5.1
The committee received evidence about the significant difficulties faced by income support recipients seeking employment. Organisations and individuals alike identified numerous barriers to employment faced by all job seekers who rely on income support payments.
5.2
This chapter examines the difficulties posed by the state of the labour market, at the time the committee was receiving evidence, including a lack of entry-level jobs, the changing nature of work, the increasing number of underemployed workers and the effects of long-term employment on an individual's prospects for getting a job.
5.3
The committee acknowledges that due to the COVID-19 pandemic, the state of national and global labour markets has changed dramatically. As a consequence, jobseekers will face a range of new and unprecedented barriers to employment which will need to be addressed in the coming months.
5.4
This chapter also explores how poverty is in itself a key barrier to employment.
5.5
Finally this chapter discusses the challenges associated with fulfilling mutual obligation requirements and the effectiveness of employment programs.
Labour market
5.6
The Australian Government has consistently put forward that the best form of welfare is a job. However, the committee received considerable evidence that finding and keeping a job that earns enough to no longer require income support in the labour market is made difficult by a range of factors including a lack of available positions, particularly at entry level, the changing nature of work, and the increasing casualisation of jobs in Australia.
5.7
As noted in Chapter 1, Australia's labour market was considered to be performing well, with an unemployment rate of 5.1 per cent. The multi-agency government submission noted that this rate had remained steady, under the 10-year average of 5.5 per cent.
5.8
However, growing rates of underemployment and increasing levels of long-term unemployment point to a labour market struggling to keep up with the growing working-age population of Australia.
5.9
The Youth Affairs Council of South Australia (YACSA) considered that the rhetoric that surrounds income support recipients is underpinned by the belief that Australia is enjoying a period of full employment. Yet, YACSA noted that the statistics 'paint a picture of an increasingly dismal employment market where thousands of people across the country are struggling to find appropriate and ongoing employment'.
The natural rate of unemployment
5.10
Full employment—or the natural rate of unemployment—in Australia is considered to be around 5 per cent unemployment. However, in the years following World War 2, the rate was much lower, at around 2 per cent.
5.11
This 5 per cent figure is based on a measure called the Non-Accelerating Inflation Rate of Unemployment (NAIRU), which is used by the Reserve Bank of Australia (RBA) to control inflation. In practice, if the unemployment rate in Australia falls below the NAIRU, the RBA will increase interest rates in order to bring the unemployment rate back up to the estimates NAIRU.
5.12
Recently the targeted rate of unemployment has been around 5 per cent. However, the RBA Governor Philip Lowe, has indicated that, in his opinion, 'the Australian economy can support an unemployment rate of below 5 per cent without raising inflation concerns'.
5.13
The Australia Institute considered that the effect of targeting a 5 per cent full employment rate of unemployment was limiting the capacity of the Australian labour market.
5.14
The Centre of Full Employment and Equity (COFEE) agreed, noting that the economics and social costs of failing to achieve and maintain full employment are considerable.
5.15
Per Capita considered that since the Australian government was targeting a lower rate of employment than it had previously, Australia has continued to have more unemployed workers than available jobs, and noted:
The reality is that the unemployment rate is driven by the demand for labour, not by the behaviour of the unemployed.
5.16
The Australia Institute proposed that the government should target a full employment policy, noting that the current cost of Newstart payments is reflective of maintaining an unemployment rate of 5 per cent.
5.17
The Brotherhood of Saint Laurence (BSL) reasoned that accountability in the social security was incumbent not only on the recipients of income support payments, but that the obligations of government should also be recognised. BSL held that:
If work is held to be the best form of welfare, government must ensure that decent, sustainable jobs exist.
5.18
Other submitters proposed the implementation of a Job Guarantee, which is discussed later in this chapter.
Job creation projections
5.19
As noted in the multi-agency government submission, the government has outlined a focus on creating job opportunities and improving services that help people get and keep a job.
5.20
The government has committed to the creation of 1.25 million jobs over 5 years from 2019–20. Treasury advised the committee that in 2019, the government created 262,000 new jobs and noted that approximately 50 per cent of these were full-time positions.
5.21
Submitters agreed that job creation was an important element in the reduction of income support dependency, however, pointed out that although job creation in Australia appeared to be strong, it is, in essence, only keeping up with population growth and labour force participation.
5.22
COFEE noted 'that the quality of work offered has deteriorated with 48 per cent of the net change in employment being part-time (as at September 2018)'.
5.23
COFEE argued that the creation of 1.25 million jobs was not a justifiable reason not to increase unemployment benefits given that such an increase would not significantly reduce the unemployment pool because the rate of spending growth in the economy was too low. COFEE considered that '[e]ven if the pledge is achieved, thousands of workers will endure a life in increasing poverty and hopelessness.
Lack of jobs
5.24
A number of participants in the inquiry pointed to the tight labour market as a key difficulty faced by job seekers in finding employment. Throughout its inquiry, the committee consistently received evidence from organisations and individuals about the high level of competition for jobs; hearing that for every available position, there were between 15 and 19 applicants.
5.25
According to the Australian Unemployed Workers Union (AUWU), based on data collected from the Australian Bureau of Statistics (ABS) and the Department of Employment, as at December 2018, the ratio of job seekers to job vacancies in Australia was one job to 15.57 job seekers.
5.26
The Australian Council of Social Service (ACOSS) and Jobs Australia's study ‘Faces of Unemployment’ showed that in March 2019 there were 'eight people unemployed or under-employed for every vacancy, and when job-changers are added in there is an average of 19 applicants for every job'.
5.27
Private individuals noted the high ratio of job seekers to available jobs as a significant barrier to employment.
