Research Paper no. 15 2007–08
A review of developments in the Job
Network
Matthew
Thomas
Social Policy Section
24 December 2007
Australia has enjoyed strong economic growth for over 16 years
and the nation s unemployment rate is at its lowest level in around
30 years. In this context of strong labour market conditions and a
buoyant economy, job seekers with minimal barriers to employment
tend to find work readily, with little or no assistance from
Australia s main employment service provider, the Job Network.
Increasingly, then, the Job Network is being asked to meet the
needs of difficult-to-place job seekers and the long-term
unemployed.
This Research Paper briefly examines the development of the Job
Network and evaluations of this system to determine the Job Network
s capacity to cater to the needs of difficult-to-place job seekers
and the long-term unemployed, and how this capacity might be
improved.
The main conclusions of the paper are that:
- problems with the performance-linked payment structure of the
Job Network, along with the limited fees paid to Job Network
providers, have resulted in many difficult-to-place job seekers
being given little or no employment assistance, and limited
employment outcomes for this group
- changes made to the Job Network in order to deal with emerging
systemic problems have resulted in substantial administrative and
compliance demands being placed upon Job Network providers
- increased Government monitoring and regulation of Job Network
providers have impacted on the ability of these providers to
furnish the flexible and tailored support necessary to improve the
employment outcomes of long-term unemployed and difficult-to-place
job seekers
- the above findings indicate the need for changes to be made to
the Job Network to ensure its capacity to meet the needs of job
seekers in the current economic and labour market environment
If the Job Network is to be reconfigured to meet
these needs, while also potentially meeting skills in demand and
tackling workforce shortages, then this may first require the
reassessment of the work-first focus of this system. A life-first
approach to employment assistance for disadvantaged job seekers,
one that addresses non-employment-related barriers alongside the
provision of employment assistance, may need to be adopted if the
Job Network is to achieve better and more sustainable employment
outcomes.
|
Contents
Executive
summary
Introduction
What is the Job Network?
Tenders and contracts
Levels of service an overview
How does the Job Network
work?
Job Network service provision
(under the Active Participation Model)
Job Network fee structure
Background to and
rationale for the establishment of the Job Network
Evaluations of the Job Network
Job Network performance
Initial problems with the Job Network
Perverse incentives
Intensive Assistance funding
Changes to the Job
Network
ESC3 and the Active Participation
Model
Welfare to Work measures
Discussion
Administration and
compliance demands
The role of the not-for-profit sector
Future directions
Appendix A Job Network service
continuum
Appendix B Job Network net impact study
results
Introduction
The Job Network provides employment
placement assistance to unemployed job seekers in receipt of
Australian Government provided income support payments. This
Australia-wide system of community-based and private agencies
competing in a quasi-market for employment service contracts, was
introduced by the Coalition Government in May 1998. The system
replaced the long-standing primarily public provision of employment
services in Australia. Given that it represented one of the first
comprehensive attempts internationally to apply market mechanisms
to the provision of subsidised employment services [1], the Job Network was regarded by
many on its introduction as a radical experiment.
The main aim of the new system was to bring flexibility, choice
and competition to the provision of employment services. This, it
was hoped, would improve the standard of service provided to job
seekers, leading to better and more sustainable employment outcomes
for job seekers and enhanced value for money for tax payers.
Australia s overall unemployment rate is currently at its lowest
level since 1974, with the nation having enjoyed strong economic
growth for more than 16 years. However, while the general number of
unemployed job seekers receiving income support is at record low
levels, there is still a number of long-term, unemployed job
seekers. At the same time, as a result of the Coalition Government
s Welfare to Work reforms, from 1 July 2006 a large number of
people in receipt of various forms of income support has increased
requirements to look for and accept part-time work. Many of these
people fall in the category of difficult-to-place job seekers and
themselves face the potential prospect of becoming long-term
unemployed. In light of the fact that in a buoyant economy with low
unemployment many job seekers are able to find work themselves
without the assistance of an employment services provider,
difficult-to-place job seekers may soon constitute the lion s share
of Job Network clients.
If the Job Network as it is currently configured is unable or
limited in its capacity to meet the needs of difficult-to-place job
seekers, as some commentators suggest, then this would demand that
this radical experiment be rethought, restructured or, indeed,
replaced.
The purpose of this paper is to chart briefly the evolution of
the Job Network with a view to identifying, through a focus on
relevant research and major attempts to evaluate the Job Network,
how well-equipped this system is to meet the needs of
difficult-to-place job seekers.
Due to the scale and complexity of the Job Network, what follows
is necessarily a very broad and general description of the system
and how it currently functions. The paper does not examine in any
detail labour market programs associated with the Job Network. Nor
does it closely scrutinise the range of evaluations of the Job
Network. Instead, it focuses on the main evaluations and criticisms
of this system and, in particular, those that concentrate on the
intensive assistance provided by the Job Network to the long-term
unemployed and other disadvantaged job seekers. It does so with the
objective of isolating what these can tell us about if and how the
Job Network might be improved to suit present economic and labour
market conditions.
The Job Network is a national network of organisations (private
and community, and originally also government) that is contracted
by the Australian Government, through the Department of Employment
and Workplace Relations (DEWR), to deliver employment services to
unemployed job seekers on Government income support payments and
employers. Job Network providers are initially selected for the
network and allocated business through a competitive public tender
process, with contract periods running for varying lengths of time
determined by the Australian Government.
Since the establishment of the Job Network in May 1998, three
tender rounds, referred to as Employment Service Contracts (ESCs),
have been undertaken. The first of these contracts ran from May
1998 to February 2000, the second from February 2000 to June 2003,
and the third from 2003 to present (in two stages). Under the first
two of these agreements, ESC1 and ESC2, contracts were awarded to
Job Network providers both on the basis of price and quality. Under
the current ESC3 agreement, which commenced on 1 July 2006 and is
to run for three years, contracts are awarded on the basis of
quality alone, with floor prices for services now fixed by the
Australian Government. Job Network providers quality is monitored
and assessed by DEWR through the use of a sophisticated statistical
model, with contracts awarded on the basis of this star rating
system.[2]
The overall composition of the Job Network has changed
substantially in the move from ESC1 to ESC3. When it was first
implemented in 1998, the Job Network was comprised of 306 private,
community and government organisations, with the private and
community sectors gaining around two-thirds of the market for
services, and the remaining third held by public providers.[3] With the second tender,
the overall number of providers was reduced to 205. At the same
time, the market share of community-based and not-for-profit
providers increased to around half of the Job Network, as did the
share of private providers. Public providers market share, by
contrast, was reduced to less than ten percent.[4] Stage one of the third tender
round resulted in 109 organisations securing contracts to offer
employment services. Around sixty percent of business was rolled
over in this round, with the remaining forty percent put up for
tender.[5] This
resulted in seven new providers being introduced to the system.
