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With a jobless rate of just 5 per cent, Australia is said to be close to 'full' employment. But not everyone who wants a job can get a job. According to employment services expert Lisa Fowkes our low jobless rate hides at least two million Australians who are either long-term unemployed, under-employed or are stuck on disability benefits.
Rethinking Australia’s employment services
Summary of this essay, by Lisa Fowkes (board Member, Australian Council of Social Services (ACOSS)), presented at the Whitlam Institute, March 2011. Edited by Kathy Leitch
In 1994, the Organisation for Economic and Cultural Development (OECD) described the growing rate of long term unemployed as so serious that it threatened “unravelling of the social fabric, including a loss of authority of the democratic system”, and the “real risk of disintegration of the international trading system”. Its roots lay in major changes in the nature of employment in these countries as a result of technological change and the impact of global trade. Rather than unemployment being a temporary feature of the business cycle, many people were becoming unemployed long term. The OECD recommended governments act to help people adapt to these major changes in the world economy.
In 1994 our official unemployment rate averaged 9.4%. The Australian economy had undergone substantial change which was being felt in households and communities across the country. Workers in manufacturing were some of those hardest hit. The Labor Government embarked on a project to develop labour market assistance that would help people adapt. But it was the Conservative Coalition government that radically reshaped our employment services – a reshaping that included complete privatisation of delivery and implementation of a raft of new obligations for the unemployed, including mandatory work for the dole, backed by rigorous application of penalties.
Despite economic growth throughout most of the last decade, the level of long term unemployment has fallen very slowly. 28% of the people currently on unemployment benefit have been there for two years or more. Since 1994, the number of people on the Disability Support Pension has increased by over 70% to over 750,000 – more than the total on unemployment benefit. The number of people identified as underemployed has also increased by 50% to over 850,000. While so many are looking for work, employers identify widespread skill and labour shortages. We have not effectively supported those affected by change to adapt, but to understand the nature of the problem we need to look at all of those who cannot secure the work that they need.
The legacy of conservative government in a period of low headline unemployment is a system which treats unemployment as, at its core, a moral failing of individuals. While assistance is provided, the major form of intervention is to increase pressure and to change behaviors of job seekers.
The risks and social costs associated with work in a labour market that is increasingly volatile need to be shared. Adaptation is not just a task for the unemployed but it is also a challenge for employers. They need to be engaged in a discussion of how structures can be adapted to support inclusion of those currently outside the workforce.
In May 1994 Labor’s Working Nation heralded a shift from ‘passive welfare’ to reciprocal obligation. Importantly, under the Government’s Job Compact, every person who had been unemployed for 18 months or more was guaranteed a job placement for 6 – 12 months. Those on unemployment benefits were required to maximise their job search effort and take up opportunities, while, in return Government undertook to ensure that they had a paid work opportunity. The election of a Coalition Government less than 2 years after the implementation of Working Nation means that it is impossible to judge whether its programs could have been effective long term. The Coalition argued that the programs were expensive, poorly targeted, and ineffective. It was really too early to say. The Howard Government was determined to fundamentally overhaul labour market assistance and, in May 1998, Job Network was born. While Labor had built on and complemented the public employment service through its Working Nation programs, the conservative Government embarked on a more radical experiment. It privatised the whole of the employment service, becoming the first OECD nation to do so. Delivery of the new Job Network program was contracted to ’for profit’ and ‘not for profit’ providers as well as a new (short lived) government owned employment provider. The Job Network program was neatly summarised by Tony Abbott, when Minister for Employment Services, as “hassle and help”.
The Howard government believed a strong economy and labour market deregulation would take care of those looking for work. The challenges in ensuring that these people became permanently attached to the labour force, that they were better off financially, and that they developed skills were left to the market.
The reward to Job Network providers for early placement in a full time job, regardless of the quality of the job, was substantially greater than the reward for equipping job seekers with skills (for example through TAFE) prior to placement. So any strategic effort to upskill or reskill unemployed people prior to placement was discouraged by the system itself.
Under the Coalition, what was described as a “mutual” obligation, became decidedly more one sided. As unemployment fell, it was easier to argue that jobs were there for anyone who wanted them. Increasingly onerous conditions for receipt of income support were used as a mechanism to secure behaviour change. While this was described as a shift from passive welfare, it was essentially a paternalistic one – the State prescribed activities which were designed to activate the unemployed for their own good.