5.28
For example, Dr Stephen Lake, an unemployed job seeker, commented that 'on average, there are 17 applicants for every job, which means that 16 applicants will not get the job'. Dr Lake also pointed to anecdotal evidence that for some jobs there have been as many as 800 applicants.
Geographical disparity
5.29
Uniting Communities noted that the ratio of jobseekers per job is starkly increased in regional and remote areas. Per Capita also noted that certain regions of Australia, particularly in areas affected by the loss of jobs in manufacturing due to technological change, are experiencing high levels of long term unemployment.
5.30
For example, in Elizabeth, South Australia the ratio of jobseekers to available positions is significantly higher than the national average.
5.31
Ms Anne Bainbridge, Chief Executive Officer of the Youth Affairs Council of South Australian Inc. specified that 'the total number of unemployed people in South Australia is 59,400, and they are vying for 11,500 job vacancies'.
5.32
Claire, an unemployed worker from Geelong, considered that the labour market was difficult for anyone to move in, including those already in employment noting that her agency case worker was also experiencing difficulty in finding a job:
She [my agency case worker] even said to me, ‘there are no jobs out there. I’m looking for another job and I can’t get one’, and she’s looking at the same jobs as what I was, probably the same level.
5.33
Barriers to employment faced by jobseekers in remote, rural and regional areas of Australia will be further discussed in chapter 6.
Lack of entry-level jobs
5.34
The committee consistently received evidence about the lack of entry level positions for job seekers. Anglicare's Jobs Availability Snapshot 2019 found that entry-level jobs made up just 10 per cent of all vacancies across the country. Reverend Professor Peter Sandeman, Chief Executive Officer of Anglicare SA noted that the number of jobs that unskilled, inexperienced people can access is 'dropping each time we look at it'.
5.35
Ms Ruth Bretherton, who has been receiving Newstart Allowance since 2015, commented 'that there [are] simply not enough jobs to go around for everyone, especially the entry-level jobs like manufacturing, warehousing and retail roles'.
5.36
In South Australia the ratio of entry-level jobseekers competing for each suitable job is nine to one; which is almost double the national figure of 5.5. Mr Alex North from the AUWU noted that the situation in Elizabeth was particularly dire:
As we are living in a changing economy, especially here in Elizabeth where manufacturing has disappeared, you need to have some sort of unskilled or low-entry jobs available for these people and we don't have those, so we need some kind of government commitment to create those sorts of jobs.
5.37
Mr Brenton Thomas, a long-term unemployed individual, also made the point that some job search programs tended to 'push people into the least skilled work available' which he believed had caused a 'clogging up [of] labour markets particularly in entry level positions'.
Changing nature of work
5.38
Participants in the inquiry considered that the changing nature of work, due to globalisation and technological advancement, in Australia would play an important role in determining the number and type of jobs available in the future. In particular, Orygen noted:
In Australia, the impact of technological innovations on the labour market and employment outcomes are significant. Recent analysis indicates that around 44 per cent of current Australian jobs are at high-risk of being affected by automation and technology over the next 20 years.
5.39
SDA National noted that increased automation would lead to a shift away from employment in primary production and manufacturing towards a more service-based labour market; pointing to research which showed that the OECD predicted that 14 per cent of jobs may be ‘completely automated’ and thirty-two per cent will 'change significantly’.
5.40
Orygen considered that the demand in more advanced skillsets would increase as new innovative and technical jobs are created and employers require more specialised workers, noting that 75 per cent of the fastest-growing occupations will require STEM skills and training.
5.41
The University of Sydney noted that positions that require high level educational qualifications had seen the highest employment growth over the last 30 years. Orygen also noted the correlation between education and employment prospects:
Australians who do not hold post-school qualifications experience significantly higher unemployment and lower labour force participation rates when compared to their tertiary educated counterparts.
Precarious employment
5.42
Casualisation of the workforce and increasingly precarious employment conditions have created unpredictable and inconsistent incomes for many workers.
5.43
COFEE considered that individuals looking for work in the current labour market face a life of uncertainty:
Many do not know for sure what hours they will work in a week or the pay they will receive, which makes planning and risk management impossible. They also face being sacked without notice and are typically the first to go in an economic downturn.
Casualisation of jobs
5.44
According to the ABS, the principal indicator for casual employment is whether an employee is entitled to paid leave, such as paid sick leave or paid annual leave. These entitlements are usually reserved for non-casual or permanent employment.
5.45
Per Capita noted that casualisation of a workforce provides two distinct advantages to employers: it transfers risk from downturns in business from the employer to the employee and it reduces the bargaining power of workers.
5.46
To compensate for the greater insecurity experienced by casual workers, their wages are subject to a casual loading of 25 per cent. However, Per Capita pointed out that casual employees in Australia are not being adequately compensated for sacrificing paid leave entitlements. Further, COFEE noted:
Workers in some of Australia’s lowest paid professions, including sales assistants, hospitality workers, personal carers, cleaners, laundry workers, food preparation assistants, and some labourers, received casual loading of 5 per cent or less. Office clerks, packers, and sports and fitness workers were actually paid less than permanent workers, receiving no casual loading at all. These occupations account for more than half of all adult casual employees.
5.47
In its submission to the inquiry, COFEE drew on ABS data from August 2018 which showed that 25 per cent of employees were not entitled to paid leave; and of those who work part-time in their main job, 53 per cent were not entitled to paid leave. COFEE further noted that, of these workers:
24 per cent have earnings that vary from one period to the next (excluding overtime payments) (2.5 million);
21 per cent do not usually work the same number of hours each week (2.2 million); and
19 per cent do not have a guaranteed minimum number of hours each week (2.0 million).
