Why Labor needs to scrap ‘mutual’ obligations and raise the rate

May 22, 2023
Image: Green Left

The Community and Public Sector Union (CPSU) has called on the Anthony Albanese government to scrap the punitive “mutual” obligations system. In its submission to the Inquiry into Workforce Australia Employment Services, the CPSU said the system “does more harm than good”.

The CPSU recommended the government return the employment service to the public sector, ending “the use of for-profit employment services”.

The submission said: “Mutual obligations, low income receipts, constant assessment, pressure to rejoin the workforce is demeaning and underpaid work, presenting unemployment as the welfare recipients’ fault and something they can fix rather than a product of large-scale economic factors”.

Anti-poverty campaigners and welfare recipients have long called for the mutual obligation system to be scrapped. The system requires people on JobSeeker to earn “points” by completing activities such as applying for jobs, attending job interviews or completing training activities, as well as attending fortnightly meetings with private job service providers (JSPs).

By failing to complete your obligations, such as missing an appointment, means points are deducted and payments are cut. Government data shows that 57.8% of recipients received a payment suspension in the second half of last year.

As Jess, a welfare recipient, told a Raise the Rate rally outside Albanese’s Marrickville office on April 28, the privatised JSP system has devastating impacts on vulnerable people. “I was advised by my job centre that I did not have to provide my job search [for that month], and then I was penalised because I did not provide my job search.

“That was a full fortnight of zero money, unable to pay rent, I had to cut into my bond money which I will never be able to pay back.

“I relied on food banks … which wasn’t the diet that either [me or my child] needed.”

There are countless stories of payments being unfairly cut off because of the mutual obligations system. Many were submitted to the inquiry, including one man (submission 223) who was told he “talked too much” after trying to explain his work history. He said his experience with JSPs included “not being listened to, being job-matched to unsuitable jobs [and] being spoken to like a child”.

“What I needed was proactive and professional job coaching and, instead, I had my [newspaper job ad] clippings ignored. I wanted help with securing a full-time job and, instead, I was pushed into casual work.

“This went on for months and months … and my mental health significantly deteriorated. I became distressed to the point of being hospitalised.”

Many more similar submissions were submitted.

As the CPSU told the inquiry, mutual obligations will not be fixed by “tinkering” and “tweaking”, there are deeper structural problems embedded into the entire system.

I have been on JobSeeker recently, and experienced first-hand how JSPs prey on the unemployed to make a profit.

I would attend my regular fortnightly meeting, having completed my obligation of applying for 20 jobs in the month. Mostly, my provider was severely understaffed which meant  no one was available to meet with me.

On other days, staff simply checked off my name and told me to come back in two weeks. At one meeting I was told there “isn’t much we can do to help you”.

I had to deal with the stress of attending these meetings and completing my obligations and received no real help finding work. When I did find a job, independently, my provider harassed my new employer for their details, trying to claim extra money for finding me a job when they had not helped at all.

JSPs are “paid when clients have been in a job for four, 13 and 26 weeks, at three different rates according to a client’s ‘job readiness’”, as Martin Loosemoore explained in The Conversation in 2021.

“Gaming the system seems to be all too common, with the most disadvantaged (stream C job seekers) being ‘parked’ while service providers focus on the ‘cream’ from stream A and B seekers, which pay less but are much easier to place,” he wrote.

Loosmoore pointed to data published in Michael West Media that shows JSPs were paid huge amounts between 2015 and 2022, with little gain to job seekers. The biggest provider, Max Solutions, received $1.21 billion, and APM Employment Services and Sarina Russo Job Access received $667 million and $606 million respectively.

CPSU assistant national secretary Michael Tull told the inquiry that the suspension of mutual obligations during the pandemic “made it easier for people to find employment and improve their engagement with the labour market”.

Tull said “mutual obligations and privatisation go hand-in-hand” as it is the mutual obligations system that “enables so many providers to get by without delivering decent services for people, because people don’t have any choice”.Mutual obligations — combined with the very low rate of JobSeeker, a measly $52 a day after the budget raise of $20 a week  — ramp up pressure on already vulnerable and stressed people.

The Interim Economic Inclusion Advisory Committee found that low payment rates were a “barrier” that prevented people finding work. It recommended a rise of at least 90% to the Age Pension — about $62 a day.

Anti-poverty advocates say the rate should be raised above the Henderson Poverty Line —currently $88 a day — until a more accurate poverty line measure is developed.

Scrapping mutual obligations, raising the rate and returning employment services to public hands would go a long way to improve the lives of welfare recipients and ending poverty.

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