Increasing workforce participation

Budget Review 2012–13 Index

Matthew Thomas

Generally speaking, the workforce participation measures contained in this year’s budget represent a continuation of those of previous years’ budgets. For the most part they are focused on refining existing Australian Government provided employment services and programs and targeting resources so as to better cater to the needs of disadvantaged and difficult-to-place job seekers. This is in keeping with the Government’s ongoing objective of increasing the employment participation and self-reliance of disadvantaged job seekers, as well as its more immediate objective of achieving a budget surplus.

There is an emphasis in this year’s budget on measures calculated to increase the recruitment and retention of mature age people in the workforce. They seek do so by, firstly, encouraging employers to take on older workers, and, secondly, increasing the skills and qualifications of existing mature age workers. The measures form a response to the recommendations of the Advisory Panel on the Economic Potential of Senior Australians which recently advised the Government on how seniors might better contribute to all aspects of society.[1]

Workforce participation measures

The workforce participation measures include:[2]

  • Up to $10.0 million over four years for a Jobs Bonus scheme, which provides a $1000 bonus for up to 10 000 employers who take on a worker aged 50 years or over for at least three months[3]
  • $15.6 million over four years for the expansion of the Corporate Champions initiative, which supports a number of employers in their recruitment and retention of mature age workers[4]
  • $25.7 million over four years to provide intensive Job Services Australia (JSA) employment preparation assistance to job seekers aged over 55 years who are seeking employment in regions or industries that are prioritised by the Government
  • $35.0 million over four years towards improving the skills of workers aged 50 years and over through the National Workforce Development Fund (NWDF)
  • $225.6 million over five years to support increased child care through the Jobs, Education and Training Child Care Fee Assistance (JETCCFA) program for parents on eligible income support payments who are undertaking work, study or job search activities and
  • $59.6 million over four years to Australian Disability Enterprises to continue existing support for workers with disability in supported employment.

The above Jobs Bonus scheme and expansion of the Corporate Champions initiative are to be funded, in part, through savings realised by cessation of the Experience+ Training, On-the-job Support and Job Transition Support programs. The support for skills assessments and training costs provided to mature age workers through these programs will be furnished through the Investing in Experience – Skills Recognition and Training Program. This program is the newly revised and renamed More Help for Mature Age Workers program. When the savings gained through not proceeding with existing training and support programs are taken into account, there is a modest increase in new funding to support mature age workforce participation.

The measures also include changes to JSA arrangements that are calculated to deliver savings.

Servicing provided to Stream 1 job seekers (who are the most work ready and typically require little assistance) is to be reduced and employment services providers will receive reduced service fees for these job seekers. This is estimated to deliver savings of $162.6 million over four years. The current Provider Brokered Outcome (PBO) and Provider Assisted Outcome (PAO) payments for employment services providers who achieve an employment outcome for job seekers are to be discontinued. They are to be replaced with a single Job Service Outcome payment. This measure is anticipated to save $44.3 million over four years. Savings from both of these measures are to be redirected to support other, unspecified, government priorities.

Comments

It is now widely recognised by governments and by many employers in Australia that, given the nation’s rapidly ageing population, there is a need to ensure that older workers are retained in the workforce. Over the past decade or so governments and employers in Australia have implemented a range of supply- and demand-side strategies calculated to increase the workforce participation of mature age workers.

Workforce participation rates for older Australians have increased quite dramatically in recent years. Indeed, mature age labour force participation in Australia has grown to such a degree that it now exceeds the OECD average in almost every age-sex combination.[5] Some researchers have argued, based on an analysis of Household, Income and Labour Dynamics in Australia Survey (HILDA) data, that Australia is likely to not just meet but exceed the Intergenerational Report recommended workforce participation rate of 67 per cent of 55 to 64 year olds by 2049–50.[6]

Nevertheless, there is evidence that if rates are to be further increased then this demands a shift in the attitude of many employers to taking on older workers, stronger incentives for employers to hire and retain older workers and assistance for a number of older workers to improve their current skill levels and employability. The budget measures should go some way towards achieving this.

The rationalisation of JSA outcome payments is in response to evidence that many employment services providers have been ‘gaming’ the system, that is, declaring that they have found employment for job seekers and claiming higher PBO fees when in fact job seekers had secured employment themselves with little or no assistance from service providers. A review of JSA provider brokered outcomes conducted between 1 July 2011 and 31 December 2011 recommended, among other things, that the differential payment rate between PBO and PAO be removed and replaced with a single outcome rate set at 110 per cent of the previous PAO rate.[7] The change will apply to all new employment services contracts from 1 July 2012.

The finding that some providers have been rorting the system where it comes to outcomes payments would also appear to have been the trigger for the reduction in servicing and service fees for Stream 1 job seekers. This measure should not pose problems so long as initial interviews with job seekers accurately assess their level of disadvantage and which of the four streams of assistance is most suitable for meeting their needs. While the JSA streaming arrangements are flexible, with job seekers able to request that they be moved into a higher level of assistance if their circumstances change, there is no guarantee that they will do so. The danger, then, is that some job seekers who are classified as Stream 1 job seekers might receive less assistance than they require and lose valuable time in the process.

The increased funding for JETCCFA is undoubtedly to cater for the enhanced demand for childcare fee assistance that is likely to result from the removal of ‘grandfathered’ participation requirements from some Parenting Payment (Single) and Parenting Payment (Partnered) recipients (see separate article on the abolition of the ‘saved’ Parenting Payment arrangements).

Australian Disability Enterprises are not-for-profit organisations that employ people with disabilities who cannot sustain employment in the open market. Additional funding for these organisations will be welcomed as there is evidence that these enterprises are currently operating at capacity,[8] and there is likely to be existing and increased demand for funded places in the future.



[1].       Advisory Panel on the Economic Potential of Senior Australians, Realising the economic potential of senior Australians: turning grey into gold, Treasury, Canberra, 2011, viewed 9 May 2012. See also W Swan (Treasurer) and M Butler (Minister for Mental Health and Ageing, Minister for Social Inclusion), Government responds to the Final Report of the Advisory Panel on the Economic Potential of Senior Australians, media release, 18 April 2012, viewed 10 May 2012.

[2].       The budget figures in this brief have been taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2012–13, Commonwealth of Australia, Canberra, 2012, viewed 10 May 2012.

[3].       Swan and Butler, op. cit. Opposition leader, Tony Abbott has accused the Government of copying its own mature age employment policy from the last election. Under the Coalition’s policy a Seniors Employment Incentive Payment of $3250 would have been paid to employers of workers aged 50 years and over. Liberal Party of Australia and the Nationals,  The Coalition’s plan for real action on employment participation, Coalition Policy Document, Election 2010, pp. 6–7, viewed 15 May 2012.

[4].       Ibid.

[5].       See National Seniors Productive Ageing Centre, Ageing and the barriers to mature age labour force participation in Australia, Department of Education, Employment and Workplace Relations (DEEWR), December 2011, p. 12, viewed 10 May 2012.

[6].       B Headey, J Freebairn and D Warren, Dynamics of mature age workforce participation: policy effects and continuing trends, Melbourne Institute of Applied Economic and Social Research, September 2010, viewed 10 May 2012.

[7].        DEEWR, Job Services Australia Provider Brokered Outcomes, DEEWR, Canberra, 2011, viewed 10 May 2012.

[8].       Senate Community Affairs Committee, Answers to Questions on notice, Families, Housing, Community Services and Indigenous Affairs Portfolio, Budget Estimates 2011–12, Australian Disability Enterprises, Question No. 341.

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