Extract from The Guardian
Analysis: There is growing evidence reforms so far have delivered a windfall for providers but done little to help jobseekers find work
Last modified on Sun 30 May 2021 10.18 AEST
For the past two decades, millions of people who have found themselves out of work in Australia have been sent to one of the country’s outsourced job agencies – whether they like it or not.
The government pays these companies and non-profits millions each year in fees to assist – but also police – their clients’ job search efforts – and they get further bonuses for getting people into jobs or education.
The idea is that the bonuses incentivise them to find work for their jobseekers, holding them accountable in a privatised system.
But as many who have looked at or dealt with the system say, while there are success stories, there are countless tales of horror too.
When Guardian Australia this week revealed the contents of an as-yet unpublished government-commissioned report into one of these programs, a reader replied gratefully that they felt “seen”. Their experience with the system had left them “broken”, they said.
The 150-page review, conducted by Boston Consulting Group, looked into the $1bn-a-year Disability Employment Services (Des) program.
The government had further regulated the system in 2018. The result, Boston Consulting Group found, was a windfall for some providers while outcomes for jobseekers went backwards.
The Des program is set up for people whose primary barrier to work is a disability. There is also the larger flagship Jobactive program, whose myriad issues have also been covered by the Guardian.
Three years ago, the government moved to introduce more competition into the Des program. Laudably, it allowed jobseekers to choose their provider – an option not offered to those in the Jobactive scheme.
And it removed market share caps so providers could compete for clients.
In response to the reforms, providers boosted their spending on marketing and started offering sign-up incentives like free iPads.
At the same time, the changing profile of Australia’s unemployed – which, before Covid, was increasingly disabled or sick – meant more people were already being sent to the Des program.
And more participants meant more money going to providers: 28% boosted their revenue by more than double.
Yet the reforms – which also included changes to the funding structure – appeared to do little to help jobseekers find work. The likelihood of a Des participant doing so declined by “around 12-14%”, the review found.
Put another way, the cost to the taxpayer of getting someone into six months of work increased from $27,800 to $38,400 in only two years.
Instead, Boston Consulting Group found that providers were increasingly channelling more jobseekers into education courses. There was “limited evidence” jobseekers were graduating those courses or that they were relevant.
At one stage, the department was forced to “lock down” its IT systems to stop providers gaming the system, documents obtained under freedom of information show.
The sector is often maligned for profiting from a broken system. As one jobseeker told the Boston Consulting Group review: “We are just money to them. It’s a pay packet, they don’t listen.”
But it is also true that the system is hardly set up to optimise their efforts. In particular, the Boston Consulting Group report raises questions about the welfare mutual obligations system.
Providers told the review they spent 40-50% on administrative tasks such as monitoring jobseekers’ compliance with their job search.
Its report said it would make more sense for Centrelink to do this work – freeing up time for consultants to develop relationships with local employers and help jobseekers with practical things like their CV or interview training.
Job agencies even told Boston Consulting Group that mutual obligations “did not, on balance, improve the likelihood of employment”. By chance, academic research came to a similar conclusion this week.
The government’s most direct response to this increasing inefficiency has been to create an online employment services system for the most “job ready” jobseekers.
Because fewer people will be sent to a provider, the move will make budget savings, and providers will have more time and resources to help their remaining clients.
While this makes some sense, there are risks. The Australian Unemployment Union, which represents jobseekers, is among those warning people could slip through the cracks.
The union says all people should have access to a good quality employment service when they want it, and that a privatised system has been proven not to work.
Peter Strong, the chief executive of the Council of Small Business of Australia, has long argued similar.
The social services minister, Anne Ruston, referred to a number of changes to the Des program this week. For example, she said the government had overhauled the rules to ensure providers would only get paid for enrolling participants in courses that aligned with skills shortages.
Des participants will also be able to opt-in to the new online system, while Ruston flagged that consultation on a broader overhaul would begin in mid-2021.
What shape that will take remains to be seen. But advocates, like Simone Casey, of the Australian Council of Social Service, are hoping for a break with the past two decades.
“Even though reforms are on the way, they need to happen in such a way that the problems of the past are not reproduced,” she says.
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