With the move to stage two of ESC3, the overall number of providers
was slightly reduced (to 103 providers), and the breakdown between
private and non-profit providers remained roughly the same as under
ESC3, stage one. Around ninety five per cent of business was rolled
over to already-contracted providers.[6]
In summary, between employment services contracts, the business
of public sector providers has been greatly reduced, with private
and non-profit providers now roughly equal in terms of market
share.[7] With a
reduced overall number of providers, and decreased opportunities
for outside agencies to compete for employment services, Job
Network business has become concentrated in the hands of fewer and
some larger private and non-profit providers.[8]
The Job Network provides different levels of service to job
seekers under the general categories of job placement, job search
training and intensive support and customised assistance. In the
first of these categories, Job Network providers match and refer
eligible jobseekers to suitable vacancies, notified by employers
and stored on a national vacancy database.[9] Job Search Support services are
available to both Fully Job Network Eligible (FJNE) job seekers,
who are identified as being eligible for the full range of Job
Network services, and Job Search Support Only (JSSO) job seekers,
who are not necessarily unemployed, but are registered for Job
Network services.[10]
Where job seekers are unemployed for a given period, Job Network
providers offer access to a Job Search Training program.[11] This involves the Job
Network provider s development of a written job-search development
plan in consultation with the job seeker, and training to help the
job seeker to adapt to a working routine.[12] After 3 months unemployment, job
seekers become eligible for Intensive Support. As a part of this
support, Job Network providers have access to Job Seeker Account
funds, which can be used to cover some of the costs associated with
a job seeker s job search activities. Job Network providers are
also able to be paid outcomes payments for job seekers who have
commenced Intensive Support. As a job seeker s period of
unemployment lengthens, the level of assistance provided through
Intensive Support increases.
Intensive Support Customised Assistance is offered to job
seekers who are assessed as being at very high risk of long-term
unemployment, gauged as being disadvantaged, or who have been
unemployed for an extended period of time. Customised Assistance
can include a range of different forms of aid such as job matching,
training, job search assistance, work experience and post-placement
support. In terms of the actual services that are provided to job
seekers in Customised Assistance, this is largely left to the
discretion of the Job Network provider.[13]
For the purposes of the Job Network, the country has been
divided into a number of labour market regions, with providers
invited to tender for the services outlined above in their
particular regions.[14] Job Network providers tender to provide some or all of
the above employment services to general or specific (such as
Indigenous job seekers or job seekers with disabilities)
populations of job seekers, on the basis of their assessed quality
according to the star rating system.
The following section provides a brief description of the
pattern of service provision that is currently made available to
job seekers throughout their term of unemployment. It should be
noted that the level of activity described exceeds that provided
under previous employment services contracts. An explanation of the
shift to higher levels of activity is provided in a later section
of the paper.
When job seekers register for unemployment benefits with
Centrelink, the organisation responsible for the delivery of
welfare payments, Centrelink uses DEWR s Job Seeker Classification
Instrument (JSCI) to determine their level of disadvantage and the
associated level of employment assistance for which they are
eligible. This assessment, combined with the point at which a job
seeker is located on the service continuum, helps to determine the
amount that is payable to a Job Network provider for a successful
outcome for the individual job seeker.
A continuum of assistance is available to job seekers, with the
point at which job seekers start on this continuum dependent on
their level of disadvantage. Where a job seeker s risk of long-term
unemployment is assessed as being high, they are immediately
referred to Intensive Support Customised Assistance. (Job seekers
who are not successful in gaining employment after a period of 12
months are also eligible for access to this form of assistance.)
Where job seekers are found to have significant barriers to
employment that cannot be addressed by the Job Network, they are
referred outside the Job Network to either a disability service or
the Personal Support Program (PSP). This program, which was
previously run by the Department of Family and Community Services
and Indigenous Affairs (FaCSCIA), but is now run by DEWR, is an
expanded version of what was formerly known as the Community
Support Program, and instituted as such along with the Job
Network.
When the JSCI assessment has been
completed by Centrelink, and a Preparing for Work Agreement[16] which outlines a job
seeker s rights and obligations with regard to job search and
training activities is prepared for job seekers who are in receipt
of activity-tested allowances, job seekers are invited to specify
the Job Network provider of their choice. Centrelink then makes an
appointment for the job seeker to meet with this provider.[17] Job seekers do not
receive income support until they have attended their first meeting
with their Job Network provider. Initially, job seekers are able to
choose their own Job Network provider, within their labour market
region. However, if they do not choose a provider within seven
days, job seekers are randomly assigned a provider that has
sufficient spare capacity by Centrelink.[18] While under earlier employment
service contract arrangements job seekers were able to sign up with
several Job Network providers, under ESC3, job seekers are required
to register with a single Job Network provider for the duration of
their unemployment episode.[19]
On initial contact, Job Network providers interview job seekers
and develop a resume summary based on their curriculum vitae and
work experience. If job seekers are assessed as not being in a
position to enter the job market immediately, they are connected to
other programs that provide an alternative pathway to employment.
Alternatively, job seekers are required to commence Job Search
Support, which will continue throughout the job seeker s period of
unemployment. Job Search Support involves the provider showing job
seekers how to search for job vacancies, prepare a resume, record
their profile on JobSearch (a DEWR website on which employers list
available job vacancies and job seekers place their resumes,
allowing employers to contact them about relevant job
opportunities), and arranging access to job search facilities and
interpreter services, if required. Job Placement Services are
available to job seekers throughout their period of assistance.
If the job seeker has not yet found paid employment within three
months, Job Search Support is augmented with Intensive Support
services. These services include three weeks of intensive Job
Search Training, which involves further practical training in how
to search for work, the preparation of a Job Search Plan, and the
revision of the job seeker s Preparing for Work Agreement. When job
seekers have been unemployed for around five months, they meet with
their Job Network provider to review and update their Job Search
plan. Where the job seeker has a mutual obligation[20] requirement and has listed Work
for the Dole or Community Work as their preferred activity, the Job
Network provider links the job seeker with the relevant Community
Work Coordinator member.[21]
After job seekers have been unemployed for over six months, they
are required to undertake mutual obligation activities, while also
actively looking for work. Where the job seeker has not commenced a
mutual obligation activity, they are referred to Work for the
Dole.
Where they have been unsuccessful in finding employment after 12
months, job seekers must participate in Intensive Support
Customised Assistance. Intensive Support Customised Assistance
involves a rigorous six-month work preparation program, which takes
into account both the needs of the job seeker and the work
opportunities that are available.