5.48
The Business Council of Australia (BCA) noted that currently around 20 per cent of working Australians are casual workers; and that this level of casualisation in Australia has remained at the same approximate rate since the mid-1990s.
5.49
However, the National Foundation for Australian Women (NFAW) considered that casual employment had grown; pointing to a paper compiled by the Australia Institute which indicated that among people moving into work that have been unemployed or out of the workforce for 12 months, almost half have taken casual jobs.
5.50
Some private individuals who have or are currently receiving Newstart also considered that casualisation of the workforce was creating a more insecure labour market.
5.51
The committee received evidence that recipients of income support payments, particularly of Newstart, faced significant difficulties in obtaining work that was not casual. In particular, Mr Tom Thorp, a long-term unemployed job seeker, noted in his submission that there are fewer full-time jobs available; most of the jobs currently advertised are temporary, casualised or contract based.
5.52
Mr Chris Twomey from WACOSS proposed that the current rates of income support payments, particularly Newstart, are not sufficient in the context of an increasingly casualised workforce.
5.53
NFAW agreed, and pointed to the Household, Income and Labour Dynamics in Australia (HILDA) Survey which noted that almost a third of casual workers in Australia are earning less than the minimum wage.
Gig economy
5.54
The gig economy is a non-traditional labour market based on flexible, temporary, or freelance jobs, often involving connecting with clients or customers through an online platform. Workers in the gig economy are not covered by the Fair Work Act.
5.55
The Brotherhood of Saint Laurence noted that an increasing number of workers who work in the gig economy are working uncertain hours and without protections such as sick leave and annual leave.
5.56
BCA noted that despite general commentary of the rise of the gig economy it remains a very small share of the labour market; and pointed to a study by Queensland University of Technology, Adelaide University and University of Technology Sydney which found that around 7 per cent of respondents were currently working via a digital platform, or had done so over the past year.
5.57
Per Capita noted that while the overall number of people engaged in the gig economy is low, such non-standard forms of work are a challenge to traditional forms of labour market regulation and Australia’s regulatory system is so far failing to keep pace with the growth of platform work.
5.58
Along with the gig economy, workers in the traditional labour market in Australia are also facing increased job insecurity. Per Capita explained:
A large part of the reason for the increasing insecurity of work in Australia is the loss of bargaining power for workers, due to declining union coverage, and successive attacks on workplace rights by governments since the 1990s.
Underemployment
5.59
As noted previously, underemployment in Australia is currently sitting at 8.4 per cent, which represents over 1 million people looking for more work than they currently have. Data shows that approximately one in five Newstart recipients does have a job, but they do not receive either enough hours or income to enable them to move off Newstart.
5.60
Jobs Australia considered that the underemployment figure has trended upward and may be concealing limp market conditions.
Underemployed and on Newstart
5.61
Jobs Australia also suggested that an increasing cohort of the underemployed exist within the margins of the workforce:
[They are] working episodically when opportunities arise, often with limited protections and largely relying on the inadequate safety net. The nation of the ‘working poor’ is a reality for many Australians, who face daily decisions on accessing of vital amenities, with trickle down poverty creating intergenerational disadvantage.
5.62
Uniting Communities noted that underemployment is the lived experience of many of its members who receive Newstart or associated payments and stated:
Only 60 per cent of the Australian workforce is in full or part-time ongoing employment. The rest – around four million workers – are engaged either as casuals, on short-term contracts, in labour hire, or as 'independent' contractors. Unemployment benefits and associated payments were introduced to deal with temporary vulnerability.
5.63
Uniting Communities pointed out that despite the intention that working-age income support payments for jobseekers were to be temporary, that this is not the reality they experience; noting that a new solution to the challenge of a population experiencing ongoing unemployment or underemployment is needed.
5.64
Currently, an individual can earn up to $52 per week before his/her Newstart Allowances is impacted. An individual will no longer be eligible for Newstart if they earn over $1,075.34 per fortnight.
5.65
Some income support recipients described the difficulty of being simultaneously employed and on Newstart payments. For example, Ms Ellen Kronen, a Newstart recipient, commented:
Just because you managed to get one or two days work a week does not mean you can support yourself and your family with less assistance.
5.66
Kay, who appeared in a private capacity, gave evidence to the committee that as an underemployed person, she was unable to secure enough pay or hours of work to no longer require Newstart, and that this had locked her into a holding pattern of simply surviving.
Increasing the income earning threshold
5.67
Ms Terese Edwards from Australian Women Against Violence Alliance, noted that the earning threshold for Newstart recipients is not consistent with other income support payments, for example, on parenting payment single, a recipient can earn up to $118 per week before his/her payment is reduced.
5.68
A number of organisations considered that, given the number of people simultaneously in some form of employment, but also receiving Newstart, that the earning threshold should be increased.
5.69
Good Shepherd Australia New Zealand suggested that increasing the minimum threshold of earned income for recipients of Newstart would enable newly employed people to receive a reward for work effort and achieve a degree of financial security.
Long-term unemployment
5.70
As noted in Chapter 1, long-term unemployment is currently defined as unemployment of more than 52 weeks duration. Between 2009 and 2016, the rate of long-term unemployment in Australia increased from 0.7 per cent to 1.35 per cent.
5.71
Although Newstart is often referred to as a short term payment; according to data from the Department of Social Services, the average payment duration for an individual on Newstart is 162 weeks, or over 3 years.
5.72
Youth Allowance (jobseeker) recipients are also on the payment for an extended period, with the average payment duration sitting at 70 weeks, or approximately 1 year and 3 months.
