In the Australian welfare sector, the obligations are ‘mutual’ but the benefits are one-way | unemployment

Two words make money in Australia’s billion-dollar welfare industry: mutual commitment.

When someone loses their job and claims unemployment benefits, they are sent to an outsourced employment agency for help finding a job. It triggers 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 main outsourced job placement programs. The top companies – some of them multinationals – will rake in hundreds of millions of dollars.

When the child of a single mother turns nine months old, it can be sent to a pre-employment support programme. The taxpayer sends cash to the charity or nonprofit running the program, sometimes to verify that they send their children to playgroup or “story time” at the library.

Those receiving unemployment benefits may be sent to work for unemployment benefits or to attend a training course, sometimes run by the same company as the provider or an affiliated company.

And if you get a job yourself? The provider can still request payment. When you start receiving Centrelink payments again, you return to an employment agency. The money round continues.

Since the dissolution of the Commonwealth Employment Service and the privatization of the system in the late 1990s, a vast network of private employment agencies and related training companies dependent on government contracts has emerged: an ‘unemployment industry’ fueled by the ideological mantra of ‘mutual obligation’ “, which their business model guarantees.

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

This includes those who have to travel long distances for ‘tick-and-flick’ appointments – in one case a 250km round trip. Another person had to skip work to visit an employment agency.

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

Last week we revealed how the industry successfully lobbied the Department for Employment and Workplace Relations to allow the practice of course referrals ‘from the same body’ to continue.

Screen capture of Communicare Understanding Closed Body Language course, which some job seekers are required to complete. Photo: Communicare

While a few cases have surfaced as part of our coverage of Workforce Australia’s new system, advocates and job seekers have rightly pointed out that many of these issues have been around for years.

Some of the jobseekers interviewed by Guardian Australia in recent months have struggled to get help when they need it; others who did not need help were placed in “busy work” activities.

Once a job seeker and welfare activist and now an organizer at the United Workers Union, Alex North recalls his time in the Employability Skills Training program which is expanding under Workforce Australia. More than 500 million US dollars will flow to private providers via the program over the next five years.

Among the tasks he was given to complete the program was a ‘scavenger hunt’, counting parking spaces and listing the items in a vending machine at an Adelaide training provider – the winner receiving a Freddo frog.

North already had a forklift license and has worked in hospitality, retail and warehousing as an order picker and packer. But because he’d been on unemployment benefits for a period of time, the system insisted he do employability training.

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

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

Former job counselors, meanwhile, have said they have referred jobseekers to online courses – at taxpayer expense – in areas their clients were not interested in. This was done, they say, because it’s the easiest way to play the key performance indicators – market share.

In other cases, agencies could receive additional direct payments.

A man who worked for a large for-profit for several years says, “A lot of people said, ‘Hey, this doesn’t get me a job?’ And basically our response was, ‘It doesn’t matter what’s on offer, that’s what you have to do. It’s either this, or you get a job, or we’re terminating your services.’”

Experts agree that some unemployed need support and guidance to get back into the labor market. This is particularly true in times of low unemployment such as now, when a larger proportion of beneficiaries are long-term unemployed.

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

The winners are the private companies and charities that refer customers and/or offer programs; the losers are the unemployed, the disadvantaged and the taxpayers.

What are mutual obligations?

  • People getting Centrelink payments must complete these tasks and activities in order to receive their benefits. 
  • The obligations vary depending on a person's circumstances and are listed in a "job plan", which people on benefits must sign with their job agency to get their first payment. 
  • To meet their mutual obligations, people on the new Workforce Australia program can complete various activities each month, such as job applications or education and training. These tasks are allocated a number of "points" and most jobseekers need to reach 100 points to keep their benefits. 
  • Jobseekers in the Disability Employment Services program must also agree to a job plan with their consultant, which generally sets how many job applications they must send off each month. But they are not subjected to the points system. 
  • Those on the ParentsNext program must agree to a similar plan – and complete tasks related to pre-employment preparation or parenting – to receive their payments. 

What happens if people don't meet their mutual obligations?

  • They will receive a "payment suspension", which means their benefits will be temporarily stopped unless they agree to rectify the problem with their job agency. They have two days to do this or their payment may be delayed. The suspension is generally automated. 
  • Those found not to have a "reasonable excuse" for failing to meet their obligations will be given a "demerit point" by their job agency. After a sixth demerit point, jobseekers can have their payments docked by 50% or 100%, and then stopped completely. 
quick start Guide

Explainers of Mutual Obligations


What are mutual obligations?

  • Persons receiving Centrelink payments must complete these tasks and activities in order to receive their benefits.
  • Obligations vary according to a person’s situation and are set out in a “work plan” that beneficiaries must sign with their employment agency to receive their first payment.
  • To meet their mutual obligations, participants in the new Workforce Australia program can complete different activities each month, such as: B. applications or training and further education. These tasks are assigned a number of “points” and most jobseekers must achieve 100 points to retain their achievements.
  • Jobseekers in the Disabled Employment Services program must also agree a job schedule with their counselor, which usually sets out how many applications they must submit each month. However, they are not subject to the point system.
  • Those enrolled in the ParentsNext program must agree to a similar plan — and complete tasks related to employment preparation or parenthood — to receive their payments.

What happens when people fail to meet their obligations to each other?

  • They get a “payment freeze,” meaning their benefits are temporarily suspended unless they agree to work things out with their employment agency. You have two days to do this, otherwise your payment may be delayed. The suspension is generally automated.
  • Those who do not have a “reasonable excuse” for not fulfilling their obligations receive a “failure point” from their employment agency. After a sixth demerit, job seekers can cut their payments by 50% or 100% and then stop altogether.

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The launch of Workforce Australia is the biggest shock to the system since it was privatized by the Howard government in the late 1990s. Having voted in favor of the law that made the new system possible, Labor has now announced a parliamentary inquiry to investigate it.

In a commendable attempt to avoid the problem of employment agencies neglecting the neediest jobseekers, Workforce Australia is reducing the number of welfare recipients sent to the privatized agencies.

Only those deemed to be disadvantaged are referred to providers, while others meet their obligations to one another via an online platform.

In the early days, some job seekers who switched from the old system to Workforce Australia noticed little difference in the quality of service. Emma Rayward, who has a PhD in creative arts, said she had to take an online personality test for her first appointment. While she appeared to have a “love of learning” but little “zeal” or “spirituality,” there was little if any discussion of relevant employment opportunities.

“It’s very frustrating that these employment agencies are getting all this money for seemingly pointless activities when welfare itself is below the poverty line,” Rayward said.

New system or not, as long as jobseekers are bound by rigid, mutual obligations enforced by private organizations with an inherent profit motive, money will continue to circulate.

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