CHAPTER 5: LABOUR EXCHANGE SERVICES

This chapter describes the arrangements proposed for the future delivery of labour exchange services, and their implications for jobseekers and employers.

Labour exchange services involve the active canvassing of employers for vacancies, the screening of jobseekers for referral to employers, the matching of vacancies and jobseekers to identify suitable referrals and the follow­up of those referrals with employers to ensure that appropriate job placements occur. These services are intended to increase the speed and efficiency with which vacancies are filled in the labour market, and were a primary reason behind the original decision to establish the CES in 1946.

Labour exchange services will be an integral part of the intensive employment assistance to be provided by EPEs for longer­term unemployed jobseekers and those at risk of becoming so (see Chapter 6). Close links between EPEs and local employers will be vital if EPEs are to be successful in their task of securing sustainable jobs for their clients in the mainstream labour market.

In addition, the Government has decided that it should continue to support the provision of labour exchange services to other jobseekers who need them most namely, income support recipients, participants in Community Development Employment Projects (CDEP) and young unemployed people not in receipt of income support. For efficiency and effectiveness reasons, however, it considers that future public funding of these services should be channelled through the competitive market arrangements described in Chapter 3. To support those arrangements, it will provide self­help facilities for jobseekers in all service delivery agency offices and a national vacancy database for use by jobseekers and EPEs.

Current arrangements for labour exchange services

Under current arrangements the CES provides labour exchange services for all jobseekers who wish to use its services, regardless of whether they are registered as unemployed, already in work or in receipt of any form of income support. It also provides a free vacancy filling service for employers. In 1995­96 the CES filled around 520,000 vacancies, of which almost 75 per cent were filled by jobseekers registered as unemployed. Of these unemployed jobseekers, around 70 per cent were receiving some form of income support. This represented a vacancy share for the CES of just over 20 per cent of all recorded vacancies in the labour market.

Beyond the services provided by the CES, other job search and vacancy filling options, such as informal networks and newspaper advertisements, are readily available to most jobseekers. The great majority of short­term unemployed jobseekers find their own employment without any help from the CES. Around 30 per cent of people who register with the CES as unemployed have found work within 13 weeks as a result of their own job search efforts.

Employers rate motivation highly in making their decisions about recruitment and assess the motivation of applicants for jobs in part by the enthusiasm of their job search efforts. Consistent with this, the Job Clubs programme is one of the most cost­effectiveness of current labour market programmes, achieving its success by encouraging a more motivated job search effort by programme participants rather than by seeking to find jobs on their behalf.

Eligibility for labour exchange services

For the reasons noted above, the Government will limit eligibility for publicly­funded labour exchange services to the following categories of jobseeker:

• recipients of Unemployment Allowances or other forms of DSS income support, apart from the Age Pension and the Mature Age Allowance;
• young people aged 15­20 years not in receipt of income support; and
• Aboriginal and Torres Strait Islander participants in CDEP projects.

The Government believes that this approach best balances considerations of equity, labour market efficiency and cost­effectiveness. All jobseekers currently serviced by the CES will have open access to the self­help job search assistance to be provided by the new service delivery agency.

A market for labour exchange services

Under the Government's approach, contracts for labour exchange services will be let on a price­competitive basis for an agreed number of placements by EPEs in vacancies registered on the national vacancy database, and EPEs will be paid for the number of eligible jobseekers they place in those vacancies. These arrangements will allow EPEs to reflect local labour market conditions in their bids. The tender guidelines could provide incentives for EPEs to weight their bids to reflect a commitment to service harder­to­place jobseekers, with subsequent monitoring of performance in this regard. The performance of an EPE in relation to the sustainability of its job placements will be a matter for overall scrutiny by DEETYA as purchaser of these services, particularly in the context of contract renewal.

