Dr. Karina Doorley:

It is a good idea to avoid a cliff edge. Withdrawing it on one day is probably to be avoided. The PUP obviously played a huge role in reducing income losses last year, but the difficulty is balancing safety nets with incentives to work. For many people the PUP is more generous than the corresponding jobseeker's payment. There is an inequity between people who lost their jobs before Covid and those who lost their jobs after it. The first point to make is that addressing that inequity is, at some point, desirable. Whether that is reducing the PUP to the rate of jobseeker's or increasing jobseeker's supports, it is a decision for policymakers, but addressing the inequity is important for a start.

One option available is the gradual tapering of the PUP over time, which could help groups at risk of long-term unemployment after the pandemic to maintain a certain standard of living while searching for work. Alternatively, recipients could be allowed keep some of their payment for a period while taking up paid employment. That is currently the case with the self-employed. This improves incentives to work. It could encourage those who are currently in non-viable industries to seek employment in other sectors where they may need some additional training. Increasing incentives to work as the economy reopens will be important and modifying the PUP, in some way, will be central to that.