Foreword. Jack Dusseldorp CHAIR DUSSELDORP SKILLS FORUM

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1 Foreword Mutual obligation is now the centrepiece of Australia's approach to social policy. The provision of public income support for individuals and families has become increasingly dependent on recipients making a social contribution through voluntary activity or Work for the Dole or a similar program. Senior Ministers from the Prime Minister down have emphasised the need for the unemployed "to give back something to the community in return for assistance in time of need." Within Opposition ranks too there is support for Work for the Dole, and for a strong framework of obligation intended to encourage people to move from welfare to work. This paper, prepared for the Dusseldorp Skills Forum by Richard Curtain, offers an important and timely comparison of active labour market assistance and the concept of mutual obligation in Australia and the United Kingdom. It was originally commissioned by the Forum primarily to inform its own work; however it contains a number of observations that should be made more widely available given the currency of debates around these issues. In releasing the report, it is not our intention to imply approval or disapproval for mutual obligation policies. Our over-riding concern is with the personal and social well-being of young Australians: policies should unequivocally support their development. In both the UK and Australia concepts of mutual obligation became part of the political landscape in the late 1990s, but the application mutual obligation has taken quite different trajectories in terms of design and implementation. One important difference is that mutual obligation in the UK has been accompanied by a strong recognition of a citizen's rights and entitlements. By contrast in the Australian experience there has been tough rhetoric about the responsibilities of citizens but little focus on the obligations of government beyond ensuring the basic sustenance of its citizens. The paper notes the important role of 'personal advisers' or case managers who can tailor services to meet the individual needs of jobseekers. Another important distinction is the direct involvement of UK business in attempting to resolve unemployment. A massive attempt has been made to harness one of the core skills of business - job creation - as an integral part of the New Deal. To date 60,000 enterprises have signed on as partners. Beyond the New Deal arrangements, the British government is working to 'join up' government and non-government programs in an effort to overcome the radical disadvantages faced by neighbourhoods that have experienced major economic dislocation. This is in contrast to the fragmented and disjointed program responses of state and federal governments in Australia to similar issues. The UK's Education Action Zones and Employment Action Zones are encouraging the creation of new partnerships dedicated to improving the skill levels, learning environments and economic opportunities of marginalised Britons. The paper is really prompting us to consider a number of significant issues not least of which is the question of situating mutual obligation arrangements within a broader context of entitlements; the responsibilities of governments; and the genuine mutuality of these obligations. Are we capable of developing richer, more inclusive and emancipatory forms of social assistance that will enable each citizen to realise their talents and goals? Jack Dusseldorp CHAIR DUSSELDORP SKILLS FORUM

2 Mutual Obligation: Policy and Practice in Australia compared with the UK Richard Curtain for the Dusseldorp Skills Forum 1

3 Executive Summary What is mutual obligation? Mutual Obligation in Australia: how it works Comparing mutual obligation programs in Australia and the UK... 6 Similarities: mandatory nature and role of case management... 7 Differences in target groups... 8 Differences in focus on employment as an outcome... 8 Differences in the range of options available Important differences in program design: role of case manager Differences in the role of intermediaries Differences in Employer involvement An overview of the two approaches Differences in performance outcomes Work for the Dole and Conflicting objectives Fragmented administrative functions producing disjointed outcomes Conclusion

4 Executive Summary The main focus of this paper is to assess how the concept of mutual obligation is implemented in Australia compared with the United Kingdom. The paper draws on, in particular, a detailed analysis of the New Deal arrangements in the UK and compares these with how mutual obligation requirements are implemented in Australia. The underlying question this paper seeks to answer is how well are young people at risk of long term unemployment served by mutual obligation arrangements as they operate in the two countries. The main finding of the analysis is that mutual obligation is interpreted very differently in practice between the two countries. In Australia, the way the concept is operationalised is one sided and hence punitive in tone, narrow in focus, and program-centred. Mutual obligation arrangements in Australia also lack connection to explicit labour market outcomes and do not involve the private sector. In contrast, in the UK, mutual obligation in practice is more reciprocal in nature, is centred on meeting the needs of individual job seekers and is closely tied to achieving labour market outcomes with a strong emphasis on partnerships with employers. The in-depth comparison shows that there are a number of features of the operation of mutual obligation arrangements in Australia which appear to be inferior to those in the UK. In particular, the primary focus on employment outcomes in the UK is notably different to the more imprecise outcomes nominated in the Australian case. Another feature of the UK arrangements compared to Australia is the greater emphasis on a coordinated approach focused on the needs of the individual job seeker. This variation between the two countries can, at least in part, be explained by differences in political philosophy and the political context in which the policy has been implemented. The New Deal was a major plank in the Labour Party s election platform to tackle youth unemployment by providing work or training for 250,000 during the first parliament of a Labour government. 1 Another factor that might help to explain the differences in approach is the lower unemployment rate in the UK where labour shortages in particular regions may necessitate a more focused approach to getting a greater range of job seekers into work. 2 However, the differences may also reflect the greater difficulty government structures and agencies in Australia seem to have in operating in a coordinated and decentralised way to deliver a set of outcomes focused on the needs of the individual. The paper starts by defining what mutual obligation is both as a concept and as a set of program arrangements. The body of the paper consists of a detailed comparison between the UK Labour Government s New Deal arrangements and the mutual obligation arrangements in Australia. A final section of the paper focuses on Australia s Work for the Dole program (WFD) and highlights some internal design deficiencies. 1 2 Source: King, D And Wickham-Jones, M; 1999,"From Clinton to Blair: The Democratic (Party) Origins of Welfare to Work." Political Quarterly, Jan 1999 v70 i1 p62(1). The UK has a stable and low unemployment rate varying from 6.2 per cent in October, 1998 to 5.9 per cent in October, Australia s unemployment rate varied from 7.5 per cent in December 1998 to 7.0 per cent in December

