In the late 1990s, Australia privatised the system that helps the unemployed find work.
The idea was that by paying employment service providers for each person they placed into a job, the process would become more efficient.
Instead, a parasitic industry developed with around 40 privately run employment agencies earning millions in fees from the unemployed.
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These agencies participate in the federal government’s Jobactive program and receive fees for each jobseeker placed on their books, as well as incentive payments once people find work.
When a job seeker attends their “initial appointment”, the Jobactive provider receives between $266 and $377. For placing an unemployed worker in an approved activity for fifty hours per fortnight (such as Work for the Dole), the provider receives $350. Placing someone into as little as four weeks of paid work nets providers $400. It’s money for jam.
This privatised system has made several multi-millionaires, including Therese Rein – wife of former Prime Minister Kevin Rudd.
Job agency consultants have also admitted that they turn to “unethical” tactics to meet targets set by job providers, or risk being fired.
With this background in mind, UTS’ Martin Loosemore has penned an article ridiculing the privatised job agency system, claiming the “model of employment services, delivered by outsourced providers, seems to have mostly benefited the providers”:
This system was introduced in the late 1990s by the Howard government, which shut down the old Commonwealth Employment Service. Competition was meant to improve the efficiency and effectiveness of employment services. Since then, however, the evidence it has largely failed has accumulated.
In 2019 a Senate inquiry reported widespread perceptions the main outcomes were “generating income and employment within service providers”.
Job seekers have described their experience of service providers “going through the motions”. Those who have worked for providers have described a system that has turned unemployment into a profitable business.
Gaming the system seems to be all too common, with the most disadvantaged (stream C job seekers) being “parked” while service providers focus on the “cream” from stream A and B seekers, which pay less but are much easier to place…
What had improved were payments to providers — by an average of 38% for each 26-week employment outcome (from $27,800 to $38,400).
Close to a third (28%) of the providers had more than doubled their revenue. The number of job seekers being employed for 26 weeks, however, increased less than 8% (from about 7,595 a quarter to 8,171).
It is noteworthy that the CEO of the Council of Small Business Australia, Peter Strong, has called for the creation of a new Commonwealth Employment Service (CES). Strong claimed the privatised system was a failure and had created a few millionaires off the back of the unemployed, while delivering a scheme that is failing job seekers.
It’s the same old story: job seekers have been turned into commodities for private providers to exploit for maximum revenue.
Sadly, the Morrison Government extended the existing Jobactive contracts until 2022 while also expanding mutual obligations for the unemployed.
It clearly cares more about propping up the profits of privatised job agencies than actually delivering jobs and financial security to the unemployed.
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