If job seekers find themselves unemployed at the 18 month point,
they are required, upon completion of their period of customised
assistance, to undertake another six month period of mutual
obligation activity. Job seekers continue to receive Job Search and
Intensive Support services and are contacted on a bi-monthly basis
by their Job Network provider.
After a job seeker has been registered as unemployed for at
least 24 months, or remained registered for a period of 6 months
since the completion of their first period of Intensive Support
Customised Assistance, they must undertake a second 6 month period
of Intensive Support Customised Assistance. After this second
period of Intensive Support Customised Assistance, a job seeker s
provider undertakes a detailed assessment of their progress against
their Job Search Plan and, based on this assessment and their
current job prospects, decides upon a course of action that is
likely to be of most benefit to the job seeker. When a job seeker
has completed their second period of Intensive Support Customised
Assistance, they are linked with a Community Work Coordinator
member if they are activity tested[22] and have not yet commenced a mutual
obligation activity.[23]
At the end of 30 months of unemployment, activity tested job
seekers are required to undertake a further mutual obligation
activity. At the same time, they continue to be contacted
bi-monthly by their Job Network provider. Where job seekers have
completed two periods of Intensive Support Customised Assistance
within their current period of registration, they are classified as
very long-term unemployed.[24] As such, they receive on-going contact from their Job
Network provider, and access to Job Search Support services.
Job Network providers are paid a fee for placing an eligible job
seeker in a vacancy that has been advertised on the national
vacancy database, JobSearch. The job seeker must complete a
specified amount of paid employment in the vacancy and within a
given period for providers to be paid a fee. This fee is paid at
different levels, depending on the length of time a job seeker has
been unemployed. A bonus payment may be made where the job
placement lasts over a given length of time.[25] In the case of job search training,
Job Network providers are paid when an eligible job seeker is
signed onto the Job Search Plan. This fee is for a service
provided, and is not outcomes-based. Various other types of
assistance made available by Job Network providers, such as
appointments and services, are also funded on a fee-for-service
basis.
Under earlier employment services contracts, Job Network
providers were paid an up-front, non-outcomes-based, commencement
fee when job seekers began the intensive phase of assistance, as
well as an outcomes fee, where relevant. Under ESC3, however, this
fee was dropped, with providers instead being paid on a
fee-for-service basis, and an outcomes fee, where applicable.
The fees for Intensive Assistance services were initially set by
the Government,[26]
subsequently changed under ESC2, and again set by the Government
under ESC3. Under ESC2, Intensive Assistance fees were set
according to competitive tender, with a minimum floor price
established by the Government.[27] Fees for Customised Assistance services are
weighted towards more difficult-to-place job seekers. Outcomes fees
are paid to Job Network providers where they successfully achieve
employment for job seekers of a given duration. This is referred to
as a final[28]
outcome. Job Network providers may also gain interim[29] outcome payments where
job seekers in Customised Assistance commence participation in
education.
The changes to the Job Network payment structure and, in
particular, the move from a fixed schedule of fees for Intensive
Assistance services to fees determined by tender with a prescribed
minimum threshold, and then back to a fee-for-service (albeit
weighted), are among the most significant modifications made to the
Job Network since its establishment. These changes to the fee
structure, and the associated introduction of increased Government
intervention in the Job Network quasi market, are discussed in
further detail later in the paper.
In the context of the 1996 97 Budget, the Coalition Government
announced its intention to introduce a new quasi-market framework
for the delivery of employment services. This framework, dubbed the
Job Network, was to replace the Commonwealth Employment Service
(CES) and various contracted out case management agencies
associated with the previous Labor Government s Working Nation
package, which was introduced in 1994. At the same time, the
Coalition Government indicated that it would restructure the nation
s welfare delivery services through the creation of a Commonwealth
service delivery agency known as Centrelink. Centrelink was to be
responsible for delivering income support services, but also was
meant to serve as a gateway to the Job Network. This one-stop-shop
arrangement was to replace the existing approach, in which
employment services were delivered by the CES and income support
services by the Department of Social Security. The new arrangement
would, the Government felt, preserve to a degree the best aspects
of the previous arrangement that is, its linking of employment
services and income support in an active society model[30] while not compromising
the necessary competition between employment service providers. At
the same time, it was felt that the purchaser-provider service
delivery arrangements under which Centrelink operated would promote
greater efficiency.
While Australia has a long-standing tradition of pursuing active
labour market policies within a largely public delivery framework,
by the early 1990s the impact of many of these policies was
generally regarded by the Coalition as disappointing . The labour
market programs developed out of these policies were, it
maintained, on the whole, failing to make any significant or
lasting difference in getting unemployed people into regular
employment.[31]
Indeed, not only were many of the programs deemed to be failing to
meet the needs of the unemployed, but they were also, partly as a
result of their complexity and failure to focus sufficiently on
employment outcomes rather than process, held to be failing to
provide value for money. While in the view of the new Coalition
Government the introduction of Working Nation in 1994 had gone some
way towards addressing these problems, the public delivery of
employment services through this package was nevertheless, the
Government argued, characterised by inflexibility, lack of choice
and diversity, the absence of competition and unclear objectives
and outcomes .[32]
In developing the Job Network, the Coalition Government
indicated that it had adopted an evidence-based approach.[33] In keeping with this
approach, it sought to address many of the perceived deficiencies
of labour market programs associated with Working Nation, while
building on this package s most promising features. As the
Government saw it, these features included: the screening and
classification tools developed to determine the level of assistance
required by individual job seekers; the case management approach
(through Employment Assistance Australia (EAA), the community
sector and private contracted case managers), which resulted in
flexible and individualised assistance; and, the finding that
employment assistance needed to be focused on those job seekers
most likely to benefit from it, rather than on job seekers with
non-employment related barriers to overcome before becoming job
ready.[34]
The Government also opted to retain the principle of reciprocal
obligation which was central to Working Nation s active employment
strategy approach. This principle that the long-term unemployed
should be guaranteed employment or training, with job seekers
obliged to accept such offers or forgo social security benefits was
reconfigured and renamed, mutual obligation . In this shift, some
changes were made. These changes are of some significance,
according to many commentators, given that they are viewed as
watering down the Government s obligation to provide effective
assistance for job seekers.
In the move to the Job Network, activity testing for
unemployment benefits was tightened and the sanctions for
non-compliance made harsher.[35] At the same time, there was a shift away from the
Job Compact element of the reciprocal obligation principle that is,
the guarantee of employment, subsidised work and training
programs. Some commentators were critical of the Coalition
Government s change on fundamental grounds. For Cowling and
Mitchell, in dropping the Job Compact, the Government signalled the
unacceptable abandonment of the goal of full employment in favour
of the lesser goal of full employability.[36] Other commentators, such as ACOSS,
were more pragmatic in their criticism of the Government s
approach. While ACOSS valued the Job Compact for its guarantee of
accountability from the Government in terms of employment
assistance for the most disadvantaged of job seekers, it
nevertheless considered the Job Compact too inflexible in its
application. This form of assistance, it maintained, was not
appropriate for all job seekers, and carried with it perverse
incentives for the provision of services to fulfil the guarantee
rather than consider the quality of these services, or their
relevance for job seekers.