5 1. What is mutual obligation? At its simplest level, mutual obligation can be defined, in the words of Prime Minister John Howard, as asking people to give back something to the community in return for assistance in time of need. 3 The OECD s recent Economic Survey of Australia observes that mutual obligation in Australia is interpreted by the Australian Government in the following terms: that it is fair and reasonable to ask unemployed people to participate in an activity which both helps to improve employability and makes a contribution to the community in return for payments of unemployment benefits. 4 The OECD notes that, unlike most other OECD countries which have an unemployment insurance system, Australia s unemployment benefits are in the nature of social assistance. This means that income support for the unemployed is means-tested. However, it is also of indefinite duration and dependent on family circumstances. Claimants are required as a condition for receiving unemployment benefits to be available for full-time work, be actively seeking it and be willing to accept any suitable job offer they receive. 5 It is in this context that the OECD suggests that the principle of mutual obligation, as it is applied in Australia, can be viewed as part of the implicit social contract that underlies the income support system. 6 However, at a more complex level, it is important to note that the concept of mutual obligation expresses a more fundamental break with the philosophical underpinning of the post-war welfare state. This has been expressed as a reworking of the relationship between citizen and state so that citizens no longer see themselves as merely having `entitlements'. The new approach postulates that citizens now must balance their rights, particularly to welfare benefits, with an obligation' to be a productive participant in the economy as far as possible. 7 The origins of the concept of mutual obligation, at least in the English-speaking world, are to be found in the introduction of a `welfare to work' programs, including the Clinton wide-ranging welfare reform embodied in the Personal Responsibility and Work Opportunity Reconciliation Act A major statement of the new approach in the UK to welfare reform is the new Labour Government's Green Paper entitled New Ambitions For Our Country: A New Contract For Welfare released in March A number of articles published recently provide the context to these changes in approach to welfare as well as assessing critically its origins. 9 However, it is not the intention of this paper to enter into this debate but merely to focus on the lessons that might apply to Australia from examining how mutual obligation as a concept has been put into practice in another country John Howard Federation Address, January 1999, cited in ACOSS, 1999, Work for the Dole Briefing Paper, Information Paper 116, August. Ibid, p68. Ibid, Footnote 64, p130 OECD, 2000, OECD Economic Survey of Australia, Paris, p98. Macintyre, C., 1999, From entitlement to obligation in the Australian welfare state, Australian Journal of Social Issues, May v34 i2 p103. King, Desmond and Wickham-Jones, Mark, 1999, From Clinton to Blair: The Democratic (Party) Origins of Welfare to Work, Political Quarterly, Jan 1999 v70 i1 p62 (1). Williams, Fiona, 1999, Good-enough Principles for Welfare, Journal of Social Policy, 28, 4, pp , Jessop, Bob, 1999, The changing governance of welfare: recent trends in its primary functions, scale and modes of coordination, Social Policy & Administration, Vol 33, No 4, pp

6 Mutual obligation requirements n Australia can be viewed as an extension of the active labour market approach adopted by most OECD countries including the Scandinavian countries. The requirement for job seekers in Australia to prove that they are actively seeking work was reinforced in the 1991 Social Security Act introduced by the Labor Government. A key plank of the Keating Government's 1994 Working Nation program was an expectation that in return for assistance there would be a strengthened obligation on unemployed people to accept a reasonable job offer'. 10 A new Job Compact offered targeted support for the long-term unemployed, but also stronger penalties for job seekers who do not meet their obligations under the Job Compact'. 11 What is new about the approach of the Coalition Government is its emphasis on increasing the obligation of job seekers by requiring additional activity for job seekers from specific age groups (18 to 24 years and 25 to 34 years). The additional activities required of job seekers to meet their mutual obligation take various forms but the most prominent is a community-based employment program, Work for the Dole. The compulsory nature of participation in WFD for at least some participants strongly influenced the debate about the merits or otherwise of the program during Mutual Obligation in Australia: how it works Work for the Dole started as a pilot program for about 10,000 unemployed young people in November In July 1998, coverage of program was extended to all 18 to 24 year olds on unemployment benefits for six months or more. The principle of mutual obligation was also extended in the 1999 Budget to young people who leave school at Year 12 and who have received Youth Allowance for three months (6000 places). The 1999/2000 federal Budget announced that mutual obligation arrangements were widened to include 25 to 34 year olds who have been receiving unemployment benefits for in excess of a year. There are now up to 14 options available for the longterm unemployed to meet the requirements of mutual obligation. However, eligibility requirements for the options differ so little that in practice a much smaller number of options are available. These options include the Community Development Employment Programme (CDEP), Jobs Pathway Programme (JPP), New Apprenticeship Access and Advanced English for Migrants. As a result it is anticipated that all eligible unemployed will be required to meet mutual obligation requirements each year by The Government estimates that in financial year , more than 300,000 young unemployed will participate in one or more of the 14 options which meet their mutual obligation. As part of these options, it was anticipated that there were 50,000 participants in Work for the Dole projects in The tenders for Work for the Commonwealth of Australia, 1994, Working Nation, Canberra: AGPS, p108. Ibid p 117. OECD, 2000, op.cit. p100. 5

