History of Employment Services

History of Employment Services

Job Network to Job Services Australia

Job Services Australia is the current evolution of mainstream privatised employment services and commenced on 1 July 2009. It consists of four Streams which are resourced to provide services appropriate to the needs of different types of unemployed people (known as job seekers), and a final Work Experience phase.  It is complemented by Disability Employment Services (DES) and job seekers' eligibility for services is determined by a combination of assessments including the Job Seeker Classification Instrument (JSCI) and if required a Job Capacity Assessment (JCA).  Centrelink is the government agency which determines income support eligibility and administers payments, and is generally the referral point for people to access employment services.

Active Labour Market Policies

Active Labour Market Policies were first introduced in response to the 1988 Review of the Social Security System under the leadership of Bettina Cass and consisted of more stringent job search reporting requirements and the introduction of Preparing for Work Agreements which preceded Activity Agreements and Employment Pathway Plans.

The contracting-out of employment services in Australia began with the Working Nation reforms flagged under the administration of the Labor Party's Prime Minister Paul Keating in a  White Paper  in which he stated that ‘[h]ealthy competition will lead to service improvement’. 

The privatised model commenced with 2/3rd of the market being contracted to nonprofit and for-profit providers and the other third retained by the corporatised public provider Employment Assistance Australia - then renamed Employment National.  The Keating reforms also introduced individual case management for long-term unemployed; the ability, on behalf of the job seeker, to choose his/her own employment agency and negotiate a service contract; the introduction of government funded training programs available to those who had been unemployed for over eighteen months; payment to private providers on a fee-for-success basis; and competition between providers based on the quality of their performance.  Following an interdepartmental review in 1995 further changes were made to the model including the introduction of Job Seeker Support Panels (JSSPs) to improve case management for disadvantaged job seekers. When the Liberal Government assumed power in 1996 it began further restructuring and abolished ESRA, JSSPs and  SkillShare, removed limited the employment services from Centrelink and created the Job Network.  These changes were flagged by the then Minister Amanda Vanstone in the 1996 "Labour Market Assistance Reformed".

Due to pressure from welfare organisations the Community Support Program (CSP) was established as an alternative to JSSPs in 1998. The CSP (the direct predecessor of PSP) aimed to provide integrated assistance to allow disadvantaged job seekers to overcome personal barriers and achieve other outcomes. These outcomes included gaining employment or self-employment, moving to Intensive Assistance in the Job Network, entering education and training, or moving to a more appropriate benefit, such as the Disability Support Pension (DSP). The program was of two years duration, was based on case management, and involved needs assessment, development of action plans, and the facilitation and coordination of access to required services.

Job Network

The first Job Network contracts ran from May 1998 until February 2000. The second contracts were operational from February 2000 until June 2003.  In 2002, the  Government announced that the third Job Network contracts would be for 40 per cent of the market only and the remaining 60 per cent market share were ‘rolled-over’ into new contracts for existing agencies.

 Under this system, agencies were selected for an extended contract based on their Star Ratings. The third contract commenced in mid-2003 (ESC2) and introduced the system whereby all jobseekers were referred to a private employment agency for customised assistance.

 This was unlike earlier iterations where only certain categories of unemployed people were streamed through the contracted service providers.

  • Contract 1 1998-2000 (ESC1)
  • Contract 2 2000-2003 (ESC2)
  • Contract 3 2003-2006 (ESC3)
  • Contract 3 Extension 2006-2009 (ESC 2006-09)
  • JSA Deed 2009-2012.

Star Ratings

The Star Ratings system was introduced in 2001 and was based on performance measures which identify those Job Network members that are best at helping job seekers achieve job outcomes.  Using a sophisticated regression model, they provided for comparisons between organisations operating in different regions and Employment Services Areas. Because these factors  can influence job seeker outcomes levels, differences in the labour market conditions under which Job Network members may operate (e.g. unemployment rates and employment growth) and differences in the characteristics of the job seekers they assist (e.g. duration of unemployment, age and gender) are accounted for in assessing Job Network members’ relative performance.

The method for assessing the performance of Job Network members was initially developed with the assistance of the Universities of Flinders and Adelaide, South Australian Centre for Economic Studies. An independent review of the Star Ratings Method completed by Access Economics in February 2002 concluded that the Star Ratings are calculated using a sound, leading-edge approach to performance measurement.

The Star Ratings have been consecutively been updated to reflect changes in policy drivers, including the Active Participation Model introduced from July 2003, and the Welfare to Work measures.  Star Ratings models have also been developed for Jobs Services Australia, Disability Employment Services and prior to their cessation WfD, PSP and JPET (?) using similar principles to the Job Network model.

