Privatization was supposed to give Australia's jobless a better chance to find work. But the scheme has few happy customers

By SUSAN HORSBURGH

ruce Tierney dreams of being a full-time storeman and packer. The 33-year-old has been in and out of work for the past decade; his last job was a 10-day stint in the Royal Doulton warehouse two years ago. Since then he's been looking--he even goes door-knocking in industrial estates, but last time he was told to "rack off" and the proprietors threatened to set the dogs on him. On days like that, he takes out his anger on his bedroom. "I go crazy and my pillows and bed go flying," says Tierney, who lives in inner Sydney. "The longer you're out of work the harder it is. I want a job. Anything's better than the dole."

To get people like Tierney off the dole queue, the federal government has taken a radical step: in May it replaced the troubled Commonwealth Employment Service with the Job Network--310 private, community and government agencies competing to find work for the unemployed. Federal Employment Minister David Kemp, a former professor of politics, proclaimed the bold move into privatized job placement--the first by a national government anywhere--"one of the great social reforms of the last 50 years in Australia." But in the three months since its introduction, the system has been condemned by those it was designed to benefit--not only job seekers but placement agencies and employers--as unfair, underfunded and inherently flawed. "It's an academic exercise prepared by an academic who hasn't got a bloody clue about job creation or job management," says Jonathan Fowler, spokesman for the Small Business Association of Australia.

According to a Newspoll survey, 50% of Australians think John Howard's conservative government is doing a poor job of helping businesses find workers. With unemployment at 8.3%, compared with 8.5% when it came to power in March 1996, the government is under intense pressure to make its job placement experiment pay off.

No one denies that the CES, created shortly after World War II, needed an overhaul. The agency's staff "were public servants and the results didn't matter," says former Adelaide factory manager William Duffy, who stopped using the CES because it consistently sent him "appalling" candidates. Maya Rapson-Coe, 25, an unemployed Sydney childcare worker, says suitability was irrelevant to the CES; she was once sent for a peanut-packing job an hour from her home.

The previous Labor government's answer to the agency's failings was an employment package titled Working Nation, which augmented the CES by bringing in private companies to provide some services; it offered subsidies to employers and individual case management to those people considered most disadvantaged in the labor market. Working Nation was getting results--a study for the University of Melbourne's Full Employment Project found that its job creation schemes were successful at keeping once chronically unemployed people in work--but it was expensive.

The Howard government's plan to replace the CES and put people to work at less cost to taxpayers is a $1.7 billion performance-based system in which agencies are paid to find jobs for the unemployed. First stop for most job seekers is Centrelink, the government's welfare agency. After an assessment of need, the client is directed to one of three Job Network services: basic job matching, job search training, or individual case management for those out of work for more than a year. Agencies--from one-person operations to multinational firms--that successfully tender for government contracts are paid in line with the difficulty of placing a client; the highest fees go to such hard cases as, say, a "schizophrenic Aboriginal drug addict who's been out of work for 15 years," says an official in Kemp's department. Agencies with job-matching contracts--the most basic service--are only paid after a person is placed (and has held down the job for five days), but those that provide training or help the most hard-to-place clients receive a partial payment up front.

It is financial incentives like these, Kemp argues, that will motivate job agencies to put more people in work than the CES managed to do. But some critics argue that the profit motive is not a proper basis for community services. Roy Green, director of the University of Newcastle's Employment Studies Centre, says the closure of the CES was cavalier: "The government thought the market would solve everything, and that's not the way things work." Bishop Michael Challen, head of the Brotherhood of St. Laurence, which runs a job placement agency, sees the new policy as "not based on human need but on how government sees itself--small, less intervening and not responsible for the whole of society." Counters Kemp: "The government is improving the extent to which it realizes its social responsibility. It's certainly a major break from what one might call the welfare mentality."

The scene in the Centrelink building in Sydney's inner west one drizzly Friday afternoon is typical: a handful of people in jeans and track pants sit in front of a television set watching a talk show as they wait for their numbers to be called. A couple of people make nervous calls to prospective employers on free telephones; others hunch over touch-screen computers, hoping to find their dream job or at least a regular paycheck. Matthew Hiller, 22, has been interviewed for everything from underwear modeling to delivery driving in the past five months. He's philosophical about the new hoops in the system: "If that's what I've got to do, then that's what I've got to do." For Karen Davies, 31, a single mother of two who started a data entry job last week, the Job Network has meant more running around to different agencies, but an improvement in the number and quality of jobs on offer. "It's a bit time-consuming," she says, "but if you're willing to persist and be patient, it will pay off."

At stake under the new system is not just individuals' futures but the government's record on unemployment. Under the coalition's economic management, the number of people in work has increased by 300,000, evenly split between part-time and full-time jobs. But that has only been enough to soak up the growth in the work force: the number of unemployed has been stuck at around 780,000 for the past two years. When the scheme was launched, Prime Minister Howard told Radio 3AW: "I'll wager that in three months' time...people will be saying what a huge success the Job Network has been."

But the Job Network has had an inauspicious start. A survey by the Australian newspaper this month found that a third of the agencies are in financial strife; a leaked document has revealed that Employment National, the government provider, is not meeting its own targets for placing the long-term unemployed; and irate callers have flooded radio lines, shooting the new job placement scheme into the top five talkback topics.

