ADDRESS TO THE NATIONAL EMPLOYMENT SERVICES ASSOCIATION

I acknowledge the traditional owners of the land on which we are meeting today, and pay my respects to elders, past and present.

To Ms Sally Sinclair, CEO of the Association, thank you for welcoming me here today. This is my first opportunity, as the shadow Minister, to address you at this forum, and I’m grateful for the invitation.

Today, I want to give you a sense of my thinking in relation to labour market programs, and to open my door to you, to hear what you have to say about how Australia’s labour market programs can be improved, in the interests of people who are looking for work, employers, and our society at large. I won’t be making any policy announcements, mostly because I am still reading, listening, and gaining a better understanding of what has been done to date.

My friend Ed Husic addressed you in August. Like him, I congratulate the National Employment Services Association on two decades of operation. Ed did a sterling job as the shadow Minister and I am grateful to be able to carry on his work.

Along with other stakeholders, I have commenced holding meetings with providers, to gain opinions from the coal-face about how Australian labour market programs can improve. I have also called upon NESA along with others for opinions about some of the issues being ventilated in the Senate about job search, and drug and alcohol exemptions, among others. Thank you for your engagement to date, and I look forward to meeting more of you in coming months.

My thinking is also being assisted by other work. I recently met with the director of the OECD’s employment, work and social affairs division in Paris, and took the opportunity to ask about the OECD’s research on labour market programs and wage subsidies. Closer to home, I was pleased to receive the report from Per Capita and the Australian Unemployed Workers’ Union about the perspectives and experiences of people using jobactive services. I know that a lot of their comments weren’t flattering towards your services. I expect you will tell me of your own frustrations about how the service you are engaged to provide compares with the service you wish you could provide.

There is a lot of interest in jobactive, and labour market programs generally, at the moment. I won’t speak in any detail about programs like ParentsNext, Transition to Work, CDP, or DES today; each is a topic in and of itself, and I defer to other shadow ministerial colleagues on issues relating to CDP and DES particularly. I do want to briefly talk about some of the work being done in relation to employment services, generally.

As you know, the Senate Education and Employment References Committee is undertaking an inquiry in relation to jobactive. There is a public hearing on here in Melbourne today. I am working closely with Labor senators on that committee and am looking forward to seeing what arises during the course of that inquiry.

I know many, if not all, of you have also participated in the government’s recent consultation, described as “the future of employment services”. The Expert Panel was due to report to the Government in October 2018. I wrote to the Minister on 23 October to ask for a copy of that report, but to date I have not received a response, and I have not been provided with a copy. Nonetheless, the submissions are, of themselves, very useful. I will make a few observations about the government’s discussion paper, that underpinned that process, shortly.

As you can appreciate from the comments I’ve made so far, like my predecessor, I am interested in how Australia’s labour market programs can change and improve. As a nation we spend a lot of money on labour market programs – with almost $7 billion allocated for the contracts running from 2015 to 2020.

As Ed said to you in August,

I have written to the new Minister twice – on the 9th of October, and on the 23rd - to ask for a commitment that no new contracts will be signed before the next federal election. I have not yet received a response. Therefore I must again call on the government to make that commitment, to provide certainty to you, to those seeking work, and to the nation.

 

Ed told you Labor has strong views about employment services. That remains as true today as when he said it.

Labor wants to work with stakeholders to renew the focus of Australia’s labour market programs on what matters: reducing unemployment. We want the people you serve to be front-of-mind. Of course, I’m talking about people looking for work, people seeking to hire, and the community at large.

Most people who are out of work, want to work. Let’s make our primary focus helping the overwhelming majority of people who are unemployed: those who are looking for work. For dignity. For identity. For the many satisfactions, big and small, that come from a job well done. Their needs should not come second to other motivations and priorities.

That begs the question: what can be done to reduce unemployment and underemployment?

Friends, there was a significant shift, in this country, and many others, towards supply side labour market programs in the 1990s. Not coincidentally, the Association was formed at around this time.

Important supply-side measures came into their own, with a focus on giving workers more information about the vacancies that exist, and helping to build their skills, knowledge, capacity and qualifications. We must continue to use supply-side measures to reduce unemployment.

We must not, though, make the mistake of thinking that supply-side measures can ever be a complete answer to unemployment. We do not have full employment in Australia. There are factors that exist beyond the motivation, qualifications, knowledge, skills and experience of individual employees that affect whether they get a job. Most obviously the strength of the economy, whether in the particular region or nationally, and the opportunities for work that exist in the economy, will be what matters to reducing cyclical unemployment.

