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The Australian National University

The rise of the CDEP scheme and changing factors underlying Indigenous employment

Working Paper 13 / 2002

Abstract

The dominance of the Community Development Employment Projects (CDEP) scheme in certain regions of Australia complicates the interpretation of any analysis of Indigenous employment. In order to enhance interpretation, the factors underlying Indigenous employment should be examined separately for areas where the CDEP scheme is relatively prominent. The 1994 National Aboriginal and Torres Strait Islander Survey (NATSIS) and census data between 1981 and 1996 are used to highlight potential biases in the effects of educational attainment (and other factors) on employment prospects of Indigenous and non-Indigenous populations.

The growth of the CDEP scheme

From its humble beginnings in 1977, the CDEP scheme grew slowly at first, before expanding rapidly in the mid to late 1980s away from the original strongholds in remote Australia. Indeed, the scheme more than quadrupled in size between 1986 and 1991. A second, less obvious, internal expansion in the number of CDEP scheme jobs occurred as a result of the Spicer review in 1997.

The main point to note is that the CDEP scheme provides a small proportion of Indigenous employment in major Australian cities and is a relatively minor source of employment in other urban areas, especially for females. The converse of this is that the CDEP is a major source of employment in rural and remote areas with about one-half of all jobs being generated by the scheme. Smaller urban areas outside the major cities lie somewhere in between these two extremes with about one-fifth of employment originating in the scheme.

A preliminary NATSIS-based analysis of the effect of the CDEP scheme

The NATSIS provides the best data for reflecting on the extent to which the CDEP scheme affects the determinants of employment, as it is the only individual level data that accurately distinguish those employed in the CDEP scheme from other workers. The results indicate that, once one controls for geography, there is little difference between the estimates of non-CDEP scheme and total employment.

Describing changes in labour market conditions in major urban, other urban and rural/remote areas

Before turning to the census analysis, it will be useful to tease out how labour market conditions changed in major urban, other urban, and rural/remote areas between 1981 and 1996.

  • The proportion of the Indigenous working-age population with any post-secondary qualifications more than doubled in major urban areas in the period examined. In rural/remote areas, the educational changes are even more pronounced with a quadruple increase in Indigenous qualifications from a low base in 1981. The convergence towards non-Indigenous outcomes is entirely due to the low initial base of Indigenous educational attainment.
  • While the percentage of the population who spoke English poorly in urban areas was extremely small throughout the period examined, even among the Indigenous population, there was a substantial fall in the percentage of the population who spoke English poorly among Indigenous people in rural and remote areas.
  • The number of people who left school before their 15th birthday fell significantly for both Indigenous and non-Indigenous populations.
  • Aggregate employment did not change appreciably for Indigenous males in major urban areas (at around 51.4%). In contrast, employment-population ratios for non-Indigenous males in such areas fell from 74.4 per cent to 67.1 per cent, largely due to the overall decline in the number of full-time jobs. Given that Indigenous workers are employed in a different segment of the market, and are more likely to be employed in part-time work, these trends are easily explainable. The aggregate improvements in Indigenous employment in other areas is particularly significant, presumably due mainly to the expansion of the CDEP scheme.
  • The changes in Indigenous labour force participation rates are larger than could be explained by the secular changes in labour supply in the rest of the population. The main changes in Indigenous participation occur in areas where the CDEP scheme has expanded dramatically.

Census analysis of total employment, 1981–96

There is no systematic trend in the effect of having a post-secondary qualification in either major urban, other urban or rural/remote areas. Indeed, the effects of qualifications are remarkably stable for all groups as there is no significant change in employment prospects among either Indigenous or non-Indigenous males and females.

The large increases in the employment disadvantage of people who left school before they were 16 years old is indicative of the general decline of jobs for low-skilled workers, especially in the manufacturing sector. The exceptionally poor prospects of this group is a relatively recent phenomenon among non-Indigenous Australians, but is well established in the Indigenous population.

In contrast, the expansion of the CDEP scheme in rural and remote areas has cushioned low-skilled Indigenous workers from the harsh realities of declining regional labour markets. For example, the disadvantage of leaving school at age 14 were greater for Indigenous males and females in 1981 than for their non-Indigenous counterparts. By 1996, these relativities were reversed with non-Indigenous people who left school at or before 14 years of age experiencing greater disadvantage.

Policy discussion

The overall finding of this paper is that the measured factors underlying employment prospects are reasonably stable in the face of a substantial expansion of the CDEP scheme in various parts of the country. This is not to say that the CDEP scheme has had no impact on the determinants of Indigenous employment. Indeed, the other major finding is that the collapse in the market for low-skilled jobs has not affected adversely the Indigenous work force in areas where the scheme’s expansion is most pronounced. While this is an obvious positive for the least educated section of society in the short-run, it may have detrimental consequences in the long run. The main issue is that the incentive to finish high school is blunted by the continuous shielding of people from the harsh realities of the labour market. The importance of maintaining the correct incentive structure for youth is particularly important for youth in other urban areas where there are more likely to be substantial employment opportunities for Indigenous people in the mainstream labour market.

The main policy prescription is that Indigenous youth are encouraged to complete school rather than move straight onto the CDEP scheme. This could be achieved through use of a series of ‘carrots and sticks’ such as those used in the mainstream youth allowance. This would curtail the use of the CDEP as simply a means of getting out of the educational system.

This paper underscores the importance of distinguishing CDEP schemes based on local labour market conditions and the likely impact of these schemes on the future incentives of youth to finish school and get a qualification. Consequently, ATSIC would be advised to refine their classification of urban labour markets to take into account detailed information on the local market conditions.

ISSN: 
1442 3871
ISBN: 
0 7315 4912 0