13. Active labour market and complementary programs

Active Labour Market Programs

13.1Active Labour Market Programs (ALMPs) play a key role in connecting unemployed and those who are inactive in the labour market with jobs and providing employers with labour. They seek to promote employment, prevent labour market exclusion, enhance social protection, and prepare for future opportunities and challenge.[1] Professor Jeff Borland summarised the different categories of ALMPs and their key aims as follows:

• Job search programs seek to affect how unemployed people look for jobs, either or both by raising the intensity of job search or increasing the effectiveness of job search, for example by providing additional advice or assistance to the jobseeker.
• Work experience programs can involve support for the unemployed to obtain employment in the private sector, or placement in public sector jobs created for that purpose. In Australia, work experience in the private sector has historically been facilitated via wage subsidies, while public sector work experience has historically involved the Commonwealth providing funding to community groups or providers to undertake labour-intensive projects to provide facilities or services of community benefit. A key example of the latter is the Work for the Dole (WfD) program.
• Formal training and education programs seek to increase the skills and job readiness of the unemployed in a classroom environment. Examples of this type of program in Australia have been the Youth Training Initiative and the former New Business Assistance with NEIS, which has been replaced with Self-Employment Assistance (S-EA).[2]
  2. Professor Borland further noted that job search and wage subsidy programs have a positive impact on employment outcomes for people who are less disadvantaged or who may be closer to the labour market. By contrast, unemployed people with higher levels of disadvantage should be supported in programs that create jobs with linked training, and which provide a pathway to permanent employment.[3]
  3. An earlier paper by the International Labour Organization (ILO) characterised ALMPs as broadly falling into two categories:
• ‘Passive’ policies and programs which focus on providing replacement income during periods of joblessness or job search. Typical passive programs are unemployment insurance and assistance and early retirement.
• ‘Active’ policies which concern labour market integration. Typical active measures include labour market training; job creation in the form of public and community work programs, programs to promote enterprise creation; and hiring subsidies. Active policies are usually targeted at specific groups facing particular labour market integration difficulties.[4]
  4. Evidence indicated that ALMPs can have a positive impact on both vocational and non-vocational outcomes if the right policy settings are in place. For example, the National Employment Services Association (NESA) stated:

[ALMPs] have potential to deliver a significant contribution to addressing the skills divide; however, there is no quick fix, and it will require coordinated approaches across policy silos and partnerships between purchasers and providers. Improved coordination between actors such as employment services providers, Local Jobs [and Skills] Taskforces, Employment Facilitators, Workforce Specialists, the Australian Apprenticeship Network, and the education and training sectors are needed to develop collaborative exchanges about labour market needs, strategies, and coordinated and agile responses.[5]

13.5Programs under the Workforce Australia umbrella are outlined in Figure 13.1 below, provided by the Department of Employment and Workplace Relations (DEWR).

13.6Measures to rebuild the Commonwealth Employment Services System—using the existing Workforce Australia program as a foundation—are discussed throughout the report. Training is discussed in Chapter 12, in the context of ensuring that jobseekers are provided with the core employability and industry-specific skills needed in current and emerging labour markets. Complementary and related programs under the Workforce Australia umbrella are discussed in further detail below. Also discussed are paid work experience, WfD and community-based programs, wage subsidies, and social enterprise in a rebuilt Commonwealth Employment Services System.

13.7A rebuilt Commonwealth Employment Services System must ensure access to education and training relevant to local labour markets and to bespoke and complementary programs that improve clients’ ability to find and keep employment. This is part of a service model in which government is the steward and co-producer of services, and where there is alignment and integration of policy, services, and funding between all government agencies connected to the employment services system—including skills and training, industry, regional policy, and social services.[6]

Source: DEWR, Submission 254, p. 9.

Existing complementary and related programs

13.8As noted above, the employment services system includes several complementary programs to which individuals may be referred. These are designed to increase employability, facilitate connections with employers, build language and literacy skills, and support individuals to create and maintain their own businesses. Facilitation programs for employers are also part of the broader employment services system.

13.9Providers indicated that at least some complementary programs should remain part of the employment services system.[7] Noting the overall number of complementary programs, the diversity of the caseload, and the fragmentation of the service system, other providers supported consolidating complementary programs, simplifying referral processes, aligning KPIs, and changing fee structures.[8]

13.10Specific proposals included:

• Ending Employability Skills Training (EST) and WfD and replacing them with bespoke services driven by local demand and funded via the Employment Fund (EF).[9]
• Retaining employability and foundational skills programs, such as EST, Career Transition Assistance (CTA), Skills for Education and Employment (SEE), and Foundation Skills for Your Future (FSFYF), but making significant changes to referral networks to ensure that jobseekers can access foundation and employability skills support.[10]
• Automatic referral from Workforce Australia to the Adult Migrant English Program (AMEP) or humanitarian support services, with measures to strengthen links between Workforce Australia and the AMEP Pathways to Work program.[11]
  11. Some stakeholders called for other life skill programs to be considered. For example:
• The ASE Group (ASE) called for greater focus on basic life skills such as financial literacy, communication, and conflict resolution across the suite of complementary programs (and in mainstream service offerings).[12]
• Your Financial Wellness asserted that there should be more support for financial literacy within the employment services system.[13]
  12. The Employment White Paper emphasised that a key objective of government is to ensure that all Australians have the foundation skills needed to participate fully in the labour market and in their local community. The review highlighted that more attention to foundation skills is urgently needed, as 20 per cent of adult Australians have low literacy or numeracy skills (or both). The White Paper: Working Futures proposes several measures to lift foundation skills, including improving access to training programs and better integration of foundation skills with employment services to ensure jobseekers gain the skills needed to improve economic participation and overcome disadvantage.[14]

Work for the Dole

13.13WfD is currently the ‘default’ activation activity for participants in Workforce Australia Services. The program can also be undertaken on a mandatory or voluntary basis to meet participants’ more general mutual obligation requirements.[15]

13.14There are two types WfD activities:

• WfD placements, which involve placing single or multiple participants in individual roles with host organisations. Hosts are frequently charities, not-for-profit enterprises, and government organisations.
• WfD projects, which are specific community projects developed for groups of participants working together as a team to meet a common goal or deliverable.[16]
  15. Many stakeholders called for WfD to be abolished entirely or to be made voluntary, stating that WfD is ineffective to increasing jobseekers’ employability and is of little community value, and that there is significant stigma attached to the program. The mandatory nature of WfD also reduces its value to host organisations, as participants are less willing or able to perform the work required.[17] A representative of the Australian Unemployed Workers’ Union (AUWU) who had participated in WfD stated:

The job search provider was sending more people there than they knew what to do with, so most of the time they ended up doing very little. Most of the jobs were menial—basic tasks like weeding and picking up sticks and things like that. At the Pegasus horse farm out at Holt, they expected people to get to a fairly remote place at a fairly early time in the morning. As I said, the job search provider was sending heaps of people there. They didn't have enough jobs for them all.[18]

13.16The Australian Council of Social Service (ACOSS) asserted that WfD is ineffective, wasteful, and mostly comprises ‘make work’ activities far removed from regular work. To the extent that a WfD placement does resemble a paid job, the participant is paid significant less (in income support) than their counterparts who are employed by the host organisation. ACOSS also stated that there is no evidence that WfD increases a person’s employment prospects, and that where a job does result from a WfD, this is because the jobseeker has taken the job to avoid participating in the program. Such jobs are often lower paid ‘survival’ jobs with little no connection to the person’s longer-term career aspirations.[19]

13.17The views of ACOSS were broadly echoed in the findings of research commissioned by DEWR regarding the 2014–15 financial year, which indicated that WfD had a limited impact on a jobseeker’s ability to find paid work—at least beyond work taken up to avoid participating in the program:

WfD2014–15 increased the rate of part-time/casual paid employment reported to JSA providers by 7 percentage points… Because paid employment reduces the activity requirement of the job seeker, the referral to WfD may provide an incentive to report pre-existing paid employment.

WfD2014-15 had a smaller, but still statistically significant impact upon job placement and moving off income support. It is estimated that in the short-term WfD2014–15 resulted in an additional two percentage point increase in the probability of job seekers having a job placement… [and] moving off income support increased by an additional two percentage points.[20]

13.18Workskil Australia (Workskil) highlighted the following deficiencies in the current program:

• The quality of projects varies greatly, with most projects wasting jobseekers’ time without enhancing work skills, socialisation, behaviour, confidence, or motivation.
• Providers spend significant time and resources developing WfD activities and are required to take responsibility for every aspect of the placement, including WHS, supervision, financial acquittals, contract management, and compliance. There is also a very significant commitment of time and resources by host organisations.
• Providers lack the information necessary to determine levels of demand for WfD activities (for example, data on when an individual jobseeker will reach their six-month activation point). This means that providers are often unable to plan WfD activities, with significant knock-on impacts for host organisations.
• Demand for WfD activities is high, with insufficient activities developed.[21]
  19. The St Vincent de Paul Society highlighted additional issues with WfD from the perspective of host organisations. These included:
• duplication of reporting exacerbated by the fact that Workforce Australia does not use attendance databases administered by host organisations;
• poor communication with host organisations around placements, leading to hosts spending time and resources on participants who ultimately do not attend;
• varied levels of support for participants, and varied benefits to host organisations;
• short placement timeframes which do not enable participants to learn new skills and deliver benefits to host organisations;
• limited financial assistance and support with basic life skills for participants, creating additional burden for host organisations; and
• limited tailoring of placements to participants’ abilities and aspirations, reducing the value of the placement to both the participant and the host organisation.[22]
  20. Safety concerns in WfD settings were also raised by several stakeholders.[23] For example, the Antipoverty Centre drew attention to a recent survey of people who completed WfD, noting that 39.9 per cent of respondents recalled a safety incident during the placement, 45 per cent said they were not given adequate WHS information, and 97 per cent said they did not want to participate in program.[24]
  21. WISE Employment observed that the provider will carry the safety risk for a person they place with a host, stating that given the low fees a provider receives and the risk involved, current arrangements do not ‘stack up’.[25]
  22. DEWR noted that in a jobactive post-program monitoring survey conducted in 2022, more than 75 per cent of respondents who had participated in WfD reported that the program had improved their desire to find a job and ability to work with others. Around 70 per cent of respondents reported improvements in work-related skills, and 83 per cent reported a safe working environment. However, DEWR also noted that WfD is not reported as a stand-alone program, and there are no specific or formal measures in place for assessing performance in relation to WfD.[26]
  23. DEWR further acknowledged that prior evaluations of the program—including the independent evaluation outlined above—found that participants experienced monotony or boredom in their WfD activity, with the evaluation noting little variety in activities offered through the program. Providers also raised concern about the activities, and queried whether they provided sufficient work experience for participants to develop employability skills.[27]
  24. During site visits, numerous stakeholders also raised concern that they experienced challenges accessing WfD sites—often due to transport costs. Those stakeholders indicated that government does not provide sufficient supplementary funding to cover these costs or to cover the costs of meals and other essentials while on WfD sites. In some cases, this leads to participants being unable to complete their mandatory activities, leading to the application of financial penalties. This was also reflected in some of the written evidence.[28]
  25. A supplementary fortnightly payment of $20.80—the Approved Program of Work Supplement—is available to assist with the costs of participating in approved programs of work. Currently, the supplement is available only to participants in WfD.[29] The final evaluation of jobactive conducted in 2022 noted that its value had not increased even in nominal terms since its introduction in 1998. During the evaluation, stakeholders commented that access to and the cost of transport can be a barrier to participating in programs such as WfD and stated that the amount of the supplement was not sufficient to cover transport costs.[30] Echoing concerns raised in the 2022 evaluation, NESA observed that the Approved Program of Work Supplement has not been raised to recognise that hours of participation in WfD have increased, as have participant costs associated with IT and data in an increasingly digital environment.[31]

Employability skills programs

13.26Employability skills refer to the core competencies require by employers across all sectors, such as communication, teamwork, problem solving, and initiative.