The logical consequence of recognising that some factors are simply out of the control of employment services and people looking for work is that you, and they, cannot be expected to wholly shoulder the responsibility for getting everyone into work. Government, business, community, unions, education and training providers, health and community organisations, and others all must share in that responsibility.

Labor’s Kate Ellis took to the 2013 election a vision of highly-connected employment services working through local jobs and skills boards to adapt to local labour market conditions and make short- and longer-term plans. She noted the low levels of awareness of job services amongst businesses, and the need to do better in meeting their skills needs. She also acknowledged the importance of collaboration within the employment services community and with others, like health and community services. Much of what Kate had to say remains relevant five years later. Significantly, her vision was for a reactive system to become a proactive system.

Friends, labour market programs are crucial.

Importantly, labour market programs should have reducing unemployment, and responding to present and future skills shortages, as their priorities.

Unemployed workers should be kept in touch with the world of work. This has to be done positively and carefully, taking care not to make people feel like what they’re doing is futile; we don’t want people to give up on finding work and drop out of the system altogether.

Programs must help reduce unemployment by facilitating job search and matching. Services should be heavily engaged in connecting people with jobs. That means bridging the information gap by making sure people who are looking for work know about vacancies as they arise. Among other things this requires building strong connections with local employers to find out about the jobs that aren’t advertised.

And even for the jobs that are advertised, how many employers think of contacting local jobactive agencies when they’re hiring? I think most of you would agree that this could be improved.

Structural unemployment requires a different focus: connecting people to the education and training they need in order to be able to fill existing and future vacancies. Additionally, as well as working closely with employers to help them find the talent they need, it requires working with them to establish where there are skills shortages now, and what skills they expect to be in short supply in the future. Then, it requires taking that information and matching it up with ways for unemployed workers to reskill, whether through formal education or training, or on-the-job training. It must be the right training, though. In a 2015 paper to the OECD, researchers from the Humboldt-Universitat zu Berlin found that there’s not just no effect but a negative effect if training is obsolete or useless.

There is also a place for encouraging employers to take on additional workers with a view to skilling them up. Employers must do their fair share when it comes to making sure Australians get the on-the-job experience they need for jobs that are available now, and for the jobs of the future. Employers must recognise that part of their role is taking on people who won’t start making money for them immediately: the pay-off is the longer-term strength of their industry or undertaking. This is a form of demand-side approach that labour market program providers can take: working closely with employers to create additional opportunities. There are presently wage subsidies available. An obvious question is whether those wage subsidies are causing new jobs to be created or just having a displacement effect (which was a warning given in the paper I referred to earlier). Making sure we as a nation are getting some additionality in return for the spend on wage subsidies relies on those who are administering them being confident that the money is being used to create opportunities. All of this work requires strong, trust-based relationships, which take time to build.

You’re probably all thinking something along the lines of “that all sounds fine, but how much of this is abstract thinking, and how much is practical?”

Maybe you’re even thinking something like “ours is a volume operation. We need to maximise the throughput of people and the number of outcomes we get in order for what we do to be economic.”

As I said, I want some time to work with you and others to look at what exactly the nation is buying with the billions of dollars being spent on labour market programs. Funding of just over $6 billion has been allocated for jobactive over 18/19 to 21/22.

I expect you’ll want to talk to me about the way that funding works. Specifically, what impact does your funding model have on whether you get time to make the real and close connections with the community, local government, business, training and education stakeholders that are critical to your success in reducing unemployment?

You’ll also, I’m sure, have some views about eligibility. Are the criteria for voluntary participation in employment services designed well? Do they remain fit for purpose in a country with high under-employment?

I am also interested in how you’re finding the New Enterprise Incentive Scheme. Is it useful for the people you’re seeing? Would it be desirable for the takeup to be higher? If so, how could that be achieved?

I know there are concerns over the way that streaming works. For example, I am new to the portfolio and confess to being surprised to learn that people in prison, who are undertaking programs to transition out into the world of work, aren’t automatically ‘streamed’ as being in the C category. Yes, they have had secure accommodation in previous months – in prison. That doesn’t really seem like enough to make them easy to place after their release.

Closely connected to the issue of building ‘human capital’ through training and education are other impediments to, and determinants of, the ability of labour market participants to get a job. I’m talking about the practicalities in which you’re engaged, such as helping people get a drivers’ licence. I’m also talking about the interaction between health and employment. I’m keen to hear from you about what could be done to help labour market programs and primary health programs work together.

