NDIS Growth Impact on Australia’s Workforce: Productivity Challenges and Economic Insights

Understanding the Impact of NDIS Growth on Australia’s Workforce and Productivity

Explore how the expansion of the National Disability Insurance Scheme (NDIS) is affecting Australia’s workforce, drawing workers from other sectors, and contributing to productivity challenges in the economy.

by Dianne Martinez 2024-10-11 02:07:33

NDIS Growth Drawing Workers from More Efficient Industries: Is Productivity Suffering?

The rapid expansion of Australia’s National Disability Insurance Scheme (NDIS), valued at $49 billion, is pulling workers from more productive sectors. A report from the e61 Institute highlights that 15% of the workforce is now employed in the care economy, up from 10% in the early 2010s.

However, this shift has come at a cost, with productivity in the care economy remaining stagnant for nearly two decades.

According to the e61 Institute, this shift has reduced annual productivity growth by about 0.2 percentage points each year since 2019. Prior to this, Australia’s productivity grew by 1.3% per year on average, but this growth has now flatlined.

Government funding is a significant factor driving the growth of the care sector, with the NDIS, aged care, and childcare subsidies totaling over $99 billion annually.

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While essential services like the NDIS are critical, policymakers are challenged with balancing the program’s expansion and broader economic health. Productivity improvements within the care sector are needed to ensure its sustainability. Suggested reforms include adopting outcome-based funding models.

For more information, you can read the full report on the impact of the NDIS on productivity in the original article.