By Pauline O'Brian
On February 26, the Howard government announced the replacement of the Commonwealth Employment Service (CES) with a system of private job-market brokerage firms, the "Job Network", to commence on May 1.
The new system relies on vouchers assigned to unemployed people. These vouchers, which range in value from around $300 for the newly unemployed to $10,000 for the long-term, hard to place unemployed, are supposed to provide an incentive for job firms to place people in jobs.
There are numerous problems and potential problems with the new system.
Since brokerage firms' income will depend on available jobs, many firms operating in regions with few jobs will probably fail. The Department of Employment, Education, Training and Youth Affairs (DEETYA) will then have to reallocate the contract to another firm.
Recessions, with even higher unemployment rates, will lead to fewer job placements because the larger number of long-term unemployed, located in the higher voucher brackets, will use up the $1.7 billion available for the scheme very quickly.
The long-term operation of the system will result in the biggest firms, such as Drake International, taking over more of the "market", forcing smaller firms out. Some charity and church organisations which have won contracts in the new system (e.g. Mission Australia, Centacare Australia and the Salvation Army), already receive tax breaks from the government and so may survive.
At a recent Sydney conference of welfare organisations, however, some of these contractors expressed grave doubts about unemployed people receiving adequate service under the new system.
Along with the CES, the Skillshare Centre network has been sacrificed. While some centres obtained contracts, the majority did not.
Skillshare Centres were set up in the 1970s as the Community Youth Support Scheme drop-in centres for young unemployed people. In 1988, the federal government forced the centres to become partly self-funded under the Skillshare scheme, with many business-oriented organisations taking them over to run courses in basic job skills.
The one ALP-initiated labour market program which has survived the changes is the New Enterprise Incentive Scheme. This scheme pays unemployed people the dole for one year while they learn how to run a small business. The scheme appears to have a high success rate only because those business plans likely to succeed are approved. Such a scheme sits well with the pro-business ideology of the Howard government.
Spouses of a person actively looking for work and people already working will have to pay to use private job brokerage services.
Employment firms are likely to "cream" off those most likely to get jobs using the "capacity to benefit" test (determines whether an unemployed person will benefit from the firm's service). People failing this "test" will be told to come back another day — when their voucher is more attractive to the firm because the job seeker has become long-term unemployed.
The new system is also likely to exacerbate the problem of "segmentation" — people being stuck in a particular occupation and/or industry. Without a national network, most firms' horizon will be firmly local and limited to employers they can do deals with for vacancies.
Australia already compares badly to other OECD countries in job segmentation by gender. Women, who are locked into low-paying occupations and industries, are not likely to be re-trained for non-traditional jobs by profit-motivated employment firms.
There is also a monetary incentive for firms to hoard rather than advertise vacancies or inform the national DEETYA vacancy database (accessible through public touch-screens). While it is a contract condition that firms hand over vacancy information to DEETYA, it is unlikely that DEETYA will withdraw the contract of a firm which is racking up job placements.
Some major companies may outsource their recruitment functions, and get windfall gains for filling their own jobs. In this vein, the Retail Traders' Association of NSW is running traineeship services in NSW under the new contract and United Mining is running basic job matching in the Cardiff coal mining district.
The amount and type of assistance provided to the unemployed is entirely up to the firm. It may be re-training but it may be just a phone call. Some regions currently serviced by CES offices are to get only a part-time service.
A full list of job brokerage firms and organisations, their service and area coverage can be viewed on the internet.