Buying and selling the poor

Australia’s unique welfare-to-work system is extensively privatised but is failing the most disadvantaged

By Associate Professor Siobhan O’Sullivan, University of New South Wales, Dr Michael McGann and Professor Mark Considine, University of Melbourne

The expression ‘what’s old is new again’ perfectly sums up Australia’s privatised welfare-to-work system.

It is a multibillion-dollar industry – the largest area of Australian Government Procurement outside defence – that involves about 40 private agencies delivering job search services to people on income support payments.

Getting jobseekers into work is the Australian’s government’s largest area of procured outside of defence. Picture: Carla Gottgens/Bloomberg/Getty Images

On July 1, 2022, Workforce Australia will replace Jobactive, as Australia’s mainstream employment assistance program. It in turn replaced JobServices Australia which began in 2009 and was preceded by Job Network, which started in 1998.

But Workforce Australia is not just a new name. It’s a tentative step away from two decades of privatisation. It’s a move towards online servicing by a public agency for most benefit recipients.

But while that may sound radically different, many long-term system observers are identifying much that is old within the context of the new.

Our recent book, Buying and Selling the Poor, provides insight into Australia’s welfare-to-work system. The title reflects the way people on welfare payments have been contracted-out of the regular public service by the marketisation of employment services.

Service providers bid for a share of the services to support, organise and make money from jobseekers, earning substantial service fees and outcome payments from the government. Many of these providers have become millionaires and some have joined the ranks of the super rich.

However, while the system achieves some success with those who are short-term unemployed and have few barriers to getting a job, it has failed to support those who are at risk of becoming long-term unemployed and who experience complex barriers – like homelessness, mental health issues, low-educational attainment – to moving into employment.

Perhaps that is why Australia’s system has been restyled so many times since the Keating government first outsourced case management of the long-term unemployed in 1994.

Privatisation has failed to adequately support harder cases like the disadvantaged and long-term unemployed. Picture: Getty Images

In our book, we set out to understand the best examples of agencies working with the long-term unemployed, through focused studies of four high performing employment offices in Victoria and New South Wales.

The offices were selected with the assistance of data provided by the Department of Employment, enabling us to discern between agencies and offices performing well in general, and those that were succeeding with the most highly vulnerable – these are called ‘Stream C’ recipients.

We spent up to four days observing and recording interactions at each of the offices. We observed and recorded interactions between jobseekers and case managers; case managers and other case managers; case managers and employers, and much more.

Then we followed the fate of approximately 100 long term unemployed clients in these offices to see what became of them.

The book tells the story of the different ways each agency classified and cajoled its client group.

The common story at all four sites was that the number of successes required to achieve a high rating in this system is very low. Just one or two jobseekers finding work in a month might be enough because the average across the system is itself so low that small numbers of successes create significant differences between the agencies.

We found no complex strategy used to assist the more disadvantaged clients, other than to test whether they might be better reclassified by Centrelink to make it possible to move them out of the system.

There is no complex strategy to help the more disadvantage jobseekers. Picture: Getty Images

We observed that an extraordinary amount of time at the frontline was spent on these classification issues and on checking and verifying matters that might lead to the jobseeker being sanctioned or given medical leave.

The reality for the ‘stream C’ cohort is that they are already seriously disadvantaged before they arrive for their appointment. Many have been unemployed for more than five years. Only one in five will get a job.

But what was most disappointing about the service they received from even the best agencies is that much of their time was spent on administrative tasks and routine activities and there was little time for improving their skills and options.

The staff looking after them are in precarious employment themselves.

Most have no qualifications and come to these jobs after working in retail, hospitality and marketing. They work hard and do their best to help. But the strategies they use are learned on the job and vary between tough-love “push, push, push” and quasi-motivational “you can do it!”.

In a few cases, we saw clients given extra help and linked directly to a local employer. But often the strategy is to drive them to find their own job.

A few months after the fieldwork was complete, we decided to send Christmas cards to staff we had met at the frontline in these offices. Most had already moved on.

A new digital platform is being introduced for jobseekers, however investment is needed in boosting frontline resources. Picture: Getty Images

The government has begun implementing the new digital platform for jobseekers which will see the majority served through an online system run by the Department itself. After twenty years they are back in the service delivery business. Meanwhile the ‘stream Cs’ will be promised a more intensive form of personal case management from private agents.

Perhaps they will finally have a service that really works for them?

If that is to happen, we know from this research that the system will need to invest in professional skills at the front line and work harder to improve the pathways into work by removing barriers and supporting employers to invest in those who have been left behind.

If the new digital delivery system can free-up resources to invest in these priorities we may finally see long term unemployed people given a real chance.

Buying and Selling the Poor: Inside Australia’s privatised welfare-to-work market (2021) – published by Sydney University Press – goes behind the scenes of Australia’s multibillion-dollar welfare-to-work industry to explore the human impacts of privatisation and how Australia responds to unemployment and disadvantage.

Join the authors on 11 May at University of Melbourne, as they discuss the fieldwork behind the book and why, despite decades of reform, Australia’s employment services system struggles to support so few long-term unemployed people into work.

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