After the Productivity Commission in 2002 found that ‘parking’ of difficult job seekers was common, new prescriptions as to the frequency of meetings and intensity of activity were introduced. The quality of providers’ performance was assessed, in part, on the basis of whether they rigorously reported non attendance by job seekers at appointments and did all things necessary to ensure that Centrelink was equipped to apply penalties. The centrepiece of the behavioural agenda was Work for the Dole. It was a populist program, playing to a view that unemployed people were getting a free ride on the taxpayer. While there were occasional attempts to characterise the program as a form of labour market assistance, it was not designed to increase the skills of the unemployed or to connect them to potential opportunities. In fact program design encouraged providers to retain participants in the program, not to help them gain employment.
“What this Government is trying to do is change a culture of welfare to a culture of work. We’re trying to replace an ethic of entitlement with an ethic of responsibility, and I have got to say for Newstart beneficiaries the era of unconditional welfare is over. It’s over.”(Tony Abbott, Minister for Employment)
The end of the Job Network and move to Job Services Australia (JSA) Labor’s critique when it gained office in November 2007 reflected its interest in skills and in social inclusion. For providers, Job Network/Job Services Australia is a “high volume, low margin business”. From day one of Job Network, cost per employment outcome was a preoccupation for Government and an oft cited measure of success.
Work in Job Network became characterised by large caseloads – a minimum of 100 people per case worker – but usually many more - with substantial time (up to 60%) spent in administration/red tape. In the context of declining revenues, less time could be spent in delivering individualised services to job seekers. Over the same period, the government moved to transfer greater risk to providers. In 2003, Job Network became a ‘demand based’ system. This meant that every person on Newstart was required to participate in the Job Network if they were considered able to do so. For providers, this meant uncertainty about how many clients would walk through the door.
Under these combined pressures, provider behaviour and practices converged. Providers became more risk averse, focussing on strategies that were proven to deliver short term results, rather than more speculative long term investments. Providers sought larger contracts so that financial and contract risk could be spread.
The change of Government has not (at this stage) solved the problem. In a context where every transaction is visible to the Department of Education, Employment and Workplace Relations (DEEWR), “what is measured is what matters” means that primacy is given to administration and numbers. Administrative complexity and red tape continue to dog the system. And the government has done nothing to address the financial dynamics of the contract. Cost per outcome remains a key performance indicator. While Job Services Australia was described by government as focusing on the hardest to place, the fees available to providers to offer services to very long term unemployed people stayed the same or declined.
What does this mean for the support people receive?
Providers rely heavily on standardized approaches: enrolment in a work preparation course; mandatory attendance at group job search activities. A typical strategy is to have a weekly list of ‘top ten employable job seekers’ and to focus attention on this group. Time pressures, and many years of Departmental focus on compliance, mean that the principal means of ‘engaging’ unwilling job seekers is bureaucratic or coercive. From a caseworker point of view the individual job seeker can be ‘parked’ until the next scheduled appointment. Given high caseloads and the need to reserve investment of time and energy into a few ‘ready to place’ job seekers, it is not surprising that many find participation in these programs unsatisfying, the focus on attendance at interviews, the “hassling” – is fundamental to the system. It is meant to be a key driver of outcomes and the key to the programs’ successes. So how successful has it been?
Is Labour Market Assistance working?
Academics interested in making an independent assessment of the Job Network found themselves, under the Coalition, unable to secure access to data. We were forced to rely on the Government’s own answers to these questions
Of the raw numbers we have been able to lay our hands on, one of the most startling things is the low level of achievement of full time work. Less than one in three of the jobs that were achieved by Job Network participants were full time. DEEWR’s conclusion was that the Job Network experience backs up the “stepping stone” theory that people with any work will be on the road to greater participation in the workforce. But the ‘uplift’ could not be seen to be very strong when only 16 months into the program, only 20% of participants were in full time work, while 50% had had no work at all.
While growth in employment has reduced numbers on Newstart it has entirely failed to arrest the growth in numbers on the Disability Support Pension (DSP). In fact, since 2002, this group has exceeded the numbers on Newstart.
Over 56% of people moving on to the DSP have moved to this benefit from another income support payment – over 35% from an unemployment benefit. They have moved from a benefit where the search for work is expected to one where it is not. The attempt to move to DSP makes sense – the weekly benefit on DSP is now $120 per week greater than Newstart and DSP has more favourable ‘cut out’ rates of pension when more income is earned. But it may also be that some want to escape participation in services and programs that they believe do not meet their needs. While they are not required or expected to work as a condition of their benefit, most people on DSP do want to work. To its credit, Labor has moved to uncap specialist disability employment services to which DSP recipients would normally be referred should they wish to participate.
We have yet to see how this uncapping will affect employment outcomes for the DSP group. However at present more people will die on DSP or move onto the old age pension than will move into employment.