Nevertheless, for ACOSS, the absence of a guarantee of
a minimum level of assistance undermined the legitimacy and
effectiveness of the system of mutual obligation, according to
which governments and job seekers have obligations towards each
other .[37] This
signals, for a number of commentators, the need for some
form of guarantee. However, some argue that such a guarantee is not
possible under the employment services contract arrangements.
Despite the fact that contracts concluded between the Government
and Job Network providers contain a series of clauses designed to
protect the rights and interests of the unemployed (including a
Code of Practice which sets minimum standards of service quality),
because remedies in either contract or consumer law are frequently
unavailable or entirely inappropriate, job seekers have become
entirely reliant on the Government s interest in and capacity to
adequately monitor and sanction breaches of contract.[38]
In announcing the move
towards a more flexible system for delivering employment assistance
during the 1996 97 Budget, the Government outlined its key overall
objectives for the Job Network. These were to:
- deliver a better quality of assistance to unemployed people,
leading to better and more sustainable outcomes
- target assistance on the basis of need and capacity to
benefit
- address the structural weaknesses and inefficiencies inherent
in previous arrangements for labour market assistance, and put into
effect the lessons learnt from international and Australian
experience of labour market assistance, and
- achieve better value for money.[39]
Implicit in the competitive tendering and contracting that
underpins the Job Network is the belief that costs can be reduced
or a better quality of service provided as a result of competition
(and the associated move from program- to outcome-based funding).
The extent to which the Job Network has been able to realise these
objectives has been the subject of some analysis and debate, which
will be considered in the next section.
A substantial number of evaluations of the Job Network have been
undertaken since its establishment, and some of these have played a
key role in the Job Network s development. These evaluations may be
broadly grouped into two categories: those attempts to evaluate the
effectiveness of the Job Network itself in terms of various
outcomes (this may be in both economic and non-economic
terms)[40], and
those that assess the Job Network in terms of the rationale and
necessary conditions that underpin the system.[41]
The remainder of the paper examines and draws on assessments
conducted under both of these categories. However, the focus is
primarily on the major reviews of the Job Network that have been
conducted on the Job Network s own terms; that is, as a supply-side
system that is primarily oriented to realising labour market
outcomes, chiefly measured through the number of people who leave
unemployment benefits. In particular, the paper concentrates on
those reviews that deal with the Job Network s most critical part:
its provision of services to job seekers through the customised
assistance category.[42] It is this aspect of the Job Network that is of most
relevance to the long-term unemployed, many of the new job seekers
created through the Welfare to Work reforms and to those
difficult-to-place job seekers that are left behind in times of
economic growth.
When the Job Network was established, the Government made a
commitment to undertake a comprehensive evaluation of the new
arrangements. This official evaluation was conducted by DEWR in
three stages, with the first two stages devoted to examining the
implementation and progress of the Job Network, including issues
raised and the preliminary experiences of key stakeholders. The
Stage One[43] and
Stage Two[44]
reports were released in February 2000 and February 2001,
respectively. The final stage of the Department of Employment,
Workplace Relations and Small Business[45] evaluation provided an assessment of
the effectiveness of the Job Network in improving the employment
prospects of job seekers on a sustainable basis. The Stage
Three[46] report
was released in May 2002.
DEWR also conducted a net impact study[47] of two Job Network services,
Intensive Assistance and Job Search Training, in the twelve months
to March 2000.[48]
More recently, DEWR completed a follow-up net impact study that
evaluated the Customised Assistance, Job Search Training, Work for
the Dole and Mutual Obligation programs.[49] Conducted as it was in February 2005,
this study provides some indication of the impacts of the changes
associated with the introduction of the Active Participation Model
in 2003.
Although not formally part of the Government s evaluation
strategy, DEWR undertook in 2001 a qualitative study of Intensive
Assistance services. This study sought to identify through a
comparison of high and lower performing Job Network members the
practices or processes that contribute to sustainable high
performance at particular sites. While the results of this study
are not necessarily representative of the practices and processes
that are used in all high or low performing Job Network sites, and
need to be treated with some caution as a result, they nevertheless
provide a useful indication of the characteristics that are likely
to be correlated with high performance (in terms of employment
outcomes) in Intensive Assistance.
The Government s Evaluation Strategy included the requirement
for an independent review of the policy framework underpinning the
Job Network, and this review was referred to the Productivity
Commission. The Productivity Commission analysed the arrangements
under the first two employment service contracts and assessed the
proposed new arrangements for the third contract released in May
2002. Its report[50] was released in June 2002. The Government subsequently
issued a response[51] to this report.
The Organisation for Economic Cooperation and Development (OECD)
conducted an analysis of the Job Network in the context of a
broader review of Australia s labour market policies and industrial
relations reforms. The Organisation s report was published in
2001.[52]
While there are a number of widely-recognised problems
associated with evaluating labour market outcomes achieved under
the Job Network,[53] it is generally agreed that, until the introduction of
the Active Participation Model, these outcomes were not
significantly different from those obtained under Working
Nation.[54] That
said, based on available data, the Job Network is substantially
more cost-effective overall than its predecessor Working
Nation programs.[55] It was reported in 2002 that while Labor s spending on
Working Nation averaged $3.7 billion a year, the Coalition
Government s spending on labour market programs averaged $1.3
billion (with the Job Network only accounting for $750 million of
this figure).[56]
For every person who found employment, it was estimated that the
Coalition Government had spent between $5000 and $6000, compared to
the figure of between $10000 and $16000 spent under Labor s Working
Nation programs.[57]
It should be noted that the figures provided above are based on
revised estimates of the net impacts of Job Network services. These
figures were updated in response to the OECD and Productivity
Commission studies which suggested that early Government
assessments of the cost effectiveness of the Job Network may not
have been as clear-cut as originally reported. The OECD and the
Productivity Commission identified methodological problems in the
way that DEWR s post-programming monitoring studies were designed,
which enhanced the average net impacts of assistance (such as those
detailed in the 2001 Job Network Net Impact Study see Appendix B).
In response to these problems, DEWR reassessed and reduced the
claimed net employment gains and cost effectiveness of the Job
Network.[58] While
the revised results were not as impressive as those first reported,
they were nevertheless in line with international
experience.[59]
In its latest net impact study, DEWR reports strong improvements
in employment and off-benefit impacts for each of the four Job
Network programs it evaluated, including Customised Assistance.