7 Dole 2000 were announced on 17 December 1999 with a total cost is nearly $139 million for over 65,000 places to be available in Mutual obligation in Australia starts with the requirement that all job seekers in the target groups must participate in an interview at Centrelink. The Centrelink officer informs the eligible job seeker of the requirement to undertake an additional activity such as part-time work, voluntary work, education and training or participation in a Work for the Dole activity or similar program (such as Green Corps). Eligible job seekers are informed that failure to select and then complete a mutual obligation option may result in a cut in benefit payments. Participants in Work for the Dole are required to work for 12 to 15 hours per week, depending on their age, for a period of six months. In addition to unemployment benefits, Work for the Dole participants receive an additional $10 a week to cover travel costs and incidental costs associated with working. As Work for the Dole is a part-time activity, they are also required to continue to search for a job. WFD projects are focused on regions with the highest levels of youth unemployment. To avoid competition with private sector employment generation, the projects are confined to activities that do not compete with paid employment in the primary labour market. The key elements of the Work for the Dole program are:! mandatory nature of requirements backed by threat of partial or complete loss of benefits! choice of options for job seekers subject to the mutual obligation requirement! Different age groups have different time limits imposed on them before they are subject to mutual obligation requirements! A community-based employment program called Work for the Dole is one of the options available to meet mutual obligation requirements! In some cases, the Work for the Dole Program is the option of last resort for job seekers unable or unwilling to take up one of the other options.! Job seekers have a continuing obligation to look for work. Some operational changes have made to the Work for the Dole program since its inception. These are explained further below. 3. Comparing mutual obligation programs in Australia and the UK The UK Labour Government s New Deal set of arrangements offers the basis for a close comparison with mutual obligation requirements in Australia. Table 1 summarises the key features of the two approaches in terms of mandatory requirements, target groups, use of case managers, operational orientation, range of 13 Abbott, Tony, Hon, 1999, $139 million for 65,000 places under work for the dole 2000, 17 December. 6

8 options, and use of community sponsors. The following section discusses the similarities and the differences. The following comparison draws on statistical reports and press releases from the Australian Government and UK Governments. Table 1: Key elements of mutual obligation programs in Australia, and the UK Key elements Mutual obligation Australia New Deal UK Mandatory with Yes Yes with exceptions sanctions Target groups 18 to 34 yrs yrs, 25 plus, lone parents, disabled, 50 plus, dependent partners of job seekers Use of case management /intensive assistance Orientation Yes but only for some eligible job seekers Process focus on imparting right attitudes Yes for all eligible job seekers Strong focus on ongoing employment as prime outcome Range of options Fourteen Five options Use of communitybased sponsors Yes, solely Yes but also heavy use of private sector employers Similarities: mandatory nature and role of case management The defining feature of mutual obligation programs in both countries is the mandatory requirement for eligible job seekers to undertake certain activities after a certain time limit and sanctions that could involve loss of welfare benefit. However, it is important to note that in Australia initially the absence of other options meant that mutual obligation requirements could only be fulfilled though participation in a Work For the Dole project. With the introduction of other Mutual Obligation options, job seekers now have a choice as to how to meet their obligation. In the UK, four options for job seekers were available from the start of the program. Preliminary data suggest that this lack of choice has caused a high level of noncompliance. The official evaluation of Work for the Dole notes that Centrelink breach data on all WFD projects showed that approximately 7,800 breaches (of not meeting the obligation) had been recorded to March 1999, with an estimated that 70 per cent of these breaches resulting in reduced unemployment payments. This compares with 9425 placements on WFD projects to January The data show that 49 per cent of breaches were recorded for the job seeker failing to attend a WFD interview and 45 per cent were for not attending a WFD project (this would cover failing to start and leaving during the course of the project). 14 In contrast, in the UK, by the end of 1998, with 200,000 participating in various New Deal activities, only 11,000 individuals were declared in breach of their obligation 14 Department of Employment, Workplace Relations and Small Business (DEWRSB), 1999, Evaluation of the Work for the Dole Pilot Programme. May 1999 EMB Report 1/99 Evaluation and Monitoring Branch, Labour Market Policy Group. 7

