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Welfare to work: a different approach for people with mental illness

Overwhelmingly, people with severe mental illness say they’d like to work in a regular job. Image from

Between 80 and 90% of people with severe mental illness such as schizophrenia and bipolar disorder are unemployed and many are on a Disability Support Pension (DSP). Despite this, when people with a severe mental illness are asked their goals, their consistent number-one ambition is to get a job.

Talk this week about potential changes to the welfare system has focused on the DSP as a key area in need of reform. The DSP is a welfare benefit made to people with a physical, intellectual or psychiatric disability, who are assessed as being not able to work more than 15 hours per week, and who meet a number of other eligibility criteria including having accessed supports such as the Disability Employment Service.

Since 2011, people with mental illness as their primary disability are the largest group receiving disability support payments, accounting for just under a third of DSP recipients.

They are also the fastest-growing group. A driver of this growth is the disparity in the amount of benefit between Newstart and the DSP. If a person with mental illness is eligible for a DSP, it’s often seen as the safer (they’re less likely to be removed) and more generous payment: $751 compared with $501 for singles.

Studies have shown that people with mental illness often become recipients of a DSP within a few years of the onset of illness. The main exit from DSP is to the aged pension and so the costs of young people with mental illnesses getting on the DSP early in life are enormous.

In starting the discussion about welfare reform this week, Minister for Social Services Kevin Andrews said that with respect to the DSP:

There are some people that if we could give them additional assistance at the time that they might go on to the DSP, they might be able to do some part time work, and obviously work is the best form of welfare.

The problem with the employment assistance program currently provided to people with mental illness on the DSP is that it is enormously expensive and it does not work. Only about 25% of people with a mental illness accessing disability employment services obtain a job and only 14% keep their job for 13 weeks, according to a 2012 government evaluation of the disability employment services.

So what is needed?

First, we need to help people avoid needing to access a DSP. Mental illness has its peak onset in adolescence and early adulthood and can derail the normal processes of finishing education and beginning to establish a career. Specialised early intervention services for mental health have already shown they can lead to increased rates of employment.

However, the benefit they provide can be turbo-charged through the addition of an employment-specific intervention called Individual Placement and Support (IPS), which I have been researching over the past nine years.

IPS has eight principles:

On average, 61% of people with severe mental illness receiving IPS return to work. Image from
  1. Every person with severe mental illness who wants to work is eligible.

  2. Employment services are integrated with mental health treatment services; the IPS specialist becomes a member of the mental health service team. This means the client doesn’t have to navigate a bunch of different agencies.

  3. The goal is competitive employment. The open labour market is the most sustainable source of jobs and there is no other intervention in mental health that is as powerfully normalising as getting a regular job.

  4. Clients receive personalised benefits counselling. Making the transition from a welfare benefit to a wage is not always easy, but can be done with support.

  5. The job search starts as soon as possible after a person expresses interest in working. Often there is a long period of assessment at disability employment services that can drain people’s motivation.

  6. IPS specialists develop relationships with employers. Ongoing relationships with employers are a great source of future jobs.

  7. IPS specialist provide ongoing support, as needed.

  8. Clients are assisted to get jobs they are interested in having.

Matt’s story

Matt is a 22-year-old who had left school in Year 11 and was working in a small business when he began to develop a psychotic illness. He came to believe that people in his workplace were plotting to kill him, and frightened, he pre-emptively attacked him. Matt lost his job, but was also brought into contact with an early psychosis service.

Matt’s illness was quite severe but he wanted to work, so he started to meet with the IPS specialist who was part of the mental health treatment team. During Matt’s four months as an inpatient, he and the IPS specialist worked on getting him ready for paid employment.

On his discharge the IPS specialist helped him to find work in a factory. She was able to liaise with the business owner, Matt’s clinical team and his family. She supported Matt to get to work, initially picking him up and dropping him off.

As he became more familiar with the work environment, Matt was able to get himself to and from work. Eventually he felt that he no longer needed the support of the IPS specialist.

Two years later, Matt dropped by to see the IPS specialist. He was still working full time, had moved out of home, had a car and a girlfriend and was doing all the things that young people should be doing.

Evidence-based reform

IPS has been evaluated in 19 randomised controlled trials in North America, Europe, Asia and Australia. In every single one of those it has significantly outperformed the comparison employment system. On average 61% of people with severe mental illness receiving IPS return to work.

When young people access IPS in the early stages of their illness and combine education as well as employment, rates of success have been approximately 85%.

You might be thinking that all sounds great, but surely it will be expensive. Not so. Compared to the money spent on disability employment services currently, implementation of IPS could save approximately A$1.5 billion dollars (to service 100,000 clients), not to mention the other savings that would accrue through people working and paying tax rather than receiving a benefit.

If “work is the best form of welfare”, any welfare reform needs to also look at the support systems available that aid people who want to work to obtain work. The current support system for Australians with a mental illness to seek employment does not work.

A new approach is needed. Resources should be reallocated from poor-performing disability employment services to enable the widespread introduction of IPS, through adult mental health services as well as headspace and early intervention centres.

This would achieve the dual purpose of reducing the cost of welfare while aiding people with mental illness to achieve their own goals of economic independence and social participation.

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