In about 2000 the underemployment rate moved past the unemployment rate. At November 2010, the ABS Labour Force Survey indicated that 858,400 people were underemployed – in other words they were working, but willing and able to work more hours. Our labour market programs are far more effective at getting people into this group of underemployed than they are at helping them achieve a full time job at a good wage. If, rather than simply ‘work’ or ‘activity’, the goal of labour market assistance includes the ability to live out of poverty, then this larger problem of underemployment needs to be brought into the picture.
There is a mismatch between the jobs available in the economy and the skills of the people who need work. But addressing the skills gap means engaging with employers and industries, and this remains a problem. On a daily basis, employment assistance providers do develop and maintain relationships with smaller employers. However large employers rarely use the system, complain that it is confusing and that the referrals that they receive are inappropriate.
While small local employers are readily accessible, and may be persuaded to increase hours of work to full time through incentives, development of recruitment links with larger employers is costly, time consuming and they are less willing to adapt employment practices on the basis of incentives that are within the discretion of providers.
If we shift our assessment of JSA to start to look at its ability to create long term career paths, to address the skills gap, and to alleviate poverty, then the failure to systematically engage with employers and industries becomes of greater concern.
In certain communities, the attempt to address unemployment in isolation appears bound to fail. While Job Services Australia was intended to be flexible enough to address specific community needs, it has already been argued that the way that the program is resourced and managed means that it will continue to be characterized by “one size fits all” practice.
Summary – is what we have, working and is it good enough?
If our goal in provision of labour market assistance is to support people to adapt to a changing economy and to do this in a way that promotes fair sharing of risk, then our program structures must do better. We need to build capacity of unemployed people to build a pathway to employment that provides security and which improves their prospects in a labour market where change is constant. We need to provide a framework which will encourage people to participate and which will provide them with real opportunities to work. We need to provide skills development that will equip people for better opportunities, and to address the problems that mean for many that ‘geography is destiny’.
A complete overhaul of the job Network/JSA model seems to be due. The terms of the welfare policy debate have been framed by the Right, who have somehow laid claim to the principle of ‘personal responsibility’ and placed it in opposition to a progressive social justice agenda: a “culture of responsibility” versus a “culture of entitlement”. Labor in office has found it easier to apply exclusionary rhetoric when it comes to people on income support than to attempt to reframe this debate.
But it is the coercive and paternalistic elements of current policy that are antithetical to exercise of personal responsibility. A policy that focuses on attitudes is not enough to deal with the complexity of current labour market challenges – the problems of long term skills, of exits onto DSP, of locational disadvantage, of the nature and quality of work. No amount of “hassling” will address these structural issues.
“Unemployment is a source of far reaching debilitating effects on individual freedom, initiative and skills.” This view rejects complacency about unemployment as a permanent feature of society, and instead requires that we attend to the social and economic arrangements that impact on the substantive freedom of people to find work. Individual capacity is important. But understanding the institutions, infrastructure, discriminatory practices which affect the extent to which decisions to act can achieve results is as important.
There are inefficiencies in a system that has compulsion at its core. Non attendance, provision of services that are poorly targeted, the bureaucracy of a compulsory system, all are signs of investment in the process of ‘activation’ not the task of supporting people to achieve. If activities were voluntary and self directed we might see greater attendance. Less investment would be made in monitoring and reporting attendance. Less investment would be made in ‘busy work’ – activities which are not considered valuable by the participant because they do not contribute to employment. Greater participant choice as to which jobs to pursue will reduce investment in poor placements and increase retention. It would also address one of the major employer complaints – the people referred are not committed to the job. On the other hand we might see participants who currently miss out demand better and more services – likely to cost more in the short run, but potentially more effective in getting more people into work.
Employers, when they are asked to identify core employability skills identify, among others: problem solving; initiative and enterprise; planning and organising; self-management; learning. Labour market assistance is not designed to enable participants to develop and use these skills, instead it encourages leaving these decisions to others.
A system that supported people to make better decisions would contribute to the development of a workforce which is more resilient in the face of labour market change as well as having spill over effects for the way that people are able to make decisions in the rest of their lives.
Even when options are known, and available, people make bad decisions. This, indeed, is the power of the coercive approach to welfare – it reflects what we know to be true - that it is easy to form “bad habits” and that they are hard to break.
A number of tools for policy makers designed to ‘mitigate irrationality and promote good choices’ include:
• Setting the default option in a set of choices
• Offering self contracting to support commitment
• Presenting and organising information (eg to reduce complexity)
• Supporting the development of social norms.