And of course, a key issue for your ability to help people find jobs is the intersection between what should be your bread and butter work – reducing unemployment – and the work you’re also asked to do, as part of administering mutual obligation and ‘targeted compliance’. I hear differing views from different people about the work you’re asked to do to impose suspensions and demerits under the compliance framework. You will have read, in the Per Capita report, a quote from a gentleman named Paul who said of jobactive providers:

I’d like to hear from you. What are the ramifications of the current arrangements? Do they help you help people stay in touch with the world of work? Do they have any impact on people’s propensity to become discouraged workers and drop out of the labour market altogether?

An obvious example is the government’s Work for the Dole program. The business case for it is less than clear. Work for the Dole is ostensibly partly about helping people find jobs, and partly about having them ‘give back to the community’. But every hour someone spends doing Work for the Dole is an hour not spent looking for work. And there’s also the potential for displacement - the risk that every hour someone spends providing labour at no cost to the boss, is an hour for which someone isn’t being hired. Getting a job - whether in private enterprise, a not-for-profit, or in the public sector - is, of itself, giving back to the community. Some like to say that the best form of welfare is a job. In response, one might say that going to work, and paying taxes, is one of the best forms of ‘giving back to the community’. As has been the case throughout these remarks, I haven’t formed a firm view about this program yet, but I do think it’s worthwhile to have a conversation about whether Work for the Dole is the best use of $65 million or so a year. The government obviously also has reservations, given they cut $148 million from the program in the 2017 budget.

I’m also interested in hearing from you about what you think for the various programs that have been introduced in the past few years. Australia is clearly interested in helping specific cohorts of people overcome the barriers to work most relevant to them. I’ve mentioned the activation  programs for disadvantaged young people and for new parents. I will say I have already had representations about the barriers facing people with a disability, and those facing carers. These issues are very important and I will be pursuing them.

 

I am also concerned about the intersection between mental health and unemployment.  Last year’s OECD paper “Connecting people with jobs: key issues for raising labour market participation in Australia” told us that “Australia has the largest employment gap for people with severe and mild-to-moderate mental illness” among ten comparator countries. It went on to state “In Australia the unemployment rate for people with mild-to-moderate mental ill-health is 2.5 times higher than that for people with no mental ill-health, and that of people with severe mental ill-health is more than five times higher.” Further, “about 26% of people with a severe mental disorder receive a disability benefit, but an even higher share (31%) relies on unemployment, lone-parent, or other allowances. Even among people who suffer from a moderate disorder, 40% depend on an income replacement benefit.”

These figures have obvious ramifications for your services. They strongly suggest there needs to be greater collaboration between mental health, primary health and employment services.

 

Let’s continue to discuss these important questions and look to the future of labour market programs - which brings me back to the government’s review, and expert panel. As I said, I haven’t seen the report.

I do have some reservations about the discussion paper. Perhaps most seriously, I am concerned about the focus on moving people into online rather than face-to-face services. Of course there’s a place for communications technology. Some people are less able to make it to meetings - especially those in remote areas, people with very young children, and people with caring responsibilities are some examples.

And people should not be unreasonably required to hold face to face meetings when a phone call would do just as well. But for a lot of people you are trying to help, building a relationship of trust and confidence will be important. For that purpose, no-one in this room would seriously tell me that communicating exclusively by chat bots, email or  video-conferencing is just as good as meeting in person. I have not formed a firm view, but as I say, I hold reservations.

Before I finish, I want to return to the point I made about a supply-side approach to reducing unemployment. As I said, I believe supply-side measures are crucial but not, of themselves, sufficient. If that’s true, that has ramifications for how governments and societies should behave. The unemployed (or their employment service providers) are not exclusively responsible for the existence of unemployment.

That means people who are looking for work should not be blamed, demonised, humiliated, or used as fodder for populist campaigns.

Everyone in this room would agree that those who use your services deserve support, and, most importantly, they deserve respect. I know all of you have wonderful staff whose vocation is to help people enjoy the satisfactions of finding decent, secure employment. I am sure you will have some views you wish to express to me about any impediments your services might have, in relation to making people feel supported and respected.

I want Australia to have labour market programs that are positive, supportive, and respectful.

Labour market programs can connect people to work, help them get the right experience for the jobs of today and of tomorrow, and build their skills, knowledge and capacity. They can help inspire the creation of new opportunities through incentives, communication and building relationships. They can help remove the impediments to finding a job that come with not having a wage to rely on, and with managing health and other personal issues. A Labor vision of labour market programs would be one of inclusiveness.

Everyone should be at the table –providers, workers, unions, community groups, local governments, TAFEs, universities, schools, vocation and adult community educators, industry associations, civil society – to work together to reduce unemployment and underemployment.

I am looking forward to hearing from you and understanding your insights as to what can be done to help get Australians into work.