Can a leopard change its spots? behavioural drivers and the jobactive system

As part of her work at Per Capita, Simone Casey outlined concerns about the jobactive system and work for the dole. Here these concerns are reinforced in observations about how the jobactive system’s over-reliance on outcome payments and sanctions are likely to play out as Mutual Obligations resume. She argues that unless there are further changes to the incentive structure that drives jobactive agency behaviour, unemployed workers are likely to face the same distressing treatments in the future they have in the past.

Present concerns with jobactive reflect 30 years of public policy design intended to engineer employment service provider behaviour so that the primary focus has been on getting people into jobs quickly. This reflects the fact that, over time, the incentive structure of the employment services system has increasingly been weighted to reward them for getting people into jobs quickly; and that has meant that the financial viability of the agencies was dependent on adopting behaviour that resulted in that. But most of these jobs were not because of jobactive agencies getting people jobs themselves - rather it was from hassling them to get jobs for themselves by threatening them with unpleasant activities like work for the dole every six months.

This thin (and cheap) model of support therefore was designed to result in the rapid referral of the frictionally unemployed to high turnover contingent jobs. Another jobactive focus has been to plug gaps in the availability of workers for areas with skills in demand where there are forecast to be job vacancies in the future such as Aged and Disability Care. The ‘skills in demand’ focus drives jobactive agencies to get longer term unemployed people into limited forms of training such as Cert II and III where they are eligible for an outcome payment only once the course has been completed 12 months later. There are disincentives built into the funding model to help job seekers with other forms of training (that they might want) and unemployed workers are actively discouraged from choosing pathways that do not lead to outcomes for the providers. This active discouragement includes failure to support job seeker with funding for their own employment goals, and the insistence that they do work for the dole rather than remain in jobs that do not meet the hours to meet outcome payment benchmarks. 

The National Employment Services Association (NESA) pointed out a bottleneck of 500,000 people who had yet to have their first appointment with a jobactive agency. And as the jobactive agencies have contacted these new job seekers, it appears to have been hard for workers to adapt to the new ‘light touch’ requirements they were asked to implement. Media reports suggest that they’ve been pressuring job seekers to sign job plans and threatening payment penalties despite the government having suspended mutual obligation penalties since March.  They’ve also been pressuring people to apply for jobs in periods of lockdown.

While this must have been a challenging time for jobactive workers (who have some been told to engage ‘proactively’ with job seekers without the use of the coercive authority of sanctions) it is clear that the need to chase job outcomes was still embedded in the practices of their employers. The pressure to get people to sign job plans is also likely have been an inefficiency problem because of the sudden doubling of the jobactive caseload, and the need for the dormant workforce to meet with all the new job seekers (online or by phone in the main part) within time-frames much shorter than usual. Indeed, data from the Department of Employment confirms that the jobactive caseload doubled since March.

Source: Labour Market Information Portal (30 July 2020)

But it is concerning that the jobactive system successfully lobbied to save itself from starvation as the numbers of job outcomes payments it receives has been disrupted by the COVID economic shock. In fact, it has been getting a massive cash boost while it deals with the sudden doubling of ‘job seeker’ numbers. There has also been a temporarily shift in the payment model from 30/70 to 50/50 (administration fees versus outcome fees). This means the average administration fee for every job seeker has increased and that the (tax-payers) cash injection to the jobactive system is even higher than that predicted in the recent Per Capita discussion papers.

The decision to impose 4 week payment cancellations for people who refuse jobs (and job interviews) from the 4th August (while keeping other job search requirements penalty free) provides a strong indication that the government intends to use employment services to get people into jobs quickly through the same use of threats and coercion that it has relied on in the past. It should  escape no-one that these ‘suitable jobs’ might be contingent jobs in meat-works, distribution centres, security and Aged-Care where lax employment, training and PPE practices have contributed to the spread COVID and where people have not had recourse to take paid leave so that they can stay in isolation.

While Victoria remains in lockdown and there are worrying signs that COVID re-emerging elsewhere, the role of jobactive job referrals in the potential spread of COVID needs attention.

The issues with the jobactive system reflect the fact that the government is not prepared to abandon market approaches that were designed in another millennia, or even a decade ago, and for what is now a very different labour market and economy. The big question about jobactive now, is whether this cashed-up system will actually help people find jobs. It has long been difficult to establish whether being connected to a jobactive agency has a direct influence on getting jobs, but it is well-known that most job seekers find their own jobs, for which the jobactive agencies get paid anyway. It is more relevant than ever to be asking what benefit there is in continuing to fund a $1.7b system that is unlikely to do much more than point people to the online job services like SEEK and Indeed where most employers advertise.  

The current suspension of mutual obligation has been temporary pivot, and hasn’t changed the practices, incentives or behaviours of the jobactive system that has been such a problem for so long.  We wait to learn what activities besides Work for the Dole and PaTH EST will be available for the large numbers of young unemployed people who have been casualties of the economic shock. To date there are no signs that anyone should expect anything different to what there has been in the past.

Further, if jobactive agencies are to adapt to the present labour market conditions they willl need to unlearn the old outcome payment incentive driven behaviours and adapt their organisational practices to post COVID unemployment. This requires skilled engagement with emerging labour market opportunities, not just for the insecure cleaning and security jobs that have proliferated since COVID. It also means ceasing needless hassling of unemployed workers the majority of whom, will work again when they can.