13.27EST is a pre-employment program which aims to help participants develop the skills which are of greatest relevance to employers, to explore career options, and build job search and workplace skills. It is the ‘default’ activation activity for jobseekers in Workforce Australia Online.[32]

13.28EST is delivered in small group settings, in blocks:

• Block 1 focuses on developing job search and workplace skills, such as interview, communication, and problem-solving skills, working in a team and digital literacy.
• Block 2 helps participants understand industries in local labour markets, build industry-specific skills, and gain insight into industry-specific tasks and duties.[33]
  29. Block 1 courses are funded by the participant’s Workforce Australia, Transition to Work (TtW), or Disability Employment Services (DES) provider. Block 2 courses are largely funded by DEWR, with a contribution from the referring provider (though this contribution may be waived).[34]
  30. CTA is a pre-employment program that seeks to help participants aged 45 and over improve confidence and build skills to become more competitive in local labour markets. It is delivered in small groups but does not split courses into blocks. Payments for CTA is funded by DEWR for Workforce Australia participants but must be paid in full if referred by a DES providers.[35]
  31. Some providers stated that EST and CTA programs can be of value to jobseekers in terms of improving work-related skills and connecting to employers.[36]
  32. DEWR highlighted a participant survey conducted from May to September 2023, to which approximately 1,260 EST participants provided feedback. Eighty-eight per cent of respondents stated that they had found their course helpful in building skills and confidence to search and apply for jobs, improving work-related skills, and planning to reach their work goals. This includes 56 per cent of respondents stating that the course had ‘helped a lot’ in increasing their confidence to apply for jobs.[37]
  33. Other stakeholders indicated that the program in its current iteration is of little value. For example, Workskil stated that EST is too prescriptive and old fashioned and is not attractive to young jobseekers.[38]
  34. Per Capita observed that EST resembles ‘training for training’s sake’ and involves paying providers for activities that do not necessarily lead to a job. Per Capita also noted that EST was originally envisaged as a program for young jobseekers who may have benefited from support to draft résumés, improve job search skills, and prepare for interviews. However, the program is now available to all jobseekers, and older jobseekers who have previously been employed may find that the program content repeats what they already know. As such, older jobseekers may find being referred to the program insulting.[39]
  35. Some providers also stated that referrals to and commencements in both programs are too low to make delivery financially viable.[40] Bamara noted that it had not been able to complete an EST course since the start of the contracts in 2022 due to low referrals. This was despite reaching out to other providers in the local area to generate referrals. Bamara also stated that challenges associated with low referrals are compounded by the fact that payments are based on commencements, and the ratio of referral to commencement in both CTA and EST is very low.[41]
  36. Asuria People Services (Asuria) expressed similar concerns in relation to the financial viability of the programs and proposed the following measures:
• allow Workforce Australia providers to use the EF to fund participation in the program or require a greater contribution from DEWR;
• review referral to commencement ratios and caps to allow EST providers to maximise the number of participants;
• link payments for EST courses to commencements only, with a minimum fee payable per course to address low participation rates; and
• allow the delivery of hybrid courses, especially in regional and remote locations where enrolments are below a set number.[42]
  37. Low referrals were reflected in an underspend on both CTA and EST—particularly EST. In the 2022–23 financial year just $1 million was spent on EST of a total of $70.8 million in administered funding.[43]
  38. Providers stated that delivery of EST and CTA can be especially challenging in remote areas due to thin markets and lack of reliable transport.[44] Moreover, courses cannot be delivered online without DEWR’s express permission.[45]

Self-employment and entrepreneurship

13.39S‑EA supports participants to start and run a small business and helps improve the commercial viability of existing micro-businesses. The program includes a range of services including workshops, support to develop business plans, business advice sessions, business heath checks, small business training, and small business coaching. S‑EA replaced New Business Assistance with NEIS during development of the Workforce Australia service.[46]

13.40Some providers expressed support for retaining S-EA, stating that the program has been effective in supporting people wishing to start or grow a business. Stakeholders also noted that participation in S‑EA increases a person’s overall employability and competitiveness on the open labour market, even if they do not go on to run their own business.[47]

13.41An alternative view was that employment service providers could organise a direct referral to business mentors or appropriate training (funded through the EF) without the need for an additional, targeted program.[48]

13.42The National Self-Employment Association (NS-EA) made the following suggestions in relation to S-EA funding:

• Review existing fee structures to ensure that they enable financial sustainability for participants and providers. At present, participants are able to access certain supports for a relatively small fee, and then exit from the program.[49]
• Review incentives such as the $300 payment for business costs to ensure that participants can access incentives to meet mandatory business expenses such as licensing and insurance.[50]
  43. The NS-EA also made suggestions for enhancing the program itself, including:
• increasing efforts to market S-EA, including to address any confusion associated with the transition from the former New Business Assistance with NEIS;
• streamlining administrative, registration and reporting requirements to enable easier access to and participation in the program, including capacity to benefit;
• reducing the red tape required to access a one-hour business advisor session;
• extending participants’ eligibility for income support from nine to 12 months after commencing in the program;
• implementing measures to connect the Department of Veterans Affairs, veteran support services, and the NS-EA to improve the delivery and increase the uptake of services designed to support veterans;
• simplifying reporting requirements relating to business income, including reducing the frequency of those requirements such that participants are required to report after six, nine, and 12 months in the Small Business Coaching service; and
• reinstating participation in S‑EA as a full employment outcome acknowledging that participation in S-EA has significant positive impacts on job readiness.[51]
  44. ASE also recommended expanding eligibility for S-EA to enable specialist support for disadvantaged participants, and particularly younger people.[52]
  45. There was also support for a review of the performance management framework for S-EA to ensure it accurately captures the realities of a person’s journey to business viability and levels of participant engagement with the program.[53]
  46. The Entrepreneurship Facilitators program provided advice and support to people wishing to start or grow a business, as well as referrals to other small business support services including S-EA. Entrepreneurship Facilitators deliver services through a mix of group support, networking events and light-touch individual support.[54]
  47. The Australian Entrepreneurs Alliance (AEA) stated that the Entrepreneurship Facilitators program was similar in many respects to S-EA, but was more flexible and person-centred:
• S-EA is funded per person and per activity, and providers are allocated a capped number of places for coaching. By contract, the Entrepreneurship Facilitator program was not capped, and facilitators have the flexibility to design services based on individual and community need.
• S-EA is not funded to provide the ongoing support that some participants need if they are not able to demonstrate the viability their business after 12 months. The Entrepreneurship Facilitators program was able to offer this ongoing support.
• The staff in S-EA are often employees of large corporations. Facilitators were typically specialists with experience in founding and growing a business.[55]
  48. A decision was taken in the 2023–24 Budget to cease the Entrepreneurship Facilitator program from 1July2023.[56] The AEA told the Committee that while there have been some changes to the S-EA program there is still a ‘huge gap’ in the available supports for people looking to start a new business or grow an existing enterprise.[57] The AEA called for supports that were previously offered under the Entrepreneurship Facilitators program to be rolled into a new ‘Self-Employment+ Services’ delivered by Self-Employment Facilitators. According to the AEA, this new program would:
• help clients to validate their business idea;
• support clients to become more financially sustainable;
• connect clients into the local ecosystem and with other small business owners;
• provide services for clients who have completed S-EA but need additional assistance in order to continue and grow their business;
• refer clients to providers where there is a good fit; and
• assist small business owners at risk of failure and returning to unemployment.[58]

Facilitation programs for employers

13.49DEWR administers several complementary programs with an employer focus. These often aim to bring together providers, employers, education and training institutions, and other stakeholders to design and implement targeted solutions for businesses’ workforce needs and improve outcomes for jobseekers. Programs include:

• Launch into Work. Seeks to achieve job outcomes for disadvantaged cohorts, through the co-design of pre-employment projects with employers who have identified entry-level vacancies.[59]
• Workforce Specialists. Aims to connect employers with large scale workforce needs with jobseekers in Workforce Australia. The initiative is delivered by a panel of organisations responsible for delivering project-based solutions.[60]
• Employer Liaison Officers.DEWR officers who assist large employers and priority industries to design and implement workforce solutions. The program includes help navigating the service ecosystem; advice and education for employers and jobseekers, and provision of industry intelligence.[61]
  50. DEWR also administers the Local Jobs Program, which aims to bring together local stakeholders to identify regional workforce priorities and develop and drive solutions to current and future workforce issues. The program includes:
• Employment Facilitators and Support Officers, on the ground in each region, who focus on connecting, collaborating, and building local capacity.
• Local Jobs and Skills Taskforces, made up of community groups, employers, Vocational Education and Training (VET) providers, universities, and employment services providers, who identify employment priorities, connect, and leverage existing programs and align efforts to maximise collaboration, minimise duplication, and inform solutions.
• Local Jobs Plans, which identify regional priorities, including industry workforce needs, and develop plans to support people to move into local jobs and training.
• Local Recovery Fund, which provides funding to support small-scale activities and projects to help skill jobseekers to meet local employer needs.
• National Priority Fund, which supports initiatives that address structural and other barriers to the attraction, recruitment, and retention.[62]
  51. Expenditure on the Local Jobs Program is estimated at between $47 million and $51million per year for the years from 2022-23 to 2024-25.[63] During the 2023‑24 Budget Estimates, DEWR confirmed that funding for the program is currently due to cease in 2025, and that at time the program will be reviewed.[64] The White Paper: Working Futures further notes that the Australia Government is conducting a two-stage reform process in relation to the Local Jobs Program to better focus its policy intent and embed place-based design principles. Initial changes to the program include broadening eligibility for funded projects, strengthening governance structures, strengthening support provided through Employment Facilitator services, and enhancing local and regional data and information to inform decision-making. Over the longer term, the government will consider the scope and priorities for investment in the Local Jobs Program to support the smooth functioning of the labour market and the program’s optimal geographic spread to address business capability, industry transitions and the adaptive capacity of local labour markets.[65]
  52. The limited evidence received in relation to facilitation programs for employers indicated that they do not always operate effectively, and that (as is the case for jobseeker-focused programs) there are opportunities to consolidate and rationalise the programs to minimise duplication and fragmentation.
  53. Social Ventures Australia (SVA) noted that demand-led solutions are hampered by the current structure of the employment services system, which distributes potential candidates across multiple providers who are reluctant to cooperate to meet employers’ needs. SVA stated that while initiatives such as Employment Liaison Officers, Employment Facilitators and Workforce Specialists attempt to overcome this problem, they have not always been successful in securing the co-operation of providers. Moreover, many of these initiatives are limited in scope, with training designed to support basic skills and industry orientation rather than to equip people for secure, quality employment. There are also limited if any measures in place relating to reshaping employer practices.[66]
  54. Jobs Statewide stated that Employment Facilitators have not increased satisfaction for employers, noting that on many occasions an Employment Facilitator has asked Jobs Statewide to send a vacancy referral to an employer with which the provider has already engaged.[67]
  55. CoAct noted that Employment Liaison Officers present job opportunities which duplicate providers’ existing service or which do not meet the criteria for a payable outcome payment. This creates disincentives to engagement.[68]
  56. The Victorian Chamber of Commerce and Industry (VCCI) raised concern that there is no information on employer engagement with the Workforce Specialists program. Moreover, while acknowledging that the program is aimed at larger scale projects, the VCCI noted that there is also no information about alternative options for smaller—but still significant—projects.[69]
  57. ACOSS stated that while the Local Jobs Program has been successful in addressing some of the issues associated with a competitive employment services system and in establishing and maintaining local employment and skills networks, additional work is needed to optimise support for place-based solutions. ACOSS recommended local employment and skills networks be established to embed government-funded supports—including employment and human services—in local communities.[70]
  58. Per Capita similarly indicated that the Local Jobs Program should be replaced, with key functions taken over by an entity within the Australian Public Service (APS). According to Per Capita, this should include establishing:
• Local Jobs and Skills Coordinators that align Jobs and Skills Australia (JSA) skills projections with local skills and labour demand, and coordinate with industry and employers to create skills and job opportunities for participants.
• Local Jobs and Skills Centres for walk-in, authoritative information and advice on local careers and industries, employment services and skills training options, and basic information on pay and award provisions. This service should be available to all jobseekers, as well as to other key stakeholders.[71]
  59. Per Capital also called for national network systems to be established to develop and share learning and insights, and for Jobs and Skills Coordinators to have access to discretionary funding to develop and fund alternative employment services.[72]

The role of paid work experience

13.60Several stakeholders supported paid work experience to enable jobseekers to gain experience, demonstrate their skills to employers, and gradually move off income support. Programs of this kind may also help drive employer engagement with the system. However, these programs may require financial support from government and require providers (or intermediaries) to have strong employer networks to identify and obtain paid placements.[73]