5.73
Jobs Australia considered that long-term unemployment perpetuates intergenerational disadvantage, with a greater portion of jobseekers trapped in this poverty cycle year on year since 2009, when 1 in 7 jobseekers were classified as long term unemployed. In 2018, 1 in 4 jobseekers experienced long-term unemployment.
5.74
COFEE noted that the unemployment benefit was never designed to support people for long durations; and argued that the level of support now needs to be increased to reflect the changing nature of Australia’s labour market.
5.75
Some private individuals gave evidence to the committee about their experiences of long-term unemployment. For example, Alyx who appeared in a private capacity, told the committee she had been on Newstart for over 10 years, with short bursts of employment no longer than three months at a time. Alyx described being told she was overqualified for most positions she applied for, and yet struggled to find suitable employment.
5.76
ACOSS noted that the chances of securing employment within the first 12 months for people on Newstart and Youth Allowance decline progressively from 55 per cent within the first three months of unemployment to 30 per cent after 12 months and just 8 per cent after 5 years’ unemployment. ACOSS explained:
Once a person is unemployed long-term, their confidence and skills diminish, their health can deteriorate, and employers are less likely to take them on due to the gap in their resume.
Poverty
5.77
As discussed in Chapter 2, over 13 per cent of Australians are living below the poverty line and one in six children are going to bed hungry each night. Further to this, 54.6 per cent of Newstart recipients and 63.7 per cent of Youth Allowance recipients live in poverty.
5.78
The committee received evidence about poverty as a significant barrier to employment. Recipients of Newstart and Youth Allowance (jobseeker) described not having enough money to be able live day-to-day life, let alone to undertake a job search.
5.79
Jobs Australia explained that although many people do transition to employment from Newstart, a large cohort find the limitations in financial support prohibitive in sourcing a suitable job.
5.80
For example, Ms Julie Farrington, a current income support recipient, explained her reality to the committee:
All I struggle to do is try to meet my mutual obligations with my [job service provider] and Centrelink. While I am starving and struggling to find work and to survive.
5.81
Ms Amanda Sieders, a Newstart recipient considered that the low level of income support acts as a serious barrier to employment as it does not allow people to maintain an acceptable standard of living in line with community expectations and fulfilling their job search activities or furthering education or skills.
5.82
SDA National agreed, proposing that jobseekers need payments set at a level that enables them to get a job:
To get a job, one needs a roof over their head, clothes on their back, food in their mouths and to be able to get to and from interviews and jobs. As costs of living rise, so too should the quantum of payments for jobseekers.
Cost of a job search
5.83
Seeking employment is not a cost neutral exercise. Jobs Australia explained that the activities that are part of any job search each 'generate costs which can take from necessary amenities'.
5.84
The committee heard that Newstart and Youth Allowance (jobseeker) recipients were unable to afford the costs related to undertaking a job search, specifically, to maintain proper hygiene or dress appropriately, to afford the cost of transport when seeking employment or to pay for phone and internet access.
Clothing and hygiene
5.85
Inability to afford new clothes was cited by a number of organisations as well as by Newstart recipients as a barrier to finding employment. For example, Ms Kate Wheller, Executive Officer of Community Information & Support Victoria (CISVic) commented that her organisation regularly provides op-shop vouchers for job seekers to get clothes so that they can be presentable at a job interview.
5.86
Mr Pas Forgione, Raise the Rate Campaign Coordinator at ACOSS, noted that over 60 per cent of respondents to a survey of Newstart recipients said they could only afford to buy second hand clothes.
5.87
Jenny, a current Newstart recipient, described her situation:
I own very few of the clothes I wear. I have a few friends who kindly give me theirs. I like their clothes, but they're not the clothes I would pick for myself.
In the last 18 months I have applied for over 400 jobs. Fifty interviews, no outcome.
Cost of transport
5.88
The Salvation Army's 2018 Economic and Social Impact Survey found that 28 per cent of job seekers say that the high cost of transport and/or lack of availability of public transport is one of the main barriers for finding employment.
5.89
The committee received evidence that owning and maintaining a vehicle on Newstart was nearly impossible; and that, for some, even public transport was out of reach. For example, Mark, a Newstart recipient from Sydney, explained to the committee that after paying his rent of $680 per fortnight, he was left with only $15 per fortnight which was not sufficient to pay for public transport.
5.90
Ms Wheller from CISVic advised the committee that the organisation frequently receives requests for travel cards for people to get to job interviews.
Remote, rural and regional areas
5.91
The committee heard that although living in regional areas might be cheaper in some ways, the costs of transport can be high. Ms Kasy Chambers from Anglicare Australia commented that this makes accessing government and other services more difficult.
5.92
In particular, Ms Julie Farrington noted that in a regional area, owning a car is important given that public transport is not as efficient as it is in big cities. Ms Farrington also noted that she was unable to pay for public transport to attend interviews as she did not have enough money left over after paying for other expenses including her mortgage, house insurance and rates.
Digital access
5.93
As previously discussed in Chapter 2, the committee heard that digital access also constituted a significant barrier to employment for some income support recipients searching for a job.
5.94
The National Employment Services Association (NESA) commented that 'job seekers increasingly require mobile phones and access to online services to job search effectively and meet requirements'; noting that:
Completing self-management and reporting of Job Plan activities, undertaking job search, applying for vacancies (which are increasingly published online) and receiving responses from employers and notices from DHS and their employment services provider requires investment in phones and data plans.
5.95
In his submission to the committee, Mr Colin Leonard, an income support recipient, commented that the only thing he had not cut costs on was his internet as it connects his phone which he needs to look for work.
5.96
As mentioned in Chapter 2, Dr Simone Casey from the AUWU proposed the introduction of a digital supplement to assist jobseekers on income support payments to effectively search for a job.