9 and of these, 4,500 had lost their unemployment benefit through non-compliance with the New Deal requirements. 15 Another feature of both sets of arrangements is a strong emphasis on intensive assistance based on a one-to-one relationship between a case manager (through various Job Network providers in Australia) or personal adviser (UK s New Deal) and the job seeker. 16 However, there are notable differences, outlined further below, in the timing of the availability of access to case management assistance. In Australia, a Centrelink officer, as a once only event, has the responsibility to match and refer eligible job seekers for mutual obligation placement, taking into account experience and health of the job seeker. However, under New Deal, the eligible job seeker is assigned to a personal adviser for at least four months before participation in any activity is required. Differences in target groups The first difference worth noting is that the target groups for the mutual obligation requirements in both countries are different. The UK started with a focus on 18 to 24 year olds on unemployment benefit (UB) for 6 months. However, the target population has expanded to jobseekers aged 25 and over on UB for two years. Also included are lone parents, those on disability benefit and those aged 50 and over. However, participation is voluntary for lone parents, disabled persons and mature aged job seekers. Another feature of the coverage of UK s New Deal is the inclusion of the dependent partners of job seekers. On a voluntary basis, dependent partners are invited to undertake a course in job search, interview skills or to refresh existing skills. In Australia, the target group is narrower than in the UK, being focused on the 18 to 34 age group. Eligible job seekers are Year 12 school leavers on UB for three months, 18 to 24 year olds on UB for 6 months and 25 to 34 year olds on UB for 12 months or more. Differences in focus on employment as an outcome A fundamental difference between the two programs is the emphasis in the UK s New Deal program on the objective to improve the employability of young people and to find them a job. In contrast, in Australia, other objectives are foremost. Employment Minister Tony Abbott s announcement of the results of the Work for the Dole tender for year 2000 noted that the programme s purpose is for unemployed people to gain valuable work experience. 17 As the OECD notes about the options available under mutual obligation requirements, many of these options Atkinson, J, 1999, The New Deal for Young Unemployed People: a Summary of Progress. Research and Development Report, Institute for Employment Studies, ESR13, March. The exact nature of what is Intensive Assistance in Australia varies between employment services provider. The tender guidelines state that: When necessary and appropriate, they will also need to provide services or incentives to employers such as wage subsidies, workplace modifications or a retention bonus, that will encourage the employers to place and retain these job seekers in their workforce. You will have to provide the support necessary to overcome difficulties such as a lack of self-confidence or self-esteem, and/or poor employment-related skills. Job seekers may need counselling; personal development; training in literacy, numeracy or English as a second language; and/or short-term fares assistance for training. Job Network members will work with these job seekers to provide them with the support they need as individuals, to prepare them for employment, and to get them a job. Many of these job seekers will require continuing assistance to help them sustain employment. Abbott, 1999, op.cit. 8

10 are not focused on immediately achieving paid employment 18 The other objectives are said to be facilitating community engagement and developing skills such as literacy and numeracy to improve long term employment prospects. The New Deal s information for young people states in forthright terms that it has a strong employment focus. A programme to get young unemployed people into work. It s a programme to help young people into work, that s different to what s gone before. New Deal is just that a deal. What it offers is real help in getting a job through advice, support, high quality training and direct work experience. What it asks in return is your commitment. By helping you close the gap between what you have to offer and what employers are looking for, New Deal aims to break the vicious circle of no job no experience: no experience no job, helping young people into real, lasting, worthwhile employment. The explicit focus on employment of the New Deal program is demonstrated by the release (22 June 1999) from the UK Department for Education & Employment under the heading Prime Minister Welcomes First Year Success for New Deal in Helping 100,000 Young People to Get Jobs: The Prime Minister said: "One of our core election pledges was to get at least 250,000 young people who have been jobless for at least six months off benefit and into work and we are on course to meet that promise. The New Deal is about offering real hope and real choice. We have also made clear that there is no fifth option. The figures show that the New Deal is making a significant contribution to reducing levels of benefit fraud. In return for accepting responsibility for their own futures, young people should have intensive support and encouragement in finding work and upgrading their skills. The New Deal is providing meaningful help and it is having a major impact in getting people off benefit and into work 19 In contrast, the Australian Government announcement of the start of mutual obligation requirements on 1 July 1998 emphasises the obligation requirements of job seekers have only an indirect link to employment outcomes. All 18-to-24-year-olds who have been unemployed for six months or more must participate in an additional approved activity in order to maintain their full unemployment benefit under the Government s new mutual obligation requirements starting today.20 The Minister for Employment at the time said the additional activities would help young unemployed people gain the skills, work experience and confidence necessary to get and keep a job OECD, 2000, op.cit., p 99. UK Department for Education & Employment, 1999, Prime Minister Welcomes First Year Success For New Deal In Helping 100,000 Young People To Get Jobs. Dept for Education & Employment, Press Release 283/99 Minister for Employment, Education, Training & Youth Affairs, 1998, New Mutual Obligation Requirements Start Today Media Release July 1, 1998 K52/98 9

