The Briefing: how jobactive providers squeezed the unemployed during COVID-19

By Chris Woods

Friday September 11, 2020

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Crux of the issue

Privately-run job agencies have been paid hundreds of millions of dollars throughout the pandemic despite the national pause on mutual obligation requirements, while some agencies have even pressured unemployed people into meetings they were not required to attend.

The debate

In the government’s May 2020 response to the Senate Education and Employment References Committee’s February 2019 report, ‘Jobactive: failing those it is intended to serve‘, it was revealed that Minister for Employment, Skills, Small and Family Business Michaelia Cash had approved a six-week advance of administration fees for jobactive providers.

Despite Cash also suspending mandatory mutual obligation requirements on March 24 — a suspension that continues in Victoria but began gradually easing for other states and territories on August 4 — this advance was extended to “provide temporary and immediate cash flow assistance to help providers maintain their staff and increase the number of appointments that were expected to be required” for the then-1.3 million unemployed Australians.

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As The Saturday Paper reported on August 29, that influx of taxpayer funds grew to at least $500 million throughout the pandemic, while a leaked document sent to providers by the federal Department of Education, Skills and Employment demonstrated that agencies were even paid bonuses for people who remained technically employed due to the JobKeeper wage subsidy:

“An Outcome may be payable where an Outcome was already tracking for a participant who moves onto the JobKeeper Payment through their previous employer or applies for/receives JobSeeker Payment initially then moves onto the JobKeeper Payment through their previous employer.”

The financial incentive to sign up new unemployed people and link them to jobs even in the face of plummeting vacancies — the Australian Unemployed Workers’ Union (AUWU) reported on September 9 that the number of Seek listings at 111,183 to the currently 1.6 million unemployed Australians — has also meant some providers pursue aggressive recruitment strategies in the face of both COVID-19 and the obligation moratorium.

Since that suspension in March, multiple unemployed people have reported being called up for ad-hoc phone appointments, pressured into undertaking interviews and met with aggressive recruitment strategies. In one of the more egregious examples, The New Daily reported in July that an employee for not-for-profit Help Employment came to newly-jobless man Thomas Roker’s house twice in the space of two hours to do a “house check” after failing to reach him a week earlier:

“It just felt like harassment. I had my eight-year-old daughter with me. She was quite petrified of the whole situation. I had to explain to her that it’s OK, ‘they’re not here to take you away’.”

Finally, running parallel to the providers controversy were pre-existing campaigns to either reform or abolish the jobactive system — i.e. the Senate inquiry found the system wastes the time of both employees and employers, not to mention the mental and physical health consequences of empowering private consultants to cut welfare payments — which, on the day that requirements were gradually re-introduced outside of Victoria in August, culminated in the AUWU’s “mutual obligation strike“.

The demonstration calls for unemployed people to not engage with the following, thus-far voluntary measures:

  • signing a job plan — “if you don’t sign one it’s harder to force you into a job you don’t want”
  • answering a phone call or email from a job agency
  • attending training programs
  • undertaking work for the dole
  • completing volunteering shifts
  • attending appointments with a job agency
  • doing job searches
  • completing ParentsNext activities

Crucially, the union does not advocate for people to risk their payments, and has stressed that the federal government has empowered job agencies to punish people that refuse to:

  • attend a job interview if offered work
  • accept an offer of suitable paid work

Stakeholders

The Morrison government

In its response to the highly-critical Senate report, the government argued that, “since its introduction in July 2015, jobactive has achieved good outcomes, with more Australians employed through jobactive than under previous programs.” The report also notes that, over the period from 1 July 2015 to 30 April 2020, jobactive had achieved more than 1.6 million job placements — note, however, there’s nothing to suggest all of those placements were due entirely to mutual obligations or even job providers.

Additionally, the government also announced the ‘New Employment Services’ model — which was meant to be introduced from July 2022 following trials this year, but was fast tracked in mid-2020 to cope with the spike in unemployment — that maintains mutual obligations while introducing a new “points based” system.

Early in the pandemic, the government both abolished those mutual obligations and introduced a $550 fortnightly coronavirus supplement that brought unemployment support for a single, childless person to $557.85 a week, a rate more than $25 above their relevant Henderson poverty line of $529.57. Despite opposition from the AUWU and other groups, the government will now slash the JobSeeker equivalent fortnightly rate from $1,100 to $800 by the end of September.

In announcing the gradual re-introduction of voluntary and mandatory mutual obligation requirements on August, Cash noted that, “the Australian government recognises this continues to be a challenging time for those looking for work” and that their, “focus remains on getting people back into jobs and rebuilding our economy as quickly as possible.”

Additionally, while the AUWU’s strike does not advocate for recipients to risk their payments, Cash described the strike at news.com.au as, “bizarre in both practical and theoretical terms”.

“The AUWU is calling for job seekers who are offered jobs to remain on income support, face financial penalties and deny themselves the opportunity of employment and income.

“In a time of recession you would think that AUWU would be helping Australians find work, rather than finding ways to avoid it.”

Under questioning at an August 6 senate committee hearing by Greens Senator Rachel Siewert, department deputy secretary Nathan Smyth noted that what happened to Roker, “is not part of the servicing arrangements at all,” although, according to The Saturday Paper, it has not contacted Roker before publication on August 29.

“We have said that face-to-face servicing is not to occur,” Smyth said. “I understand and I’m aware of the issue that you’re raising. Without going into the specifics and taking into account privacy considerations, that matter is being investigated by us at the moment.”

Private job agencies

The unemployment business is, to put it bluntly, booming.