Policy Drivers

During the Job Network era, the model was continuously reviewed and updated, including extensive consultation processes prior to the release of the tender (see our tender page for more) for each version.  Government policy in relation to the activation of unemployed people and those at risk of long term or intergenerational welfare dependency shaped the evolution of the model.

The McClure Report

In 1999 a review of the Australian welfare system was initiated which resulted in the The McClure Report which presented the Reference Group's medium to long term recommendations. In addition, they set out some initial steps, which could be taken in the development of a new Participation Support System.

The Government's overarching response to the McClure Report was the Building a simpler system: to help jobless families and individuals report which led to the Australian's Working together package.

Australian's Working Together (AWT)

The Australians Working Together package was announced in the 2001-02 budget. The objectives of the AWT package were:

  1. increasing self- reliance through economic participation (principally through paid employment) and social participation (which can assist transition to economic participation);
  2. generating opportunities and supporting economic and social participation through governments, communities and businesses working together; and
  3. building a social safety net that is more responsive to individual circumstances.

The measures introduced the concept of mutual obligation and established Work for the Dole and changed CSP to the Personal Support Program.

Active Participation Model (APM)

The Active Participation Model (APM), was implemented on 1 July 2003 as part of the third Employment Services Contract (ESC3) and was the most significant change to Job Network since its inception in 1998. The primary objectives of the APM were to:

  • increase the effectiveness of employment services in securing employment and other positive outcomes for job seekers; and
  • ensure that job seekers who remain unemployed are engaged in ongoing employment focused activity and job search.

The APM introduced a continuum of assistance to ensure that job seekers had continuous and uninterrupted employment services. This involved:

  • a single Job Network member providing increasingly intensive assistance to a job seeker throughout their period of unemployment;
  • the introduction of two streams of assistance: Job Search Support and Intensive Support (after three months of unemployment);
  • incorporating mutual obligation requirements into the continuum; and
  • increasing the range of outcomes fees to strengthen the link between the delivery of services and achieving outcomes.

Rapid connection processes were introduced to hasten job seekers’ engagement with Job Network. Reconnection processes were also introduced to re-establish engagement when a job seeker failed to attend an interview or service without a valid excuse. Employment exchange services were expanded. These changes involved increasing the number of organisations providing job brokerage through issuing Job Placement Licences to Job Network members and other (private) employment agencies, the inclusion of commercial job vacancy data bases on Australian JobSearch and greater use of electronic services in job search and matching activities. This included auto-matching information in a job seeker’s vocational profile against the requirements of vacancies listed on JobSearch. Intensive Support customised assistance replaced Intensive Assistance, with each episode of assistance (to a maximum of two per unemployment spell) reduced from a maximum of 12 to six months, with a six-month gap in between. All Fully Job Network Eligible job seekers assessed (by the Job Seeker Classification Instrument) to be at risk of long-term unemployment and those continuously unemployed for 12 months were eligible for Intensive Support customised assistance. To accommodate this change duration of unemployment was removed from the Job Seeker Classification Instrument as one of the factors used to assess risk of long-term unemployment.

Job Seeker Account

The Job Seeker Account was introduced to provide Job Network agencies with a pool of funds for purchasing services or other forms of assistance for job seekers. Although the  amount credited for each job seeker increased with the job seeker’s duration of unemployment and level of disadvantage, the level of expenditure on any job seeker is at their Job Network provider’s discretion. The APM was designed to enhance the link between Job Network and other programs. Accordingly, employment service providers were able to refer job seekers to programs outside Job Network (Complementary Programs) while continuing to provide Job Network services.

To maintain their eligibility for income support job seekers were now required to maintain a minimum level of job search activity irrespective of where they were in the continuum of assistance. Moreover, most job seekers on activity tested payments were required to participate in mutual obligation activities for six out of every 12 consecutive months they received income support while actively participating in Job Network services.

External Scrutiny

There have been several inquiries and reviews of the Job Network which have been critical of certain elements of its administration. 

In 2002 the Productivity Commission (PC) published Independent Review of the Job Network which made several recommendations which were incorporated into the Active Participation Model.  Some of the Commission's recommendations were not accepted which were not consistent with Government policy and recommendations supported in principle but subject to further consideration.