DEWR claims an estimated employment net impact for this program of
10.1 percentage points; that is, more Customised Assistance program
participants gained jobs than did comparison job seekers who made
up a non-participating control group.[60]
DEWR also claims strong off-benefit net impacts for Customised
Assistance participants. Customised Assistance program participants
were found to be more likely than were their otherwise comparable
control group counterparts to leave income support, and to do so
more often and more quickly. Off-benefit net impacts are said by
DEWR to increase over time, with impacts of 1.07, 4.49 and 6.30
percentage points at the 6, 12 and 20 month points since program
commencement.[61]
While DEWR claims strong off-benefit net impacts for most groups
of job seeker, it indicates that Customised Assistance was
particularly effective for job seekers with a disability (12.6
percentage point impact) and for those with a trade qualification
(13.5 percentage point impact).[62] It should be noted that such results are to be
expected: in the case of job seekers with a disability because of
the additional support and services provided for this group and,
for those with trade qualifications, because these people are
likely to be relatively employable in a labour market characterised
by widespread trade skills shortages. No mention is made of the
off-benefit net impacts of other, more disadvantaged, groups of job
seekers who participated in the Customised Assistance program.
Generally speaking, the improved results reported in the 2006
net impact study have undoubtedly been assisted by enhanced labour
market conditions. It should also be noted that the results do not
include those job seekers with increased obligations to look for
and accept part-time work from 1 July 2006 as a result of the
Welfare to Work reforms.
Perhaps the major concern expressed in early evaluations of the
Job Network was that the overall cost effectiveness of the system
may have been won at the expense of difficult-to-place job seekers
(and some smaller Job Network providers and their staff).[63]
A number of the above reports found that the Intensive
Assistance services provided by the Job Network under earlier
contracts did not appear to have been successful for the most
difficult cases. This was largely because, in many instances, more
difficult-to-place job seekers received little help while in the
Intensive Assistance phase.[64] This neglect pointed, in part, to problems
associated with the performance-linked payment structure of the Job
Network.
While the outcomes-based payment structure of the Job Network
was designed to increase the cost effectiveness of the system and
to promote assistance for difficult-to-place job seekers through
higher outcome payments for this group, in reality it also
introduced perverse incentives to park difficult job seekers in
Intensive Assistance.[65] These difficult job seekers were offered minimal or no
service by some Job Network providers, with the resources saved
then invested in those job seekers most likely to generate an
outcome payment. Because Job Network providers received an up-front
commencement payment irrespective of employment outcome, so long as
they did not spend too much on service provision for job seekers in
Intensive Assistance, their profitability would be assured.[66] Moreover, where
employment placements for job seekers were delayed for a sufficient
length of time, the outcomes payments for these job seekers
increased substantially.[67] With few conditions attached to the intensive phase of
assistance and little monitoring of this phase under the first two
employment services contracts[68], the perverse incentive was increased.[69] The higher payments
for positive outcomes also resulted in providers creaming the
system through dead weight loss, that is, the high proportion of
positive outcomes likely to have occurred even without
assistance.
According to a number of commentators, it was not only the
perverse incentives associated with the Job Network fees structure
that led to reduced services being made available for job seekers
in Intensive Assistance, but also the limited fees paid to
providers for these services. This was especially the case for more
difficult-to-place job seekers and long-term unemployed people. It
is generally recognised that achieving successful employment
outcomes for these people is very expensive.[70] Nevertheless, even at the highest
level of funding available under the first employment services
contract, payments for Intensive Assistance services were
insufficient to either improve the employment outcomes of
disadvantaged job seekers or to encourage providers to invest in
such assistance.[71]
Changes to the Job Network
Since the earliest and most substantive assessments of the Job
Network were conducted, the Coalition Government introduced
measures to alleviate negative incentive effects associated with
the system’s fees structure. In the second contract round, it
reduced the up-front fee paid to providers and, as noted earlier,
set the total fee for Intensive Assistance through competitive
tendering, subject to a minimum fixed by the Government.[72] The new payment
structure was calculated to encourage providers to furnish a
greater level of services and more expensive forms of assistance to
difficult-to-place job seekers. It was also intended to increase
incentives for Job Network providers to achieve higher placement
rates, rather than minimise costs.[73] In addition, minimum levels of
assistance were specified for Intensive Assistance contracts, and
monitoring arrangements enhanced (with plans able to be audited by
DEWR and a system to record contacts between providers and job
seekers established). The Government also introduced Declarations
of Intent and Intensive Assistance Support Plans under ESC2 to
encourage providers to raise their investment in services for
disadvantaged job seekers. The OECD welcomed all of these changes
in its report, and recommended that such efforts should
continue.[74]
And continue they did. In the move to the third employment
services contract in July 2003, the Coalition Government made
further changes to the Job Network structure to encourage providers
to raise their investment in services for disadvantaged job
seekers. In the face of evidence that providers bids for Intensive
Assistance services were generally close to the floor price[75], and at a level that
was insufficient to ensure proper employment assistance for the
most disadvantaged job seekers, the Government did away with price
competition for these services. Instead it instituted fixed service
fees that were weighted towards difficult-to-place job seekers. The
Government also introduced a Job Seeker Account (a quarantined pool
of funds for the purchase of services to assist job seekers in
Intensive Assistance, with unused funding to be returned to this
pool) and other tied-fee arrangements to help counter the lack of
incentives for providers to invest in disadvantaged job seekers
.[76] At the same
time, the Government established a Service Guarantee for job
seekers which was to define the nature and frequency of services to
be provided to them by their Job Network provider. These measures,
along with a range of prescribed points and types of service
intervention, formed the basis for what the Government termed the
Active Participation Model.[77]
ESC3
and the Active Participation Model
The introduction of the Active Participation Model was not just
about ensuring that job seekers were provided with adequate
employment assistance by Job Network providers. It was also an
exercise in tree-shaking , or a means of ensuring that job seekers
were in regular contact with a Job Network provider and actively
engaged in job search, mutual obligations or other authorised
activities.[78]
With the introduction of the Active Participation Model, the
Government required every eligible job seeker to attend an
interview with a Job Network provider and to provide employment
history and personal details for entry on the JobSearch data base,
the entry of which was not previously compulsory. Where job seekers
did not attend these interviews, they risked being breached[79], and either losing
their income support payments or having these reduced.[80]
This requirement posed a number of challenges for both the Job
Network and Centrelink, which was responsible for processing new
job seekers and booking or confirming interviews with Job Network
providers. When only one in three job seekers attended their
compulsory interviews, the then Minister for Employment Services,
