In Australia’s welfare sector, the obligations are ‘mutual’, but profits only flow one way | Unemployment

Two words get the money going in Australia’s multi-billion dollar well-to-work industry: mutual obligation.

When someone loses their job and applies for the benefit, they are sent to an outside employment agency to get help with their job search. It leads to a payment to the provider – and the possibility of more to follow.

The federal government will spend more than $11 billion over four years on the two major outsourced job placement programs. The top companies – including some multinationals – will bring in hundreds of millions of dollars.

When a single mother’s child reaches nine months, she can be sent to a work preparation support program. The taxpayer sends money to the charity or the charity that runs the program, sometimes checking whether she sends her children to preschool or “story time” at the library.

Those who receive the Job Seeker Payment may be sent to work for the benefit, or training, which is sometimes provided by the same company as the provider, or a related company.

And if you get a job yourself? The provider can still claim a payment. If you find yourself back on Centrelink payments, return to an employment agency. The money-go-round continues to spin.

Since the Commonwealth Employment Service was disbanded and the system privatized in the late 1990s, an extensive network of private employment offices and related training companies that rely on government contracts has formed: an “unemployment industry” fueled by the ideological mantra of “mutual obligation”. ‘ that guarantees their business model.

Some readers have been shocked by examples of the mutual commitments Guardian Australia has exposed in recent weeks.

So are those told to travel long distances — in one case, a 250-mile round trip — for “tick and flick” appointments. Another person had to skip work to go to an employment agency.

Then there are the courses: including basic computer and literacy tests and others such as “understanding body languages” and “making decisions”.

Last week, we revealed how the industry successfully lobbied the Department of Employment and Workplace Relations to continue the practice of “same entity” course referrals.

Screenshot of Communicare's Understanding Closed Body Language course with six images of a woman conveying different expressions
Screenshot of Communicare’s Understanding Closed Body Language course to be taken by some job seekers. Photo: Share

While some cases have emerged as part of our reporting on the new Workforce Australia system, lawyers and job seekers have rightly pointed out that many of these issues have been around for years.

Some job seekers interviewed by Guardian Australia in recent months have struggled to get help when they needed it; others who did not need help were shoved into “busy work” activities.

Once a job seeker and welfare activist and now an organizer with the United Workers Union, Alex North remembers his time in the Employability Skills Training programme, which is being expanded under Workforce Australia. More than $500 million will flow to private providers through the program over the next five years.

The tasks he was given to run the program included a “scavenger hunt” that involved counting parking garages and placing the items in a vending machine at a training provider in Adelaide – the winner received a Freddo frog.

North already had a forklift certificate and worked in the hospitality, retail and warehousing as a picker and packer. But because he had been on welfare for some time, the system insisted that he undergo employability training.

On other days, he says, he was asked to copy text from paper to Microsoft Word and create a fake company, including a logo.

“It was pretty humiliating,” he says. “Most people just went through the motions.”

Former employment consultants, meanwhile, have said they are directing job seekers to online courses — at the expense of taxpayers — in areas their clients have had no interest in. This happened, they say, because it’s the easiest way to identify key performance indicators that determine market share.

In other cases, agencies could receive additional direct payments.

A man who worked for a large commercial services firm for several years says, “A lot of people said, ‘Hey, this isn’t going to get me a job?’ And basically our response was, ‘It doesn’t matter what’s on offer, this is what you should do. It’s this, or get a job or we’ll end your shifts.’”

Experts agree that some unemployed people need support and guidance to return to work. This is especially true in a period of low unemployment such as now, when a larger proportion of benefit recipients are long-term unemployed.

But the evidence suggests that the combination of a privatized job placement system and mutual obligations produces perverse results.

The winners are the private companies and charities that refer clients and/or offer programs; the losers are the unemployed, the underprivileged and the taxpayer.

Quick guide

Explanation of mutual obligations

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What are mutual obligations?

  • People who receive Centrelink payments must complete these tasks and activities to receive their benefits.
  • Obligations vary depending on a person’s circumstances and are stated in a “job plan,” which people on benefits must sign with their employment agency in order to get their first payment.
  • In order to fulfill their mutual obligations, people of the new Workforce Australia program will be able to carry out different activities each month, such as job interviews or education and training. These tasks are given a number of “points” and most job seekers have to reach 100 points to keep their benefits.
  • Job seekers in the Disability Employment Services program must also agree a job plan with their consultant, which generally defines how many applications to send each month. But they don’t fall under the points system.
  • Those who participate in the ParentsNext program must agree to a similar plan — and complete tasks related to employment preparation or parenthood — in order to receive their payments.

What happens if people do not fulfill their mutual obligations?

  • They will be given a “payment suspension”, meaning their benefits will be temporarily suspended unless they agree to resolve the issue with their employment agency. They have two days to do this, otherwise the payment will be delayed. The suspension is generally automated.
  • Those who do not have a “reasonable excuse” for not fulfilling their obligations will receive a “penalty point” from their employment agency. After a sixth penalty, job seekers can have their payments docked by 50% or 100% and then stop completely.

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The introduction of Workforce Australia is the biggest change to the system since it was privatized by the Howard government in the late 1990s. After voting in favor of the legislation that made the new system possible, Labor has now announced a parliamentary inquiry to look into it.

In a commendable effort to avoid the problem of employment agencies neglecting the most deprived job seekers, Workforce Australia is reducing the number of welfare recipients sent to the privatized agencies.

Only those deemed disadvantaged are sent to providers, while others fulfill their mutual obligations through an online platform.

Although still in their infancy, some job seekers who have moved from the old system to Workforce Australia have noticed little difference in the quality of service. Emily Rayward, who is completing a PhD in creative arts, said she had to take an online personality test at her first appointment. Although she apparently had a “love of learning” but little “lust” or “spirituality”, there was little or no discussion about relevant employment opportunities.

“It feels very frustrating that these employment agencies are receiving all this money for what is considered a very pointless activity, when welfare services themselves are below the poverty line,” Rayward said.

New system or not, as long as job seekers are subjected to rigid, reciprocal obligations imposed by inherently profit-driven private organizations, the money-go-round will only continue.

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