ANAO

The Australian National Audit Office (ANAO) has undertaken several reviews of elements of the Job Network which resulted in changes in DEEWR's risk management approach particularly that following the publication of Administration of the Job Seeker Account.  The ANAO found although that the overall approach taken by DEWR to administer the JSKA was sound there were three areas where DEWR could strengthen its administration of the JSKA:

  • better identify, assess and monitor the specific risks relating to the JSKA (including the potential for fraud) presented by particular Job Network Member organisations and sites;
  • place greater reliance on existing controls around the processes and procedures undertaken by Job Network Members that take effect prior to reimbursement of JSKA claims; and
  • implement and report on DEWR’s evaluation strategy.

Parliamentary Library

The Parliamentary Library have published a number of overviews of aspects of employment services including the thorough A review of developments in the Job Network.

This Research Paper briefly examines the development of the Job Network and evaluations of this system to etermine the Job Network’s capacity to cater to the needs of difficult-to-place job seekers and the long-term unemployed, and how this capacity might be improved. The main conclusions of the paper are that:

  • problems with the performance-linked payment structure of the Job Network, along with the limited fees paid to Job Network providers, have resulted in many difficult-to-place job seekers being given little or no employment assistance, and limited employment outcomes for this group
  • changes made to the Job Network in order to deal with emerging systemic problems have resulted in substantial administrative and compliance demands being placed upon Job Network providers
  • increased Government monitoring and regulation of Job Network providers have impacted on the ability of these providers to furnish the flexible and tailored support necessary to improve the employment outcomes of long-term unemployed and difficult-to-place job seekers
  • the findings indicate the need for changes to be made to the Job Network to ensure its capacity to meet the needs of job seekers in the current economic and labour market environment.

Welfare to Work

The Welfare to Work measures were announced in the 2005-06 Budget, and marked a further shift towards a work first approach.  Heralded as a response to the need to increase workforce participation in response to the warnings of the Treasury's 2002 Intergenerational Report the Welfare to Work measures targetted principal carers, people with disability, mature age job seekers, and the very long-term unemployed. 

The key aspects of the Welfare to Work measures included:

Parents on welfare will generally be required to seek part-time work if their youngest child is aged 6-15. People with disabilities applying for welfare who can work part time were required to undertake a Job Capacity Assessment and a new category of NewStart recipient with a 15hrs plus work capacity was introduced. Parents with a youngest child aged 6-15 and people with disabilities applying for welfare after 1 July 2006 will be eligible for enhanced Newstart. Existing parenting payment and DSP recipients entitlements were grandfathered.

New taper rates for benefit recipients were introduced as well as conditions for suitable employment.  Some modifications to the original Welfare to Work proposals were made during the passage of the bill through the Senate.

A new compliance framework will provide better incentives for people to meet their obligations including 8 week non payment penalties for third or serious non compliance and full time work for the dole for the long term unemployed.

Welfare to Work also include a renewed focus on stimulating employer demand and included an employer strategy will help promote the employment of parents, mature age Australians and people with disabilities who can work.

The Welfare to Work evaluation of 2008 found the measures had not significantly altered patterns of welfare dependency except inflow onto Parenting Payment because of the more stringent eligibility rules.  It did find a trend towards higher Disability Support Pension inflows consequential to this.

Welfare to Work Contact Model

The Welfare to Work measures were accompanied by the Contact Model which commenced in 50 Centrelink sites in November 2006 and sought to increase the engagement of job seekers through a meaningful face-to-face contact with Centrelink each fortnight. The Contact Model evaluation found that although the model improved participation, it was difficult for Centrelink to resource this.

Review of Employment Services

The Job Network model was subject to a review and major overhaul which began with the Future of Employment Services in Australia discussion paper in May 2008 after several years of  advocacy from providers and peak bodies on the shortcomings of the Job Network and related programs which needed to be updated to reflect the contemporary labour market conditions.

Social Inclusion

A change in Federal Government occurred while the model was being reviewed and the incoming Labor Government led by Prime Minister Kevin Rudd introduced a Social Inclusion portfolio overseen by Minister Julia Gillard.  It was conceded the Job Nework (and related services) model had not enabled disadvantaged job seekers to participate in the workforce and that the numbers of long term unemployed continued to grow, that Indigenous and other highly disadvantaged job seekers continued not to be serviced well by the model.  Consequently the new model which came to be known as Job Services Australia was to provide integrated services for job seekers and gave providers more incentive to find jobs for the harder to assist in the form of higher outcome payments based on the duration of unemployment. 