5.97
Finally, Jobs Australia contended that the cost of job seeking for many income support recipients may be detrimental to their wellbeing, and suggested:
When coupled with various indicators of disadvantage, such as mental health concerns, housing stress and pre-existing debt, the strain can be overwhelming creating circumstances where obtaining a job is not a viable option.
Mutual obligation requirements and employment programs
5.98
As noted in Chapter 1, Newstart and Youth Allowance (jobseeker) recipients must fulfil certain requirements in order to continue receiving their income support payment.
5.99
Recipients must report their income every two weeks. The rate of payment they receive each fortnight is linked to the amount of income reported.
5.100
To retain their payments, recipients must also satisfy an activity test by seeking work or participating in an activity designed to improve their employment prospects (such as a training course).
5.101
The avenues through which people are required to do this vary according to their circumstances. The majority of recipients will be required to create a Job Plan that can be agreed directly with Services Australia, or through an employment services provider. Specialist employment services are available for some people with disability or a partial capacity to work—called Disability Employment Services—and job seekers in remote Australia are subject to the Community Development Program (CDP).
5.102
The requirements established in an individual's job plan, also vary according to the person's age and assessed capacity to work. Job seekers aged 22 to 49 years with no assessed limitations on their capacity to work are required to undertake regular job search, attend appointments with their employment service provider, and complete an Annual Activity Requirement (Work for the Dole) of 50 hours per fortnight after they have been in jobactive for 12 months.
5.103
Newstart recipients 55 years or older can meet their mutual obligation requirements by undertaking 30 hours a week of one or a combination of suitable paid work, self-employment, or approved voluntary work.
5.104
If an individual does not meet their mutual obligation requirements (in part or in full), or does not report their income, their payments may be delayed, reduced, or stopped. This is implemented through the Targeted Compliance Framework which establishes demerit points and financial penalties for failures to meet requirements.
5.105
The committee received evidence that the mutual obligation requirements system for job seekers was highly complex and difficult to navigate; and pointed to the system itself as a significant barrier to work.
5.106
Dr Simone Casey stated:
There are so many criticisms you could level at the employment services system that it's difficult to know where to start.
Meeting mutual obligation requirements
5.107
Mutual obligations agreed to in a Job Plan can include income support recipients being required to attend regular appointments with their jobactive service, apply for a minimum number of jobs each month, attend job interviews, and attend education or training courses.
5.108
Submitters considered that the mutual obligations required of job seekers were inappropriate and ineffective.
5.109
In undertaking a job search, many job seekers are required to apply for 20 jobs each month.
5.110
Brenton, a previous Newstart recipient, considered that the requirement of having to apply for 20 jobs per month was not an effective job seeking method and further considered that the circumstances he had to do it in were oppressive:
I spent years of my life being forced to do my job search from the premise of a job search agency. It's not just the 20 jobs a month; it's having to do it under supervision during fixed hours.
5.111
Mr Clive Seiffert, a 63 year old job seeker on Newstart, believed that the assumptions that underpin Newstart are outdated and no longer reflect the current situation, commenting that 'in metropolitan areas asking clients to apply for 20 jobs per month is unrealistic and futile'. Mr Seiffert noted that previously, 'if you were willing and able to work you could get work after a few weeks or months'.
5.112
In his submission to the inquiry, Mr Brenton Thomas, a Newstart recipient, noted that the Social Security (Administration) (Job Search Efforts) Determination 2018 indicates that the number of job applications required to be lodged is not specified, rather participants must undertake an 'adequate' search. The adequacy of this search is determined by the Secretary.
5.113
Dr Arthur Chesterfield-Evans, a medical doctor and retired member of the New South Wales legislative council considered that:
Those who chronically cannot find work remain on Newstart and the demeaning effect of continually applying for jobs that do not exist must demoralise even the most resourceful person.
5.114
Submitters proposed that the job search requirements for Newstart and Youth Allowance recipients should be reviewed. For example, the Science Party pointed out that 'mandating a minimum number of (inappropriately-named) ‘job searches’ per month burdens local small businesses, particularly in areas where work is most insufficient'.
5.115
Dr Simone Casey from the AUWU proposed that the policy that sits behind [mutual] obligation 'needs a rethink'; in particular, the number of hours that people are required to do in Work for the Dole and other activities, and the nature of those activities.
5.116
ACOSS proposed that default job search requirements for people with barriers to employment should be lower. In particular, for people in regions with high unemployment, parents, people with disabilities and older people. The particular barriers to employment faced by these groups are discussed in Chapter 6.
Compliance
5.117
The Australian Government considers that 'a necessary feature of compulsory participation requirements is a system of consequences for non-compliance'.
5.118
Most jobseekers with mutual obligation requirements are subject to the Targeted Compliance Framework (TCF) which penalises jobseekers, by suspending or stopping payments, for failing to meet their obligations:
If a job seeker accrues five demerit in six months they enter the Penalty Zone, where subsequent failures result in strong penalties:
One week's payment for a first failure,
Two week's payment for a second failure, and
Payment cancellation for four weeks for a third failure.
5.119
Since the introduction of the TCF in July 2018, managing compliance has become the responsibility of job service providers. This role includes applying demerits for any failures to meet the mutual obligations set out in the participant's Job Plan.
5.120
People With Disability Australia (PWDA) considered that jobactive staff spend a disproportionate amount of time on compliance with only 10.3 per cent of jobactive staff time is spent working with employers, with more than a third of their time (34.6 per cent) being spent on compliance measures. PWDA considered that this does not align with what the community expects jobactive to do.
5.121
Dr Casey from the AUWU noted that the automatic payment suspensions that occur 'when people haven't really done anything wrong' were a significant problem.