11 The community is willing to financially support young people looking for work. In return, it is fair and reasonable to ask those people receiving that support to help themselves get the skills necessary to get a job These extra activities will give young unemployed people practical support that will significantly improve their chances of getting and keeping a job. A joint press release from Ministers Reith and Newman on 11 May 1999 announcing the strengthening mutual obligation notes the following: The aim is to provide more long-term unemployed people with the opportunity to enhance their job prospects and competitiveness in the labour market and encourage their involvement with the community which supports them. The enhanced arrangements impose extra obligations for the receipt of unemployment allowances to encourage unemployed people to look for work more actively and to take part in activities which will improve their skills and work habits. It aims to move those dependent on unemployment benefits from welfare to work. Clearly the aim of mutual obligation requirements in Australia are only indirectly related to employment compared with the objectives of the UK s New Deal. This is more starkly shown in the objectives of Work for the Dole programme. As will be discussed in greater detail below, employment outcomes are not an explicit objective of the programme. There is obviously some ambiguity on this issue. The official evaluation of the program, published in May 1999, records information on the employment outcomes of the participants. Nevertheless, a number of features of the operation of WFD undermine its capacity to achieve employment outcomes. These are discussed further below. Differences in the range of options available In Australia, the range of options available for eligible job seekers to meet their mutual obligation requirements increased in mid 1999 to 14 in number - the major options being: Intensive Assistance through the Job Network - 156, 000 places, Work for the Dole - 50,000 places, part-time work - 23,000 places, Community Development Employment Programme - 18,500, voluntary work - 12,000, education or training - 12,000 places and literacy and numeracy training - 10,000 places. Australia places major emphasis on community-based projects as an option for mutual obligation requirements. Initially in mid 1998 Work for the Dole was promoted as equal second option (with job search training both at 20,000 places) with Intensive Assistance in first place with 36,000 places). 21 The Budget has placed Work for the Dole with 50,000 places and Community Development Employment Program with 18,500 places in second and third place in importance after Intensive Assistance with 156,000 places. 22 For the UK s New Deal, the range of options offered to job seekers subject to mandatory requirements covers four options. These four options are: subsidised work for six months with one day a work allocated to training, full-time education/training, a job with the Environmental Task Force or a job with the 21 Fact Sheet: Mutual Obligation, June DETYA web site. 22 Reith, Peter and Newman, Jocelyn, 1999, Strengthening and Extending Mutual Obligation, Joint Press Release, 11 May. 10

12 voluntary sector. These options are similar to those offered under the Australian arrangements. However, a fifth option, to be introduced in June 2000, is distinctly different from those available in Australia. A fifth option available under the New Deal in the UK focuses on helping job seekers aged 18 to 24 years to set up their own businesses. This involves help with a business plan and training and test trading. Other arrangements are made for job seekers aged 25 plus. New Deal Personal Advisers are able to refer young people who want to find out more about the self-employment element of the employment option to an awareness session about the most important aspects of selfemployment. Following on from this there will be a short course - usually one day a week for four weeks - or one to one counselling. This course will help young people decide whether self-employment is the best choice for them and, if so, get further information and training to enable them to produce a business plan Once an approved business plan has been produced, young people who have not yet found unsubsidised employment or independent self-employment can join the selfemployment element of the employment option. Under this option, participants can get advice and support from training providers for up to six months while actually setting up and running their own business, plus the opportunity to train towards an approved qualification. Training providers are to be funded to offer a range of help, from dealing with day-to-day queries to help with finding start-up finance. They will also meet with young people regularly to check their progress. Help and advice will continue to be available for up to two years after the option has ended. Young people taking up the self-employment option will receive an allowance plus a grant of up to 400 paid in equal weekly or fortnightly instalments. Any money the business earns during the six months on the option can either be ploughed back into the business or stored in a special bank account until the option has ended. Important differences in program design: role of case manager One of the most fundamental differences between mutual obligation arrangements in Australia compared with the UK s New Deal relates to process involved. In the case of the latter, eligible job seekers are first put into a four-month program with a New Deal Personal Adviser called Gateway. The purpose of this initial phase of the program is to develop an individually tailored plan for improving the jobseeker's employability. During Gateway, young jobseekers who have not found unsubsidised work can choose one of four options. A recent report from the National Centre for Social Research in the UK highlights the importance of the Gateway process. The report collected evidence that shows that young people see the key to the success of New Deal as the personal relationship between the Personal Adviser and the jobseeker. The report also noted that the effectiveness of Gateway stems from ensuring that people are not forced into any old job, but matched to the one that suits them. Other important aspects of New Deal options reported on favourably by young people were the experience under the employment option, good work-based training opportunities to develop skills and gain qualifications through the full-time education and training option and continued support once in a job Jowell, Teresa, 1999, Research shows secrets of New Deal success, Ministerial Press release 11

13 In contrast in Australia, the role of intensive case management in the mutual obligation arrangements is notably different. The initial interview with Centrelink for all eligible job seekers is focused on how to meet their mutual obligation requirement. In Australia, access to Intensive Assistance under the Job Network arrangements is only available for job seekers who are eligible and who have already undertaken one of the mutual obligation options. A job seeker participating in Intensive Assistance is not permitted to participate in Work for the Dole. The reason given for this for stipulation is that: This would be double funding on the part of the Commonwealth Government. 24 To be eligible for referral to Intensive Assistance, a job seeker must be registered with Centrelink as unemployed for at least 52 weeks, or classified as being at high risk of long-term unemployment and be: a recipient of Newstart or Youth Allowance or another form of qualifying Government income support or a person aged 15 to 20 years and not in full-time education or training; or an Aboriginal person or Torres Strait Islander participating in the CDEP scheme. A change to arrangements, announced by The Minister for Employment Services, Tony Abbott, in March 2000, is that anyone leaving a Work for the Dole programme and not going into a job or training scheme would be automatically referred to job search training. 25 Eligible job seekers undertaking an external activity such as participation in a Mutual Obligation program, a state government-funded program or a Department of Family and Community Services (FACS) program will not be referred to Intensive Assistance until their participation in the program ends. Also ineligible for Intensive Assistance are job seekers with a disability who are streamed for assistance to specialist disability employment services funded by FACS. 26 This back-end access to intensive case management is in marked contrast to UK practice. Mutual obligation requirements in Australia, therefore, appear to be used as a screening device to reserve intensive assistance for those who have been required to undertake another mutual obligation activity first. The Australian approach may reflect an intention on the part of the designers of the Job Network to minimise the costs involved in granting job seekers access to an expensive form of assistance. Differences in the role of intermediaries The role of intermediaries in the form of partnerships is a prominent feature of New Deal arrangements. The partnership arrangements include local authorities, the voluntary sector, trade unions, Learning and Skills Councils, race equality councils, colleges, careers companies, training providers and employers are all involved. These local and regional groups are said to have influenced the design and delivery of New Deal and play a key part in local marketing activity. 24 DEWRSB, 2000, Questions And Answers Raised In Information Sessions Held For Community Work Coordinators:17-27 January Department of Employment, Workplace Relations and Small Business, Canberra. 25 Tingle, L, 2000, Minister, Labor in one mind on jobs, Sydney Morning Herald, 24 March, p6. 26 DEWRSB, 1999, General Information and Service Requirements for the Employment Services Request for Tender Department of Employment, Workplace Relations and Small Business, Canberra, p

