A new report from the OECD on Australia’s employment service system has prompted the Federal Government to claim that Australia is a “world leader in employment participation” and that Job Services Australia (JSA) has delivered exceptional results in moving unemployed people into jobs. But are the Government’s claims justified in terms of what the report actually says?
The role of Newstart in jobs growth
The report, “Activating Jobseekers: How Australia Does It”, describes Australia’s high levels of jobs growth and growing labour force participation over recent years. It notes its success through the GFC in maintaining low unemployment compared to other OECD countries. However, it also notes that there is a high level of involuntary part time work or underemployment, at 7.2% of the workforce in 2010 (and in 2012), the highest in the OECD.
It says that Australia has a “flexible labour market, with high levels of casual and part-time work, short average job tenures, and limited regulation of layoffs, but a fairly high minimum wage.”
According to the report the “effectiveness of quasi-market delivery of employment services and a slow decline in the net replacement rate for unemployment benefits may have contributed to the strong performance of the Australian labour market.”
By this account it wasn’t only the employment service system operated by a range of for- profit and non-profit organisations that may have been so beneficial for the labour market. The well documented declining rate of Newstart Allowance in relation to wages – the replacement rate – acted to force unemployed people off benefits presumably into casual and part-time jobs which account for such a large proportion of the Australian labour market.
While the hourly minimum pay rates in these jobs are not low by international standards, many do not provide sufficient hours of work which are also very important for net earnings and income. Where hours of work are insufficient, vulnerability to poverty is increased.
The OECD report goes on to say that the effect of the low Newstart payment was magnified by increased workforce participation requirements imposed on people receiving higher welfare payments such as disability and sole parent payments. This included for some groups such as sole parents, reallocation to the lower level Newstart payments after 2006.
The aggregate outcome of these policies was to reduce the proportion of the working-age population in receipt of benefits from 21.3% in 1996 to 15.2% in 2007.
Long term outcomes from employment services
According to a report commissioned by the OECD and undertaken by researchers at the University of New South Wales, job placement outcomes for clients of job services are measured over quite short time frames, usually between three and six months following commencement in a job.
The report’s authors, Dr Peter Davidson and Professor Peter Whiteford say “the extent of ‘churn’ in employment and income support after leaving employment assistance and the jobseeker and employment characteristics with which it is associated, is an under-researched area.” Churn refers to the cycling back and forward between employment and income support payments.
This gap in the research base is also acknowledged in the OECD report which supports longer term tracking of both employment outcomes and earnings as a way of promoting employment retention and advancement and placement into stable jobs.
What’s the problem?
There are deficits in information about the type and quality of jobs that unemployed people are finding through Job Services Australia agencies. We do know that the low level of Newstart payments and rigorous welfare-to-work policies mean that there are strong incentives, or little choice, for unemployed people to take whatever jobs are immediately available even if these are precarious and poor quality.
For the Federal Government, both the present and former, this has important outcomes. It reduces overall unemployment rates and claims on welfare payments. For unemployed people themselves, it may be true that being in a job is better than being on welfare especially as Newstart payments are too low to live on. A quick return to work also reduces the risk of long term unemployment and the further labour market disadvantages this brings.
However, a quick turn over from unemployment into casual, unsustainable jobs is not necessarily the best outcome for all unemployed people. A better path may be to improve the ‘human capital’ through education and training, of people who have a work history in low end jobs or who have been out of the workforce for a long period.
This is supported by another new report from the OECD which tells us that “a large body of theoretical and empirical analysis exists on the link between investment in human capital and economic growth.” Davidson and Whiteford in their report to the OECD also say that studies in the United States show that employment outcomes are better over the long term where programs focus on improving human capital.
Both economic growth and individual employment outcomes, it seems, benefit from investments in human capital.