Mal Brough, reportedly attributed this failure to the unemployed,
who, he claimed, either had jobs and were claiming income support
regardless, or who were simply refusing to meet their obligations
to find work.[81]
In response, welfare agencies and the Australian Democrats claimed
that the low attendance rates were a result of IT problems, with
access to DEWR s new computer system either not available for the
entry of job seekers details or unacceptably slow.[82]
In the wake of many job seekers failure to attend their
compulsory interviews, and in the context of a general shortfall in
Job Network business compared with Government predictions, the
Government increased its payments to Job Network providers by
around $30 million. However, the Government denied claims from some
commentators that this was a bail-out of the Job Network, arguing
that providers were simply being paid for the extra follow-up
services that they were required to undertake in contacting job
seekers who had not turned up for interviews.[83] Despite the increased funding
paid to Job Network providers, the National Employment Services
Association (NESA) indicated that many providers were struggling
financially, with the fee structure for all services, including
helping the long-term unemployed, inadequate.[84]
In early 2004, the Government introduced a pilot scheme under
which people on disability support pensions were encouraged to sign
up to the Job Network and to undertake training and job-search
programs, if necessary, preparatory to entering the
workforce.[85] Once
again, some commentators accused the Government of propping up
struggling Job Network providers, this time by using the scheme as
a means to expand the available pool of job seekers for providers
assisting disabled people.[86] While there are indications that this may, to an
extent, have been the case, there is also evidence to suggest that
the scheme was in line with the Government s general policy
thinking. The Government was seeking both to increase the
proportion of the population taking part in the labour market in
the face of an ageing workforce, and to reduce the amount spent on
social welfare.[87]
This was broadly in line with the recommendations of the OECD s Job
Strategy which emphasised, among other things, the strengthening of
active labour market policies and reinforcement of their
effectiveness.[88]
This orientation was reflected in the Welfare to Work reforms
that were introduced as part of the 2005 06 Budget. These reforms
involved jobseekers with a partial capacity for work, including
some of those who would previously have qualified for the
Disability Support Pension, Parenting Payment Partnered and
Parenting Payment Single, being required to look for and accept
part-time work of up to 15 hours a week, subject to certain
conditions. With the introduction of these reforms, Job Network
providers were, in the view of NESA, to be subjected to still
further financial burdens, as the Government reduced the funds
available to providers for assisting job seekers to find work.
In the light of improved labour market conditions , the
Coalition Government reduced funding for the Job Network by $457.4
million in 2005 over a four year period.[89] At the time, the then Treasurer,
Peter Costello justified the cuts on the grounds that in a buoyant
labour market with more jobs available than ever before you would
expect that the costs of getting people into work would be lower
rather than higher .[90] The cuts were to be offset to a degree by increased
funding for job seeker training and rehabilitation services for the
new cohort of job seekers. It should be noted, however, that these
increases were not to be implemented until 2006. In addition, much
of the increased funding was to accrue to service providers
contracted by Job Network providers, rather than to providers
themselves. The Government also adjusted the Job Seeker
Classification Instrument (JSCI) to account for relative
improvements in some labour-market regions while lifting the
threshold at which job seekers were classified as highly
disadvantaged.[91]
These changes effectively meant that fewer job seekers would be
classified as highly disadvantaged, resulting in a reduction in
average funding for Job Network providers.
Job Network providers were highly critical of the changes,
variously arguing that the Welfare to Work measures would
effectively increase the number of disadvantaged job seekers while
the changes to the Job Seeker Classification Instrument would
simultaneously reduce the number of job seekers that could qualify
for the necessary higher levels of employment assistance, and
reduce the funding available to providers for use in assisting
disadvantaged job seekers to overcome their barriers to
employment.[92]
Sheridan Dudley, the CEO of JOB Futures, the biggest network of
community-based employment agencies, condemned the Government s
decision to raise the JSCI threshold, arguing that the barriers
that determine whether or not a job seeker is disadvantaged relate
primarily to the individual s personal circumstances quite
independent of the labour market .[93] The Government s decision would, in
her view, simply deny these job seekers the additional assistance
necessary for them to ultimately gain employment.
The 2007 08 Budget included additional funding for a number of
measures that expanded assistance for disadvantaged job seekers.
Given that the measures were targeted primarily at those job
seekers with a partial capacity for work, they may be seen as
recognition of the barriers faced by, and an attempt to provide
additional assistance to, those new job seekers created through the
Welfare to Work changes. While the measures undoubtedly ensure
increased access to assistance for disadvantaged job seekers, on
the whole they involve modest increases in expenditure and do not
increase the funds for the providers contracted to furnish the
assistance. The increases covered some of the costs associated with
the new cohort of job seekers, but did not account for or address
existing funding problems and shortfalls. The 2007 08 Budget
measures did not include any changes to the fee structures for Job
Network providers.[94]
Generally speaking, the development of the Job Network between
contracts has been characterised by a move away from free market
conditions (flexibility, choice and competition) and towards
increased Government monitoring and regulation. With the imposition
of further rules and regulations on providers to deal with problems
encountered (chiefly parking and creaming ), the focus has shifted
from rewarding outcomes to specifying process.[95] This changed approach brings
with it a number of associated problems.
While increasing the number of prescribed services and enhancing
regulation to ensure their delivery helps to guarantee that
some services are actually provided to job seekers, this
also places additional administrative and compliance demands on
providers; many of whom are already stretched financially, and
dealing with greater numbers of difficult-to-place clients.[96] Moreover, as the
Productivity Commission noted in its final report, it is not clear
that higher levels of activity actually produce better outcomes for
job seekers.[97]
The increased regulation and tightly circumscribed provision of
services that characterise ESC3 and the Active Participation Model
leave little scope for innovation on the part of Job Network
providers. They limit the ability of providers to furnish the
tailored (and typically expensive) assistance that is required by
difficult-to-place job seekers, including many of those introduced
to the Job Network system under the Welfare to Work
reforms.[98] What
appears to be required by these disadvantaged job seekers is not
necessarily more services, but rather better quality
services, and the scope for any assistance provided to be adjusted
in line with their specific circumstances and needs.[99]
The Coalition Government did observe that beyond its prescribed
minimum contact requirements Job Network providers had flexibility
to tailor contacts and assistance to meet client needs, using Job
Seeker Account funds.[100] However, as noted above, given that the minimum
contact requirements are already demanding, and that various
commentators have observed that customised assistance services are
under funded[101], many providers are unlikely to be in a position to
tailor their services to meet the particular circumstances of job
seekers. This highlights another problem with the Job Network as it
is currently configured, and impediment to its capacity to meet the
needs of disadvantaged job seekers.
