Redesigning Employment Services after COVID-19

April 27, 2020

Work and Workers


This Per Capita discussion paper argues there is a need to redesign employment services to better meet the needs of people experiencing unemployment after the COVID-19 economic shock.

Current estimates suggest as many as 700,000 people may soon be signed up to jobactive employment services. If these estimates are correct, the number of people using these services will effectively be doubled in a very short period of time. Based on the existing fee structure, our estimates indicate that funding existing jobactive providers to provide employment services to 700,000 new recipients will cost the government around $210 million. Further, during the economic recovery, jobactive provider incomes will be boosted by ‘outcome fees’ that will total $1515 per person when people made unemployed by COVID-19 get back into work.

Given that there are already concerns about the effectiveness of the jobactive model it is questionable whether these newly unemployed people will receive services that are useful. This reflects concerns about both the capacity and capability of the jobactive providers, which have been identified in recent reviews of employment services.

In terms of capacity, there is evidence that jobactive workers already have excessive caseloads and that service provision is suffering as a result. This is only likely to get worse when jobactive providers are inundated with people who have become unemployed because of the economic shut-down in response to COVID-19. It is hard to envisage jobactive providers being able to do more than basic servicing, which can be done independently by job seekers using online digital self-service tools.

In terms of capability, the jobactive model is already undergoing significant reform in response to government and stakeholder recognition that it has failed to provide real assistance to most people seeking work. As a result of this, a ‘New Employment Services Model’ has been developed. This new model has advantages over the jobactive model in that it has introduced the capacity for large numbers of unemployed workers to agree to a job plan and meet job search requirements using digital self-servicing. It also introduces an Enhanced Services model intended to provide higher levels of intensive case management for unemployed workers with complex needs.

However, it is Per Capita’s view that neither the existing jobactive system, nor the New Employment Services model, is a good fit for the post COVID-19 unemployment scenario. This is because both models are hamstrung by a dependency on job outcome payments, which leads to under-investment in the needs of people most at risk of long-term unemployment.

In this discussion paper, we outline the case for a review of employment services. We will explain why viable funding for employment services should not be dependent on outcome payments and should be sufficient to enable agencies to provide ongoing services regardless of labour market conditions.

The most critical issues are those relating to job creation and employment supports that will prevent further long-term unemployment. These matters should be the substance of a significant review of government investment in active labour market programs, a review that is urgent given the predicted significant increase in unemployment. This review should engage stakeholders from businesses large and small, the labour movement, government department and agency heads, the skills and education sector, chambers of commerce and industry and other peak bodies, civil society, the social services sector, and unemployed workers.

This discussion paper proceeds by firstly looking at the likely post COVID-19 unemployment scenario. It then describes jobactive and the reasons it is being reformed. The paper then outlines the changes to the service model and fees of the New Employment Services trials.

It uses this analysis to outline the case for undertaking an urgent review of employment services for the post COVID-19 unemployment scenario. The paper concludes with more detailed recommendations for the scope and composition of this review.