This is the third paper in Per Capita’s series examining the operation and effectiveness of Australia’s employment services system, known as jobactive, in the context of the profound labour market disruption caused by the COVID-19 pandemic.
It follows Redesigning Employment Services after COVID-19, an analysis of the capacity of jobactive to respond to the surge in unemployment after the onset of COVID-19, which was published in April 2020; and an assessment of the fairness of the mutual obligation system, Mutual Obligation after COVID-19, published in June.
With the Mutual Obligation system set to return on 28 September 2020, this briefing provides an update on our earlier estimates of the cost of jobactive given the significant increase in the number of unemployed people needing assistance, and reflects on how the system has adapted so far to the unforeseen surge in case numbers.
The fact that the federal government has directed many newly unemployed people to its relatively new Online Employment Services (OES) system to slow the referral of unemployed workers to jobactive during the height of the economic shock indicates that policy makers are alive to a looming cost blow-out of the privatised employment services system.
This briefing paper finds that there is likely to be substantial inflation in the cost of jobactive, necessitating the allocation of additional government funding for employment services, unless there are radical changes to the jobactive model.
As with all areas of public policy, decisions about government funding of employment services have risks that need to be managed. There are trade-offs reflecting the variables of cost and effectiveness which, in the case of jobactive, include the need to balance the estimated value of employment services expenditure against its benefits to job seekers and the broader community.
At the centre of the current cost-benefit debate about jobactive is a concern about the adequacy of the help provided to unemployed workers either through online services or in person. In fact, neither of these options is the best solution for the post-COVID unemployment and labour market restructuring ahead. As the following analysis makes clear, a more fundamental reconfiguration of resources is required, so that skilled vocational counselling can be aligned to initiatives focused on emergent labour market opportunities.
This briefing paper concludes with observations on the likely impact of recent policy initiatives such as JobTrainer and the new Local Jobs Program, and a number of policy recommendations that would strengthen the capacity of Australia’s employment services system to provide useful and tailored support for Australians seeking to return to the labour force after the widespread loss of work since early 2020.