5.122
Ms Amanda Sieders, a jobseeker, noted that she has consistently met the requirements in her job plan, however, considered that the constant monitoring she experienced as an unemployed jobseeker was 'a waste of time and taxpayer money on top of the inconvenience to myself, my employer and my provider'.
5.123
Jesuit Social Services considered that the government's 'focus on compliance and meeting narrowly prescribed outcomes is failing disadvantaged people looking to secure work'.
5.124
Numerous participants in the inquiry considered that, along with the mutual obligation requirements, the compliance measures should be urgently reviewed.
5.125
Matters relating to the compliance within the CDP are discussed in Chapter 6.
Employment services providers
5.126
Employment services are designed to assist job seekers to find work and to address their employment barriers. The Business Council of Australia (BCA) agreed that employment services play a crucial role in assisting job seekers find steady work.
5.127
However, the majority of participants in the inquiry considered that employment service providers constituted a barrier to employment, rather than an aid; pointing to their overall lack of effectiveness in finding employment for job seekers, the lack of specialised staff, and a lack of appropriately directed funding.
Effectiveness
5.128
BCA noted that, in 2017–18, almost 50 per cent of job seekers were in work three months after participating in jobactive. However, the majority of submitters to the inquiry, including BCA, considered that employment service providers were not meeting the requirements of job seekers, particularly those with multiple barriers to employment.
5.129
Diversity ACT Community Services provided a number of examples of 'disastrous experiences'. Some of these included allocating inappropriate jobs to people and individuals being penalised for circumstances beyond their control.
5.130
Ms Amanda Sieders, a Newstart recipient, considered that her jobactive provider does not adequately support her or those experiencing insecure employment, inconsistent employment and precarious hours in the workforce. She explained:
If I were to raise my current workplace issue with them, that my employer is advertising for a new person for our team in spite of every one of us agreeing that we are happy with the current level of hours we have on future rosters, they would not intervene on my behalf, but contact my employer to put forward candidates.
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Sacred Heart Mission submitted that employment services do not support jobseekers effectively, stating that they are 'demeaning, and our clients have reported experiencing discrimination by employment services'.
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BCA proposed that improving the effectiveness of jobactive will 'help to address individual barriers to work, improve job seekers’ employability and directly facilitate job opportunities for recipients of Newstart'. BCA considered that:
It is particularly important to strengthen the quality and effectiveness of employment services for the most disadvantaged job seekers, for example, through highly specialised case management and recognition that a job might be the ultimate goal of service provision, but is not the first step.
Staffing
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According to a study undertaken by the University of Melbourne, jobactive providers are not required to have specialised skills, training or accreditation to work with vulnerable people. An assessment of frontline staff found that nearly 37 per cent held a TAFE or vocational certificate as their highest qualification, while only 20 per cent held an undergraduate degree. Nearly a quarter indicated their highest qualification was a Year 12 or below. Slightly over half (56 per cent) indicated they had received formal in-house training.
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Some participants in jobactive felt that jobactive providers and the activities they require participants to undertake do not involve skills training to improve or enhance their job prospects.
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Mr Alex North from the AUWU also noted a study which highlighted the very large caseloads that job service provider staff are required to manage, explaining:
They're higher than doctors' caseloads. The average caseload, from memory, is about 155 people, which is crazy. It's impossible to maintain personal relationships, with that many people.
5.136
Noting that jobactive providers are responsible for enforcing participants' compliance with mutual obligation requirements, Per Capita considered that the structure of the contracted service between government and private providers is 'skewed towards incentivising job services staff to prioritise compliance measures over genuine assistance to job seekers'. Per Capita considered that 'the sole focus within employment service agencies should be on job placement'.
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Mr Jim Morris, who has lived experience of trying to find employment through a job service provider, agreed, noting that:
For the job agencies' part, just to be viable, they have to fill in daily forms (“dotting i's and crossing t's”) to the cost of inadequate service and follow-up. They haven't the time to sufficiently match jobseekers with vacancies, and if vacancies appropriate for the jobseeker aren't sufficiently available, jobseekers have to waste their own and business people's time applying for whatever is out there to meet their quotas.
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Some submitters also described a disconnect between the participant's understanding and the jobactive staff member's understanding of the mutual obligation requirements that fit their personal circumstances.
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For example, Mr Alex North from the AUWU gave evidence to the committee that he was once asked to participate in a PaTH (Prepare Trial Hire) course even though it intervened with the paid work he was undertaking. Neither he nor the jobactive staff member appeared to be aware that this was not suitable for his circumstances.
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Mr North emphasised that 'what's happened to me has happened to thousands of other members across Australia. It's so common'.
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Brenton, a Newstart recipient who appeared at a public hearing in Sydney, pointed out that the legislation indicates that the needs and circumstances of participants must be taken into account. His own experience, however, had been that jobactive staff had a different interpretation of the legislation.
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Per Capita is of the view that more targeted assistance to participants would result in more people being able to move off unemployment benefits and into paid work, and reduce the rate of long-term unemployment, or short-term, insecure work that ultimately sees people back in the system too quickly.
Funding
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ACOSS considered that one of the main reasons Australia has made few inroads into long-term unemployment is that the government is not investing enough into employment services:
Australia invests less than half the average invested in employment services by other comparable wealthy countries (countries in the OECD). Consultants in jobactive services have average caseloads of 140 and providers receive less than $1,000 a year, on average, in Employment Fund credits to devote to training and paid work experience for people disadvantaged in the labour market. This would typically pay for a few week’s training at most.