13.61VCCI stated that paid work placements and trials for those who are entering (or re‑entering) the workplace provide workers with relevant workplace information and build their confidence, while allowing the employer to observe the person in day-to-day work settings. The VCCI stated that placements of this kind should be supported by subsidies, with subsidy amounts varied by the relative disadvantage of the jobseeker and by the labour market where the employer conducts business.[74]

13.62The value of work experience was also reinformed by academic and policy experts. For example, a 2015 policy briefing by Professors Considine, Borland, Kalb and Ribar emphasised that employment programs to assist jobseekers with high levels of disadvantage should substantially address their deficiencies in job readiness and skills and provide a pathway to employment via work experience, stating that this is most likely to be feasible where programs are implemented at a local level through a partnership between service providers and employers. This and other research also indicated that paid work experience in the private sector or on the open market may be useful in addressing some of the deficiencies in public programs such as WfD (discussed below):

[A meta-analysis of] 207 studies of labour market programs … concluded [that] [a] … clear finding…is the relatively poor performance of public sector programs … This pattern suggests that private employers place relatively little value on the experiences gained in a public sector program … The explanation for the poor performance of the usual type of public sector job creation programs is twofold: the absence of substantial skill development for disadvantaged jobseekers, and the absence of a pathway to a permanent job.[75]

13.63The Enterprise and Training Company (ETC) suggested that a model for paid work experience could involve the following elements:

• A minimum wage, paid in accordance with hours worked and adjusted based on work capacity.
• Wage costs met by government or split between government and the employer, noting the employer benefits in terms of workforce attraction and retention.
• Genuinely mutual obligations for jobseekers, employers, and providers, including a requirement for businesses to support a minimum number of work experience placements per year based on total number of employees.
• A set time limit (for example, two months) for each placement.
• A gradual increase in working hours to build jobseekers’ resilience and fitness for work, based on individual capacity.
• An iterative program of support tailored to each jobseeker.[76]
  64. NESA similarly recommended that work experience options be developed including consideration of two- to four-week funded job placements and funded placements in social enterprises. NESA stated that work experience could be leveraged to provide employers with a risk-reduced opportunity to observe new employees and evaluate their contributions, ideally leading to longer-term engagement.[77]
  65. Some stakeholders called for EF guidelines to be reviewed with the aim of allowing funds to be used to support paid work experience.[78] SYC Ltd (SYC) noted that under the NEST, providers were able to offer paid work trials, funded through the EF. SYCindicated that employers responded very favourably to the opportunity to trial jobseekers before potentially employing them on a more permanent basis.[79]
  66. Stakeholders observed that paid traineeships, apprenticeships, and internships connect jobseekers with employers offering training and work experience and indicated that greater support for such programs should be considered as part of reforms to the employment services system.[80]
  67. ACOSS called for the establishment of an annual jobs and training offer for people who are unemployed long-term, explaining that this would consist of employment experience in a regular paid job, training, or further education.[81]
  68. Stakeholders also indicated that on-hire enterprises and sectoral programs (also discussed in Chapter 12) may have a substantial role to play in facilitating paid work experience opportunities. The Brotherhood of St Laurance (BSL) highlighted their partnership with Spark consortium on a large-scale social procurement project looking to secure over 900 jobs for disadvantaged people on the North-East Link Tunnel project in Victoria.[82] Per Capita argued for greater engagement with industry-focused not-for-profit labour hire models, noting that these organisations can coordinate and broker employer-worker relationships. According to Per Capita, this type of model offers the opportunity to learn about employers’ recruitment needs, assumptions and practices, and key issues relating to job design and rostering.[83]

Community and voluntary work

13.69Several stakeholders argued that the employment services system should include a community-based program that provides real-world experience in areas of demand, incorporating training and skills development. Some stakeholders indicated that such a program might replace or be build upon a reformed WfD, while others called for a community-based program without indicating whether establishing such a program would have an impact on WfD. The Green Corps and Landcare Environment Action Projects were highlighted as examples of programs that had provided meaningful experience, connected jobseekers to employers, and built skills.[84]

13.70Per Capita observed that WfD is a program that has potential for reform if participants are paid and the program is integrated with community work and enables purposeful activities and a greater range of endeavours.[85] Per Capita argued that a rebranded WfD, re-named ‘Work for the Community’, must:

• be founded on strong evidence of what local needs and interests, mapped to local community work options;
• involve meaningful work, based on mapping of these local needs. This should include consideration of the work that is already planned or ongoing within these communities; and
• involve community work coordinators assigned to each region to map and develop activities, including by collecting information from individuals about problems that exist in their communities and how they would like to contribute to solving them.[86]
  71. Per Capita also stated that participants should have opportunities to earn wages while undertaking community work, subject to constraints on government resources and funding.[87] This view was echoed by ACOSS, who asserted that community work should either be paid or undertaken on a genuinely voluntary basis,[88] and by the Antipoverty Centre, who stated:

People are doing a lot of maintenance work they find really valuable. A person who we spoke to in Tasmania … really enjoyed what he was doing. I said, 'Do you think it should have been paid?' He was like, 'Oh, I don't know.' I said, 'What did you do?' Then he explained and said, 'Oh, yeah. That should have been a job.' People who are doing valuable projects for the community should be paid.[89]

13.72BSL, Centre for Policy Development (CPD), and University of Melbourne (UniMelb) indicated that a ‘Work in the Community’ type program would have significant social benefits for the participant and would enable people to derive a sense of self-worth and recover self-esteem. Placements would also act as a transitional pathway to employment by offering more enduring work experience in diverse social enterprise and community service settings and in-work training. Work would also have a social benefit to the community by contributing to development and other local needs.[90]

13.73CVGT Employment (CVGT) highlighted a voluntary pilot program they ran for semi-skilled and unskilled individuals experiencing a range of personal challenges. This program included:

• learning strategies to address, manage and/or overcome non‑vocational barriers;
• volunteering in a job of interest which contributed to their local community;
• referral to in-house activities focused on social and employment capabilities; and
• pathways to sustainable employment through work experience, job placements and ongoing mentoring.[91]
  74. There are also key examples of community employment initiatives in international jurisdiction. For example, during its European delegation the Committee examined in detail the Irish Community Employment scheme. This is outlined in Chapter 3.
  75. Stakeholders also noted that unpaid work which builds social and economic capacity should be recognised within the employment services system. Engaging in non-paid volunteering and caring roles was reported as having a positive impact on an individual’s wellbeing and social inclusion.[92] Professor Green et al observed:

[M]any welfare-dependent people currently make a meaningful contribution to their society, not least in child rearing and supporting elderly relatives and people with a disability … The work of long-term unemployed people whose lives are complicated by patterns of care and engagement with family and community should be recognised as already providing a social contribution. They should not be required to do more.[93]

13.76Volunteering Australia noted that the National Strategy for Volunteering2023–2033 provides a strategic framework for safe, supported, and sustainable volunteering opportunities.[94] Issues in relation to volunteering are included in Chapter 14.

Wage subsidies and financial incentives

13.77Wage subsidies provide incentives to businesses to employ and retain participants under certain terms. They are intended to alleviate some of the initial onboarding, induction, and training costs associated with new employees. Wage subsidies are currently funded through the EF.[95] Professor Borland summarised the objectives and operation of wage subsidy programs as follows:

A wage subsidy program has the objective to motivate an employer to hire an unemployed jobseeker by lowering the cost of employing that jobseeker. For example, a profit-maximising employer operating in competitive product and labour markets will hire all workers whose value added to revenue is greater than or equal to their cost (wages and non-wage costs). In this case a wage subsidy, by lowering the cost of employing a worker, should make employers willing to hire extra workers – specifically, workers whose value added to revenue is lower than they would be willing to hire in the absence of the subsidy.[96]

13.78Professor Borland explained that a ‘macro’ effect of wage subsidies is some increase in aggregate employment (understanding there will be a significant dead weight loss), while ‘micro’ impacts include supporting skill development for clients and allowing clients to demonstrate their value to an employer.[97]

13.79Direct engagement with stakeholders suggested one way to understand different ‘levels’ of subsidised employment is to categorise them in three ways:

• ‘Marginal’ subsidies (mostly in private sector employment) which are targeted to long-term unemployed people with little or no recent work experience, and which are designed to encourage an employer to consider hiring a person they may not otherwise have engaged. These subsidies can also be used to address chronic labour shortages and support pathways to ongoing employment.
• Full subsidies for people with limited immediate prospects in open employment, but who may be competitive with the right experience and training. Programs of this kind often focus on transitions to regular employment in the longer term.
• Full subsidies for participation in work which serves as an alternative to regular employment, for people whose prospects of open employment are negligible. Subsidies may be used to support participation in community projects. Caution must be exercised in ensuring subsidies are properly targeted. Consideration should also be given to whether wage subsidies are the best way to encourage participation in the relevant project, as well as to whether the project could be supported by other means (for example, direct government funding).
  80. Providers delivering Workforce Australia Services, ParentsNext, and Transition to Work (TtW) may offer wage subsidies of up to $10,000 to an employer. Providers have discretion to offer a wage subsidy where they consider it to be the most effective intervention to place a person into ongoing employment.[98] Subsidies are not available for participants in Workforce Australia Online, as they target jobseekers facing disadvantage.[99]
  81. As of 30 September 2023, 21,908 wage subsidies have been recorded in Workforce Australia Services and TtW. Subsidies were used in 10.8 per cent of all placements recorded for eligible participants.[100]
  82. Wage subsidies are also available across several other jurisdictions. Some of the wage subsidies the Committee heard about as part of the inquiry are outlined in Table 13.1 below, but this is by no means an extensive list of all subsidies.

Sources: DEWR, Submission 254, p. 205;Australian Apprenticeships, Employer Incentives, www.australianapprenticeships.gov.au/aus-employer-incentives; JobsandSkills WA, Employer Incentive, www.jobsandskills.wa.gov.au/employerincentive;Queensland Government, Support Payment, https://backtowork.initiatives.qld.gov.au/back-to-work-support-payment

Effectiveness of wage subsidies

13.83Several stakeholders told the Committee that incentives such as wage subsidies, tax exemptions, or tax credits may encourage employers to hire jobseekers and improve in-house training and career development. Stakeholders also asserted that incentives should be designed to support employment for specific cohorts of jobseekers and should be accompanied by targeted marketing campaigns.[101]

13.84However, the Committee also heard that the wage subsidy framework requires improvement, with stakeholders indicating that employers see subsidies as a payment for hiring a jobseeker rather than assistance for training and other supports, and accordingly may attempt—often successfully—to obtain subsidies for engaging jobseekers who do not require additional supports.[102]

13.85In addition, some evidence indicated that some employers only hire a jobseeker for the period covered by a subsidy agreement, and then terminate their employment.[103] For example, the Antipoverty Centre stated:

[Wage subsidies] must come with some kind of commitment from the employer that it is an ongoing role and that, when the wage subsidy ends, it is some type of permanent employment. It is throwing people on the trash heap at the moment. People aren't getting enough money to get off income support, or they are getting just enough money to get off income support, losing access to their payment and then having no work after six months. That's a big problem.[104]

13.86DEWR observed that the return to service rate for individuals who achieve a 26-week outcome (the percentage of the cohort who return to the employment caseload within three months of exiting income support) is slightly higher for individuals who have been supported by a wage subsidy (3.7 per cent of subsidised placements, versus 3.2 per cent of unsubsidised placements). However, this does not necessarily reflect employers misusing subsidies or negotiating subsidies in bad faith—particularly as subsidised placements often involve individuals in disadvantage, who are also more likely to experience challenges remaining in employment.[105]

13.87Associate Professor Jo Ingold (Dr Ingold) and Mr Tony Carr observed that research in Australia, the UK, and Denmark indicates that subsidies may not encourage employers to hire candidates they otherwise would not have hired. Accordingly, subsidies may not lead to the systemic impacts needed to change recruitment practices.[106]

13.88The Committee also heard that subsidies and other incentives may not, on their own, be sufficient to encourage businesses to hire jobseekers. Employers often require a range of different supports to ‘de-risk’ hiring jobseekers, including system navigation, recruitment and HR assistance, and ongoing support following placement.[107]

13.89Professor Borland observed that international evidence on wage subsidies suggest that subsidy programs are effective in increasing the probability that a client will find employment, with more significant positive impacts observed over the longer term. However, Professor Borland also cautioned that studies of wage subsidy programs are likely to over-state the net impact of those programs on job creation, because:

• The studies fail to take account of equilibrium effects. For example:

• Workers hired via the wage subsidy program may crowd-out unsubsidised jobseekers who would otherwise have been hired.
• Wage subsidies may pay for a job that would have been created anyway.
• Employers who do not hire workers using a subsidy may lose business to those who do. Employment may therefore shift from employers who do not use the subsidy to those who do.