14 Until recently in Australia, intermediary organisations played no role in the operation of WFD. However, from January 2000, Community Work Coordinators have been appointed through a tender process. Their role is to act as a broker and managing agent for the program. This involves having in place a contract with a sponsor organisation for jobs funded under Work for the Dole. Community Work Coordinators are also responsible to the administering Department (Employment, Small Business and Workplace Relations) for monitoring sponsor organisations in terms of meeting their contract milestones at various stages throughout the duration of the project. The role of the Coordinators is to mediate between government and community organisation sponsors: The new arrangements will make it easier for community groups to get involved in Work for the Dole, facilitating partnerships between local community organisations wanting to sponsor Work for the Dole activities and Community Work Coordinators. Local community organisations will find it less daunting to obtain funding for projects. No longer will they have to apply directly to the Government. They will now be able to approach Community Work Coordinators with their ideas and proposals for projects in their local area and Community Work Coordinators will assist community organisations in developing quality proposals. 27 Intermediaries play an important part in the UK in managing the delivery of government funded labour market services. This was a major role for the former Enterprise and Training Councils, now reconstituted as Learning and Skills Councils. However, in the Australian case, the equivalent organisations, Areas Consultative Committees, are not expected to perform the function of managing agent. 28 Their role in relation to government, as their name suggests, is often an uncertain one because of the lack of financial autonomy to operate independently of their sponsoring department (DEWRSB). Differences in employer involvement Another notable difference between the UK and Australia s mutual obligation arrangements is the extent of involvement by employers. New Deal program publicity for the first months of the year 2000 notes that 60,000 employers have undertaken to provide employment opportunities for New Deal participants. This involves signing a New Deal Employer Agreement provided by the Employment Service. The agreement is a commitment to quality from both sides. It sets out the terms and conditions of the New Deal subsidised employment under which employers agree to treat New Deal employees in the same way as other employees and, wherever possible, to continue their employment after the end of the subsidy period, subject to commitment and aptitude. In return the Employment Service promises to make subsidy payments accurately and on time. Assistance available to employers in the UK consists of a subsidy of up to 60 a week for six months for a person aged and up to 75 for a long-term unemployed person aged 25 plus. There is also available up to 750 towards training a young Abbott, 1999, p1. There are approximately 58 Area Consultative Committees set up across Australia. The Area Consultative Committees have been established to advise the Government on regional employment, education and training issues and are made up of local business people. 13

15 person aged There is a strong emphasis on the obligation of employers to provide training leading to formal qualifications with a strict requirement for employers to provide a minimum of one day s training a week which must lead to the equivalent of a National Vocational Qualification. This training can take place in the workplace or at a college. The training provided by employers is constantly monitored and reviewed and if an employer is found not to be meeting these requirements, they will lose their subsidy. 29 New Deal is also well promoted to employers. In Australia, there is no explicit involvement of private sector employers in the mutual obligation options. Indeed, Work fro the Dole projects are selected on the basis that the work that they provide does not actively compete with jobs in the private sector. However, this requirement serves to further confirm that the primary focus of mutual obligation requirements in Australia and Work for the Dole in particular is not on getting participants into ongoing work. The OECD s Economic Survey of Australia notes that: The requirement that under Work for the dole Programme jobs must not compete with paid employment in the regular labour market remains a problem as it favours unskilled work with little opportunity for training which may impede the integration of the unemployed into gainful work An overview of the two approaches The following three tables offer an assessment of the differences between the two countries approaches. The programs in each country are rated in terms of the features identified as key inputs, processes or outcomes (1 = important, 2 = less important and 3 = not important). In terms of inputs, as noted above, the UK Government appears to play a far more proactive role in promoting the New Deal program. New Deal is promoted as a high profile initiative of Government. It was one of the main policies in the Labour Party s election manifesto, and the only area where the Labour Party pledged additional expenditure (of 3.5 billion) prior to the election. Work on the design of the programme was started immediately after the May 1997 election; the programme was introduced in pathfinder (pilot) areas in January 1998 and launched nationally in April The strong employment focus of the New Deal set of arrangements is expressed through private sector involvement in a series of partnerships. Similarly, local level intermediary bodies have a more prominent role in the UK than the newly created role of Community Work Coordinators in Australia is likely to permit. The design of the program in Australia in relation to Work for the Dole ensures that community groups have a primary role to the exclusion of private sector enterprises UK Department for Education & Employment, 1999, Employment Minister Welcomes Prince s Trust Report As Proof That New Deal Is Making A Real Difference 27 July Press release 357/99 OECD, 2000, op.cit., p