Since the Commonwealth Employment Service was gutted and the sector privatised, the largest player in the space has become Sarina Russo Job Access, a company that received a $606 million jobactive contract in 2015 that now lasts until 2020. Additionally, the company has won over $2 billion in total government contracts since 2006, including one for the controversial ParentsNext employment program and, in just February this year, four state-based education and training contracts that are worth more than $80 million.

 

Source: jobactive Deed 2015-2020.

Despite that six-week advance from Cash and lucrative JobKeeper ‘double dipping’ scheme revealed by The Saturday Paper, some agencies appear to have done their best to squeeze Australia’s unemployed — the amount of whom more than doubled from 630,000 in February — throughout COVID-19.

The jobactive Deed 2015-2020 dictates that rates are paid to providers per recipient for administration, Work for the Dole and outcome (i.e. employment) payments; considering the pandemic effectively wiped that latter category, it is surprising to hear anonymous consultants tell The New Daily they were given job targets by their providers and, facing the threat of being fired, convinced others to sign up to job plans despite both the lack of opportunities and federal moratorium.

Speaking to RN Breakfast on Wednesday, September 9, CEO of the National Employment Services Association Sally Sinclair said she was “not aware of any specific complaints about job provider agencies”, but has hit out at the government’s decision to exclude providers from its fast-tracked digital employment services model, which allows digital jobseekers to complete and report their mutual obligations online and access assistance such as an online jobs board, job matching and training modules.

While the initiative was initially designed to funnel jobseekers to providers, the government decided in July to halt that engagement and allow roughly 400,000 “Stream A” jobseekers — those with the least obvious difficulties to re-entering the workforce — to defer the need for providers and use a digital portal; Sinclair now argues that there is:

“not really a valid assessment of what [people’s] requirements for support are, so we could have a situation where people who stay in the service end up becoming long term unemployed because they’re not actually getting those personal interventions or career coaching support”

The Australian Unemployed Workers’ Union

A coalition of unemployment advocates founded in 2014, the AUWU has five core welfare demands:

  1. Raise all Centrelink benefits to the Henderson Poverty Line ($517 per week)
  2. Abolish Work for the Dole
  3. End discrimination against Centrelink recipients (including income management)
  4. Remove punitive eligibility for Centrelink payments
  5. Abolish use of privately owned employment services industry and reinstate Commonwealth Employment Service

On their current strike, the group explains they are targeting “the failed job service provider model” and “oppose the cruelty of the system and the power job agencies wield over the unemployed and vulnerable, [and] the lack of funding transparency, inadequate regulation and operation of this industry.”

While they maintain mutual obligations must ultimately be abolished, the union calling for the current suspension to be extended until at least December 31, “because the worst possible time to be forcing people to engage with a permanently broken system is during a pandemic and severe economic crisis.”

The problem: Job plans do not cater for a person’s situation and there is an economic incentive for providers to force people into a job – regardless of the long-term security, safety, conditions and appropriateness of the selected employment. The best pathway to employment is for us to have agency, not for private operators to have public funds.

During the greatest economic downturn since the Great Depression, those on social security do not need harassment and punishment endorsed by a government that believes a “snap-back” is inevitable, even as their own numbers say otherwise and COVID brings Victoria to its knees.

Throughout this crisis, the government has given opaque information about unemployed workers’ rights. The AUWU made sustained attempts – through private channels – since the crisis began to have clear information released to the public.

The result was job agencies yet again exploiting vulnerable people. They do so because they are incentivised to punish and not provide. The evidence suggests this is intentional.

 

The Greens

Released in April, the Greens’ plan for the employment services sector during COVID-19 likewise called to suspend all mutual obligations until the pandemic is over, while social services spokesperson Senator Siewert noted that it had been “clear for years now that employment services are not fit for purpose and do not meet the needs of jobseekers…

“Giving unemployed workers standardised job plans, or asking them to apply for an arbitrary (albeit reduced) number of jobs each month, will not improve their chances of gaining employment. Employment providers should be incentivised to provide a quality and supportive service rather than the current punitive approach.”

Key points to note: On multiple reports

The Senate report ‘Jobactive: failing those it is intended to serve‘ made a series of recommendations relating to jobactive providers and mutual obligations, including that:

Recommendation 4: the government consult in a meaningful way with jobactive participants (including participants from disadvantaged groups) and other unemployed and underemployed Australians, as well as employment services providers, in designing future employment services.

Recommendation 19: the government consider expanding the activities that people can use to meet mutual obligation requirements, including attending an interview.

In additional comments, Siewert noted that there has been “overwhelming evidence presented throughout the inquiry, and many other Senate inquiries including into the Cashless Debit Card, Community Development Program and Robo-Debt, regarding the negative impact of mutual obligation is having on people on income support.”

On April 27, 2020, think tank Per Capita released discussion paper ‘Redesigning Employment Services after COVID-19‘, which argued that, “neither the existing jobactive system, nor the New Employment Services model, is a good fit for the post COVID-19 unemployment scenario [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.”

Source: ‘Redesigning Employment Services after COVID-19‘.

Additionally, Per Capita argued that evidence at both the Senate inquiry and the 2018 McPhee review, ‘I want to work: Employment Services 2020‘, demonstrated that jobactive’s “activation” model and funding priorities was failing to help unemployed people to find work.

Come June 22, the think tank had released another report, ‘Mutual Obligation After COVID-19: The Work for the Dole Time Bomb‘, which calculated that — considering a) it is feasible to expect as many as one million people could remain on JobSeeker ever after COVID-19 restrictions are lifted and b) 250,000 can then conservatively be expected to undertake Work for the Dole under the existing mutual obligation system — the current system offer a “time bomb will cost the Australian taxpayer $322 million and some of this will be on top of the already allocated $1.3 billion annual jobactive appropriation.”

Further reading

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