• The studies may be impacted by selection bias. Studies may compare jobseekers from an eligible population who receive and who do not receive a wage subsidy. However, obtaining a subsidy is conditional on getting a job, and jobseekers who can get jobs may not be identical to jobseekers who cannot.[108]
  90. Professor Borland also indicated that Australian and international research highlight several lessons for the design and implementation of wage subsidies. In particular, it is important to recognise that the level of a subsidy will affect its impact and cost to government. Higher subsidies may encourage employers to consider a wider pool of candidates. However, without additional controls, an employer may also receive a higher payment than is necessary to induce them to hire a jobseeker. While a subsidy may be varied depending on a jobseeker’s level of disadvantage and length of time for which they have been unemployed, this requires government to have access to reliable, up-to-date information. Related policy considerations include:
• The timing of payments, including whether a greater portion of the subsidy should be paid upfront or whether equal payments should be made at defined points in the program. Higher upfront payments may increase an employer’s willingness to engage a jobseeker but may decrease their willingness to retain the new employee and to provide quality work experience.
• How to vary the subsidy based on the nature of the job. For example, paying a subsidy based on hours worked may appear to provide an equal incentive for employers to offer full- and part-time work, there will be fixed costs (for example, training) that mean it is financially attractive to offer full-time work.
• Whether the subsidy should be a direct payment or a less direct incentive such as a tax reduction. Evidence suggests that employers prefer direct payments received before the new worker commences.
• Whether and how to vary the amount of a subsidy over an employer’s business cycle and in response to changing labour market conditions.[109]
  91. In addition, wage subsidy programs must be targeted at jobseekers who need them most. Jobseekers with lower barriers to employment are less likely to need the subsidy, while for jobseekers with high barriers a subsidy is unlikely to be sufficient to enable them to find and keep employment. While this suggests that subsidies should be targeted to jobseekers ‘in the middle’ of the distribution of barriers to employment, there is still a need to carefully define eligibility for the program. Moreover, wage subsidies can be effective in supporting jobseekers with high barriers to employment, provided they are accompanied by other, more intensive supports.[110]
  92. Other key issues highlighted by Professor Borland included:
• mechanisms for informing employers of and encouraging them to participate in a wage subsidy scheme;
• restrictions on the types of jobs and work for which subsidies may be paid; and
• Monitoring, oversight, and evaluation.[111]
  93. ACOSS indicated that wage subsidies should be de-linked from the EF, stating that when wage subsidies were folded into the EF in 2019 they ‘virtually collapsed’. ACOSS also called for partial wage subsidies for three to six months in private and community sectors, and full wage subsidies for employment and community organisations—including social enterprises—for six to 12 months. Full subsidies would be for jobseekers who are further from the labour market.[112]
  94. MatchWorks similarly expressed support for scaling subsidy amounts in accordance with levels of disadvantage faced by jobseekers and hours worked, to give employers incentives to hire jobseekers with higher barriers to employment and to allow the use of subsidies to address precarious work arrangements. MatchWorks raised concern that subsidies cannot be paid in relation to current employees, stating that this limits their utility in terms of supporting career development.[113]
  95. There was also support for extending the wage subsidy period, to increase the value of subsidies supporting long-term employment outcomes. The Salvation Army Employment Plus (SAEP) suggested that the period be extended to 52 weeks (from the current 26), and that subsidies target industries where the supply of jobseekers significantly exceeds demand.[114] Joblink Plus expressed general support for this proposition but stated that subsidies should only be paid for permanent employment that extends beyond 26 weeks.[115]
  96. There were also mixed views as to the types of employers who should be eligible for subsidies. For example, SAEP asserted that subsidies should be restricted to small and medium enterprises (SMEs) and that labour hire companies should be ineligible for the scheme.[116] By contrast, the Recruitment, Consulting, and Staffing Association (RCSA) stated that restricting or eliminating wage subsidies would remove a critical component of the framework on which firms rely to support jobseekers and clients.[117]
  97. DEWR observed that the return to service rate for individuals who achieve a 26-week outcome is slightly higher for placements with labour hire companies compared to other businesses. However, the difference in the return to service rate is negligible when comparing subsidised and unsubsidised placements with labour hire companies. This is reflected in the following data:
• The return to service rate for subsidised placements is 4.3 per cent for labour hire companies, compared to 3.4 per cent for other employers and an overall average of 3.7 per cent.
• The return to service rate for unsubsidised placements is 4.2 per cent for labour hire companies, compared to 3.1 per cent for other employers and an overall average of 3.2 per cent.[118]
  98. Evidence from the 2022 evaluation of jobactive indicated that labour hire companies were over-represented in the use of wage subsidies, with approximately 25 per cent of all subsidies being paid to labour hire companies. The evaluation also noted that labour hire companies comprised 38 of the top 50 largest wage subsidy employers.[119] More recent data indicates that this trend continues. From July to December 2022, 23.9 per cent of expenditure on wage subsidies was paid to labour hire companies.[120]
  99. Wage subsidies have been funded from the EF since 1 January 2019. The decision to change the funding source for subsidies from a separate funding pool to the EF aimed to encourage more targeted support from providers and to reduce the amount of dead-weight loss seen in the early part of jobactive. DEWR explained that where a discrete funding pool was made available for wage subsidies, providers offered subsidies indiscriminately rather than using subsidies in a targeted manner, and subsidies had little impact on hiring decisions. By contrast, where subsidies were funded from the Employment Pathway Fund (a precursor to the EF) under Job Services Australia, there was an opportunity cost for providers in offering a subsidy, and accordingly funds were used more sparingly and were better targeted.[121]
  100. DEWR acknowledged a gender bias in the use of wage subsidies in favour of male jobseekers: as of 30 September 2023, 12.4 per cent of placements for a male jobseeker were supported by a subsidy, compared to 8.8 per cent of placements for female jobseekers. DEWR stated that this bias is largely driven by the gendered nature of many occupations, with the 10 most commonly subsidised occupations being male dominated. DEWR stated that it is working with providers to improve support for women within employment services, including by addressing gender gaps in placements and wage subsidies DEWR has also released a data analytics tool to assist providers to examine their targeting of wage subsidies to different cohorts at the organisations, employment region, site, and industry level to help identify and address bias.[122]

Challenges accessing and using wage subsidies

13.101In addition to expressing views as to the utility of wage subsidies, some stakeholders raised concern that subsidy arrangements can be inflexible, complex, and overly bureaucratic.[123] Specific concerns included:

• Subsidy agreements are administered via MyGov, with parties to an agreement required to have a MyGov ID. Reports of MyGov often failing or being clunky to use were common, or of the Digital Solutions Team being unresponsive to concerns.[124]
• The timeframe for finalising a wage subsidy agreement is too short at 28 days. Previously, the timeframe for finalising the agreement was 84 days.[125]
• Reports received during site visits and via other stakeholder engagement indicated that large businesses operating across multiple regions are willing to take on disadvantaged jobseekers but find it frustrating and inefficient to access subsidies via the EF as this requires negotiation with multiple providers as there is no longer a stand-alone program.
  102. Stakeholders also observed that that the different types of subsidies available across program areas and jurisdictions leads to confusion for employers and may open the system to exploitation.[126] APM noted that different subsidies apply where an employer engages a person with disability in DES and a person with disability in Workforce Australia, and there are different incentives for hiring First Nations jobseekers and hiring single parents. APM suggested a consolidated wage subsidy scheme for all programs and cohorts, complemented by other incentives for hiring disadvantaged jobseekers.[127]
  103. The Committee also head that administrative burden associated with wage subsidies creates particular challenges for SMEs. Asuria noted that smaller employers routinely experience difficulties with the 28-day time limit to finalise a subsidy agreement, with linking business accounts via MyGov, and with the overall opacity of the scheme.[128]

The role of social enterprise

13.104Several stakeholders observed that social enterprises—businesses with the objective of making a social impact rather than generating profits—are effective in addressing place-based disadvantage and enabling jobseekers to gain skills before moving into open employment. They are also key employers of disadvantaged jobseekers.[129] Inparticular, Work Integrated Social Enterprises (WISEs) have proven effective in delivering better employment outcomes than mainstream employment services.[130]

13.105Governments at all levels partner with the social enterprise sector to advance common objectives. The Employment White Paper review highlighted the Social Enterprise Development Initiative that will support organisations such as social enterprises and charities to build capability and support improved social outcomes. The Treasury and Department of Social Services (DSS) have been tasked with investigating opportunities for government to partner with social enterprises to improve labour market outcomes for people who experience entrenched disadvantage.[131]

13.106Despite the value of social enterprise (particularly WISEs), submitters argued that there has not been sufficient investment in the sector or efforts to integrate them into the employment services system, with initiatives to support social enterprises often delivered in a piecemeal manner. This has hampered the sustainability of social enterprises and minimised opportunities for scaling local services.[132]

13.107While social enterprises frequently do considerable work preparing jobseekers for employment and matching them to vacancies, they are often not compensated for their efforts. This comes into sharp focus when a social enterprise supports a Workforce Australia participant to move into employment but a provider, rather than the social enterprise, receives an outcome payment.

13.108During its site visits, the Committee engaged with a social enterprise which provides hospitality training and work experience to local jobseekers and brokers employment opportunities with local employers. The enterprise told the Committee that when a Workforce Australia or DES participant is placed in work, the provider receives the outcome payment and is often reluctant to share it with the social enterprise. In some cases, providers have been willing to partner with the social enterprise and share a portion of their outcome payment. However, this is at the provider’s discretion.

13.109The enterprise told the Committee they had no interest in becoming a provider due to high levels of administrative burden and the potential to be involved in compliance and enforcement. While grant funding and sales revenue may be enough for the enterprise to remain viable as a business, it is not sufficient to sustain larger training programs or to support state- or national-level scaling of services.

13.110Stakeholders emphasised that social enterprises must be financially supported to train, employ, and on-place jobseekers on the employment services caseload. Proposals included:

• ensuring subsidies for employing jobseekers are provided to social enterprise, rather than to a provider or another employer;[133]
• providing social enterprise with long-term, ongoing contracts to enable provision of ongoing employment to people from disadvantaged backgrounds;[134]
• expanding the payment by outcomes model;[135]
• greater use of social procurement to enable robust contracts between social enterprise and government; and[136]
• reverse tendering and regional-level grants.[137]
  111. Social Traders recommended Workforce Australia carve off a fund to enable WISEs that are already delivering outcomes to sustain, scale, and maximise the role they play. Social Trades submitted that this fund should be co-designed with the sector, and that measures should be implemented to support collection and sharing of data to enable learning from the fund and to inform future decision-making.[138]
  112. Social Traders recommended a fund of $50 million over an initial two years, building to $100 million per year over five years. Social Traders also made the following recommendations on the design of the funding mechanism:
• Use a grants process which asks applicants to detail the unique costs, revenue sources, and impacts of their service. This is critical as WISEs and other social enterprises support a range of participants and do not provide a uniform service at a fixed cost. A grants process should recognise and allow for diversity and innovation, help focus on quality and avoid a race to the bottom on price and help avoid incentivising social enterprises to work with jobseekers who are the easiest to place.
• Collect data and learn from enterprises to understand the impact and costs of different models. This may require greater investment in data initiatives and data infrastructure. Data should enable an understanding of costs to meet different needs and measure the commensurate benefits of outcomes to government. There should also be greater sharing of data between social enterprise and government.
• Engage large WISEs directly and small WISEs in aggregate. While there are some WISEs large enough to contract directly with government, most WISEs are too small for this approach to be effective. Accordingly, government should engage a single intermediary to deliver an aggregation function, through which multiple WISEs are engaged and funded. This is the approach taken in the Payment by Outcomes trial administered by DSS, whereby White Box Enterprises is the point of contact for the 16 WISEs in the program.
• Make participation available as an alternative to all people accessing personalised support through employment services. Engagement by a WISE should take the place of employment support delivered by a provider. WISEs should not be involved in compliance activity. Disincentives to employment service providers referring clients to social enterprises must also be addressed.
• Connect funding mechanisms with other government social enterprise initiatives, including the Social Enterprise Development Initiative, Outcomes Fund, and Economic Pathways to Refugee Integration Program. Funding mechanisms should also be co-designed with the sector.[139]
  113. Submitters also indicated that funding for social enterprises should be underpinned by a certification scheme, to ensure confidence in the validity of the enterprises which are engaged in the employment services system and ensure value for money in public expenditure. Stakeholders who addressed this issue recommended adoption of the existing certification process administered by Social Traders.[140]
  114. Social Traders informed the Committee that its certification is world-leading, has been developed and adapted over five years, is overseen by an independent expert advisory group, is endorsed by the social enterprise sector, and is inclusive of all social enterprises models, legal structures, and stages of development.[141]