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St Vincent de Paul Society also noted that since the introduction of Job Services Australia in 2009, there has been a reduction in the overall budget available to assist unemployed people into employment.
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Some participants in the inquiry considered that more funding should be allocated to job services providers in order to increase their effectiveness in assisting job seekers.
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Mr Colin Leonard, a job seeker in his 50s, commented that numerous studies have shown that the longer a person is unemployed, the less employable they become. Mr Leonard pointed out that, therefore, 'the best opportunity to get somebody back into the workforce is to right from the day that they become unemployed'. Mr Leonard considered that funding for job networks should reflect this:
Job Networks need to be funded on a result orientated basis with justification for client spending.
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BCA proposed that, rather than allocate further funding to employment service providers, they could adopt new 'technology to achieve cost efficiencies in service delivery that can be used to direct greater resources to the most disadvantaged job seekers'.
Access to appropriate training
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In its submission to the inquiry, NESA stated that it is 'challenging for job seekers to build their employment prospects through gaining skills such as undertaking accredited training…if relying on income provided by Newstart'.
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Submitters agreed that more access to appropriate training for job seekers was required. For example, Mr Jim Morris, a Newstart recipient commented:
On Newstart, I initially was sent to a two-week training class to learn how to apply for a job. I'd successfully obtained many jobs over forty years without training. It was totally ridiculous humbug, but a source of extra taxpayer funds paid to the job agency.
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Reverend Professor Peter Sandeman, CEO of Anglicare SA highlighted the particular need for training for jobseekers who did not finish school:
Education to year 12 or equivalent is by far the best indicator of success in later life in employment. Unfortunately, if you don't finish school, it's a real barrier. So having programs that really assist young people in particular to make the transition to employment is really important.
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Ms Julie Farrington, a jobseeker for the last six years, said that in her experience there was 'no government support for older adults for retraining or funding but everything for younger people'.
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Ms Ruth Bretherton considered that more funding was needed for Newstart recipients to have better access to training and proposed that tertiary and trade courses be further subsidised to ensure that jobseekers are better equipped for applying and securing jobs.
Access to appropriate support services
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Participants in the inquiry considered that access to appropriate support services was a vital part of an income support recipient's job search.
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Jesuit Social Services is of the view that intensive, flexible and individualised training and support may be needed to support people looking to enter or re-enter the workforce who face significant barriers to do so.
5.155
As discussed in Chapter 3, some cohorts need additional and targeted support for undertaking a job search, including people who experience mental health conditions.
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The committee received a large volume of evidence relating to the need for increased mental health support services for jobseekers on income support payments.
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Orygen commented that mental health services were fragmented, and lamented the fact that 'employment services are seldom located with or linked to mental health services, resulting in difficulty navigating the service system, and creating barriers to holistic, person-centred care'.
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As previously mentioned in Chapter 3, the Royal Australian and New Zealand College of Psychiatrists highlighted that employment is almost universally ranked among the highest goals of people with serious mental illness, and yet this population faces the highest unemployment rates of any disability group.
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Orygen pointed to evidence from the federally-funded youth mental health service headspace which indicates that 'existing and traditional employment and study support mechanisms do not provide adequate support for young people experiencing mental ill-health'.
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St Vincent's Health Australia considered that greater investment in community support services is required.
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Orygen agreed and pointed to a small number of programs currently attempting to fill this service gap, including the Individual Placement Support (IPS) trial, the eheadspace Digital Work and Study Service, the Youth Online Training and Employment System (currently a research trial at Orygen), and incorporating youth vocational peer workers into IPS programs.
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Orygen recommended an increase in supported employment and education programs, embedded within mental health services which would improve employment and mental health outcomes, and mitigate against future reliance on the income support system among young people with mental illness:
The Australian Government should investigate expanding the availability and improving the integration of education, vocational and mental health service pathways, to better support young people who are not engaged in employment or education. Particular focus should be placed on existing evidence-based best-practices, such as IPS, which deliver long-term employment outcomes for young people with mental ill-health.
A punitive system
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Submitters considered that not only is the system ineffective, it is punitive. For example, the Salvation Army stated that, in their view, there is no evidence that a particular measure will lead to, or increase the chance of work; and added: 'measures that ignore economic, structural or individual barriers to employment are not productive, they are merely punitive'.
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Dr Elise Klein from the University of Melbourne considered that 'welfare conditionality does not work'. She contended that people on jobactive are 'asked to undertake menial and pointless tasks just to fill in their days', noting that the compliance measure of having one's income support reduced or suspended is particularly harsh. Dr Klein considered that the CDP was even harsher than mainstream jobactive requirements.
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Dr Casey from AUWU commented that people are dropping out of the income support system:
We find that the system itself is so demoralising and so harmful that it really compounds the abject poverty of being on Newstart. Often, to avoid the harsh requirements in the employment services system, people will go off Newstart so that they don't have to do Work for the Dole that is not going to benefit them.
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Uniting Communities believes that the system is causing harm to income support recipients, especially those subject to compliance programs which include penalties for breaches 'which result in people earning even less than the inadequate stipulated payment rate'.
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Dr Klein concluded:
These programs are punitive in that they attribute unemployment and poverty as the fault of the individual and use ‘mutual obligation’ as a ‘stick’ approach to seek compliance.
Proposals for change
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In March 2019, the Australian Government announced a new employment services model to be introduced from July 2022. Under the new model, all job seekers 'will receive more personalised support through a digital platform'. In the multi-agency government submission, the Department of Social Services explained:
Those who are more job-ready will largely self-manage and self-direct, and employment services providers will deliver greater support to the more disadvantaged job seekers. By targeting resources more effectively, the Model aims to improve outcomes for job seekers and reduce the prevalence of long-term unemployment.