The former related programs, WfD PSP and JPET were collapsed into Stream Services, with Streams 3 and 4 providing assistance to those with the greatest barriers to employment. WfD was to be provided in the Work Experience phase with significantly reduced fees. The concept of the job seeker account (JSKA) was retained and renamed the Employment Pathway Fund (EPF).  Former activity agreements were also renamed Employment Pathway Plans (EPP),  and these were to be customised according to the needs of job seekers and include a skills assessment and intensive activity for Stream 1 job seekers.  The Government's social inclusion objectives were embodied in the form of new requirements for providers to provider  "holistic" services, including by having Memorandum of Understandings with local Homelessness and Indignenous and  to demonstrate strong relationships with other community welfare organisations and vocational education and training providers.

Jobs Services Australia (JSA)

JSA went to tender as New Employment Services in October 2008 and was hotly contested.  When the tender results were announced there was a significant carve-up in the provider market and a number of new subcontracting provider formations consequential to the changes in the service delivery model.  The DEEWR media release announced:

There will be 116 contracts servicing job seekers across Australia. The 116 contracts comprise individual organisations or groups of organisations totalling 141 providers. They will be supported by at least 48 sub contractors. There will be more than 2000 Job Services Australia sites across the nation, an increase from 1800 sites under the current system.
Other tender results included:

  • 72 per cent of Job Services Australia contractors are existing employment service providers. They will deliver 93 per cent of services.
  • 74 organisations delivering specialist services to help job seekers with special needs. This includes young people, the homeless, those with a mental illness and people from non-English speaking background.
  • 27 Indigenous organisations delivering employment services.
  • 88 not-for-profit contracts and 28 private sector contracts. A number of private sector contracts will see not-for-profit providers delivering services. This means the employment services share between not-for-profit and private sector providers will be similar to the current system.
  • There will be two new overseas entrants which deliver less than 2 per cent of employment services.

See the JSA Tender Results page for more.

Inquiry into the DEEWR tender process to award employment services contracts:http://www.aph.gov.au/senate/committee/eet_ctte/employment_services/index.htm

The tender process and outcomes received criticism from providers which resulted in a Senate Inquiry into the conduct of the 2009 tendering process by the Department of Education, Employment and Workplace Relations to award Employment Services contracts, with particular attention to:

  • the design on the tender, including the weighting given to past performance and the weighting given to the ‘value for money’ delivered by previous and new service providers,
  • evaluation of the tenders submitted against the selection criteria, including the relationship between recent service performance evaluations in various existing programs (such as provider star ratings), selection criteria and tendering outcomes, and
  • the extent to which the recommendations of the 2002 Productivity Commission report into employment services have been implemented;
  • the level of change of service providers and proportion of job seekers required to change providers, and the impacts of this disruption in communities with high levels of unemployment or facing significant increases in unemployment;
  • any differences between the recommendations of the Tender Assessment Panel and the announcement by the Minister for Employment Participation of successful tenders on 2 April;
  • the transaction costs of this level of provider turnover, the time taken to establish and ‘bed-down’ new employment services, and the likely impacts of this disruption on both new and existing clients seeking support during a period of rapidly rising unemployment;
  • communication by the department to successful and unsuccessful tenderers, the communications protocol employed during the probity period, and referrals to employment services by Centrelink during the transition period;
  • the extent to which the Government has kept its promise that Personal Support Program, Job Placement Employment and Training and Community Work Coordinator providers would not be disadvantaged in the process, and the number of smaller ‘specialist’ employment service providers delivering more client-focused services still supported by the Employment Services program;
  • the particular impact on Indigenous Employment Services providers and Indigenous-focused Employment Services providers;
  • the Employment Services Model, including whether it is sustainable in a climate of low employment growth and rising unemployment, and whether there is capacity to revise it in the face of changed economic circumstances; and
  • recommendations for the best way to maintain an appropriate level of continuity of service and ongoing sector viability while at the same time ensuring service quality and accountability and maximising the ancillary benefits for social inclusion through connection and integration with other services.

The inquiry concluded that the committee could identify no probity issues in relation to the tender process.

Global Financial Crisis (GFC)

Australia was spared the worst during the GFC being cushioned by the constant demand for exports especially in the resource sector. In addition, a Economic Stimulus package gave generous payments to low-middle income earners to maintain consumer spending.  As a result the downturn was very slight in Australia compared to other OECD countries and unemployment peaked at only 5.9% in July 2009.  However, as predicted by several labour market experts (see for example Bruce Chapman's presentation at the 2009 Jobs Australia conference), the recession did result in an increase in long term unemployed which has continued to grow.

Job Services Australia Customer Population by Unemployment Duration, September 2010

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