A national social enterprise strategy

13.115Social Traders and Social Enterprise Australia (SEA) both expressed support for a national social enterprise strategy, noting that such a strategy would help bring together the various and often piecemeal initiatives to support social enterprise, enable the growth of the sector, and better integrate social enterprise with other government initiatives such as social procurement.[142] SEA also outlined key next steps which should be taken by Commonwealth portfolio areas to implement a national strategy, as follows:

• Department of the Prime Minister and Cabinet co-creates a national social enterprise strategy with the sector, enables endorsement of the use of data on social enterprises by government, and enables endorsement of certification as the national standard for social enterprise.
• The Treasury provides funding for the foundational measures for the strategy, including a national peak body, the rollout of data initiatives and the uptake of certification, co-designs an outcomes fund with the sector, and provides access to appropriate capital for social enterprises at different stages of development.
• The Department of Finance creates a national social procurement framework (discussed in Chapter4) that names social enterprises and includes targets.
• DEWR adds social enterprise as a ‘stream’ in the employment services system and re-deploys existing funding to make social enterprise an alternative to employment services for jobseekers (discussed in Chapter 5).
• DSS co-designs a social enterprise development initiative with the sector and expands existing, proven payment mechanisms for social enterprise to drive more employment outcomes and reduce welfare dependence.
• Department of Home Affairs expands the Economic Pathways to Refugee Integration program to support employment outcomes for refugees and migrants.[143]
  116. Social enterprise strategies already exist at the state level. For example, Victoria has in place the Victorian Social Enterprise Strategy 2021–2025. This strategy focuses on building capacity within the sector; enhancing recognition of social enterprise and access to innovative funding models; fostering a connected and innovative social enterprise system across Victoria; and connecting social enterprise with government, including via social procurement.[144]
  117. The Employment White Paper observed that the social enterprise sector is growing and offers job opportunities to those experiencing disadvantage through inclusive employment opportunities, job training and on-the-job support. The review found that government is already partnering with the social enterprise sector to advance common objectives. The Commonwealth will also explore partnerships with state and territory governments, and service providers, under the Outcomes Fund (a funding commitment to support local projects which address disadvantage in communities). Going forward, the Government will also investigate opportunities to work with social enterprises to address persistent labour market disadvantage, with a focus on the role that social enterprise could play in creating jobs and career pathways.[145]

Committee comments

13.118There is strong evidence that ALMPs have the potential to generate very positive outcomes for clients, employers, and other stakeholders. However, evidence also indicates that the various programs under the Workforce Australia umbrella—like the broader human services ecosystem—have become fragmented and difficult to navigate. In addition, it appears that the manner in which several of these programs are implemented no longer reflects their original policy intent, and that the supports under these programs may duplicate what is—or at least should be—offered under a properly funded, quality core case management service.

13.119Within a rebuilt Commonwealth Employment Services System, policy settings for the various ALMPs must ensure that support is targeted where it is needed most and that complementary and facilitation programs do not duplicate the supports offered under case management services. Consolidating and reducing duplication and overlap is critical to building a coherent, coordinated employment services system.

13.120As outlined in Chapter 2, Australia currently invests significantly less than the OECD average in start-up incentives, direct job creation, and training and skill development. Part of rebuilding a system which includes a targeted and effective suite of ALMPs will be targeting investment in those areas which have historically been neglected. This may involve some rebalancing of funding priorities to ensure funding is targeted where it is needed most but is also likely to require additional overall expenditure if long-term unemployment is to be substantially reduced.

13.121Understanding that ALMPs can be relatively expensive, especially for disadvantaged jobseekers, the extent of reliance on them should be tailored to the net benefit to society informed by rigorous and ongoing evaluation as labour markets continue to change.

13.122Complementary programs in Workforce Australia should be consolidated as reforms to the systems are progressed, with ineffective or duplicative programs discontinued or rolled into core services. Programs which deliver a unique or clearly necessary service should be retained, with adjustments to ensure their ongoing effectiveness. Government must also invest in the robust, large-scale complementary programs such as wage subsidies and paid work experience, to ensure that providers have the tools they need to tackle long-term unemployment.

13.123The Committee acknowledges that there are relatively high levels of satisfaction with the EST program among participants. However, many of the services delivered through EST Block 1 courses could equally form part of the core supports delivered through mainstream case management services, particularly within a system where providers are encouraged to focus on equipping jobseekers with the full range of foundation skills necessary to compete in the open labour market. Block 2 EST courses are focused on equipping jobseekers for the demands of specific industries and brokering relationships with employers. Those services could be delivered via Employment Services Australia’s (ESA’s) regional hubs and through greater engagement with the education and training system. The industry placements supported through the EST program could also be enabled through paid work experience.

13.124Accordingly, while there is value for some jobseekers in the supports provided through the EST program, the Committee is not convinced that it needs to be retained under a separate contract. In a rebuilt system, EST as a separate program should be discontinued with services provided through the Block 1 and 2 EST courses instead delivered, respectively, by service partners and by ESA’s regional hubs.

13.125CTA should be retained as part of a reformed system. CTA delivers a unique service to a specific cohort (those over 45 years of age) and has a focus on improving digital literacy, moving between jobs, and returning to the workforce. Lifting digital literacy and other foundation skills, and preparing workers for transitions between careers and sectors, are critical to ensuring that the Australian workforce is prepared to respond to future skills needs and are key components of the government’s skills reform agenda.

13.126To ensure CTA continues to operate effectively, government should review payment structures for the program to ensure they are not acting as a barrier to program delivery. Constraints to program delivery should also be addressed, including by at least allowing remote delivery to be trialled to address issues associated with thin provider markets and provide more flexible access.

13.127The Committee supports the retention of a dedicated self-employment program as part of the employment services system. The S-EA program appears to have been effective in supporting new and growing small businesses and while also building the work readiness of jobseekers who do not ultimately move into or stay in self-employment. Some stakeholders—and particularly the NS-EA—have made a variety of suggestions for enhancing S-EA and making it more accessible to target cohorts. The Committee encourages the government to review and, where appropriate, implement those proposals for reform as many appear sensible and worthwhile.

13.128In particular, the Committee is supportive of reviewing S-EA to help ensure that participants in the former Entrepreneurship Facilitators program can be supported and consideration should be given to expanding eligibility for S-EA to make it more accessible for disadvantaged cohorts such as migrants, women, First Nations peoples, and people from CALD backgrounds. Review of the S-EA program should include consideration of the proposal for a ‘Self-Employment+ Services’ put forward by the AEA, and engagement with both the AEA and the NS-EA, among other key stakeholders.

13.129Facilitation programs for employers appear to have been at least moderately successful in supporting employers to access suitable candidates and in enabling place-based employment solutions. However, there is compelling evidence that facilitation programs for employers are not performing at optimal levels, and that the Local Jobs Program would benefit from public leadership, greater integration of labour market insights, and efforts to embed services within local communities.

13.130In a rebuilt Commonwealth Employment Services System, the Committee considers that existing facilitation programs for employers (including the Local Jobs Program, Workforce Specialists and Employer Liaison Officers) should be consolidated in employer facing services delivered through ESA’s regional hubs. This will help to embed employment services and associated supports within communities and is consistent with broader proposals to rebuild a public core of enabling and stewardship services.

13.131Finally, there are several foundation skills programs in the employment services ecosystem to which jobseekers may be referred. These include SEE, AMEP, and FSFYF. The Committee had only limited opportunity to review these programs as part of the inquiry, however, foundation skills programs clearly must be retained in the employment service ecosystem, consistent with the focus of the Employment White Paper on broadening access to foundation skills. The Committee proposes that there be an enhanced focus on digital skills and encourages government to consider any opportunities to further consolidate foundation skills programs to enable easier navigation for jobseekers and other stakeholders.

13.132The Committee recommends that the Australian Government consolidate and reduce the number of complementary programs and implement measures to enhance the programs which are retained. Over time, this should include the following changes:

• Ceasing Employability Skills Training, with the support provided via Block 1 courses incorporated into quality case management services and the support provided via Block 2 courses incorporated into the services delivered by Employment Services Australia’s regional hubs.
• Retaining Career Transition Assistance and trialling remote participation in the program to improve accessibility especially in thin markets.
• Retaining Self-Employment Assistance while reviewing the program with consideration to the enhancements recommended in evidence to this inquiry. This should include broadening eligibility criteria for the program.
• Ceasing facilitation programs for employers and rolling these services into a consolidated employer-focused service delivered via Employment Services Australia’s Regional Hubs. This consolidation would include the Local Jobs Program, Workforce Specialists, and Employer Liaison Officers.
• Continuing foundation skills programs with an enhanced focus on digital literacy and digital skills.
  133. It is clear that the current WfD program bears little to no resemblance to previous version of the program—including the program as introduced under the Howard Government. Previous iterations of the program had a much stronger focus on community projects, group work and skills and training development.
  134. While acknowledging that some people report benefit from WfD activities, the weight of evidence historically and presently is that WfD is overwhelmingly ineffective in terms of enabling jobseekers to increase employability, fails to enable social participation, and creates risk to the jobseeker’s safety. Contrary to popular belief, WfD attracts very little funding ($500 in total, of which at least half of which must go to the host organisation). By contrast, placements require a significant investment of time and resources by both the provider and the host, often with little benefit to the host’s organisation. In addition, under the current WfD program, there are very few group projects offered, with most participants in sole placements. Moreover, in some places there are no suitable WfD activities available—for example in thin market areas or for people with criminal records. This is despite WfD being mandatory for many people in the employment services system. Perversely, participation in WfD may requires the participant to pay transport and meal costs. These are not offset by the tiny Approved Program of Work Supplement (currently $20.80 per fortnight). This situation is patently unfair and unrealistic.
  135. The Committee considers that a rebuilt system should have a much broader suite of better designed alternatives and that WfD should be seen as a last resort activity, most likely only for that small minority of people who fail to meaningfully engage or comply with their Participation and Jobs Plan over the longer-term. If people choose or are referred to WfD, they should also receive a higher supplement that at least realistically covers their transport and participation costs. As reiterated elsewhere in this report, it is unreasonable and unrealistic to expect people surviving on a Jobseeker payment to be able to bear such additional costs.
  136. The Committee has reflected on the desirability of developing a community work program as a better alternative to WfD and whether this would be a useful augmentation given the small percentage of people for whom work in the private labour market is not a realistic goal—at a point in time or ever.
  137. Such mechanisms are not generally popular with economists and can quickly become controversial hence require very careful design and oversight and have only a limited role to play. Professor Borland’s conclusions that public sector job creation programs generally have little effect on outcomes for job-seekers due to a lack of skill development and the absence of a pathway to a permanent job should drive a cautious approach.
  138. Nevertheless, while the priority should be on private sector job creation programs such as wage subsidies, the Committee is on balance attracted to the strong evidence received proposing that a new community-based program should be trialled for jobseekers who clearly are not able to succeed in the open labour market in the short to medium term. It is proposed that community employment options be trialled in a limited number of communities / regions taking account of these findings and suggested parameters.
  139. The Committee proposes that such a program, called ‘Work in the Community’ should be capped and tightly targeted and key attributes are proposed below which should be subject to co-design:

• There should be a labour market attachment element to community employment with work attributes as people should not be seen as ‘abandoned’.
• Success should be defined around improvements in capability, health, mental health, connectedness, self-esteem, skills, and confidence rather than expecting entry into open employment in the first instance though open labour market pathways should be actively encouraged and facilitated.
• Participation should be voluntary and allow people to make a genuine contribution to their local community, based on comprehensive mapping of community needs and co-design of the job. The program should not be a ‘make-work’ exercise.
• Participants should have opportunities for training and skills development and support to build their personal capacity.
• Jobs should be of varying intensity and time though generally community jobs would be of longer duration more likely six to 12 months rather than seen as a short-term activation option.
• Participants should receive additional income for community employment while avoiding making the program too attractive as the goal should be to improve capability and ultimately prepare a person to transition to the open labour market.
• Hours and payment options could include allowing a person to retain their social security payment and work one day a week on top and retain those earnings; or design a two to three day a week job with a top-up payment so the income received ideally equates to minimum wage or close to.
• Such a program should only be trialled in a limited number of regional areas with thin markets and metropolitan areas of high and concentrated disadvantage.
  140. Participation in such a community-based employment program be sufficient to demonstrate ‘meaningful’ participation in employment services. For some people community employment would be a new launchpad into the open labour market, though for some people it may not ultimately prove to be so.
  141. The Committee also considers it important to give people the right to return to the program should they not retain employment on the open market. Measures such as this—which exist in community-based programs in Ireland and France—are an important safeguard and a key contributor to labour market attachment for clients.
  142. Community-based projects existed under previous iterations of employment services, and the Committee encourages government to have regard to those projects, as well as consulting extensively with stakeholders, in developing the new community-based program. Co-design processes should give careful consideration to the experiences of other jurisdictions including community-based programs in Ireland which include a social participation pathway and an employment pathway, and the Territories with Zero Long-Term Unemployment project conducted in France. These initiatives are discussed in Chapter 3. Attention should also be paid to the forthcoming OECD evaluation of Ireland’s program which the Committee understands is well advanced.
  143. Enabling infrastructure would be needed in each region such as Community Work Coordinators with responsibility for organising and facilitating access to more highly rated community projects or similar to build local partnerships, map and develop activities.

13.144The Committee recommends that Work for the Dole (WfD) be retained primarily as a last resort activity for people who fail to meaningfully engage or comply with their Participation and Jobs Plan over the long term. People who choose to participate in or are referred to WfD should receive a supplement that at least realistically covers their costs of transport and participation.

13.145The Committee recommends that the Australian Government co-design and trial a ‘Work in the Community’ community employment program in a limited number of regional areas and places with entrenched disadvantage, including the following key elements:

• Voluntary participation and choice of placement.
• Projects that contribute to community development, identified based on mapping of community need.
• Jobs of varying duration and intensity with appropriate payment.
• Work-like experiences with skills development and in-work training.
• Success be defined around improvements in capability, health, mental health, connectedness, self-esteem, skills, and confidence rather than expecting entry into open employment in the first instance though open labour market pathways should be actively encouraged and facilitated.

The Australian Government should also consider providing a right of return tothe program to give clients confidence and security to pursue open employment.

13.146The Committee is firmly of the view that social enterprise can play a greater role in the employment services system—both as employers and as delivery agencies which build jobseekers’ capacity and meet participation requirements. For some people, social enterprises will be the most realistic destination while for many others they can be a pathway towards employment on the open market. The Committee is particularly supportive of bringing a greater number of WISEs into the system, given their focus on employment outcomes.

13.147The Committee welcomes the Government’s broad commitments in the White Paper: Working Futures to investigate opportunities to work with social enterprises to address persistent labour market disadvantage, particularly in creating jobs and career pathways for disadvantaged people. The Committee considers that this issue is so important that it warrants a considered strategy to underpin measures to better integrate social enterprise into the employment services system. Among other matters, this strategy should provide an overarching framework for how social enterprises are funded at the national level, integration with employment services and other human services, links to social procurement, the sharing of data to enable continuous improvement, and measures for certification. Victoria has implemented a strategy of this kind, which may be used as a model.

13.148A critical first step to integrating social enterprise into the employment services system is to ensure there are arrangements in place to ensure the legitimacy of those enterprises and the value of services they deliver. Social Traders’ certification process is evidence based, transparent and mature and there is no need to reinvent the wheel. It is already being used by the Victorian, New South Wales and Queensland Governments and is under consideration elsewhere and should be endorsed by the Commonwealth Government. This may require modest financial assistance on a temporary basis to ensure that Social Traders has the capacity to certify a larger number of enterprises and bring them into the system.

13.149In a reformed system, ESA and contracted service partners would be able to refer jobseekers to open vacancies with social enterprises to enable the jobseeker to gain work experience, build core employability and sector-specific skills, and move into employment on the open labour market. Subject to hours of work or participation in training, engagement in social enterprise would be a suitable activity to include in a Participation and Jobs Plan to demonstrate meaningful engagement with services in fulfillment of mutual obligation requirements.

13.150A critical precondition to enabling social enterprises to participate directly in a rebuilt Commonwealth system is to ensure that IT systems allow social enterprises to efficiently share data on participation, training, and employment outcomes. These arrangements are likely to be integral to funding social enterprise and should generate useful data for future policy and program development. As with other parts of the employment services system, engagement with IT and other systems should be as simple as possible.

13.151In reaching the conclusion that social enterprises can and should play a larger role in assisting disadvantaged jobseekers, one of the issues the Committee has grappled with is how best and most efficiently to fund and enable their work. There is a range of options to ensure social enterprises have the financial support necessary to remain viable and are appropriately rewarded for their role in building jobseekers’ capacity and achieving employment outcomes.

13.152The Committee highlights a combination of the following funding options, but leaves the detail of any new funding model to co-design and further consideration by DEWR in advising government and which could be trialled and experimented with to build an evidence base:

• Providing social enterprises at least a portion of the outcome payment that would otherwise go to a provider, noting that enterprises frequently take responsibility not only for training a jobseeker but for brokering a role with an employer. This may involve contracts between social enterprise and government, which should be as simple as possible and not involve an enterprise having any role in compliance or enforcement beyond minor reporting requirements.
• Enabling the use of the EF or a dedicated social enterprise fund to pay social enterprises, subject to agreement between the parties.
• Use of outcome payments drawing on the work led by the DSS in their Payment-by-Outcomes Pilot with WISEs.
  153. The Committee is particularly attracted to directly funding social enterprises using a reverse auction grant model as used by Jobs Victoria. Funding could be provided at the national, state and territory, or employment region level. The Committee agrees with the view put forward by Social Traders that a grants model should include the following key elements:
• Asking applicants to detail the unique costs, revenue sources, and impacts of their service. This approach should recognise the fact that the cost of delivering services will vary widely depending on the cohort, individual, regional labour market, and nature of the enterprise. It will also help to avoid a ‘race to the bottom’ on price where applicants only target those cohorts who are the cheapest and easiest to help. Jobs Victoria’s experience shows that by asking enterprises to effectively bid for funding on the basis that a particular amount of funding would result in particular outcomes, an efficient price can be established. The price which is established is often well below the Commonwealth price per outcome.
• Collecting data and learn from enterprises to understand the impact and costs of different models, including greater investment in data initiatives and infrastructure as necessary and greater sharing of data between social enterprise and government.
• Engaging larger social enterprises directly, and smaller enterprises in aggregate, using an intermediary. The approach taken in the Payment by Outcomes trial may be an instructive model.
• Making engagement with social enterprise available to all on the employment services caseload and encouraging contracted service partners to refer clients to social enterprise as appropriate. This should be facilitated through the new ESA regional hubs.
• Connecting funding mechanisms with other social enterprise initiatives.
  154. The Committee strongly suggests that a reverse auction grants approach be trialled as part of any rebuilt system—potentially in two complementary ways:
• Each employment region (noting the proposal to be outlined that there would be more regions of a smaller scale in a rebuilt system) be allocated a flexible grants fund which could be used to fund local organisations including social enterprise. Organisations would apply for funding using the Jobs Victoria reverse auction grant methodology, with grants to be assessed at a regional level. Authority to approve funding allocations could be delegated to the DEWR State or Territory Manager. Funding could be reallocated from the existing Local Jobs Program and designed to allow state and territory governments and/or philanthropists to co-invest in particular regions of interest (for example those experiencing economic transition or entrenched place-based disadvantage).
• A complementary National Employment Grants Fund be established to allow social enterprises and complementary community-based programs to bid for funding for projects that cross more than one region (this could include social enterprises as well as cohort-based programs with proven success.).
  155. Recognising that social enterprises are often open market employers as well as training and service delivery organisations, they should continue to be supported as employers in a future employment services system. This should include access to wage subsidies and ensuring that contracted service partners and delivery agencies can claim payments for employment outcomes with a social enterprise.
  156. The Committee does not consider it necessary to restrict the social enterprises with which a jobseeker can be placed to certified organisations, noting that open market employers are not subject to such controls. However, the Committee would encourage providers to engage with certified over non-certified enterprises insofar as this is possible.

13.157The Committee recommends that the Australian Government work with State and Territory Governments and key stakeholders such as Social Traders to develop and implement a Commonwealth social enterprise strategy, including the following measures:

• Funding for social enterprises. Subject to the outcomes of the trials contemplated by Recommendation 51, a reverse auction grant model as developed by Jobs Victoria should be preferred.
• Articulation of the role of social enterprises within the employment services system—both as employers and as training and support providers.
• Direct links to the Commonwealth Social Procurement Strategy outlined in Recommendation 5.
• Reducing if not eliminating barriers to entry into the employment services system for social enterprises.
• Ensuring that data on training and employment outcomes is shared between social enterprise and government systems.
• Endorsement of the certification framework administered by Social Traders, including additional financial support to enable national scaling.

13.158The Committee recommends that direct funding be made available to social enterprises which directly support employment outcomes. A reverse auction grant model as developed by Jobs Victoria should be used to establish an efficient price per outcome for various cohorts. This should include trialling the following complementary funding measures:

