Prime Minister Scott Morrison says people are refusing shifts because of the amount of money they're earning off the government on JobKeeper and JobSeeker.
Mr Morrison, who will receive a Treasury review of JobKeeper and other payments today, continued to suggest a higher JobSeeker unemployment payment will continue beyond September. But he said the amount must be a level that didn't discourage people from looking for work.
"What we have to be worried about now is we can't allow the JobSeeker payment to become an impediment for people going doing work, seeking extra shifts," he said, speaking on Sydney radio.
Businesses had told him they were having trouble persuading staff to take shifts because of the high government payment, he said.
The JobKeeper wage subsidy is $1500 a fortnight, paid by the government to about three million workers.
The JobSeeker payment amounts to about $1100 a fortnight. Half of it is the old Newstart unemployment benefit and the other half an extra coronavirus payment.
Both JobKeeper and JobSeeker are due to end at the end of September, but the government is now working on a new support package post-September, which looks increasingly likely to include a permanent increase to the unemployment benefit.
The government is due to deliver an update, including a path for economic stimulus and support after September, in three weeks - on Thursday July 23.
"We can't let the help get in the way," he said. "These aren't easy decisions. They're very complex. Our opponents are going around and stamping their feet and smashing their fists on the table, demanding to know. But they clearly don't appreciate just how complex and intricate this decision is."
The Grattan Institute says the JobSeeker unemployment rate should stay at the current level of $1100 a fortnight till the end of the year then be phased down over three months to a level $100 a week above the old Newstart, which was $280 a week.
Newstart was worth just 27 per cent of the average wage, lower than any other OCED country, and even with the extra $100 people on the unemployment benefit would be well below the poverty line, the think tank says.
The government is bracing for potentially hundreds of thousands of workers to join the unemployment benefit after September as the wage subsidy is removed from businesses.
In May, 360,000 people still officially had a job but worked no hours, suggesting they're on the JobKeeper wage subsidy but firms have no work for them.
Another 1.2 million people worked fewer hours than usual.
On top of that 830,000 people lost their jobs in April and May.
While the official unemployment rate rose from 5.2 per cent in March to 7.1 per cent in May, the Australian Bureau of Statistics said that if all of the workers who had been stood down were included in the data, the rate would have been 11.3 per cent.