Implications
In my research on women in insecure jobs, there were participants frustrated by the lack of support to improve their “human capital” and to find better quality jobs. Janine, aged 52, was keen to retrain for an alternative occupation in health services. She had been attached to an employment service provider to assist her with her job search efforts and retraining. She describes her experience:
“(The adviser) wanted me to do a course that lasts a few weeks and be in work straight away. And I thought, I’ve done all those menial jobs. I want to do something different, something I like.”
The rigid welfare-to-work requirements on Janine meant she worked part-time as a cleaner although she sustained a repetitive strain injury which made this work very painful. She had raised a large family and had worked in her former husband’s business. She won’t be eligible for an age pension until she is 67, which means at 52 she has another 15 years of potential workforce participation.
Janine’s story highlights the increasing significance of changing circumstances across the life course, the “care penalty” on mothers, and the need for sustainable employment for older age groups. Her story shows that the employment services system is singularly ill-equipped to help people like her to make a transition into decent work.
The Government and the employment service provider were able to claim a positive outcome when Janine started her cleaning job. The employment service may have obtained a payment for this.
It wasn’t much of an outcome for Janine though. And there was not much value added for Australia. In a better quality, sustainable job, Janine could work more hours,over a longer time frame, with all the benefits this would bring to herself and the economy through increased income, tax revenues and retirement savings.
The underemployment rate is currently 9.5% for females compared to 5.4% for males. Janine’s situation also reflects the systemic gender biases in the Australian labour market, raising questions about employment policies and services which reinforce these.
The Government is conducting a review of employment services with a view to changes in 2015 when current service contracts are due to expire. An issues paper “Employment Services: Building on Success” is the basis for the public consultative process. The terms of reference for the review are narrowly focussed on marginal improvements to the present “successful” system.
A broader review of the policy settings and scope of employment services in Australia, and the measurement of their success, is sorely needed.
Michael Shand
Michael Shand is a Friend of The Conversation.
Software Tester
Very interesting article, I worry about a service based economy....who are they serving? usually rich people who have made money elsewhere, if the majority of our workforce is selling latte's - who is left to buy them
Meg Thornton
Dilletante
I've had prior experience with a couple of different employment services providers, and haven't been impressed. I've been told by the manager of one ESP that I should stop my part time study toward a BSc in Computer Science because "the government won't pay for it". I've had to take a six week contract working in a call centre (for Centrelink) which was one-and-a-half hour's drive (country driving, the majority of it) from where I lived, because the other option was losing access to Newstart…
Read moreJohn Q Citizen, Aussie
Administrator
Yes Meg, I too have found the 'Take a job any job' to be one of the most frustrating things (and there are many) with JSA. The carrot & stick approach ensures turnover, both financial and bums on seats for providers.
Read moreI have worked in recruitment and found the individuals employed by said ESP to be indifferent, rude, slovenly and ill disciplined. No am not a snob, just telling how it is.
The stick approach revolves around take this job or i'll cut your dole off. ESP's only recommend Centrelink…
Michael Swifte
writer
Perfectly articulated Meg! My experience of ESP's made me feel like a cow in the stalls ready to get shipped to the slaughter house. Workers just go through the motions ticking boxes and harvesting consent. My current consultant can't tell me how long a cover letter should be, can't format a resume or CV, and can't tell me if it would be better to provide my documents in PDF form. She is typical of ESP consultants and as John Q says she and her co-workers are "indifferent, rude, slovenly and ill…
Read moreVeronica Sheen
Research Associate, PSI at Monash University
Thank you for your comments. I note an omission in the article. The employment service system not only reinforces the disadvantages of people with a background in low end jobs. It also creates new classes of disadvantaged workers by pressuring people with a background in skilled, higher quality employment to take low end jobs. This is a particularly pernicious outcome of the system reducing the 'human capital' of the workforce and having deleterious effects on individual lives. VS
John Q Citizen, Aussie
Administrator
I agree with your additional comments Veronica. ESP's are funded on the back of the initial assessment of the NSA recip on registration. Depending on many factors, the ESP can request a 'reclassification on the client.
