Inflated JobSeeker payments may need to be reduced as the economy gathers momentum or risk acting as a disincentive for some employees to return to work.
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Griffith University economics professor Tony Makin says the federal government has a real juggling act on its hands knowing when to reduce JobSeeker payments to pre-COVID-19 levels.
More than 800,000 people have signed up for JobSeeker since the global pandemic began.
Prime Minister Scott Morrison on Wednesday insisted the payment, which has been doubled to $1100 a fortnight, would return to the previous level at the end of September.
Professor Makin says part-time and casual workers may choose to sign up for JobSeeker while it remains at the higher rate if they would be paid considerably less by returning to work.
He says the changes need to occur in sync with JobKeeper, which helps employers keep staff by paying them $1500 per fortnight regardless of whether they earned less, as the economy starts gaining momentum.
"This is going to be a challenge for the government because if the (JobSeeker) payment stays at that level, it's going to be a disincentive for some to look for work," Prof Makin told AAP.
"In principle, it should be wound back once the economy moves into action and they're going to have to make changes to both programs in tandem to prevent people from crossing over.''
Prof Makin is not advocating JobSeeker payments return to the pre-pandemic level of $550 a fortnight, saying that was for the government to determine.
However, if it was too high, then it would act as a disincentive for some to actively pursue employment.
"That's on the basis that casuals were earning less and now they're unemployed and earning more," he said.
"It's going to be a real challenge to get the JobSeeker payments down because it would be an incentive to switch across and economists say people follow incentives and people are going to do it."
QUT Business School professor Paula McDonald conceded a minority may switch to JobSeeker instead of working but firmly believed the vast majority were likely to return to work.
She said employment gave people a sense of meaning and purpose, and that was just as important as remuneration and a big enough incentive for most, if not all, to rejoin the workforce.
"People don't work just for economic reasons. Their motivation for working is far wider and deeper than just earning money," Professor McDonald said.
"Many people will decide to return to work for a range of reasons including maintaining a relationship with their employer, for social reasons ... even people in low quality, low paid, jobs get a sense of fulfilment and purpose from their work.
"I don't think this is going to be too much of a problem."
Australian Associated Press
