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    "Outcomes" in Oz
    Long term unemployment on the rise

    from The Jobs Letter No.94 / 5 February 1999

    Long-term unemployment has been on the rise since the Australian government introduced its Job Network as a replacement for the Commonwealth Employment Service (CES). A third of the unemployed across the Tasman almost 250,000 people have now been without a job for more than a year. ROSS GITTINS writes in the Sydney Morning Herald that the "outcomes"-driven system being introduced by the Howard administration is having some perverse effects:

  • In its first Budget the Howard Government slashed spending on the many labour-market programs designed to provide special assistance to the long-term unemployed under Labor's Working Nation.

    These programs included short-term training schemes and temporary wage subsidies to employers who took on the long-term jobless. They were administered partly by the CES and partly by a range of "case managers" drawn from the churches, charities and local community groups.

    What few Australians realise is that these programs haven't just been chopped back, they've been abandoned. Pretty much all that's left is the smallest, cheapest and least helpful labour-market program you could devise: Work for the Dole. It involves no training and it's for kids, not adults.

  • As part of the move to replace the CES with the corporatised Employment National and private "employment service providers", the cut-back programs have been "cashed out".

    Now, those participants in Job Network who've won contracts to provide "Flex 3" services are offered a fixed sum for each long-term unemployed person they help. This `bucket of money' ranges from $3,300 to $9,200 depending on the individual's degree of disadvantage, as hurriedly assessed by Centrelink.

    On paper, it's a great scheme, intended to maximise the incentive for the providers to get results and minimise the temptation to spend for the sake of it.

    The trick is that the providers get only 30% of the promised bucket of money when they take on each individual. The next 40% comes only if the person's been placed in a job and has lasted 13 weeks. The final 30% comes only if he or she lasts 26 weeks.

    So the bulk of any money a provider spends on making a person "job ready" is done on spec. If it doesn't do the trick, it's dead money. But if you do manage to get the person employed for the requisite term, you get the government payment regardless of how much you spent or what you spent it on.

  • All the emphasis is on outcomes and none on process. The obvious danger is that providers will sign up long-term jobless people to get the easy, up-front 30%, but not risk doing or spending much in pursuit of the elusive 70%.

    And this danger is heightened by two factors. First, the often cash-strapped charities and community groups are required to fund their activities until the government payments start arriving. Second, many providers under-priced their bids for the "Flex 1" tender (to undertake job-matching for ordinary jobseekers) in the expectation that they would cross-subsidise from the fixed-price Flex 3 contracts.

  • Whichever way you look at it, the long-term unemployed have been dudded. Little is being spent on providing "intensive assistance" to the long-term unemployed. We've gone from excessive training to no training. Job subsidies seem to have disappeared. The Government has budgeted to spend $1.2 billion on Flex 3 over the first 19 months of Job Network, but most of that money is likely to stay in the bucket.
    Source- Sydney Morning Herald, 7 December 1988 "Long-term jobless are being dudded" by Ross Gittins

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