16 Table 2: Inputs Role of stakeholders Government as promoter of program Mutual obligation Australia New Deal UK 2 1 Employers/enterprises 3 1 Intermediaries 3 1 Local community groups 1 2 Processes Table 3: Processes Mutual obligation - Australia New Deal - UK Work first focus 3 1 Role of intensive case management 3 1 Post program support 2 1 Table 3 summarises the differences in processes. The work first focus of the New Deal compared to the change attitudes to work or work experience focus of mutual obligation arrangements in Australia. Intensive case management is used in both programs but its place in the process is very different. In the case of the UK, it is upfront and is the lynchpin for making the most of participation in the five options available to participants. In Australia, Intensive Assistance is not accessible to job seekers required to undertake a mutual obligation option. For those job seekers who are eligible, they are required to first undertake a mutual obligation option before being able to participate in Intensive Assistance. Community based work is a prominent feature of the options available in Australia but is less prominent among the UK options. As noted above, there is a danger that community based jobs are mainly low skilled and hence offer participants little opportunity for worthwhile on-the-job training. Outcomes Table 4: Outcomes Mutual obligation - Australia New Deal - UK Employment 2 2 Education & Training 2 2 Community based work 1 2 Role of on-the-job training Little potential where work is skilled Key element 15

17 Differences in performance outcomes The data reported in Table 5 are difficult to compare because of the differences in what is being compared. However, the data suggest that New Deal is more successful in placing young people in employment than Intensive Assistance for all ages and Work for the Dole for 18 to 24 year olds in Australia. 31 However, it is not possible to identify what extent this is due to differences in program design and delivery and to what extent it is a product of better labour market conditions in the UK. Table 5: Performance outcomes of mutual obligation arrangements in Australia, and the UK Performance outcomes Employment and other activities Number Employers involved Mutual obligation - Australia Intensive Assistance (for all age groups): 29 % placed in a job but only 12 % in work or education for at least 13 weeks (1 May 98-4 June 1999). Work for the Dole: 34 % in unsubsidised employment 3 months after leaving WFD. Of those unemployed 3 months after leaving WFD project, 23% had some work. 11% in education or training 3 months after leaving WFD Information not available for Job Network Intensive Assistance. Private sector employers not permitted to apply for WFD funding New Deal - UK April 1999: (for 18 to 24 yrs) 33% in unsubsidised employment, 11% in subsidised jobs, 16% in fulltime education, 11% on Environment Taskforce option & 10% on Voluntary Sector option More than 60,000 employers agree to participate in New Deal Source: DEWRSB, 1999, Evaluation of Work for the Dole, May. Press releases, UK Department for Education and Employment. The data in Table 4 suggest that the New Deal has achieved better employment outcomes (44 per cent in unsubsidised and subsidised jobs compared with 29 per cent for Intensive Assistance. The longer-term employment outcome result for Intensive Assistance in Australia (in work for at least 13 weeks) only stands at 12 per cent of program participants. It is not known what the equivalent figure in the UK is. The longer-term impact on employment outcomes of the UK participants in the Environment Taskforce or Voluntary Sector is unknown. 5. Work for the Dole and conflicting objectives The key role for local community groups in Work for the Dole stems from the emphasis given to community involvement in two of the program s three objectives: 31 A press release in August 1999 notes that long term youth unemployment has fallen by almost 75 per cent since spring Department for Education and Employment, 1999, Blunkett Hails Record Employment Levels, 11 August press release 380/99 16

18 develop work habits in young people; involve the local community in quality projects that provide work for young people and help unemployed young people at the end of the projects; and provide communities with quality projects that are of value to the community. The potential for these objectives to conflict with the implicit employment outcome objective is high. The WFD evaluation provides evidence of this. The desire of local community groups to obtain the best persons available for their projects can be reflected in a tendency to recruit persons judged to be more work ready. Project sponsors initially had responsibility for recruitment but in practice Centrelink recruited participants for most projects. Centrelink officers had a duty of care to ensure that the placement was not detrimental to either party.32 According to the evaluation report, sponsors were given the opportunity to reject voluntary participants if they believed that they were unsuitable for the project. 33 The impact of the sponsor s desire to select participants that are see as more likely to have the right work attitudes is suggested by the higher proportion of WFD participants who had been unemployed for 6 to 12 months (38 per cent). This compares with 25 per cent unemployed for 1 to 2 years and 33 per cent for more than two years. 34 Unlike options under New Deal, providing access to systematic training is not a requirement for WFD project sponsors nor is a training component funded. The WFD evaluation noted: Most sponsors would have liked the option to provide more training to help participants to be better prepared for the labour market. They were concerned that the training and experience provided would have limited application outside their WFD placement. It should be noted, however, that WFD is not a training programme. 35 Fragmented administrative functions producing disjointed outcomes The lack of focus on employment outcomes and the use of intensive case management after participating on Work for the Dole exposes those administering the program to wide areas of discretion in deciding who should be subject to mutual obligation. This is shown in the administrative guidelines that state Centrelink officers can decide whether eligible job seekers should be exempted or not from undertaking a mutual obligation option, allocated to a Work for the Dole place or not, and when to give access to intensive assistance. The WFD evaluation identified one result of this wide area of discretion on the part of Centrelink staff: the lack of integration of services to job seekers. The role of the Centrelink officer in the recruitment process for Work for the Dole is a narrow one, with little or no emphasis on a continuing one-to-one relationship. The Centrelink officer recruiting for a WFD project: performs the important function of making individuals aware of their obligation and consequently reducing reliance on income support. While DEWRSB, 1999, op.cit., p 8 Ibid., p26. Ibid., Table 1, p11. Ibid., p

