Activating Jobseekers

How Australia Does It

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This report on the recent Australian experience with activation policies contains valuable lessons for other countries that need to improve the effectiveness of employment services and control benefit expenditure. It provides overview and assessment of labour market policies in Australia including the main institutions, benefit system, training programmes, employment incentives, and disability employment assistance.

Australia is unique among OECD countries in that its mainstream employment services are all delivered by over 100 for-profit and non-profit providers competing in a “quasi-market”, with their operations financed by service fees, employment outcome payments, and a special fund for measures that tackle jobseekers’ barriers to employment. In most other OECD countries, these services are delivered by the Public Employment Service. In the mid 2000s, several benefits previously paid without a job-search requirement were closed or reformed, bringing more people into the effective labour force.

Australia now has one of the highest employment rates in the OECD and this report concludes that its activation system deserves some of the credit for this relatively good performance. The Job Services Australia model, introduced in 2009, reinforced the focus on employment outcomes for highly-disadvantaged groups. This report assesses the latest model for activation and puts forward some recommendations to improve its effectiveness.


Unemployment and related benefits in Australia

Income-replacement benefits in Australia are means-tested. Payment rates vary as a function of social risk (such as education, unemployment, care responsibilities and incapacity), age and household composition. Unemployment benefit rates are indexed to prices, and have fallen well below disability benefit rates. Effective tax rates on earnings are sometimes high, but in standard cases jobseekers can retain a significant proportion of any earnings from part-time work. In some cases, parttime work satisfies participation requirements and unemployment benefit is paid as an in-work benefit. It can also play the role of a training allowance or a shortterm sickness allowance. When job-search requirements apply, failure to attend appointments with JSA providers can lead to benefit sanctions. Controversy over harshness or laxity of the regime has led to sharp swings of policy. The phasing-out of inactive benefits (i.e. that have no job-search or work availability requirements), and the extension of labour market participation requirements to Parenting Payments and workers with partial incapacity has progressively reduced the share of benefit recipients in the working-age population. Evaluations show that new participation requirements for a particular demographic group increase the rate of exit from benefit, but a greater impact arises from a fall in new claims. Policy-driven declines in benefit-recipiency rates have been matched by increases in employment rates, partly in the case of single parents and fully in the case of older workers.


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