Read moreESP's payments revolve around, initial placement fee, milestone payments and when the client reaches 3 months.
I did try to communicate with my caring sharing EC. The abuse and thinly vailed threats if i decided to leave my loevely call centre job were astounding.
Thus, the…
Thy Fere
logged in via email @gmail.com
Well, there are some pitfalls in this program. Let me tell you an interesting and ridiculous fact about new-start allowance or job services; you are not eligible for new-start allowance or job services unless you live in Australia for two years. When I migrated to Australia and heard about it, I said, seriously? Why on this earth you call it new-start allowance after two years. Two years are enough for anyone to settle down; then why would anyone need new-start allowance then?
That should be renamed or all newly migrated immigrants should be eligible for new-start allowance or job services.
Theo Pertsinidis
Theo Pertsinidis is a Friend of The Conversation.
ALP voter
Coherent sensible sustainable policies are of great importance for transition such as welfare to work.
Have a look at the green economy transition.
Australia is well positioned to take advantage of growth in demand for lower emissions goods and services, particularly in the renewable energy sector and the management of natural resources, owing to a relative abundance of solar radiation and wind resources, as well as strong traditions in land and water management systems.
Skilling people for jobs does have it's challenges...
and achieving human capital is the responsibilty of the individual as well.
Education and training does take time... a matter of task discipline and education, training and learn on the job time.
John Q Citizen, Aussie
Administrator
Hmm I missed your posting Theo. I think we are alluding to the fact the ESP's don't really care about returning to study as a win-win for the jobseeker or them. Their rationale is a job = money.
Like you I too believe in further studies. ESP's have to put up a case to their managers to pay for the studies out of their payment for said jobseeker. Plus, the criteria for allowable study is very narrow see forklift licences, Gaming and Alcohol etc 3 hour courses!
Some ESP's have a policy, no study!!, The poorer communicators in their ranks EC's (Employment Consultants) cannot convey this to jobseekers as previous post "Meg" and in the article by Veronica have stated!!.
margaret moir
old lady
MANY PROBLEMS LIKE THIS WOULD BE SOLVED If we could have a real comprehensive debate in the media with all facts and factors there would be a chance to find support for managing this problem but can we get past the sections of our community who wield the power and influence whne it shold be our elected governments.
Read moreIt appears to me tabloid media instead of delivering to our people real facts and all factors influencing our economy, government policy outcomes it seem to promote division…
John Q Citizen, Aussie
Administrator
Margaret, think you are right, but T Abbott has decided he wants THE job whatever the cost. The media as you point out follow like lost sheep waiting for a 60 sec soundbite for the evening news.
One side continually being negative, yet playing on peoples fears, rational or not means we all loose. The cost to the electorate whichever their side of the fence is means the likes of t abbot can play them like a pinball machine. Wake up australia...stupidity awaits!
margaret moir
old lady
John Q Citizen
I don't see the media anymore as a sheep but definatly as the engine to the down hill slide and I wonder who owns who runs and to what advantage there is to promote this theatrical fiasco.
No matter what political flavour we are I believe it is essential for the good of our country and people to have a serious media outlet even one, that is able to without bias or fear of outcome of telling the whole truth I would think it is a non-negotiable for any serious democracy.
One…
Read moreCraig Minns
Self-employed
With all due respect to the author, it seems to me that the problem is not with ESPs per se, but the bureaucratic nature of the HR industry, which has lead to credentialism becoming a scourge. Because HR staff rarely have any understanding of the actual work done by the people they employ, they rely entirely on paper credentials, which often have only a tenuous link to the requirements of the job, or could be easily and cheaply obtained by an incumbent once given the job.
