Posted: May 08, 2005

Breaching all standards - Part 2

This is Part 2 of my response to the ‘suggestion’ by the Minister for Workplace Relations (in an interview on the AM program) that the following measures will be announced in Tuesday’s Federal Budget:

1. Job Network (JN) agents will be given the power to identify and punish up to 25,000 unemployed people the Government believes are deliberately avoiding work;

2. Once identified, JN agencies will then be able to force these ‘shirkers’ to complete double the hours in work-for-the-dole programs; and

3. JN providers will also be able to issue on-the-spot suspensions of payments for unemployed people who fail to attend interviews.

This blog argues that we shouldn’t shift the power to penalise job seekers to Job Network providers. But before we work through these arguments, let’s review the story so far….

In Part 1 (see my blog of April 30, 2005) I discussed how shelling out more funding for policing and compliance measures does not address the cause of unemployment - the failure of the Government’s macroeconomic policy to deliver full employment. While the Minister claimed that up to 25 per cent of the unemployed could be shirking their obligations (see Part 1 for comments on why these “anecdotal” figures are implausible) the group that is failing to meet their obligations is the Government. CofFEE’s message to the Federal Treasurer is to create full employment. The introduction of a Job Guarantee will deliver the jobs required and anchor inflation. You can then divert Centrelink constables to the task of matching the unemployed to paid work that benefits the workers, our communities and the environment. CofFEE has done the policy work and with some grind from Treasury officials we can have the JG ready to go on Tuesday.

But let’s assume that the Government is determined to punish the unemployed rather than provide them with minimum wage jobs. Why shouldn’t Job Network providers be dishing out the penalties as the Minister has proposed?

Under the Job Network, the government is a purchaser and regulator of employment services and awards contracts for service provision to profit and non-profit organisations (JN providers). At the present time, providers are required (under the terms of their contracts) to report individuals to Centrelink if they fail to comply with activity test requirements. It is then Centrelink’s job to determine if a breach has occurred and to impose the associated penalty.

Involving JN providers in breach recommendations - let alone breach and penal decisions - raises a series of conflicting demands and conflicts of interest. Providers must both support the unemployed and police them, while making sure they meet the terms of their contract and stay either profitable or viable. For example, the 2002 Report of the Independent Review of Breaches and Penalties in the Social Security System (the Pearce Report) noted the advantages in reporting non-compliance very “rapidly” (without costly attempts at contact to determine whether the person has a reasonable excuse) and “repeatedly” so they can “free up a place in their quota for another jobseeker with whom it may prove easier and more remunerative to work”. This is the product of a system where providers are paid for achieving ‘outcomes’ for jobseekers and where a jobseeker will be withdrawn from the provider’s quota after three breaches.

On the other hand, a not-for-profit agency may be reluctant to breach a jobseeker if they feel the cost of providing food and shelter - when the person’s social security payment is reduced or stopped - will fall on their emergency relief services. Most not-for-profit agencies are linked to churches and charities.

While thinking through what the proposed change will mean I came across research by Christine Bigby and William Files on breach recommendation decision making in a for profit Job Network agency. The article titled ‘Street Level Leniency or Unjust Inconsistency’ was published in the Australian Journal of Labour Economics in June 2003. Bigby and Files interviewed staff from six offices of a for profit Job Network provider in Victoria to investigate how providers make decisions about breach recommendations and the extent to which staff exercise discretion. The provider specialised in providing Intensive Assistance (support for highly disadvantaged jobseekers). The key findings were as follows:

1. Organisations had no specific procedural guidelines for making decisions about breach recommendations leading to inconsistent treatment of jobseekers within a single organisation.

2. Job seekers who fail to attend a first interview are more consistently and readily breached than others. Staff exercise considerable discretion about jobseekers with whom they are already engaged, often basing their decisions on different factors to those specified in the Government guidelines. These factors include the individual’s vulnerability, social disadvantage, previous endeavours to find work, and ‘worthiness’.

3. Rules of natural justice were not being correctly applied in all instances (some jobseekers are subject to unjust decision-making processes).

4. Strategic breaching to remove potentially ‘non productive’ jobseekers from the books is occurring (a conclusion supported by the Pearce Report); and

5. Conflicting demands are structurally inherent in the competitive market-based system of employment services.

The new compliance regime the Government is set to dish up on Tuesday will not address any of these issues and will only exacerbate the conflicting demands on Job Network agencies. In the new model, providers must make money, meet the performance targets specified in their contracts, support the unemployed, police behaviour and stick the fine notice on the foreheads of those who step out of line. But then again, you might get away with a warning if you’ve had a chance to share your life story and offer even a slim hope of an outcome payment….

At the end of the day the problem lies not with the individuals but with a ‘mutual obligation’ system that lacks mutuality. Once we start suspending the Treasurer’s salary and superannuation for failure to deliver a fully employed economy then we might see the swift introduction of a Job Guarantee. Under this system, those who are able to work will always have access to a minimum wage job. If they choose not to work, life will be tough in the absence of unemployment benefits. We can then turn our attention to those unable to work - due to disability, illness, family and caring responsibilities - to make sure they have access to a living income and the health and support services they need.

Blog entry posted by Sally