The Case for a National Scheme for Paid Pandemic Leave

July 2020

Key Points

  1. A lack of Paid Pandemic Leave furthers inequality.
  2. Paid Pandemic Leave would slow the spread of COVID-19.
  3. The cost of Paid Pandemic Leave would be lower than the cost of further outbreaks.

In addition to JobKeeper and JobSeeker, Australia is in desperate need of a LifeSaver– paid pandemic leave to ensure that workers who are exposed to COVID-19 stay home.

The coronavirus has exposed the fault-lines that exist in Australian workplace arrangements. When one class of citizens show symptoms, they can use their leave entitlements to stay home, get tested and keep the community safe. When another class of citizens show symptoms, they are stuck between economic disadvantage and getting tested.

Paid pandemic leave is a sensical policy to slow the spread. It’s also popular, having 80% of workers support the idea. Last week, the Victorian Andrews government announced that there would be a $300 hardship payment for those who were awaiting test results for COVID-19. Yesterday, the Fair Work Commission ruled that paid pandemic leave would be made available to aged care workers, in recognition of recent developments in aged care. 

Paid Pandemic Leave would slow the spread of COVID-19

The current health advice in Australia is that if you feel sick with any of the COVID-19 symptoms, stay home, get tested, and isolate.

There are 2.6 million Australians who work casual jobs that have no access to paid leave. In Victoria alone, where the second-wave is happening, there are 651,000 casuals without paid leave.[1] 

Of 3810 cases in Victoria in mid July– 90% did not isolate between feeling sick and getting a test.[2] This is not surprising given the amount of individuals without paid leave. It is estimated that 80% of new cases are linked to workplaces.[3] 37% of Australians have no access to paid leave.[4] Not only that, but industries that have been hardest hit by COVID-19 have also been the ones where there is no paid leave.

“To fight this virus, we need every Victorian who is sick to get tested and then stay home. If you are waiting for a test, you must stay home until you are notified of your result” – Daniel Andrews, Premier of Victoria

The policy rationale is simple. All workers, regardless of their employment type, should have access to leave to get tested. If positive, that leave should be extended to a period of isolation. This would minimise the amount of transmission in workplaces.

The cost of Paid Pandemic Leave would be lower than the cost of further outbreaks

To date, 4 million tests have been conducted. The normal wait time for tests in most cases is usually no more than 72 hours. Our modelling is based on a scheme where once someone requires a COVID-19 test, they are given 4 days paid pandemic leave to ensure they stay home until they receive their test results. If they get a positive result, this leave is extended to 14 days. Our modelling prices each day on leave relative to the original JobKeeper amount of $1500 a fortnight.

Currently, the testing wait times vary between states. Ideally, the policy would be framed in such a way where the initial payment of paid leave is an accurate reflection on the amount of time it takes to get a result. In NSW for instance, where all results are guaranteed to be received within 72 hours, only 2 or 3 days of leave would be needed.

We estimate that if the program had been running from 1 Jan this year, it would have cost between $600 and $700 million depending on the rate of positive tests. The cost of the program running for a full year would be between $1.5 and $1.7 billion.

By comparison, the cost to the Victorian economy resulting from the failure to contain outbreaks is estimated at $100 billion.[5] The total cost of JobKeeper alone is over $70 billion. Governments around the world have spent trillions of dollars in packages to support the economy, as shown in McKell’s Global Economic Response Tracker.

According to ACTU Secretary Sally McManus “Paid pandemic leave costs are a drop in the ocean compared to ongoing lockdowns”. Based on our above calculations, she’s right. It is likely that this would have reduced the tens of billions of damage to our economy that has resulted from the second wave currently occurring in Victoria. It needs to be legislated now to ensure that there are no further waves in any other Australian state.

It can be argued that this creates a moral hazard problem, as there are no eligibility requirements for being able to a COVID-19 test. A morally suspicious individual may, in theory, undertake a COVID-19 test with no symptoms simply to be eligible for the paid pandemic leave. While this is possible, the costs of potential exploitation are minimal compared to the costs of not undertaking this program. Consider for instance, the outbreak of at least 34 cases linked to one patient at the Crossroads Hotel, Sydney. The cost of ensuring that that patient self-isolated in Melbourne would have been maximum, a small price to pay compared to the millions of dollars of economic damage that would result from a second NSW wave.

A lack of Paid Pandemic Leave furthers inequality

Earlier this year, McKell analysis showed how COVID-19 is exacerbating inequality. For instance, jobs in tourism and food have decreased by 25.6%. A lack of paid pandemic leave serves as another blow to these workers. Those that remain in the workforce after a reduction in hours and jobs, are forced to choose between livelihoods and the safety of themselves and others.

These low-income workers are also less likely to have even $500 in savings, as demonstrated in McKell’s report on the need for a Social-Emergency Savings scheme.

Passing paid leave requires parliament to resume

Ultimately, this scheme would require Commonwealth legislation to be implemented nationally. Unfortunately for that cause, parliament has shut down its sittings due to COVID-19 and is not scheduled to return until August.[7] Parliaments across the world are adopting to the virus, such as the European Union conducting votes via email. Professor of Constitutional Law Anne Twomey has suggested that virtual sittings are possible constitutionally.[8] The recent second wave shows us that current policies aren’t enough. We need a dedicated scheme to ensure that sick people stay home. Parliament needs to resume, sit online if necessary, and legislate.

If you agree, Australian Unions currently have a campaign going for Paid Pandemic Leave. Don’t forget to share this article, and subscribe to the McKell mailing list if you want to read more contributions like this.

[1] ABS 6333.0 Characteristics of Employment, Australia, August 2019

[2] Daniel Andrews, press conference 22/07/2020

[3] ANU Crawford School of Public Policy professor Peter Whiteford.