 1:57 pm

Starting a business to solve unemployment is a noble gesture but not that simple as Industrial Relations expert Grace Collier insinuated on Q&A recently. Simply being unemployed does not make someone qualified to start, run and maintain a successful business – business is a long term investment and commitment, not a short term fix.

While Ms Collier is correct in saying that the Government does not owe people a job, she fails to understand or communicate that it is the responsibility of the Government to the Australian people to create opportunity, an environment conducive to economic development and business prosperity. Such an environment is sorely lacking in Australia due to lack of planning, the high levels of bureaucratic red tape, outsourcing and poor social policy.

It is highly irresponsible for Ms Collier to suggest that the answer to unemployment is starting your own small business due to so many factors including and not limited financial restrictions.

Today, we have the highest failure rates and closures as never before. Starting your own small business is wonderful but you need to go in not because you are forced to find alternative work but rather you go into small business because you want to have a go and had the opportunity to do your due diligence regarding the requirements of your venture and more importantly you have some money behind you. This is impossible for the unemployed unless they have been retrenched with a lucrative payout.

It is often believed that those who are running their own business lead a comfortable lifestyle and are well to do. This is simply not the case for many small to medium enterprises. One does not start a business one day and have fistfuls of money rolling in the next – business owners may not see a return on investment for years to come. This alone negates the feasibility of the unemployed starting a business to no longer be categorised as unemployed.

To start a business with a hope of bucking the trend that 95% of businesses close in the first 12 months, a person must come equipped not only with passion and know how, but with capital. One of the principal failures of newly start-up businesses and existing established business is a lack of capital – where should a person with limited means go to source capital to get their idea successfully off the ground? If the answer to that question is to borrow money, the security required is often a home. With such high rates of failure to flourish, a lender is surely going to end up taking possession of the residence to recoup funds – this will end up not only adding to the official ABS Unemployment figures (which are wildly inaccurate and not representative of the current environment) but creating a homeless person or family.

While it may not be the Government’s responsibility to ensure every Australian has a job, it would not be far fetched to believe that based on the amount of revenue raised through income tax that the Australian Government has a vested interest in ensuring that the economic environment is amenable to employment and business growth. People need to be invested in by using education pathways to allow for upskilling and career progression if we are to see a change in unemployment trends.