ESSA

ESSA

The economic advantages of disabled labour inclusion


Catherine Paquette

By

May 1st, 2014


Australia’s disability spending is projected to balloon. Catherine Paquette proposes a solution to make all better off—not just economically.


The Australian Bureau of Statistics describes a disability as ‘any limitation, restriction or impairment, which has lasted, or is likely to last, for at least six months.’ According to their 2012 Survey of Disability, Ageing and Carers (SDAC), more than four million Australians are affected by a disability. That equates to 18.5% of the population or nearly one in five people living in Australia.

These numbers will likely grow with the ageing of the population, as the percentage of people with disabilities increases with age. This makes individuals with disabilities one of the largest minority groups in Australia. Unlike other minority groups though, it is not homogenous but heterogeneous. The characteristics of individual disabilities can vary from physical, to mental or behavioural, to intellectual or developmental, to a combination of these. An individual’s ability to adapt to a disability also varies widely. Contrary to popular belief, only a small portion of disabilities are congenital: most arise during a person’s lifetime. Anyone can join the ranks of those with disabilities at any time, meaning disabilities cross all demographics and play no favourites.

At present nearly one in two individuals with disabilities in Australia, 45%, are living at or below the poverty line. Their employment rate is under 40%, compared to nearly 80% for the general population. This has left the majority of individuals with disabilities reliant on either government or family assistance for survival. Governmental assistance exists in the form of Disability Support Pensions (DSP), for long-term disabled individuals, or the newly created National Disability Insurance Scheme (also known as DisabilityCare). DisabilityCare aims both to provide tailored support for individuals with a disability and increase labour force participation.

Over the last few years expenses for DSP have consistently risen, exceeding $15 billion for the 2013 fiscal budget. While DisabilityCare is still in its trial phase, having been implemented in 2013, and although it is meant as a measure to kerb disability spending, recent projections have revealed that it could cost as much as $11 billion by the year 2024. It is estimated that federal spending on disability could match defence spending within the next decade. While this may be cause for alarm, there is one logical solution to kerb this projected increase in disability spending. This solution is not related to charity and also happens to make good business sense. It is to encourage and support the hiring of people with disabilities.

Despite the Disability Discrimination Act 1992, which prohibits discrimination based on disability, individuals with disabilities face higher barriers of entry to employment than non-disabled individuals. At present only 53% of Australians with disabilities are active in the labour force, with higher unemployment rates than non-disabled workers. While much of the effort to increase both labour force participation and the employment rate most often concentrate on programs which focus on the disabled labour supply-side, less is done to encourage employment from the demand-side of the equation. Without appropriate attention on the latter, substantial changes will have reduced effect.

The primary identified labour demand side problem is the lack of knowledge and stereotypes that exist with regard to disabled labour. Lack of ability to fit in, higher employer and training costs, capability of performing basic jobs only, higher insurance and safety costs, higher absenteeism and lack of productivity, are all common misconceptions of disabled employees. Although it may be the case that changes are needed to adapt working environments and training regiments for individuals with disabilities, these may not be as drastic or expensive as employers believe.

Individuals with disabilities are capable of more than just basic jobs with 19% of those employed working in professional positions, 15% working in clerical positions, 15% in technical positions and 13% being business owners themselves. According to the Australian Network on Disability, individuals with disabilities also have a low incidence of workplace injury, a lower absenteeism and a lower turnover rate than non-disabled individuals. Fifth Quadrant Analytics’ Return on Disability Rating has evaluated and shown that ‘companies that perform well in disability are highly responsive to their customers, and thus outperform peers in revenue growth.’ Successful companies such as Walgreens and Telstra have proven that employing individuals with disabilities makes them more competitive and thus increases their profitability.

Changing the stereotypes about individuals with disabilities is a necessary first step for an increase in demand for disabled labour. This change must be coupled with a change in cultural attitudes from employers and society as a whole. The hiring process will require appropriate leadership at the employer level. It will also necessitate adequate government resources for businesses, especially small businesses, as well as community support. These changes make economic sense both for companies as well as society. If Australia increased its performance with regard to the employment of individuals with disabilities and moved into the top eight OECD countries, this could add between $31–50 billion to GDP by 2050. This excludes the additional income from caregivers who would be freed for increased labour force participation and the reduced health expenditures from improved mental health outcomes associated with work and social participation.