Rather than jobseekers being referred to a specific EPE by the service delivery agency, EPEs will compete among themselves to attract jobseekers to fill their vacancies. The national vacancy database will be the prime mechanism for eligible jobseekers to identify suitable vacancies and for EPEs to attract jobseeker clients. Jobseekers will be encouraged to approach a number of EPEs for assistance in their job search efforts and to facilitate this, the agency could be authorised to provide their personal details directly to the EPEs of their choice. As far as possible it will be desirable for any given regional labour market to be serviced by a number of EPEs. This will maximise the benefits of competition and reduce the dependence of jobseekers on the performance of any single EPE in the market.

Employers who currently use the CES will benefit from the effective deregulation of labour exchange services and the greater choice of agencies with which to lodge their vacancies. Some EPEs may choose to specialise in intensive employment assistance clients, others in labour exchange services for the short­term unemployed and others again in a range of services for special groups. Greater choice should lead in time to better quality of services.

EPEs would be free to charge fees for "value added" services provided to employers and to jobseeker clients not eligible for Commonwealth labour market assistance (eg, employed people seeking to change jobs). A diversified revenue base will increase the flexibility and market power of EPEs.

A national vacancy database

A key element of the Government's new arrangements for labour market assistance is a national vacancy database which DEETYA will maintain. This database will play a particular role in the market for labour exchange services, but will also be available as a self­help facility in the service delivery agency and for use by EPEs in helping their intensive employment assistance clients.

The national vacancy database will operate as a multi-list system and include a range of open vacancies (with full details on the vacancy and the employer's name and address) and closed vacancies (for which employers have requested that applicants be screened before they are referred). Newspaper vacancies also will be incorporated as far as possible, and there will be a direct vacancy registration service for employers through a 13 number and the Internet. There may also be scope for some contracted vacancy gathering should the vacancy flows from newspapers and EPEs prove inadequate. In general, however, such vacancy flows should be significantly enhanced under the Government's new arrangements for labour exchange services, in that they offer clear incentives for EPEs to broaden the distribution of their vacancies.

The national vacancy database will serve to encourage the development of a subordinate market for vacancies and placements between EPEs, training providers and other agencies. It will also be used to support the new arrangements for monitoring compliance with the activity test, as outlined in Chapter 8.

Entry­level training

While EPEs will attract payments for placing eligible jobseekers in an apprenticeship or traineeship, there will be a need to retain some specialist job brokerage arrangements in these areas to support the Government's objectives under MAATS. Key objectives include improvements in the nation's skills base and a reduction in the current high levels of youth unemployment.

A significant proportion of young people undertaking entry­level training are not income support recipients prior to commencing their training and, as noted in Chapter 4, entry­level training programme funds will not be cashed out into the employment placement market. For these reasons, separate administrative and contracting arrangements will need to be put in place to support the promotion and facilitation of apprenticeships and traineeships under MAATS, as a complement to the arrangements outlined in this Statement.

The details of these MAATS support arrangements will be subject to a separate consultation process after the Budget. Further information is provided in the paper released by the Minister for Schools, Vocational Education and Training Training for Real Jobs - The Modern Australian Apprenticeship and Traineeship System.

CHAPTER 6: INTENSIVE EMPLOYMENT ASSISTANCE

This chapter sets out the arrangements proposed for eligibility, targeting and delivery of intensive employment assistance (IEA).

The Government has decided that intensive employment assistance should be concentrated on those persons who are already long­term unemployed or at high risk of becoming so. Within this group it will concentrate assistance on those who are most in need and most able to benefit from the assistance provided.

Many short­term unemployed people will obtain employment relatively quickly on their own account, using the self­help facilities in the service delivery agency and other resources at their disposal. It would be unfair and wasteful to direct scarce public resources significantly to this group.

Equally, recent experience under the Working Nation strategy indicates that there is a minority of highly disadvantaged jobseekers for whom no realistically affordable level of employment­related assistance will be able to secure a real and lasting job. As noted in Chapter 2, many of these people suffer from problems such as psychiatric disorders, alcohol and drug abuse which markedly reduce their competitiveness in the general labour market.