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However, as noted throughout this chapter, participants in the inquiry considered that the problems of the current system would not be resolved without more significant changes to the mutual obligation requirements system.
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In particular, SDA National suggested that the government should 'shift focus from Jobactive programs such as PaTH, Work for the Dole and ParentsNext towards a focus on skills needed for the future of work'.
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ACOSS called for a commitment to major reform of employment services to ensure that unemployed people, particularly those long-term unemployed individuals are not excluded from paid work. ACOSS' proposals include:
Employment services based on individual agency and support more than compliance and enforcement;
An investment fund, topped up each year for people unemployed long-term, to finance intensive services and activities to improve people’s skills and employment prospects;
A career counselling and support service for young people entering the paid workforce for the first time, people returning after caring for a child or family member with a disability, and those over 40 years old who are struggling to renew their careers;
Encouraging and financially backing local partnerships with employers and other health and community services to assist people who have complex needs and communities with high and entrenched levels of unemployment;
A licensing system for employment service providers administered by an independent statutory body charged with maintaining quality standards;
Lower default job search requirements for people with barriers to employment including people in regions with high unemployment, parents, people with disabilities and older people.
Committee view
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The committee recognises that the current state of the labour market can be a significant barrier to employment. However, as discussed throughout the chapter, it is deeply concerning that the income support system itself is acting as a key barrier to employment because of the inadequate payment rates that force people into poverty and the flaws in the design of its mutual obligation requirements.
Labour market
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The committee acknowledges that the current rate of unemployment in Australia is considered relatively low by the Australian government. However, the committee notes that Australia's unemployment rate is similar to the OECD unemployment rate which sits at 5.2 per cent. Looking at the national unemployment rate alone is insufficient to understand current labour market trends and the challenges jobseekers are facing. Indeed, the rate of long-term unemployment has been rising for the last ten years. The current lack of jobs at entry-levels combined with the fundamental changes in the nature of work in Australia is resulting in workers facing potentially longer periods of unemployment or underemployment. With uncertain economic conditions on the horizon, it is critical that the income support system provides an adequate safety net and focusses on supporting people to get back into work.
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However, evidence received by the committee points to multiple failures in the system in relation to supporting people to transition to employment. For example, the rise in precarious employment conditions is resulting in people having to rely on income support payments while being underemployed. The committee is of the view that given that 20 per cent of people on Newstart are also in some form of employment, it is important that the income support system is flexible enough and adequately supports them while they transition to work. The current earnings threshold at which taper rates come into effect should be reviewed to ensure they are not creating a disincentive for individuals to take up casual work. Allowing people to earn income and gain experience in the workforce should be encouraged as it would better support people to transition to work.
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The committee recommends the Australian Government immediately review the earnings threshold of income support payments to ensure it does not impede jobseekers transitioning to work.
Poverty
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The evidence received by the committee strongly indicates that poverty in itself is a key barrier to employment. As discussed in Chapter 2, the current levels of jobseeker allowances are inadequate and impede peoples’ ability to engage socially and economically within their community.
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On many occasions, income support recipients described to the committee how they did not have enough money to be able live day to day life, let alone to undertake a job search. An increase in the rate of the JobSeeker Payment and Youth Allowance would significantly improve income support recipients' job prospects. It would enable people to meet the costs associated with job searches and interviews.
Mutual obligation requirements and employment programs
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The evidence received by the committee clearly demonstrates that the current mutual obligation requirements and job search activities are not working and certainly not leading to positive employment or education outcomes for many people. Instead, evidence received by the committee suggests that the system has become increasingly complex, punitive, inadequate and ineffective in getting people into work. Accounts of people having to apply for jobs that do not match their skills or people having to attend training for qualifications that will not lead to employment are far too common. Instead of facilitating a return to employment, the system itself appears to have become a significant barrier to work. Understanding the complexities of the system and how to improve it to ensure that it supports people into finding work requires further investigation.
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The committee heard that many job service providers are not meeting the requirements of jobseekers, particularly those with multiple barriers to employment. The committee agrees with submitters that job service providers should be focussed on providing targeted assistance to jobseekers rather than implementing compliance measures.
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The committee notes the Senate Education and Employment Committee inquiry into the appropriateness and effectiveness of the objectives, design, implementation and evaluation of Jobactive found that Jobactive is failing those it is intended to serve. In particular, it found that it was not meeting the needs of the most disadvantaged in the community. The committee received similar evidence during the inquiry and noted that people raised issues around funding, lack of access to appropriate training and targeted programs to support them to secure employment. The committee is of the view that it is critical to improve the quality and effectiveness of employment and training programs. Importantly, whilst jobseekers should be accountable, the Australian Government has a responsibility to ensure that meaningful training and assistance are provided to all jobseekers in order to ensure that people are adequately helped in securing ongoing employment and protected from exploitation. Based on the evidence received by the committee, further work is required to understand and address the issues associated with job search activities and employment programs.
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In light of the COVID-19 pandemic and its direct and profound impacts on the labour market in Australia, the committee considers that the role of employment service providers is critical in ensuring jobseekers have appropriate and timely support to find work.
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The committee recommends the Senate consider referring to the Community Affairs References Committee an inquiry into the mutual obligation requirements for working-age income support recipients and the adequacy and effectiveness of employment programs.
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The committee recommends the Department of Social Services and the Department of Education, Skills and Employment urgently undertake, in collaboration with stakeholders, an evaluation of the current employment services with a view to ensuring:
There is adequate capacity to meet the significant increase in demand for their services;
That employment programs move to a strength based, individualised approach that better meets the needs of all jobseekers; and
That employment services are not responsible for any compliance implementation.