While competition within the Job
Network has resulted in some efficiency gains[102], a number of commentators has
noted that it is difficult to determine where and how these gains
have been achieved, because of the commercial-in-confidence
provisions that apply to Job Network provider operations.[103] Indeed, Nevile and
Nevile describe the mostly quantitative and net impact studies of
the Job Network (along with studies of labour market programs in
general) as being like a black box .[104] Where the focus of the system and
its evaluation is primarily on measurable employment outcomes, this
limits the identification and understanding of the methods and
approaches that have proven to be effective by policy makers and
other commentators.[105] And, under current purchasing and contracting
arrangements, where providers themselves identify methods and
approaches that work, there is little incentive for them to share
this information with other providers or to work collaboratively in
the best interests of job seekers.[106] It is, as a result, difficult under
current arrangements to actually improve at a wider level, services
in the areas where high quality assistance is most needed.
The Job Network has moved from a
purely outcomes-focused system to one in which increased attention
is paid to inputs. Nevertheless, this move has been confined to the
stipulation of process by Government, with little attention having
been paid to the identification and implementation of effective,
evidence-based inputs.
When considering the performance of the Job Network (and
especially its capacity to meet the needs of disadvantaged job
seekers), it is necessary to account for the role played by
not-for-profit providers in this system. Likewise, it is also
important to consider the potential negative impact of competition
on the not-for-profit sector and relations within this
sector.[107]
While many non-profit providers are increasingly operating like
private businesses[108], one commentator notes that they nevertheless remain
committed to the welfare of their clients and to providing the best
services they can .[109] (Arguably, not-for-profit providers commitment to
their clients welfare is evidenced, in part, by their higher
likelihood of achieving interim rather than final outcomes and
their lower breaching rates.[110]). This same commentator goes on to argue that
government takes this commitment for granted and is inclined to
exploit it .[111]
The problem with this situation, according to various observers, is
that it places not-for-profit providers in an invidious position.
As ethical organisations they are obliged to provide services to
their typically disadvantaged clients, even where they are not
necessarily in a financial position to do so, and unlikely in many
instances to realise an outcomes payment. But, in providing these
services, they are effectively masking the degree to which the Job
Network system is under funded.[112] Further, according to some more hard-nosed
critics, by providing a benign front for the Coalition Government s
unacceptable employment and welfare laws and policies, these
providers ultimately legitimated these laws and policies, and
compromised themselves and the not-for-profit sector in the
process.[113]
That many providers (and, in particular, those that assist the
most disadvantaged of job seekers) are struggling financially would
appear to be beyond doubt. Arguably, several recent incidences of
fraud on the part of some Job Network providers furnish further
evidence of this.
[114] The fact
that these fraudulent providers were primarily not-for-profit
organisations may provide an indication of just how badly some Job
Network providers are struggling. As mentioned earlier, the
Coalition Government significantly reduced its funding for the Job
Network in the 2005 06 Budget, reasoning that, in a buoyant labour
market, Job Network providers costs in gaining employment outcomes
for job seekers would be decreased. However, this rationale fails
to account for the fact that, in a buoyant labour market, those
unemployed job seekers with readily marketable skills tend to find
work quickly, leaving behind on income support the more
difficult-to-place job seekers with significant and/or multiple
barriers to employment.[115]
Earlier in the Job Network s development, Dockery and Stromback
observed that the Government may have initially been too zealous in
trying to generate cost savings [116], and it appears that, until it lost
office in November 2007, this may, to some extent, still have been
the case.[117]
It is generally agreed that many of the earlier problems
associated with the Job Network were a result of teething troubles
and an under developed market, rather than with fundamental flaws
in the system.[118] While noting that not all aspects of the Job Network
were working well and recommending various incremental reforms, the
Productivity Commission broadly endorsed the Job Network s
purchaser-provider model, with its focus on outcomes, competition
and choice, as being a suitable policy framework for the delivery
of active labour market programs .[119] Nevertheless, it should be noted
that this endorsement of the Job Network was conferred in the
context of rather different labour market conditions from those
that currently exist.
The Job Network market is clearly a difficult one to manage. Its
effective administration demands an understanding of the
motivations and actions of both Job Network providers and job
seekers so as to ensure the best use of incentives and resources to
achieve positive employment outcomes. It also demands an
institutional framework that is appropriate to meeting the needs
of, and achieving employment outcomes for, a heterogeneous job
seeker population and a changing labour market. To some extent
these objectives have been realised through adjustments and
modifications to the Job Network over recent years. Nevertheless,
there would appear to be room for further changes and improvements
in the light of experience and a changed economic and labour market
environment.[120]
Alternatively, more radical measures may be called for.
While some commentators may question just what the precise rate
of unemployment is[121] it is nevertheless generally agreed that unemployment
in Australia is at its lowest level in around 30 years. This,
combined with sustained strong economic growth and widespread
skilled workforce shortages, provides an opportunity to focus on
the needs of difficult-to-place job seekers and the long-term
unemployed, while potentially addressing simultaneously certain
workforce shortages. Arguably, this objective could be pursued in
one of two different institutional arrangements and policy
frameworks.
The first of these is relatively straightforward and would see
the retention of the Job Network with its employment-first focus
for work-ready job seekers. These job seekers would largely be
provided with job placement and job search training services. In
the case of more difficult-to-place job seekers, however, the Job
Network would serve simply as a referral service. These job seekers
would have their customised assistance needs almost entirely met by
service providers that are currently contracted by the Job Network,
such as Community Work Coordinators and Work for the Dole
providers. Funding and resources for Job Network providers and
other service providers would then be redistributed, commensurate
with these providers changed roles.
The second arrangement would involve the reconfiguration of the
Job Network, so as to better cater to the needs of
difficult-to-place job seekers and thus make the system more
relevant to current labour market conditions.
Addressing underlying barriers to employment while also meeting
skills in demand and tackling workforce shortages would appear to
demand a greater role for Community Work Coordinators and Work for
the Dole providers. This could entail their either being brought
within the Job Network itself, or being given a greater
collaborative role in providing services to job seekers. In either
case, funding for customised assistance services would need to be
increased.[122] A
possible means of achieving this without undermining the efficiency
of the competitive market could be the introduction of more interim
outcome payment categories for intensive phases of assistance. This
would be to take up the Productivity Commission s recommendation
that outcome payment categories should be introduced to take
account of the characteristics that underlie disadvantage, where
supported by sufficiently robust Job Seeker Classification
Instrument classifications.[123] Although these interim outcomes payments need
not necessarily be on the same level as those paid for employment
outcomes, they should nevertheless be sufficient to demonstrate the
importance of such outcomes in moving disadvantaged job seekers
towards quality, sustainable employment outcomes.