The Government is sympathetic to the plight of these people and acknowledges the severity of their needs. In general, however, those needs will best be met by experts in the treatment of the underlying problem rather than by EPEs responsible for placing people into jobs. Accordingly, the Government intends to apply a 'capacity to benefit' test to ensure that assistance is targeted not only on the needy but also on those who stand to benefit significantly from the assistance on offer.

As under current arrangements for labour market programmes, it will be necessary also to set criteria for the targeting of assistance within the broad eligibility criteria outlined above. It would be self­defeating to spread assistance too thinly to the point where the resources available for individual clients were insufficient to help them into real jobs. It is important that targeting criteria for this purpose should be fair and open to public scrutiny. Possible arrangements are outlined later in this chapter (noting that this is one important area in which the Government will be seeking views as part of its proposed public consultation process).

Eligibility for intensive employment assistance

Eligibility for intensive employment assistance will be confined to jobseekers who have been unemployed for 12 months or more or are assessed as at high risk of long­term unemployment and who fall into one of the following eligibility categories:

• a recipient of a qualifying DSS income support allowance;
• a CDEP participant; or
• an unemployed young person aged 15­20 years and not in receipt of income support.

For this purpose, a qualifying income support allowance is defined to be one of the following forms of income support:

• Unemployment Allowance;
• Sole Parent Pension;
• Disability Support Pension;
• Parenting Allowance (excluding those receiving basic Parenting Allowance only) where the jobseeker requires and is assessed as being able to benefit from assistance; or
• other forms of DSS income support such as Special Benefit, Sickness Allowance, Widow Allowance, Partner Allowance and Carer Pension, but excluding the Age Pension and Mature Age Allowance.

Criteria and mechanisms for determining access to intensive employment assistance

Given that eligibility for IEA will not imply automatic or immediate access, criteria will need to be set for the targeting of access. Three general guidelines will be applied in the targeting process:

• that long­term unemployed people (rather than newly unemployed at high risk) should receive the largest share of intensive employment assistance;
• that the current balance of assistance should be broadly maintained between persons in receipt of unemployment allowances and other groups eligible for intensive assistance (ie, persons in receipt of other forms of income support and unemployed young people aged 15­20 years); and
• that members of special groups (see below) should receive an equitable share of the total assistance available.

In addition, it is proposed that the following groups should be accorded a lower priority for intensive employment assistance:

• jobseekers who are assessed as relatively more likely to find jobs for themselves without intensive assistance;
• jobseekers who have already received substantial case management assistance; and
• jobseekers who are unlikely to get a job even with intensive assistance (ie, who fail to meet 'capacity to benefit' criteria).

To better target IEA to those jobseekers most in need a new method of screening and assessment for jobseekers will be introduced. The Jobseeker Classification Instrument (JCI) will build on the existing Jobseeker Screening Instrument (JSI) and Client Classification Levels (CCL) tools and assess jobseekers' level of job readiness. Those assessed as job ready will not be eligible for IEA.

The JCI will be applied to all potentially eligible registrants and will be based on a series of questions about factors which have been shown to have a significant effect on a person's likelihood of becoming long­term unemployed. These factors include age, educational attainment, access to a viable labour market, disability, country of birth, English speaking ability, reading and writing ability in preferred language, Aboriginal and Torres Strait Islander status, duration of unemployment, recency of work experience and stability of residence.

Assessment of capacity to benefit

Instruments such as the JCI can assist in the identification of jobseekers who are at risk but it is undesirable to rely too heavily on an 'instrument only' approach. Under the new arrangements, in addition to the JCI assessment, agency staff will make an assessment of a jobseeker's capacity to benefit from IEA. Guidelines for this purpose will be developed following the public consultation process. It will be important to ensure that jobseekers are not unfairly excluded from assistance.

Those jobseekers excluded from intensive employment assistance on capacity to benefit grounds will continue to have full access to self­help facilities in the agency and to labour exchange services.

Jobseekers already referred to and participating in IEA but not making sufficient progress towards an employment outcome may be referred by the EPE (at the EPE's expense) to a specialist organisation for an assessment of their capacity to benefit. Guidelines for the contractual arrangements to apply in these cases will need to be determined, but will need to include procedures requiring EPEs to demonstrate that they have made genuine and adequate attempts to assist these jobseekers.