• Each employment region be allocated a flexible grants fund which can be used to fund local organisations including social enterprises. Organisations could apply for funding using the reverse auction grant model making transparent the impact and cost, with grants assessed at the regional level. Funding should be reallocated from the existing Local Jobs Program, and designed to allow State and Territory Governments to co-invest in particular regions or places of interest; and
• A complementary National Employment Grants Fund be established to allow social enterprises and complementary community-based programs to bid for funding for employment projects that cross more than one region.
  159. The use of wage subsidies is contested by labour market economists. In a very hot labour market as Australia is currently experiencing, wage subsidies are less effective. They do little in the way of entry level job creation and carry a dead weight loss. This loss is higher for the state and territory governments than the Commonwealth due to the costs of social security payments and entrenched (especially intergenerational) disadvantage.
  160. Wage subsidies have—at least in some cases—been effective in reducing perceived risks to employers associated with hiring jobseekers from the employment services caseload, including jobseekers who face disadvantage. In plain English, they can be a strong financial incentive for an employer to take a chance on an unemployed person, albeit that subsidies are generally seen as ‘necessary but not sufficient’ and are just part of a toolkit to help long term unemployed people back into sustainable work (alongside measures such as job design, workplace adaption, in-employment support, and job-linked training funding).
  161. Wage subsidies are also expensive. However, there is a strong case for well-designed incentives that pay money to an employer to support jobseekers to try actual work in a business rather than just paying them social security (whether at the current or increased rates). In addition, the use and effectiveness of wage subsidy programs should not be considered in isolation of other financial incentives such as tax exemptions or credits, paid work experience or internships, and work trials. The relative effectiveness and suitability of these programs should also be the subject of evaluations and (potentially RCTs) before scaling to the national system.
  162. Wage subsidy and other intensive ALMPs are also often treated warily by governments of all persuasions due to the fear that such programs will be too easily or more frequently rorted by business than intensive assistance models of service. However, taking account of OECD data, the experience of other nations and entrenched long-term unemployment in Australia, the Committee considers that the current system is profoundly unbalanced. There is very large expenditure on the operating core of the system (including very high overheads from operating an overly competitive, fragmented and heavily regulated quasi-market) but very little on direct job creation or employer engagement.
  163. There are also massive and inappropriate incentives for providers to move people into training in related entities. A rebuilt system needs to make employers the lead partner in on-the-job training as occurs in other countries. This means services and well-designed ALMPs clustered around the system giving case managers and employer engagement staff the tools they need to succeed.
  164. As a fundamental design principle, the Committee concludes that wage subsidies along with other ALMPs should be centrally administered by DEWR and available on an equitable basis to all. This means de-linking wage subsidies from the EF to ensure that subsidies remain available transparently irrespective of a provider’s use of the EF for other supports.
  165. While the Committee acknowledges some likely minor efficiencies in the current approach, this outweighed the significant disadvantages and inequities that are apparent. Linking wage subsidies to the EF creates a disincentive to their use, as the subsidy must be balanced against funding for other work-related needs such as transport, IT equipment, and uniforms. Wage subsidies are a significant investment and access often rests on whether a consultant wants to give one to the client in front of them. De-linking wage subsidies from the EF is also consistent with recommendations in Chapter 11 which envisage clearer rules and greater focus of the EF on directly supporting jobseekers.
  166. Central administration also allows government to monitor usage patterns and integrity issues more closely. Subsidies could benefit from greater oversight and more effective safeguards, noting some evidence of employers engaging jobseekers on a short-term basis to claim a subsidy, and terminating the employee (or not extending their contract) when the subsidy period comes to an end. Centralisation also allows government to continuously evaluate and adjust wage subsidy programs, nationally or potentially within labour market regions or jurisdictions, in a more dynamic way as labour markets change.
  167. In redesigning programs for wage subsidies and other financial incentives consideration should be given to a more nuanced system which scaled subsidies according to levels of disadvantage, productivity and number of hours worked. Similar programs in other jurisdictions have an expert assessment (either upfront or over the first period of work) to determine the appropriate percentage of wage subsidy. The main policy driver (observed in The Netherlands, Denmark and other jurisdictions that utilise this scaled approach) proposed is that the subsidy should reflect the capacity of the person you are hiring or trialling and give consideration to how long someone has been out of the labour market.
  168. With regard to the question of what sort of jobs subsidies should be available for, the Committee concludes that wage subsidies should generally only be paid for secure jobs (say of more than 6–12 months duration) and is not persuaded by arguments that wage subsidies for casual labour hire work should be universally or widely available. The Committee acknowledges the need for some flexibility for use in industries where casual work is the norm and that this question needs to be monitored and adjustments made as labour markets change.
  169. With regard to administration, the current arrangements for wage subsidies are inflexible, complex, and too often deter rather than entice businesses. The 28-day timeframe for finalising a subsidy agreement appears to be unduly short and a particular problem for SMEs, particularly noting that a longer timeframe is provided for subsidy agreements in other programs such as DES. In addition, a specific (personal) MyGov ID is required to enter an agreement. This can create significant challenges if, for example, the only holder of an authorised ID is on extended leave when an agreement is created in the system, and the agreement expires before that person returns to work.
  170. Administrative arrangements for wage subsidies should be simplified in a reformed system. In the shorter term, government should explore options such as allowing all people within an organisation to enter into a subsidy agreement, with questions of authorisation left to internal processes. Other options such as such as enabling verification of claims via Single Touch Payroll might also be explored.
  171. The Committee also proposes greater cooperation and alignment between jurisdictions, noting examples of subsidies state- and territory-based wage subsidy schemes. In the longer term, government should explore options to align the underpinning policy for wage subsidies—including subsidy amounts and eligibility criteria—across Commonwealth and other government programs insofar as possible.

13.172The Committee recommends that as a fundamental system design principle, wage subsidy programs (and other Active Labour Market Programs including paid work experience) should be centrally and transparently administered by the Department of Employment and Workplace Relations with funding de-linked from the Employment Fund.

13.173The Committee recommends that in redesigning wage subsidies as part of reforms to the employment services system key design principles to be considered include:

• Maximum subsidy amounts available to employers, including scalable subsidies which reflect the capacity of a person being hired or trialled, their disadvantage and how long they have been out of the labour market and the number of hours a worked.
• The types of work for which a wage subsidy may be claimed, including:

• a preference for secure work (more than six to 12 months) rather than temporary, casual and ‘gig’ work;
• the availability of subsidies for industries or roles which are currently excluded from the scheme;
• the extent to which subsidies should be available to labour hire organisations— if at all then likely only in sectors where labour hire is the major industry norm; and
• coherence and integration of disparate incentive programs including within DES, CDP and any other such Commonwealth programs.

• The adequacy of safeguards and integrity oversight, including restrictions on the circumstances in which an employer can claim a subsidy and on the number of subsidies that may be claimed.

13.174 The Committee recommends that the Australian Government work with State and Territory Governments to simplify access to and administration of wage subsidies across jurisdictions. This should include:

• expanding the range of ways in which a person or organisation may enter into a wage subsidy agreement;
• extending the time available to enter into a subsidy agreement, and aligning timeframes for agreements across programs as far as possible; and
• enabling access to wage subsidies across Commonwealth, States and Territories programs via a single user interface.
  175. The Committee is also in principle supportive of well-designed paid work experience programs. Paid work experience can allow jobseekers to gain valuable experience and demonstrate their value to employers. Ideally such placements lead to longer term or permanent positions though international experience shows that this is not always realistic, whether because sufficient positions do not exist or because a jobseeker is not suitable or a match. Paid work experience programs can be a key means of reducing actual and perceived risks to the employer of engaging a jobseeker although proper integrity safeguards and monitoring are required to avoid unethical churn and misuse by employers. The Committee is attracted to the model of paid work experience put forward by ETC.
  176. Paid work experience should be entered into on a voluntary basis, should be clearly recorded in a Participation and Jobs Plan, and form part of a progression to employment and financial security. Paid work experience should ideally include a structured training component, consistent with broader views about the role of employers as key contributors to skills development rather than only as destinations for jobseekers.
  177. Social enterprises, sector-based organisations, and not-for-profit labour hire bodies could also have a role in providing work experience opportunities. Government, in designing a paid work experience program, should consider how these entities could be enabled to support work experience placements. For social enterprises, this should be part of a broader strategy to support social enterprise and to integrate these organisations into the employment services system, discussed below. The role of other intermediaries in a rebuilt Commonwealth Employment Services System is discussed in Chapter 12.

13.178The Committee recommends that the Australian Government consider properly designed paid work experience, including the following key elements:

• Engagement of a jobseeker from the employment services caseload for set periods (which may vary by placement).
• Wages at or above the minimum wage with costs met by government or split between government and the employer, subject to negotiation.
• Structured training and skills development opportunities.
• Incentives for businesses to take on a number of work experience placements per year based on their total number of employees with employment pathways for a reasonable percentage.
• A gradual increase in hours worked to build jobseekers’ resilience and fitness for work based on individual capacity.
• Proper integrity safeguards and monitoring to avoid unethical churn and misuse by employers.

Footnotes

[1]See Organisation for Economic Co-operation and Development (OECD) (2021), Institutional set-up of active labour market policy provision in OECD and EU countries: Organisational set-up, regulation and capacity, p.8, www.oecd-ilibrary.org/social-issues-migration-health/institutional-set-up-of-active-labour-market-policy-provision-in-oecd-and-eu-countries_9f2cbaa5-en, viewed 20 November 2023; OECD (2020), Impact evaluation of labour market policies through the use of linked administrative data, p. 2, www.oecd.org/ els/emp/Impact_evaluation_of_LMP.pdf, viewed 20 November 2023; OECD, Active Labour Market Policies: Connecting People with Jobs, www.oecd.org/employment/activation.htm, viewed 20 November 2023.

[2]J Borland (2014), ‘Dealing with unemployment: What should be the role of labour market programs?’ ANZSOG Evidence Base, Issue 4, pages 2–3.

[3]Borland, ‘Dealing with unemployment: What should be the role of labour market programs?’ Evidence Base, p. 17.

[4]International Labour Organization (ILO) (2003), Active labour market policies, p. 3, www.ilo.org/public/english/ standards/relm/gb/docs/gb288/pdf/esp-2.pdf, viewed 20 November 2023.

[5]National Employment Services Association (NESA), Submission 260, p. 18.

[6]See, for example, Getting Welfare to Work Research Team, Submission 191, p. 4; Brotherhood of St Laurence (BSL), Centre for Policy Development (CPD), and University of Melbourne (UniMelb), Submission256, pages 13–14.

[7]See, for example, The Salvation Army Employment Plus (SAEP), Submission 190, p. 42; Navitas, Submission 262, p. 3; MatchWorks, Submission263, p. 10.

[8]See, for example, Sarina Russo Job Access (SRJA), Submission 145, p. 15; CoAct, Submission 151, p. 13; MTC Australia (MTC), Submission 164, pages 6–7; Asuria People Services (Asuria), Submission 246, p. 28.

[9]Workskil Australia (Worksil), Submission 196, pages 19–20.

[10]Navitas, Submission 262, p. 3. See also MatchWorks, Submission 263, p. 28.

[11]Navitas, Submission 262, pages 4, 9.

[12]The ASE Group (ASE), Submission 258, p. [5].

[13]Your Financial Wellness, Submission 290, pages 1-2.

[14]Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, pages 209–210.

[15]Department of Employment and Workplace Relations (DEWR), Submission 254, pages 188.

[16]DEWR, Submission 254, pages 184–185.

[17]See, for example, Ms Aeryn Brown, Submission 114, p. [3]; Dr Ann Nevile, Submission 136, p. 9; SRJA, Submission 145, p. 14; Name Withheld, Submission 162, p. [3]; Name Withheld, Submission 187, p. [1]; Workskil, Submission 196, p. 29; atWork Australia (atWork), Submission 210, p. 12; Workways Australia Ltd (Workways), Submission 239, pages 20, 24; Australian Unemployed Workers’ Union (AUWU), Submission 253, p. [21.]

[18]Mr Ray Sutherland, ACT Member, AUWU, Committee Hansard, 19 September 2023, p. 29.

[19]Australian Council of Social Service (ACOSS), Submission 203, p. 22; See also Dr Peter Davidson, Principal Adviser, ACOSS, Committee Hansard, 19September 2023, p. 28

[20]Department of Employment (2015), Evaluation of Work for the Dole 2014–15, p. 89, www.dewr.gov.au/employment-services-evaluations/work-dole-evaluation, viewed 20 November 2023.

[21]Workskil, Submission 196, p. 29.

[22]St Vincent de Paul Society, Submission 170, pages 2–3. See also MAX, Submission 146, p. 41. The StVincent de Paul Society noted that by contrast to WfD placements, mutual obligation placements are less burdensome to administer and result in more positive outcomes—including gaining work skills, social connections, and self-confidence.

[23]See, for example, Name Withheld, Submission 123, p. [1]; Name Withheld, Submission 142, p. [2]; SRJA, Submission 145, p. 17.

[24]Antipoverty Centre, Submission 276, p. [11].

[25]Mr Matthew Lambelle, CEO, WISE Employment, Committee Hansard, 19 September 2023, p. 30.

[26]DEWR, Submission 254, pages 185–186.

[27]DEWR, Submission 254, p. 186.

[28]See, for example, AUWU, Submission 253.1, p. [1]; Per Capita, Submission 249, p. 56.

[29]Department of Social Services (DSS), Guide to Social Policy Law, 1.2.7.180 Approved program of work supplement (APWS)—description,https://guides.dss.gov.au/social-security-guide/1/2/7/180, viewed 20November 2023.

[30]DEWR (2022), The evaluation of jobactive: Final Report, p. 152, www.dewr.gov.au/employment-services-evaluations/resources/evaluation-jobactive-final-report, viewed 20 November 2023.

[31]NESA, Submission 260, p. 82. See also Per Capita, Submission 249, p. 56.

[32]DEWR, Submission 254, pages. 104, 152.

[33]DEWR, Submission 254, p. 152.

[34]DEWR, Workforce Australia Guidelines – Part B Employability Skills Training, pages 16–17, 19–20. Copies of all Workforce Australia guidelines available via www.dewr.gov.au/workforce-australia/workforce-australia-information-providers#toc-guidelines, viewed 20 November 2023.

[35]DEWR, Submission 254, p. 150. See also DEWR, Workforce Australia Guidelines – Part B Career Transition Assistance, pages 18–19.

[36]See, for example, WDEA Works, Submission 168, p. 6; SYC Ltd (SYC), Submission 189, p. 9; APM, Submission 213, p. 17; Navitas, Submission 262, pages 14–15.

[37]DEWR, Submission 254.7, p. [7].

[38]Workskil, Submission 196, p. 20.

[39]Per Capita, Submission 252, p. 17.

[40]See for example, SAEP, Submission 199, p. 42; MatchWorks, Submission 263, p. 28.

[41]Bamara, Submission 214, p. 11.

