This report provides an overview and assessment of Australia's labour market policies to tackle welfare benefit dependency and unemployment. It examines Australia's main labour market institutions, employment services and other active and passive labour market programmes. Australia is unique among OECD countries in that its mainstream employment services are delivered by over 100 for-profit and nonprofit providers competing in a "quasimarket", with their operations financed by service fees, employment outcome payments, and a special fund for measures that tackle jobseekers' barriers to employment. In most other OECD countries these services are delivered by the Public Employment Service. The Job Services Australia model, introduced in 2009, reinforced the focus on employment outcomes for highly disadvantaged groups. This report assesses the latest reforms of Australia's "activation" model and puts forward recommendations to improve its effectiveness. A growing share of Australia's fast-growing population has a tertiary qualification, boosted by a skill-based immigration policy, but the share with less-than-secondary education remains relatively high. Australia has a flexible labour market, with high levels of casual and part-time work, short average job tenures, and limited regulation of layoffs, but a fairly high minimum wage. By 2005 the unemployment rate in Australia was down to 5% and it subsequently rose by much less during the economic and financial crisis that in most other OECD countries. Since 2009 Australia has had the highest employment rate among G7 and OECD G20 countries. The increasing effectiveness of quasi-market delivery of employment services and a slow decline in the net replacement rate for unemployment benefits may have contributed to the strong performance of the Australian labour market. The application of job-search and related requirements to benefits previously paid on an "inactive" basis - for parents, widows and partners, older workers and people with partial capacity to work - has progressively increased labour force participation. As the easier-to-place unemployed were the first to enter work, and also some of the harder-to-place groups could no longer access inactive benefits, the jobseeker caseload has become more skewed towards the most disadvantaged. At the same time, detailed regulations and individual assessment by the benefit administration, Centrelink, allow clients to be exempted from job-search requirements in certain circumstances, which helps to keep the demands on them reasonable and enhances the effectiveness of employment services. Star Ratings, which are measures of placement performance adjusted for differences in jobseeker characteristics and local labour market conditions, are used to eliminate employment service providers that perform poorly. There are also some significant minimum service requirements applying to providers, although they retain much flexibility over their use of funds. The Australian Department of Education, Employment and Workplace Relations continuously audits employment service providers for contract compliance, the validity of expense claims, service quality, general organizational health and other factors. This helps to achieve a "level playing field" for competition but the implied "red tape" is a major concern. The Job Services Australia model, while continuing the basic model of private and notfor- profit provision of employment services, introduced a number of reforms. In particular, it increased the fees paid to employment service providers for assisting and achieving employment outcomes for the most-disadvantaged clients. It also made the same providers responsible for organising work-experience activities and enforcing minimum hours of participation in them when their clients have been unemployed for more than a year. These revisions of the strategy have been effective, although placement rates are still modest for jobseekers with partial work capacity, and some providers tend to neglect the short-term unemployed because fee payments for them are low. A broad policy priority now should be to sustain the current good labour market outcomes over the longer term, minimising the risk from demand shocks and ensuring the continuing effectiveness of activation measures. Among the other topics examined in this review are: Workplace relations; compliance monitoring and benefit sanctions; Disability Employment Services; the special provisions for unemployed youths; Indigenous workers and some other target groups; and the microeconomic evaluation of the impact of individual active labour market programmes and benefit-system reforms. © OECD 2012.
Author Keywords
Index Keywords