At the beginning of last…
Read moreJohn Q Citizen, Aussie
Administrator
Craig, I have worked in both sectors and seen as you point out the 'ego-tripping' of some consultants, the of lack tact and little or no knowledge of their own role. Let alone the sector they recruit for. My own experiences indicate its about 50/50.
To take a step back, some HR recruiters are from sales backgrounds. One I dealt with as a candidate had actually been a high performance athlete and sold used cars. To this day, 5 years on am still wondering how that qualified her into such a position…
Read moreCraig Minns
Self-employed
John, I wasn't necessarily referring to recruiters in my comments. My experience of external recruitment as an employer is that they're a waste of time generally for both the jobseeker and the employer.. I have several anecdotes, but I won't bore you with them, except to say that the most egregious example saw nearly 50 people referred to me over a period of a couple of months, all of whom had lots of qualifications, but not one had any experience or background in the field I was specifically interested…
Read moremargaret moir
old lady
Please bore us this is the only way others will get a real understanding and possibly another part of the picture.
Bob Buckley
ASD advocate
While the average figures show employment outcomes that politicians can spin into positive media stories, there are other aspects of Australia's employment outcomes that show our nation in a particularly poor light.
The Australian Bureau of Statistics reported that labour force participation in 2009 is 56% for indigenous Australians and 54% for people with a disability.
For people with autism, labour force participation is 34% (see http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4428.0main+features72009). These are abysmal outcomes.
Australia's disability unemployment and poverty rates are a national disgrace (see http://a4.org.au/a4/node/426).
So far, the Government has been unresponsive on these matters (see http://a4.org.au/a4/node/521). Will they be any more responsive with their current "consultation"?
margaret moir
old lady
Never get offended or offend if someone challenges your ideas your bias your suggested facts it is only by being able to hear listen think about all comments that we may come to some rational reasonable idea of what is really happening.
If we cannot bear to hear another opinion is that a cause for concern that we are not open to facts and civil debate and only want our type of bias fed heard or read.
I think looking at the jobs sent off shore our inability in a global market to compete against…
Read moreNick Costello
logged in via Facebook
Bring on an investigation into churning. In my opinion, it has enabled politicians to regularly claim that thousands of "new-full-time-jobs" have been created when many are short-term positions that have been recycled through the system numerous times. Such opportunism might be good for public-confidence, but failure to acknowledge job-shortage not only compounds the problem, but also feeds the myth-of-opportunity-for-all and deepens community-resentment towards jobless people.
I would also…
Read moreVeronica Sheen
Research Associate, PSI at Monash University
Thanks for the comments. I largely agree with what you are saying, Good points about education and training but I think the issue is not so black and white. I have come across people in my research where a credential would help their access to certain occupations but there was no assistance for them to attain the credential they needed. They were pushed back by the system into low end jobs to get them off welfare payments.
I also believe there should be some kind of 'vocational' approach embedded…
Read moreJohn Q Citizen, Aussie
Administrator
Nick I agree wholeheartdly I have seen both sides to this argument / debate or waste of time.
Read moreESP's are notivated only by the montly P & L, its seen as profit and nothing more.
I tell people now if there is a job you don't want to be lined up for ie cleaning then remove it from your work history. As the EC's will target the lowest common denominator on /in your resume as see it as their duty to put you into these types of jobs with little or no regard to past skills of significance and actually…
Simone Casey
Research and Development Manager
Newstart’s not much to get by on at the best of times, but when you lose money because you didn’t do what you were asked, things can get even tougher.
I'm undertaking a study to find out people’s experiences of employment services and the stories behind having your payment withheld. We also want to know how this affects your attitudes and feelings towards Centrelink, employment services and the government.
If you have an experience like this you would like to share with us, let me know.
I am going to use the stories we collect to show another side of the system – the one experienced by people who use employment services who don’t often get a chance to tell their side of the story.
Please contact the researcher to find out about how you might participate in this project:
Simone Casey: 03 9450 5700 or email : S9502268@student.rmit.edu.au