Participation in some form of work directed assistance needs to be compulsory for income support recipients who have work capacity and have been out of work for some time (including DSP recipients) – but the intensity, timing and form need to be subject to participant direction.
The logical consequence of a program design which supports individual agency is that the use of resources should be directed by participants. Implementation of participant driven services brings with it considerable challenges.
It is a widespread perception that many unemployed people do not want to work. The evidence, such as it is, suggests otherwise. At the height of the period when the Coalition was moving to crack down on the unemployed DEEWR conducted a survey of 3,500 people who were Centrelink ‘customers’, seeking to categorise these in terms of their attitude to work. Only 16% of these were identified as “cruisers” – those who were comfortable being unemployed. Although many of the others were described as being discouraged, disheartened or wanting to have some sort of say in the type of job they took, they wanted to work.
Individuals should be able to make decisions about the jobs they take and the work they do (although we may set expectations in relation to how long and how much this will be subsidised, and we should ensure that these decisions are well founded). It makes little sense to attempt to coerce a person to take a job. One of the biggest employer complaints about the Job Network has been that people referred had the wrong attitude or that they weren’t enthusiastic about the work. The single biggest factor in determining whether a job will last is whether the match was a good one (from both employer and employee perspective) in the first place. It is hard to believe that coercion is efficient. On the other hand we need to challenge people to consider jobs that may not be what they are used to, to build their confidence to work with different people and in different settings, and provide useful information about the job market and the options available within it.
In addition to a program that supports individuals, we need concerted action to address structural inequalities in the labour market. If we adopt a capability approach, we are forced to consider how we can make work more attractive, rather than making life out of work more miserable. The world of work that most unemployed people are contemplating is full of risk with uncertain rewards.
In other countries there are examples of governments moving to reduce real and perceived income risk during the period of transition from welfare to work by supplementing income for a period of time. These programs have been found to have positive impacts in terms of supporting transition to work and reducing poverty, particularly where combined with employment assistance and when applied to the most disadvantaged families. In the Australian context this could mean a weekly income guarantee for a period of, say 12 months to 2 years and could be targeted at the very long term unemployed.
Another structural area of concern is the phenomenon of casualisation of work. Almost 30% of total employment - retail, health and community services, and food services – have the lowest level of average earnings and have seen the slowest wage growth over the last 15 years. These sectors are characterised by part-time, casual employment.
Many of the benefits of casual work are speculative. Casual employment brings with it no entitlement to a set number of hours, to a notice period, to paid leave in the event of illness for the worker or a family member. In other words, even if people who move from Newstart are better off in theory, their actual take home pay will be less certain than if they are on a fixed benefit.
The inability to plan a budget combined with losses (eg loss of concessions, loss of public housing) mean that many may have reason to pause before taking on work that is offered.
In the UK and in the US there has been considerable investment and experimentation in the area of career advancement programs, and while the findings are mixed, there is certainly a case for investment in this area. Ultimately, addressing the issue of access to reliable, decent work will mean working towards a fairer workplace. To the extent that Labor has developed a fairer industrial relations system, it should mean that more people can get better work.
The fact that employment is the province of the Commonwealth, while the States run vocational training make this entire area fraught for policy makers and practitioners alike. If training is going to lead to quality employment then employers need to be directly involved.
The skills gap is not just about ‘hard skills’ or qualifications. DEEWR conducts regular surveys of employers about their recruitment problems. Employers are more likely to cite problems with communication skills and attitude than hard skills as a reason not to employ. Even where workers have credentials, employers tend to want people with experience, or particular job specific skills.
Discrimination is alive and well in the jobs market. Even where they are not overtly biased, employers are often nervous about employing people with disabilities, young people, and indigenous people. Employment rates of people with disabilities in Australia are amongst the worst in the OECD. The ABS reported the Indigenous unemployment rate in 2009 as 18%. Even where employers recruit Indigenous workers, retention is poor. If we are to improve access to employment for ‘harder to place’ job seekers, we need to engage employers in a discussion about what adjustments could be made to application processes, job design, minimum qualifications, workplace support and so on. Employers need to consider workplace culture and practice and how it might need to change to be inclusive. We also need to be able to assure employers that they will have support to handle issues that arise during the transition to work. The current system could deliver this on a local/individual level, if resources allow, but it is poorly designed to approach this problem on an industry wide or large employer level. There are some good examples of larger scale programs
Intermediate Labour Market (ILM) programs (or social enterprises) have played a critical role in enabling people to learn soft and hard skills for work in industries with growing employment opportunities. ILM programs offer paid work in an environment that is supportive but which is real work. They offer an opportunity for employees to work through the personal and work related issues that usually derail employment with extra support. They offer a setting in which skills can be learned on the job by people who find it difficult to learn in a formal classroom setting. ILM programs are different from Work for the Dole. They are real work, although there is an understanding that participants may not perform at work standards required in the mainstream workforce from the outset. They are paid and participants earn their wage. If they don’t turn up they don’t get paid.