Arrangements for special groups

The Government is committed to ensuring that its new arrangements for labour market assistance are sensitive to the needs of special groups including Aboriginal and Torres Strait Islander peoples, people with disabilities, youth and sole parents. To reflect the particular needs of these groups the Government will:

• provide dedicated officers in the service delivery agency such as JET Advisers, Disability Support Officers, Youth Advisers and Aboriginal Contact Officers who will facilitate specialist assistance to jobseekers with specific needs and help them to access assistance in the employment placement market;
• ensure that funding allocations and selection guidelines for intensive employment assistance provide an equitable share of total assistance to these groups;
• develop special assessment criteria for use by agency staff to determine access to intensive employment assistance and appropriate levels of such assistance (people with a disability may be referred to specialist agencies such as the Commonwealth Rehabilitation Service for a professional assessment of their capacity to benefit from assistance);
• ensure that outcome definitions and payment arrangements for intensive employment assistance reflect the special needs of these groups; and
• maintain discrete programmes of assistance, as discussed in Chapter 4, which cater specifically for their needs.

Compliance arrangements under intensive employment assistance

Unemployment allowees are subject to an activity test and must comply with certain activity and reporting requirements. Chapter 8 of this paper sets out the role of the new service delivery agency in administering activity testing and compliance conditions under the Government's new arrangements for labour market assistance. For clients selected for intensive employment assistance EPEs will be required by the conditions of their contracts to:

• determine the activity requirements for individual jobseekers (within guidelines to be developed for this purpose);
• include these requirements in an activity agreement or contract with the client;
• monitor compliance with the requirements specified in the activity agreement; and
• notify the service delivery agency promptly of any breaches of the agreed requirements.

The agency will remain responsible for determining the sanctions and penalties to be applied when breaches are reported by an EPE. The agency will also be responsible for administering compliance with other requirements for the receipt of unemployment allowances. Unemployment allowees in IEA will be required to declare their circumstances (eg, earned income) on a regular basis to the agency.

Duration of intensive employment assistance

In most cases IEA will be limited to twelve months. This should be sufficient for most jobseekers to significantly increase their chances of gaining a job or an accredited education or training outcome. Limiting the period of assistance provided to each jobseeker also gives others the opportunity to benefit from assistance.

The EPE and the jobseeker will be able to extend the period of IEA (without additional funding) by up to an additional six months if they believe that they are close to achieving an employment or training outcome.

The Government is prepared to consider variations to the standard duration of IEA for members of certain especially disadvantaged groups, such as jobseekers with disabilities who have special needs. It will seek views on this matter as part of the public consultation process.

Where jobseekers complete their period of intensive employment assistance without achieving an outcome, they will retain their access to self­help facilities in the agency and to labour exchange services from EPEs. They will also be required to comply with standard compliance and reporting arrangements, but after six months may be considered for approved alternative arrangements as outlined in Chapter 8.

Issues for public consultation

Interested parties may wish to consider the following issues relevant to the arrangements for intensive employment assistance outlined in this chapter.

• What procedures and assessment mechanisms are appropriate for use in the service delivery agency to determine access to intensive employment assistance, both generally and for specific groups? How should the guidelines set down in this chapter be applied in practice?

• What procedures and guidelines should apply to the assessment of a jobseeker's capacity to benefit from intensive employment assistance? Under what conditions should an EPE be able to refer a client to a specialist organisation for assessment of the client's capacity to benefit?

• What is the appropriate form of an EPE's activity agreement with a client? What general guidelines should be used in determining the activity requirements to apply to jobseekers receiving intensive employment assistance? For long-term unemployed jobseekers not selected for such assistance, what range of activities should be recognised as meeting the alternative activity test requirements described in Chapter 8?

• For what special groups should variations be allowed to the standard (12 months) duration of intensive employment assistance? What is the rationale for such variations, and how could they be applied in practice?