Commonwealth Employment Service: The pitfalls of privatisation

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(Image via Jeremy Segrott / Flickr)

Darren Rexter examines the ways in which the privatisation of the Commonwealth Employment Service has failed job seekers and employers alike.

THE PRIVATISATION OF the Commonwealth Employment Service (CES) has failed.

The largely unregulated $7.3 billion a year employment services industry is struggling to deliver quality services for both job seekers and employers.

More than a third of job agencies are performing so poorly they should be ineligible to provide services and only 20 per cent of unemployed people are finding long-term work.

It’s time for a total rethink and the reintroduction of a government-run employment service. One that suits the needs of both job seekers and business and assists our nation in producing a highly skilled and productive workforce.

The CES fell victim to the deregulation and privatisation reforms of the 1990s and early 2000s. Governments of all persuasions argued that the market and competition would create a more efficient and economical way of delivering services. 

Its successor was Job Network — a group of charities and for-profit businesses that were assigned the task of helping job seekers into employment. There have been various reinventions of the scheme over its existence. Currently, we have Jobactive and, like its predecessors, it is failing, with complaints skyrocketing and poor performance by providers going unchecked.

Peter Strong, CEO of the Council of Small Business Australia, recently wrote a piece calling for the creation of a new CES, stating that the privatised system was textbook driven policy and has created a few millionaires off the back of the unemployed — while delivering a scheme that is probably delivering, at the most, minimal service.

He also stated that: 'The private sector will always do a more efficient job. But many believe that no private sector organisation should make a profit from the ills of the needy'.

At the heart of the problem is that private providers exist to make money. Job seekers have been turned into commodities, with providers paid for various outcomes achieved for their clients, such as placing someone in a job or an activity like Work for the Dole program.

Most providers rely on low margins and high turnover to make a profit and harder to place clients are often “parked”, meaning target groups and harder cases receive little or no assistance to find sustainable employment. This fact alone defeats the whole purpose of the scheme, employment services should exist to ensure everyone has equitable access to economic opportunities.

With the Salvation Army losing more than $1 million a month in the first 18 months of the latest version of the privatised system, it’s little wonder that some providers have turned to dubious practices in order to stay afloat.

In 2015, Four Corners reported that the Federal Government had retrieved more than $41 million worth of false claims over a three-year period. They found that the privatised system was vulnerable to exploitation and fraudulent activity within the scheme was widespread. There have been reports of job agencies pushing people into fake jobs, manipulating attendance figures, forging signatures and harassing clients for pay slips. 

A former policy director and expert in human services design and delivery, Rob Sturrock, has written that providers are:

... shielded from public scrutiny by the commercial-in-confidence provisions in their contracts with the department, which also protect them from freedom of information requests.

He also wrote that 'it is a system, replete with grand alibis, for which none of the mutually dependent participants inside and outside government takes overall responsibility'.

The pressure to turn a profit and with many staff within the system having no more than a high school education, has led to many job seekers being bullied and harassed by those assigned to assist them.

Stories have surfaced of providers attempting to force women with high-risk pregnancies into Work for the Dole program, terminally ill people being harassed for not looking for work, people who make complaints given tough regimes of activities and appointments, and refugees being treated with disrespect.

The Australian Unemployed Workers Union was formed – and created a much-needed advocacy service to fill this gap – due to the common occurrence of inappropriate behaviour in staff and the government department's interest in protecting the providers, rather than assisting vulnerable job seekers.

There are key social, economic and community benefits in supporting people to gain employment and major social and economic costs in unemployment and underemployment. Stakeholders – from small business groups to those representing the unemployed and vulnerable – are calling for urgent reform.

It is time to admit that this experiment in privatisation has failed and for those currently in power, along with future governments, to return to one of its main responsibilities — helping unemployed Australians into secure, well-paid jobs with a world-class public employment service.

Testimonials collected by the Australian Unemployed Workers Union for their 2018 report

You can follow Darren Rexter on Twitter @DarrenRexter.

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