19 complex to administer, the eligibility rules for WFD contribute to the effective functioning of the Mutual Obligation requirements. 36 The WFD evaluation noted the following findings about the often-fragmented administrative arrangements: Many respondents in this study suggested that better communication could be achieved through more continuity of contact with Centrelink officers who are responsible for helping recruit participants for Work for the Dole. Difficulties reported in the case studies included participants receiving inconsistent advice from different Centrelink staff. Respondents suggested that a dedicated WFD officer would be helpful in each office. 37 The evaluation identified the need to clarify the relationships between different elements of the Mutual Obligation arrangements and between Job Network and Mutual Obligation as an area for improvement in the operation of the program: Participants who become eligible for Intensive Assistance were required to leave their WFD placement and link up with an Intensive Assistance provider. This created recruitment and replacement problems for sponsors. (This has since been changed so that participants who are already in a WFD project do not enter Intensive Assistance until WFD is completed.) Different eligibility requirements for the various Mutual Obligation options sends a confused message to young people and makes estimating the eligible population for these different activities complicated Conclusion The above analysis suggests that the political context for introducing mutual obligation arrangements is crucial to determining how they operate in practice. In Australia, the political motivation for mutual obligations arrangements appears to respond to fears of welfare dependency among young job seekers. Implicitly and sometimes explicitly, these motives are based on a negative view of those receiving unemployment benefits. In some local communities, other motives for supporting mutual obligation may revolve around wanting to engage young people in some form of worthwhile activity to keep them occupied and out of harm s way. In both instances, the focus of mutual obligation arrangements is narrow and short term. In the UK, however, mutual obligation appears to be interpreted more in terms of both a citizen s entitlements as well as obligations embodied in a contractual relationship between the individual and the State. The former is part of a reform process to introduce a more personalised approach to how government relates to its citizens in place of the anonymous, bureaucratic uniformity that has been a hallmark of the welfare state. 39 The New Deal is oriented more to achieving for the individual job seeker a more lasting employment outcome based on a better appreciation of their specific needs Ibid., p29. Ibid. Ibid p32. See the British Government's Green Paper entitled New Ambitions For Our Country: A New Contract For Welfare released in March

20 What is notable about the operation of Australia s mutual obligation arrangements is the emphasis on requirements or obligations without any strong focus on the purpose for so doing. Mutual obligation arrangements in Australia appear to be primarily a set of administrative hurdles presented to the job seekers to test their good faith in seeking work. The range of options available under mutual obligation is disjointed and are not focused on how best to meet the needs of an individual job seeker. Work for the Dole, as the mutual obligation option with the largest number of places, also suffers from a lack of focus on achieving employment outcomes. The objectives of meeting the needs of community sponsors as well as participants may conflict, particularly when there is no explicit requirement on the part of the sponsor to provide a bridge into employment through the provision of systematic training or other means of support. Mutual obligation, with its emphasis on the individual, is dependent for its success on how it is implemented by those responsible for the direction, monitoring and supervision of the behaviour of these individuals. 40 Professor Anna Yeatman has identified three essential ingredients for a contractual relationship between government and the job seeker based on mutual obligation to be effective. 41 The first is the direct engagement and participation of the individual job seeker in decision making and planning for his/her future. The second is the need for a negotiated agreement between the case manager and individual client. This means that the service provider s guidance and direction have to be offered so that, as far as possible, they work with, rather than against, the client s voice and choice. The third necessary element of the contract is openness about the use of sanctions if the agreement is not complied with. According to Yeatman, it is the explicit nature of the negotiation and agreement that defines the reciprocity of the exchange. Without such explicitness, neither party could be aware of when or if reciprocity is breached by the other. 42 These conditions underpin the operation of mutual obligation arrangements in the UK. The emphasis on the individual s responsibilities in the UK takes place in a context where there is already a strong recognition of a citizen s rights and entitlements. The UK Government has publicly affirmed the following entitlements for young people: free education up to age 18: the UK Government s White Paper on Post 16 Learning, June 1999, commits the government to measures to encourage and enable all young people to stay in learning beyond the age of 16; Mead, L The Rise of Paternalism in L. Mead ed., The New Paternalism: Supervisory Approaches to Poverty. Washington DC: Brookings Institute.p21 cited in Yeatman Yeatman, A, 1999, Mutual Obligation: What kind of contract is this?, Paper delivered at the National Social Policy Conference, UNSW, July Ibid, p