Critics cite a range of possible reasons for the system's troubles: the tendering process favored the lowest bidders, overlooking many reputable outfits with good employer networks; Centrelink was not prepared for the extra workload; payments for basic job matching do not cover costs. Some employers, especially those in rural areas, say they cannot afford a service once provided free of charge; as many as 4 in 5 people coming into agencies are rejected because they are not on the dole and placing them does not earn a government fee; and, despite heavy advertising of the new scheme, few employers and job seekers seem to understand how it works.

A report by the Australian National University's Research School of Social Sciences calls the Job Network "a system where altruism and capitalism collide." The author, Paul Pickering, says it is "underfunded and poorly constructed--a recipe for a costly mess." He claims that the government has not properly budgeted for the promised number of cases (548,000 in the first 19 months) in the intensive assistance stream, and that agencies are unevenly distributed, with more services in low-unemployment areas where people are easier to place and fewer in high-unemployment areas where help is needed most. Yet Thorsten Stromback, who studies labor market programs at Perth's Curtin University of Technology, believes it is too early to write off the system. "If you make a large-scale reform, you're obviously going to have some problems," he says. "But it doesn't mean that what you're trying to do is wrong."

Those problems, according to some struggling agencies, are more than just "settling-in challenges," as Howard has described them. Providers with the less-lucrative job matching contracts complain that there are too few vacancies and that the $200 payment per placement is too low to cover overheads. Agencies in the nonprofit Jobs Australia consortium have reported losses of $15,000 to $50,000 a month. Predicts Paul Fitzgerald, chief of Job Futures, which has 160 offices: "You will see the emergence of three or four major providers and the rest will disappear." One of those survivors could be Drake Jobseek, which has had the resources to weather a tough bedding-down period. "To call it a money maker at this point would be premature," says national manager Sue Simons. "But we're confident that the potential is there for it to be financially viable."

Despite a 10-year track record for placing former prisoners and the homeless, the People 1st agency is less optimistic. It was not hooked up to the government's computer system for the first two weeks, and received no referrals from Centrelink for seven weeks. "It was like a morgue," says manager Cheryl White. The office once buzzed with 60 clients a day under the previous government's job schemes; now it gets maybe 15. The staff has shrunk from nine to three. The agency plans to hand back its contract on Aug. 28.

Other companies are changing tack. Martin Wren, general manager of Winning Edge--which has 11 offices in the Job Network--says his firm has resorted to touting for clients in railway stations and shopping centers: "You get a little concerned sometimes that you've been hung out to dry." Fitzgerald--who fears many companies will hand back their contracts by Christmas--suggests an up-front grant to keep agencies open and an additional payment based on performance. But the government is unmoved. "It is up to the agencies to perform," says Kemp. "No agency has a contract that it didn't freely accept."

To stay afloat, many agencies have had to charge employers: Employment National, for example, charges $250 per placement. In response, some businesspeople refuse to list their vacancies with the Job Network, preferring to find their own staff through classified advertisements or signs in shop windows. To get enough job postings to survive, some agencies have been forced to cut their charges.

Rosie King, co-owner of the Ansonia hotel in Ballarat, Vic., was charged nothing by BRACE, the local Job Network agency that helped her hire three people; she advertised on Monday and had a cook in her kitchen on Thursday. "I'm very positive about the changes," says King. "It makes good business sense." But she appears to be in the minority. "No one knows about it," says small-business spokesman Fowler. Says Opposition employment spokesman Martin Ferguson: "How can you expect a system to function when employers can't afford the charges and when you're not even including all the unemployed in trying to make the system work?"

Unemployed people who are not drawing welfare payments--new migrants, people who have received redundancy packages, those whose spouses have jobs or who want to move from part-time to full-time positions--are virtually excluded under the new regime. Since the government offers no payment for placing such people, agencies have little incentive to help them. Haigo and Sam Kokozian, who live with their three children in Sydney's west, are ineligible for free help because they are living on a car accident compensation payout. "It feels like everywhere you turn there's a brick wall," says Haigo, whose husband has been rejected by four agencies. She asked the ombudsman's office to help 43-year-old Sam into the Job Network's intensive assistance program--he has been out of a job for more than three years, his English is poor and he can do only unskilled work--but it turned him down.

Agencies that find jobs for the long-term unemployed (who represent almost one-third of the total) receive payments of $A2,500 to $A9,200 per client, but some say those fees do not always compensate for the effort required. Critics fear that some of the hardest cases will be swept aside in the rush to push people through the system. Says David Matthews, executive officer of the Australian Youth Policy and Action Coalition: "Anybody that requires any time at all to be spent with them is too expensive under this market."

The Job Network's poor publicity seems to be filtering through to the unemployed. Drake Jobseek cannot attract enough young people to fill its vacancies. "It could be that the youth are taking very literally what they're hearing in the press," says national manager Simons. "They may lack confidence and think, Why bother?" Some job seekers come to providers upset and confused. Says Pamela Hayman, who works for the Catholic Church agency Centapact: "They don't like change, especially when the future is already unstable."

It is not clear how many people have benefited from the Job Network; the government refuses to release figures. All Kemp will say is that 40% of the positions filled under the new system have gone to people who have been out of work for more than a year. While the government is ignoring its critics' calls to correct the new system's perceived faults, the Opposition does not have a costed alternative approach.

With the coming federal election expected to be fought mainly on the issue of tax reform, unemployed people like Bruce Tierney could be left behind in the scramble to court middle-class families. After two years without a job, Tierney has little faith in political solutions. "They promise you the earth," he says, "and nothing happens." The rest of Australia's 770,000 unemployed must be hoping the same won't be true for them.