Speech - How rigorous evaluation can help improve Australia's employment services

National Employment Services Association
Brisbane
Thursday, 12 October 2023

I acknowledge the Jagera and Turrbal people on whose lands your conference is taking place, and the Ngunnawal people, on whose lands I’m recording this video today. My thanks to National Employment Services Association CEO Kathryn Mandla for the invitation to speak, and every NESA member here today.

The value of employment services

Since 1998, NESA members have contributed to Australia’s economy and supported Australians into work through employment services. 

This is important work.

You help people into jobs, you help employers fill vacancies, and you help the labour market run smoothly.

Work is more than a pay packet. It provides a sense of dignity and connection. It integrates people into the social fabric. As writers such as Jon Cruddas have noted, human beings do not see ourselves primarily as consumers, but as producers. When we meet a stranger at a barbecue, we’re unlikely to ask ‘what do you buy?’. Instead, the more common question is ‘what do you do?’.  

The importance of work is borne out in wellbeing data. Research by economist Nick Carroll finds that to retain the same level of emotional wellbeing, a person who is unemployed would need to have an income that is $40,000 to $80,000 higher than they had when employed. Studies from the United States and Germany have reached similar conclusions.

At a macroeconomic level, mass unemployment can be seen as a fundamental market failure. When people want to work but cannot find suitable jobs, the productive capacity of the economy is impeded. 

But this impact also plays out at a personal level. When society fails to equip people with the skills to succeed in the labour market, we don’t just hurt their earnings potential, but their potential to experience the meaning and fulfillment that comes with a good job. 

Just over a year ago, the Australian Government introduced digital services so that your members can focus on supporting the most disadvantaged job seekers. But just because we’ve taken this step, doesn’t mean the employment services system is perfect.

The world has changed a lot since 1998, and the labour market has changed too. Unemployment remains near historic lows at 3.7 per cent (the latest figure, for August 2023). But we still have people struggling to gain secure and sustainable employment – for instance, of the Workforce Australia Services caseload: 

• 85 per cent are long-term participants (a year or more); 
• 71 per cent are very long-term participants (two years or more); and
• 32 per cent are ‘extremely’ long-term participants (more than five years).

The Australian Government’s approach is to evaluate the system, based on the best available evidence.
Last month, our government handed down Working Future, our employment white paper. This is the third employment white paper delivered in Australia’s history, after Curtin’s in 1945 and Keating’s in 1994. 

Working Future lays a pathway for a more dynamic and equitable labour market where more Australians have an opportunity for secure and fairly-paid jobs and people, businesses and communities can benefit from the big shifts underway in our economy. It contains 31 future reform directions and nine immediate actions such as turbocharging TAFE Centres of Excellence and addressing labour market data gaps to better support policies and programs. Further, Working Future helps guide and complement work across government including through the eight guiding principles for employment services reforms. The paper was built on the work from last year’s Jobs and Skills Summit and was informed by over 400 submissions.

Drawing on that work, the white paper outlines how employment services can help build a more inclusive labour market, improve productivity and participation, lift people’s skills, and facilitate high quality job matching. This means changes that improve the employment services system can benefit everyone: job seekers, communities and businesses.

Change will be methodical

The Albanese Government doesn’t seek change for change’s sake. We are sensitive to disrupting the sector – employment service providers like you have been placing Australians into work for more than two decades.

But we are equally sensitive to business-as-usual. 

That’s why we are taking a methodical approach to reviewing employment services. Julian Hill, a talented colleague, is leading the Inquiry into Workforce Australia Employment Services, which will report by the end of this year. 

It will be one of the most important parliamentary reports this term, and we will take time to study it deeply before we develop a response.

How we can improve

But I can already say – if we are spending $2 billion a year on employment programs, we owe it to the taxpayer to invest that $2 billion only in the most effective, the very best programs.

We do that through building an evidence base through testing and evaluation. My focus in the employment portfolio is on overseeing evaluations of labour market policies and programs to produce the most robust evidence. This aligns closely with the employment services guiding principle where we want reforms grounded in evidence, high quality evaluation and continuous learning and improvement.

Yes, we have evaluated every iteration of the employment services system since the Job Network. NESA has frequently been consulted.

But we weren’t using the best approach – randomised trials. When we test medicine, we have a control group who receives a placebo like a sugar pill, and a group that receives the intervention – the medicine. And we randomly allocate who receives what treatment.

This means we know for sure the medicine works.

That’s not the case with employment services, and you would be surprised how often randomised trials turn up a result you didn’t expect. Just last year, a series of randomised trials analysed ten different job training programs in the United States, and found that only one had a positive effect on earnings.

Successive Australian governments have applied methods other than randomised trials to evaluate employment services. 

This Government is committed to building on the evidence from these current approaches with trials.

In this year’s Budget, the Australian Government established the Australian Centre for Evaluation, with a remit to conduct rigorous evaluations, and with a focus on randomised trials. The Department of Employment and Workplace Relations will be working closely with the Australian Centre for Evaluation to increase the use of high-quality impact evaluations in the future.

We need rigorous evidence, grounded in a strong ethical framework, for our employment programs.

Conclusion

Employment services are one of our nation’s biggest investments, and with a renewed focus on rigorous evaluation, we have the potential to do even better.

And we won’t be able to do carry out these trials without support from NESA and its members.

Thank you for supporting some of the most vulnerable people in Australia, and for your hard work in helping shape a more productive, more egalitarian nation.