[42]Asuria, Submission 246, pages 28–29.

[43]DEWR, Submission 254, pages 150, 152.

[44]See, for example, Nirrumbuk Aboriginal Corporation (NAC), Submission 180, p. [5]; Bamara, Submission 214, p. 12.

[45]See, for example, CVGT Employment (CVGT), Submission 106, p. 15; Bamara, Submission 214, p. 12.

[46]DEWR, Submission 254, p.

[47]See, for example, VERTO, Submission 202, p. [17]; MatchWorks, Submission 263, p. 28.

[48]See IntoWork Australia (IntoWork), Submission 156, p. 3.

[49]National Self-Employment Association (NS-EA), Submission 225, p. 6.

[50]NS-EA, Submission 225, p. 7.

[51]NS-EA, Submission 225, pages 6–7, 9–11, 14, 17–18. See also Asuria, Submission 246, p. 28; Mr Adam Collinson, Deputy Chair, NS‑EA, Committee Hansard, 26May2023, p. 14; MrLuke Van Lith, Operations Manager, ABS Institute of Management, Committee Hansard, 26May2023, p.23.

[52]ASE, Submission 258, p. [5].

[53]See, for example, NS-EA, Submission 225, p. 12; Asuria, Submission 246, p. 28.

[54]DEWR, Submission 254, p. 157.

[55]Mrs Wendy Perry, Chair, Australian Entrepreneurs Alliance (AEA), Committee Hansard, 11 August 2023, p 23.

[56]Commonwealth of Australia (2023), Budget Measures 2023–24: Budget Paper No. 2, May 2023, p. 106.

[57]Mrs Perry, AEA, Committee Hansard, 11 August 2023, p. 22.

[58]AEA, Submission 289(Attachment 1), pages [4–8].

[59]DEWR, Submission 254, pages 94, 163–164.

[60]DEWR, Submission 254, pages 95, 188–189.

[61]DEWR, Submission 254, pages 96, 155–156.

[62]DEWR, Submission 254, pages 166–167.

[63]DEWR (2023), Portfolio Budget Statements 2023–24:Budget Related Paper No. 1.6, p. 32.

[64]Senate Education and Employment Legislation Committee, Proof Committee Hansard, 25 October 2023, p.71.

[65]Commonwealth of Australia (2023), Working Future: The Australian Government’s White Paper on Jobs and Opportunities, p. 225.

[66]Social Ventures Australia (SVA), Submission 232, p. 14.

[67]Jobs Statewide, Submission 272, p. 6.

[68]CoAct, Submission 151, p. 16.

[69]Victorian Chamber of Commerce and Industry (VCCI), Submission 259, p. 4.

[70]ACOSS, Submission 203, pages 33–34.

[71]Per Capita, Submission 252, p. 12.

[72]Per Capita, Submission 252, p. 12.

[73]See, for example, Name Withheld, Submission 137, p. [3]; Australian Centre for Career Education (ACCE), Submission 149, p. 8; Joblink Plus, Submission 157, p. 14; Host International (HOST), Submission 188, p.6; Mission Australia, Submission 190, p. 5; Workskil, Submission 196, p. 29; The Agnus Knight Group (AKG), Submission 208, p. [5]; Australian Chamber of Commerce and Industry (ACCI), Submission 236, p. 5; DrDavidson, ACOSS, Committee Hansard, 19 September 2023, p. 28.

[74]VCCI, Submission 259, p. 5.

[75]Melbourne Institute—University of Melbourne (UniMelb) (2016), What are Best-Practice Programs for Jobseekers Facing High Barriers to Employment, Policy Brief No. 4/16, p. 4, https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0019/2168200/Melb-Inst-Policy-Brief-416.pdf, viewed 20 November 2023. See also Institute of Labor Economics (2015), What works? A meta analysis of recent active labor market program evaluation, Working Paper No. 21431, p. 12, www.nber.org/system/files/working_papers/w21431/w21431.pdf, viewed 20 November 2023.

[76]Enterprise and Training Company (ETC), Submission 133, pages 5–6.

[77]NESA, Submission 260, p. 67.

[78]Mission Australia, Submission 190, p. 7.

[79]SYC, Submission 189, p. 11.

[80]See, for example, Youth Projects, Submission 141, p. 13; VCCI, Submission 259, p. 5; MatchWorks, Submission 263, p. 33.

[81]See ACOSS, Submission 203, pages 8, 9, 10, 25, 27, 35, 37; Dr Davidson, ACOSS, Committee Hansard, 19September2023 p.28. The full details of the proposed Jobs and Training Offer is detailed in ACOSS(2023), Budget Priorities Statement 2023–24 – Submission to the Treasurer, www.acoss.org.au/wp-content/uploads/2023/10/ ACOSS_Budget-Priorities-Statement_2023-24-1.pdf, viewed 20November 2023.

[82]BSL, Submission 249, p. 57. See also, Per Capita, Submission 252, p. [43] that details the Given the Chance project with the ANZ bank to hire and trial refugees and new migrants.

[83]Per Capita, Submission 252, p. [52].

[84]See, for example, Professor Leila Green, Dr Kylie Stevenson, Dr Kelly Jaunzems, Ms Claire Hanlon and Mr Arthur Hanlon (Professor Green et al), Submission 120, p. [11]; MatchWorks, Submission 263, p. 25.

[85]Dr May Lam, Senior Fellow, Per Capita, Committee Hansard, 14 March 2023, pages 31–32.

[86]Dr Lam, Per Capita, Committee Hansard, 19 September 2023, pages 29–30.

[87]Dr Lam, Per Capita, Committee Hansard, 19 September 2023, p. 30.

[88]Dr Simone Casey, Senior Advisor—Employment, ACOSS, Committee Hansard, 17 May 2023, p. 8.

[89]Ms Kristin O'Connell, Co-coordinator—Research and Policy, Antipoverty Centre, Committee Hansard, 19 September 2023, p. 32

[90]BSL, CPD and UniMelb, Submission 256.1, p. 13.See also Dr Michael McGann, Senior Lecturer in Political Science, UniMelb, Committee Hansard, 20September 2023, p. 3

[91]CVGT, Submission 106, p.12

[92]See, for example, St Vincent de Paul Society, Submission 170, p. 4; Centre for Policy Futures—University of Queensland (CPF-UQ), Submission 217, p. 6.

[93]Professor Green et al, Submission 120, p. [4].

[94]Volunteering Australia, Submission 240, pages 7–8.

[95]DEWR, Submission 254, pages 76, 206.

[96]J Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, 19(3), p.133.

[97]Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, p.133.

[98]DEWR, Submission 254, p. 205.

[99]DEWR, Submission 254, p. 205.

[100]DEWR, Submission 254.7, p. [14]. As outlined in Table 1 in that document, wage subsidies are used across a range of sectors and occupations.

[101]See, for example, MAX, Submission 146, p. 35; CoAct, Submission 151, p. 16; Professor Jeff Borland, Submission 171, p. 3; Jobs Australia, Submission 185, p. 19; SYC, Submission 189, p. 15; SAEP, Submission 199, pages 52, 55.

[102]See, for example, CVGT, Submission 106, p. 20; Associate Professor Jo Ingold (Dr Ingold) and Mr Tony Carr, Submission 216, p. 7; TRECCA Employment - Ventia Australia (TRECCA),Submission 228, p. [6].

[103]See, for example, CVGT, Submission 106, p. 20; SAEP, Submission 199, p. 54; VERTO, Submission 202, p.[18]; Dr Ingold and Mr Tony Carr, Submission 216, p. 7; TRECCA, Submission 228, p. [6].

[104]Ms O’Connell, Antipoverty Centre, Committee Hansard, 19 September 2023, p. 29.

[105]DEWR, Submission 254.7, pages [18–19].

[106]Dr Ingold and Mr Carr, Submission 216, p. 7.

[107]See, for example, SVA, Submission 232, p. 15.

[108]Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, pages 135–137.

[109]Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, pages 137–140.

[110]Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, pages 140–141.

[111]Borland (2016), ‘Wage Subsidy Programs: A Primer’, Journal of Labour Market Economics, pages 141–142.

[112]Dr Davidson, ACOSS, Committee Hansard, 19September 2023, p. 28.

[113]MatchWorks, Submission 263, pages 34–35. See also Joblink Plus, Submission 157, pages 16–17.

[114]SAEP, Submission 199, p. 54.

[115]Joblink Plus, Submission 157, p. 17.

[116]SAEP, Submission 199, p. 54.

[117]Recruitment, Consulting, and Staffing Association (RCSA), Submission 201, p. 5.

[118]DEWR, Submission 254.7, p. [19]. DEWR indicated that gathering data on placements with labour hire enterprises can be challenging, noting that the definition of a labour hire enterprise and which employers must be licensed to deliver labour hire services varies between jurisdictions.

[119]DEWR (2022), The evaluation of jobactive: Final Report, pages 164–165.

[120]Standing Committee on Education and Employment, Response to question on notice SQ23-000195, p. [1].

[121]DEWR, Submission 254.1, pages [35-36].

[122]DEWR, Submission 254.7, p. [14].

[123]See, for example, AMES Australia (AMES), Submission 148, p. 6; CoAct, Submission 151, p. 16; SYC, Submission 189, p. 15; MatchWorks, Submission 263, pages 34–35.

[124]See, for example, SYC, Submission 189, p. 15; SAEP, Submission 199, p. 54; Workways, Submission 239, pages 10, 12.

[125]See, for example, atWork, Submission 210, p. 11.

[126]See, for example, MAX, Submission 146, p. 35; Training Alliance Group (TAG), Submission 195, p. [4].

[127]APM, Submission 213, p. 18.

[128]Asuria, Submission 246, p. 33. See also Management Governance Australia (MGA), Submission 183, p. 3; SAEP, Submission 199, p. 54.

[129]See, for example, Jobs Australia, Submission 185, p. 18; Good Cycles, Submission 237, p. 6; Mr Luke Terry, CEO, White Box Enterprises, Committee Hansard, 16 June 2023, p. 18.

[130]See, for example, White Box Enterprises, Submission 274, p. [3].

[131]See Commonwealth of Australia (2023), Working Future: The Australian Government's White Paper on Jobs and Opportunities, p. 234; The Hon Dr Jim Chalmers MP, Treasurer, and the Hon Amanda Rishworth MP, Minister for Social Services, Boosting opportunity for Australia’s most disadvantaged through social enterprises, Media Release, 25 September 2023.

[132]See, for example, Ms Jess Moore, CEO, Social Enterprise Australia (SEA), Committee Hansard, 17 May 2023, pages 33, 36; Mr Bryan McCormack, Senior Advisor—Government and Policy, Jobs Australia, Committee Hansard, 20 September 2023, p. 18.

[133]Success Works, Submission 139, p. [2]; SEA, Submission 307, p. [3].

[134]Ability Works, Submission 147, p. [2].

[135]See, for example, Ms Moore, SEA, Committee Hansard, 17 May 2023, pages 33, 36; Mr Terry, White Box Enterprises, Committee Hansard, 16 June 2023, pages 18–19.

[136]See, for example, Mr Terry, White Box Enterprises, Committee Hansard, 16 June 2023, pages 18–19; SocialTraders, Submission 298, pages 7–8.

[137]Mr Terry, White Box Enterprises, Committee Hansard, 16 June 2023, p. 20.

[138]Mr Alex Hooke, Executive Director—Advocacy and Engagement, Social Traders, Committee Hansard, 19September 2023, p. 26. See also Ms Moore, SEA, Committee Hansard, 17 May 2023, pages 33, 36.

[139]Social Traders, Submission 297.1, pages 1–7.

[140]See, for example, SEA, Submission 307, p. [3]; Mr Terry, White Box Enterprises, Committee Hansard, 16June 2023, p. 16.

[141]Social Traders, Submission 297, p. 6.

[142]Social Traders, Submission 297, p. 3; SEA, Submission 305.1, p. [1].

[143]SEA, Submission 305.1, p. [1].

[144]Government of Victoria, Victorian Social Enterprise Strategy 2021–2025, pages 29–35, https://djpr.vic.gov.au/__data/assets/pdf_file/0018/2036205/DJPR-Victorian-Social-Enterprise-Strategy.pdf, viewed 20 November 2023.

[145]Commonwealth of Australia (2023), Working Future: The Australian Government's White Paper on Jobs and Opportunities, p. 234.