Indigenous unemployment rates in the 1996 Census were between two-and-a-half and five times the national average depending upon whether participation in the CDEP scheme counts as being unemployed (Taylor & Hunter 1998). If CDEP scheme participants are counted as unemployed, Indigenous unemployment will become even greater over time as large numbers of Indigenous youth enter the workforce. Fig. 11.1 shows that if the CDEP scheme did not exist, the overall unemployment rate among Indigenous people would increase steadily from just over 41 per cent to about 48 per cent between 1996 and 2006. Detailed projections are found in Table 11.3. However, the CDEP scheme does exist and it substantially reduces the official unemployment rate. If CDEP scheme jobs are treated as employment, the Indigenous unemployment rates falls by over one-third.

The recent expansion of the CDEP scheme resulting from changes to the CDEP administration and the renewed spending push in ATSIC has not only contained the growth in Indigenous unemployment but has even led to a small reduction in Indigenous unemployment rates. However, on current projections such gains will be eroded by the large increase in the numbers of Indigenous people entering prime labour force age. The Indigenous unemployment rate fall from just over 25 per cent in 1996 to a low point of 20 per cent in 2001 (coincidentally the census year), before it increases under the current policy settings to about 25 per cent in 2006.

The CDEP seems to be keeping total Indigenous unemployment in some sort of holding pattern. We now seek to address the question of what are the numbers of jobs required for Indigenous people to achieve equity, in terms of unemployment rates, with the rest of the Australian population.

In July 2000, the overall Australian unemployment rate was 6.2 per cent. Fig. 11.2 describes the number of jobs required to reduce the Indigenous unemployment rate to this level. It follows the same basic pattern as Fig. 11.1, showing a substantial fall in the number of jobs required to June 2001. Unfortunately without further supplementation of the number of CDEP scheme places, the number of jobs required increases consistently after that point.

These estimates are conservative—or low—because they are based on Indigenous labour force in 1996, which excludes many people who want to work. For example, workers who have become discouraged by prolonged exposure to poor labour market conditions (or, indeed, who have experienced persistent discrimination) may re-enter the labour force when job prospects pick up (or we enter a brave new world without racism) (see Hussmanns, Mehran & Verma 1990: 107 for the precise International Labour Organisation [ILO] definition). The potential labour force, which includes all those currently in work as well as those who are discouraged from looking for work, can be substantially greater than the existing labour force (Hunter & Gray 1999).

Being discouraged from looking for work is an inherently subjective phenomenon. The conventional ABS definition of a discouraged job seeker in the LFS uses the reasons for not looking for work to classify whether or not a person is a discouraged worker. For example, job seekers are deemed to be discouraged if employers’ attitudes or behaviours dissuade them from looking for work. Individuals who are not looking for personal reasons but state that they want to work are not classified as being discouraged workers. Given that many respondents (especially Indigenous people with a history of experiencing discrimination) may not be able to abstract their personal circumstances from the labour market situation, this definition is probably too circumscribed.

The 1994 National Aboriginal and Torres Strait Islander Survey (NATSIS) provides the only reliable data on the extent of the discouraged Indigenous workforce. Unfortunately, it is not possible to achieve the correspondence between the NATSIS and LFS categories that would allow a direct comparison between Indigenous and non-Indigenous peoples’ reasons for not looking for work. However, it is possible to observe that personal reasons also dominate those given in the LFS survey (ABS 1994). Almost three-quarters of LFS respondents who are not in the labour force and want to work indicate they were not looking for work for personal reasons (especially to do with child care or attending an educational institution).

The predominance of personal reasons for not looking for work among both the Indigenous and non-Indigenous populations indicates how potentially sensitive the results might be of an analysis of Indigenous labour force status based narrowly on the ABS definition of discouraged worker. The theoretical literature on the discouraged worker emphasises the relative productivity of family members in both market and non-market work, and the level of welfare entitlements, and as a result the official definition can easily be challenged (Hunter & Gray 1999). Nevertheless, the ABS definition should provide a conservative benchmark for the extent of discouraged workforce.