While this would certainly, as the Coalition Government noted,
add complexity to the system of outcome payments, perhaps a bigger
barrier to its introduction may be the strength of the commitment
to a final (employment) outcomes focus that underpins the Job
Network.[124] A
final outcomes focus is not necessarily a problem in and of
itself.[125] Most
commentators would appear to agree with the Productivity Commission
s recommendation that the Job Network should remain a primarily
jobs-oriented program .[126] However, it needs to be recognised that without
Government assistance and recognition for providers efforts to
provide less measurable forms of personal support, including access
to further education and training to meet current labour market
demands, alongside employment assistance, quality and sustainable
employment outcomes for disadvantaged people are not likely to be
achieved.[127]
This is especially so given the changing characteristics of the
general job seeker population. A focus on obtaining employment
outcomes that deals with barriers to employment only to the extent
necessary to ensure a job seeker s entry to the workforce
may lead in the short term to more jobs and higher
performing Job Network providers. Nevertheless, if the ultimate
objective is to achieve better and more sustainable employment
outcomes, and to ensure that job seekers do not end up becoming
long-term unemployed, then this points to the need for a changed
approach and one that recognises that some barriers to employment
are likely to be stubborn and ongoing.[128]
In the light of the Coalition Government s earlier experiences
with some Job Network providers parking difficult-to-place job
seekers in Intensive Assistance, the Government is likely to be
wary about allowing too much leeway for providers in their
provision of services to this group of job seekers. That said, it
needs be recognised that high performing providers appear to be
those who employ a wide range of interventions and tailor their
assistance to meet the particular circumstances and needs of job
seekers.[129]
This demands a large degree of employment consultant autonomy. One
means for facilitating this at an institutional level would be to
implement the Productivity Commission s recommendation that Job
Network providers should be able to propose to DEWR alternative
activity strategies for job seekers, where appropriate.[130] These strategies
could be developed in consultation and cooperation with job
seekers, who currently have little influence over the choice of
services they receive in customised assistance. Were this
flexibility to be combined with risk-based compliance monitoring of
providers, it is likely that the parking problem could be
addressed, and the Government s concerns allayed.
Additional funding for Job Network providers and the provision
of better quality services for more difficult-to-place job seekers
addresses only one side of the equation in improving Job Network
performance and outcomes. According to a number of commentators,
without demand-side interventions and, more specifically, the
creation of suitable jobs, there is a limit to what can be achieved
in the way of employment outcomes.[131]
In the current environment, such interventions could involve the
development of community enterprises, ventures in which business,
government and the community sector work together to tackle areas
of workforce shortage while providing supervised employment and
skills development in a workplace to assist disadvantaged job
seekers to become more competitive in the labour market.[132] Interventions such
as these would also meet many commentators requirement for
increased work experience opportunities for job seekers in
customised assistance, rather than just in the Work for the Dole
program.[133] The
need for such opportunities is particularly acute for many new
Welfare to Work job seekers. Another advantage of community
enterprise-like arrangements is that they could foster the
increased development of working relationships between Job Network
providers, employers, government and the community sector. Such
relationships would be conducive not only to improved employment
outcomes for program participants, but also for disadvantaged job
seekers more generally.[134]
The Job Network itself need not necessarily be past its use by
date, as suggested by recent headlines[135] but it may be time to reconfigure
it. There will always be a call for an employment services program
that can cater to the needs and requirements of a wide range of job
seekers and employers, and under different economic and labour
market conditions. And, given that the Job Network has been
substantially changed since its introduction, there is no reason to
suggest that it cannot be further adapted to meet current needs and
requirements. That said, for this reconfiguration and redefinition
to be achieved, a conceptual shift may first be required. It may be
the case that the Job Network can no longer be understood as a
system concerned first and foremost with employment outcomes, given
the changing nature of its clientele. Instead, the Job Network may
need to be thought about as an enabling system, not just for job
seekers but also for employers, tax payers and the nation as a
whole.
In the twelve months to March 2000, the Department of
Employment, Workplace Relations and Small Business conducted a net
impact study of Intensive Assistance (IA) and Job Search Training
(JST) services. The study assessed the proportion of job seekers
who had left benefit altogether (off-benefit) and compared the
off-benefit outcomes of a sample of IA and JST participants with
those of a matched group that had not been referred to, or
participated in the program in the previous six months. The study
then compared the off-benefit outcomes of a sample of IA and JST
referrals with matched comparison groups that had not been referred
to, or participated in the program in the previous six months.
While noting some caveats, the study concluded that:
Intensive Assistance:
- participants were substantially more likely to leave income
support than similar job seekers who had not recently participated
in the programme: the prospects of leaving income support were some
47 percent higher
- that is, IA off-benefit outcomes averaged over 31 per cent
compared with a little over 21 per cent for the control group,
yielding a net impact of 10 percentage points
- compared with the suite of previous labour market programs
operating in the mid 1990s (under Working Nation), in terms of
off-benefit net impacts (which averaged 10 per cent, although
individual programs varied widely)
- was relatively cost effective at around $22000 per net impact
outcome compared with a Working Nation average of $35100 for the
programs IA replaced, and
- was associated with a compliance effect (of around 3 percentage
points), through job seekers leaving benefits between referral and
commencement of the program
The
inclusion of impacts associated with compliance effects reduced the
cost per additional off-benefit outcome substantially to
$16500.
The
study also found that Job Search Training:
- participants were more likely to leave income support than
similar job seekers who had not recently participated in the
program: the prospects of leaving income support were some 13
percent higher. That is, JST off-benefit outcomes averaged just
under 27 per cent compared with under 24 per cent for the control
group, yielding a net impact of 3 percentage points
- was comparable to the Job Clubs program (4 percentage points)
operating in the mid 1990s (under Working Nation), in terms of
off-benefit net impacts
- was relatively cost effective at around $13 800 per net impact
outcome, compared to $16 500 for Job Clubs, and
- was associated with a very high compliance effect (around 10
percentage points), through job seekers leaving benefits between
referral to and commencement of the program
The inclusion of impacts associated with compliance effects
reduced the cost per additional off-benefit outcome to $1 400.
Acknowledgements
Thanks to Dr Tony Eardley, Social
Policy Research Centre, University of New South Wales; Darryl
McClimont, Work Solutions; and Parliamentary Library staff who
provided helpful comments on earlier drafts of this Research Paper.
The author remains responsible for any errors and omissions.
[54]. OECD, op. cit., p. 20. While noting that it was
necessary to be cautious in comparing labour market programs, the
Productivity Commission indicated that it was likely that Job
Network programs had only a very modest net impact on aggregate
employment, and that this finding was consistent with those for
previous Australian programs, overseas programs and realistic
expectations. Productivity Commission, op. cit., 5.1, 5.12.
[57]. Department of Employment and Workplace Relations, op.
cit., Report 1/2002, p. 4. See also T. O Loughlin, Help for
the jobless failing, studies find , Sydney Morning Herald,
20 September 2002.
[58]. T. Eardley, Non-economic perspectives on the Job
Network , Australian Journal of Labour Economics, 6:2,
2003, p. 322.