Transcript Slide 1

Reforming labour market policy to strengthen
social & economic participation
Anglicare Australia Annual Conference
13 September 2010
Michael Horn
Senior Manager, Research & Policy
Overview
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Core proposition about the labour market
Appraisal of current performance – the data
Imperative for further reform – labour market programs
Policy challenge
Core proposition
• Australia can and should do far more to improve the economic
participation of working age citizens as the most effective path
out of poverty and social exclusion
• This requires a new social contract which balances individual
obligations with government investment & acknowledges the
structural barriers to participation
Current situation – key statistics
Labour Underutilisation levels:
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Unemployment: 5.1% or about 608,000
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LTU (over 12 months): 110,000
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Underemployment: 7.4% or about 874,000
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Underutilisation: 12.5% or nearly 1.5 million
(ABS Labour Force Survey, August 2010, seasonally adjusted figures)
Current situation – key statistics 2
Specific groups affected:
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9% of 15-24 year olds on income support payments for >1yr (45% of these on
DSP)
15-24 year olds: Unemployment rate 11.6% & underemployment rate 13.6%:
over 25% underutilisation
780,000 people on Disability Support Pension
Less than half of those with a disability are engaged in paid work
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15% of children live in ‘jobless’ families
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Current situation – key statistics 3
Labour market participation rates:
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15+ years: 65.4%
15-64 years: 76.1%
Likely to decline in absence of policy reforms
Job vacancies:
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ANZ total job adverts: 172,000 per week (July 10)
10% of vacancies are public sector jobs (ABS)
Internet vacancies: 222,000 lodged in July (DEEWR)
Current situation – job vacancies
Internet Job Vacancies, July 2010
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
NSW
Vic
Source: DEEWR Vacancy report - IVI
Qld
SA
WA
Tas
NT
ACT
The challenge
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Prior to GfC, the sustained period of economic growth - but we left behind far
too many working age Australians.
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We still have an underlying policy challenge - how to build a bridge for the
pool of disadvantaged and disengaged working age Australians into
meaningful paid work that matches their aspirations.
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As our economy picks up, and demographic change impacts on the labour
force, labour shortages will reemerge across industries and regions.
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Employers will become frustrated again at the shortage of job seekers with the
foundational or soft skills to take up and retain jobs.
Active Labour Market Programs
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Job search and self-help assistance, including basic labour exchange services
aimed at job matching *
Job placement services
Training programs to develop soft or foundational skills, strengthen vocational
skills of job seekers or retrain displaced workers with redundant skills or
qualifications
Intensive support aimed at disadvantaged job seekers who may be considered
not ‘job ready’
Job creation strategies such as intermediate labour market (ILM) or
transitional employment programs using social enterprises to deliver work
experience
Job subsidies to stimulate demand from public and/or private employers,
including self-employment incentives
* Includes conditionality or obligation provisions and sanctions for non-compliance
Long history of ALMP’s – here & in OECD
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Tended to be a reactive response to global shocks or internal recessions
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With stubborn levels of unemployment & LTU in late 20th C, governments
introduced ALMP programs to build a bridge between the unemployed & jobs
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Expenditure on ALMPs dependent on politics of the day, stage in economic
cycle, etc. but reliance on passive LMP’s no longer adequate
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Increased interest in ALMP’s as old industrial economies transition into service
based economies over past 2 decades across OECD:
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reduction in % of ‘job for life’ employment (single employer)
high % of casual & part-time jobs and SMEs
majority of new jobs require higher level skills
increased occupational & regional mobility of labour
Growing concern about changing demographics & health problems on labour
supply to maintain productivity:
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ageing population
growth in single parent households
increased levels of disability
Australian ALMP developments
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Australia has led the way in some aspects of design and governance of employment
assistance system over past 2 decades:
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Strong suite of active participation, compliance measures and coercive penalties
Reduced role of public employment services & increased privatisation to commercial
and community providers
Expansion of universal & compulsory participation to broader groups of income
support recipients
Stronger drivers to improve performance focused on short term job outcomes
Use of a sophisticated assessment tool to stream job seekers for levels of assistance
(and $ for providers)
But this innovation (Job Network) was in a period of strong economic growth until
GfC
Underpinning ALMP design was a ‘work first’ focus, based on assumptions about
behavioural poverty to explain welfare dependence & job seeker behaviour
Since GfC, immediate shift to human capital focus by Rudd government through a
‘training first’ agenda
Some changes to Job Network model (now JSA) and disability employment services
through contract renewal from 2009
Policy challenges for Australia
1. Insufficient investment in ALMP provision compared to OECD
2. Underinvestment in integrated models aimed at highly disadvantaged
groups
3. Has Australia gone too far in privatising program delivery (JSA) in the
quest for efficiency and performance?
4. Reconsider conditionality policy levers based on evidence of impact
Public expenditure on LMPs in OECD
as % of GDP (2007/8)
3.5
% GDP
Passive programs
3
Active programs
2.5
2
1.5
1
0.5
DNK
BEL
SWE
NLD
FRA
FIN
ESP
GDR
AUT
IRL
SUI
OECD ave
NOR
POR
POL
LUX
ITA
NZ
UK
AUS
HUN
CAN
CZE
SVK
JPN
KOR
USA
0
Increase investment in integrated models
Further reforms to universal employment assistance system (JSA) to:
• Resource transitional employment programs (Intermediate Labour
Market approach) as complementary pathway:
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Client centred assistance with continuity of support
Integrated training, real work experience and support
Vocational training and work experience linked to local jobs & employers
Utilise social enterprises to provide work opportunities
• Integrated service responses that join up assistance across silos and
programs:
− Effective engagement and complete assessment
− Case management resourced
− ‘Make work pay’ provisions
Has Australia gone too far in privatising program
delivery (JSA) in the quest for efficiency and
performance?
• Requires sophisticated profiling tools & assessment processes to
accurately categorise job seekers into 4 streams (JSA) – plus
Disability Employment Services and Work Experience phase
• Complexity of contract management arrangements required to assess
performance and prevent ‘creaming’ or ‘parking’ of job seekers
• Diverts provider resources to contract accountability
• Reduces case worker expertise & skills
• Constrains collaboration and sharing of best practice approaches
between providers
• Limits independent research & evaluation of ALMP impact
Reconsider conditionality provisions
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Little evidence here or overseas in support of reliance on strong
conditionality measures and harsh penalties for non-compliance
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OECD experience shows that a balanced approach to activation is required:
– Conditionality measures are needed to encourage the unemployed to engage in job
search activities
– Strong penalties are not required
– Positive incentives more effective
– Personalised approach to assistance works best
– Address structural and external barriers faced by disadvantaged groups
Summary
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A solid case has been made for a new social contract to respond to the ongoing
challenges, post GfC, of globalisation, technology change and demographic trends.
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A more coherent and balanced labour market policy framework is needed to:
– Substantially increase the working age participation rate and reduce the level of
underutilization of the labour force
– Improve overall productivity & meet employer needs for labour
– Focus on disadvantaged groups, neighbourhoods and areas.
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Fundamentally, this requires increased investment to deliver effective labour market
programs aimed at highly disadvantaged job seekers.
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It also requires a fair balance in policy measures between the obligations placed on
individuals and the resolution of structural and systemic barriers to participation.
Thank you
For Brotherhood of St Laurence research publications:
www.bsl.org.au