At present, though, Australia’s disability policy is failing and not just economically. Out of 27 OECD countries it ranks 21st for employment participation rates and last for relative poverty risk of individuals with disabilities. It should be infeasible that such an advanced and affluent country does not better address this discriminatory problem. It is a human rights imperative, a social imperative and an economic imperative that greater inclusion of individuals with disabilities be tackled.

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

  • Christine Li

    Hi Catherine, thanks for the uplifting and compelling read. Having worked with disabled customers claiming and receiving DSP at Centrelink, I can certainly attest to their willingness to find work and maintain employment.

    You’ve mentioned that those with disabilities form a heterogenous group, some of which have more severe mental or physical handicaps than others. I wonder whether those 10-15% rates of employment in positions of technical, clerical, professional and entrepreneurial capability partly reflects this already. That is, companies would hire individuals with disabilities, but only those who are not severely disabled. Higher disability employment rates in other OECD countries proves this is not the completely so in Australia – but I’m interested if you are aware of any metrics that are used to determine severity of disability and fitness for work?

    “If Australia increased its performance with regard to the employment of individuals with disabilities and moved into the top eight OECD countries, this could add between $31–50 billion to GDP by 2050.”

    How much does Australia have to increase its performance, and what is the upper limit of workforce participation for individuals with disabilities? Is it full employment for individuals with disabilities (presumably not)?

    Thanks Catherine!

  • Catherine Paquette

    Hello Christine,

    According to the Australian Bureau of Statistic’s Survey of Disability, Aging and Carers, the severity of a disability will be dependent on the limitations to everyday core activity areas. There are four levels of core activities in the 2009 survey:

    -Profound (6346000 or 2.9% of the population) .Person is unable to do or always needs help with a core activity task.

    -Severe: (636000 individuals or 2.9% of the population) Person sometimes needs help with a core activity task, has difficulty understanding or being understood by family or friends or/and can communicate more easily using sign language or other non-spoken forms of communication

    -Moderate: (659000 individuals or 3% of the population) Person needs no help but has difficulty with a core activity task.

    -Mild (1214500 individuals or 5.6% of the population) Person needs no help but uses aids and equipment, cannot easily walk 200 metres, cannot walk up and down stairs without a handrail, cannot easily bend to pick up an object from the floor, cannot use public transport, can use public transport, but needs help or supervision or/and needs no help or supervision, but has difficulty using public transport.

    The remaining 13% of disabled individuals have no limitations.

    The labor force participation for these different categories is:

    Profound -18%
    Severe – 39%
    Moderate – 45%
    Mild – 60%
    All disability – 53% (employment rate 39.8%)
    Carers – 69%
    No disability – 85% (employment rate 79.4%)

    Therefore employment rates exist in all disability levels, increasing with decreasing disability impact level. This trend is consistent with other OECD countries but with lower participation percentages. As for the different categories of employment, they are measured on the aggregate of all disabled employees; I do not have the breakdown. That being said, although the labor force participation is lower for individuals with disabilities, as is the number of hours worked and number of part time workers, the types of professions is not that different:

    Disability Non Disability

    Professional 19% 22%
    Clerical 15% 15%
    Technical 15% 15%
    Business 13% 10%
    Owners

    These differences prove that individuals with disabilities are not handicapped in their comparable ability to those of non-disabled. The real tackle is to increase labor force participation. The NDIS was the necessary first step. It includes steps to increase employment as well as steps to help individuals with necessary disability care. It also covers all age spectrums to hopefully increase the lower graduation rate of individuals with disabilities. This will increase future labor participation and prospects. Because it is in its implementation stage it is still too early to know if this will be enough.

    If this scheme, as well as increased education worked and Australia were to move in the top eight OECD countries this would add and additional 370000 individuals. With these individuals the 31-50$ billion measure is calculated using the following metric:
    It assumes that the productivity of people with a disability is approximately 60% that of the national average to 80% for the upper range and that they would be working part-time at 60% -80% of a full time equivalent worker.

    I hope this clarifies!

    Cheers,

    Catherine

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