That there are many Indigenous discouraged workers is highlighted by the fact that the ATSIC regions with the highest employment rates (often because of substantial numbers of CDEP scheme places in such areas) also have the highest labour force participation rates. For example, the Cooktown region has the highest Indigenous male labour force participation rate of any ATSIC region, presumably because of the relatively large numbers of CDEP scheme participants in the area (Hunter 2000). The Cooktown rates can be contrasted to those in nearby Cairns which, despite a larger and more buoyant labour market, has substantially lower Indigenous labour force participation rates because of relatively small number of CDEP scheme places in that region.

What happens to the estimates if one includes all of these discouraged job seekers in the projections of Indigenous job need? In an attempt to be consistent with the ABS definition, only NATSIS respondents who nominated ‘economic’ reasons for not looking for work are counted here as discouraged: thus a person is counted as a discouraged job seeker if they want to work but are not looking for work because of the lack of suitable jobs in the local area, or in the economy at large.

As noted above, it is not possible to compare directly the proportion of discouraged workers in NATSIS with that in other ABS collections because of the lack of concordance in the reasons given for not looking for work. For example, potential workers who have given up looking for work because of their low levels of skill cannot be identified through NATSIS, further reinforcing the conservatism of the definition adopted in this paper. However, another problem arising from using a standard definition is that the formal ABS definition requires that discouraged job seekers be available to start work within four weeks (ABS 1994). Since the NATSIS unit record file does not include information on availability of job seekers, the operational definition may tend in this respect to overstate the numbers of Indigenous discouraged job seekers. These competing biases will thus tend to balance out, and the estimates which follow thus provide a reasonable basis for approximating the potential Indigenous workforce.

According to the 1994 NATSIS, only one-sixth of people who want jobs but are not currently in the labour force indicated they were not looking for work because of the lack of availability of suitable jobs. If such discouraged workers are included as unemployed then the number of jobs required to reduce Indigenous unemployment to that of other Australians is lifted by another 4000–5000 ( Fig. 11.2). This adjustment does not substantially change the pattern in the trend of the number of jobs required; it merely shifts it up. The upshot is that by 2006, about 33 000 jobs are required nationwide to achieve equity with the non-Indigenous unemployment rates.

The reinforcement of CDEP scheme employment is clearly a vital strategy for expanding Indigenous labour force participation. Even so, producing incremental improvements in Indigenous employment is just tinkering around the edges of an enormous, and growing, problem. Estimates of job need are conservative because they focus on the low series projection of the Indigenous population, and the estimates of the number of discouraged workers are very low, based as they are on the official ABS definition. If all the Indigenous people who want to work are counted as unemployed, then policy makers need to find work for another 30 000 or so people.

The bulk of growth in the Indigenous population is occurring in urban Australia. If CDEP growth only occurs outside the capital cities, then Indigenous unemployment rates in the cities are liable to remain high and participation rates low. This is not to say that there is no room for growth of CDEP schemes in rural and remote Australia. Clearly the population growth in such areas means many new jobs are required. However, an unbalanced approach to CDEP funding which ignores the urban areas may result in a greater inclusion of discouraged workers, and hence an increase in the Indigenous labour force, in non-urban areas relative to urban areas. This raises the question of horizontal equity in labour force status among Indigenous Australians.

Finally, the excess demand for CDEP scheme places is of a similar size to the current number of participant places (see e.g. Dukakis, Ch. 27, this volume). That is, the number of CDEP scheme places would have to double to reduce the Indigenous unemployment rate to that of other Australians. If all people who want to work are included in the Indigenous labour force, then the number of CDEP places would have to treble. This calculation is designed to illustrate the magnitude of Indigenous employment need: it is probably not feasible to expect that the scheme will absorb all Indigenous people who want a job. Clearly, it will be necessary to augment the demand for Indigenous labour by other means as well (for example, through education and training).^[12]