The opportunity to work is not evenly distributed across Australia. Some remote and rural communities are not only job poor but are not even close to work opportunities. Motivation to look for work tends to diminish when the number of employers in town can be counted on two hands. Other job poor locations are within major cities but effectively isolated from work by poor transport links and poor infrastructure (eg lack of childcare, lack of ability to move to job rich areas because of housing costs). Addressing inequities in access to work should be a key driver of decisions about spending on infrastructure and urban planning.
Conclusion
Australia spends less on employment services per capita than most OECD countries. According to Government data these services make a difference to employment outcomes for around 10% of the long term unemployed people who participate in them. But, even then, most will not gain work which moves them out of poverty or into a job that provides a future. Around half of participants in our current programs aimed at the long term unemployed will gain no work at all. Their sense of exclusion, of helplessness and of shame is reinforced by the way that labour market assistance operates and the public discourse around unemployment. By changing the basis of employment assistance so that it emphasises individual agency, so that it supports effective decision-making, and provides a sense of control, we can reduce the negative effects of joblessness and contribute to development of soft skills that employer’s value. This framework should be better placed to encourage people currently outside the employment market (eg those on DSP) to enter. But it is not enough to focus on individuals. Work structures, credentialism, discrimination and welfare traps mean that many who seek work will not be afforded the opportunity to work. We can reduce the economic risks for individuals in their first phase of working, and there is good evidence that this will make a difference. But we also need to confront the employment and industrial structures that mean that people cannot access work, and to look at developing new types of learning/work experience pathways to bridge the gap. There are also some places where disadvantage is concentrated where a whole of community response is needed to address basic needs (health, justice, transport) as well as employment. The current system, based on competition, and dominated by large national or state wide providers, is a poor fit for the sort of ground up response that is needed. What I am proposing represents a major change. There are many implementation issues – including resourcing, development of new performance management and accountability structures. An incremental approach would be needed to ensure that providers have a chance to adapt. But perhaps the biggest changes would be needed in our leadership. At the bureaucratic level it would mean letting go of micro management and placing trust in program participants to take some control of their destiny. At the political level it would mean reframing the welfare debate so that we see the unemployed as citizens, not spongers, and talk about our obligation to create opportunities, not their need to be punished.
Feature Article
There is a big difference between non-discrimination (equal opportunity), a minimalist approach and having a pro-active approach to a diverse work force. In order for someone with a disability or for someone from another disadvantaged group to prove discrimination there has to be blatant and obvious reasons for discrimination. This needs to be clearly the reason for a person not to get the job.. read mor
Recently, ADDE was involved in the judging of the Diversity@Work 2010 Employment and Inclusion Awards: People with a Disability. This award recognises excellence in initiatives or programs related to the employment and inclusion of people with a disability. Peter Rickards, ADDE president, was a judge on the panel and stated how happy he was to once again have the opportunity to judge the nominations.. read more
ILO (International Labor Organisation) Employment Working Paper No. 43
A summary: We hear a lot about the costs of inclusion of people with disabilities - pensions, subsidies, services, access etc - but hardly anything about the costs of exclusion. The following report estimates the costs of exclusion from the world of work as between 3-5% of GDP: http://sebastian.buckup.de/4.html
While this study looks at ten low to middle income countries, the percentage is probably higher for countries like Australia.. read more
- The health and saety conundrum read more
- Australia signs the International Convention on the Rights of Persons with Disabilities read more
- Some personal remarks about disability By Roger Beale (AO) read more
- GOVERNOR-GENERAL Quentin Bryce has advocated the introduction of quotas to ensure more women are appointed as directors on the boards of Australian companies. Theage.com.au, 8/3/11 read more
- UN Convention on Rights of People with Disabilities.
A summary by Kathy Leitch read more
Our mission is to increase employment opportunities for
people with disabilities and from diverse backgrounds
in Australia. For those of you who are not aware we were
officially formed on September 7, 2005 at Victorian Council
of Social Services (VCOSS).
ADDE promotes pro-active employment
policies and practices for disadvantaged groups including
people with disabilities, mature age workers, people from
culturally and linguistically diverse backgrounds as well
as indigenous people. People who fall into more than one
of these categories are recognised as being even more
disadvantaged. Therefore, we see a greater need for a
change of attitude and awareness.