Rethinking the Welfare State: The prospects for ... - e-Library

Labour market training 199
through the tendering process, approved clients are able to exercise choice among these
suppliers.
Government referral constitutes a voucher by any other name and the Australian
approach is, de facto, a voucher system. Job-matching agencies receive a stipulated
amount for each jobseeker. 86 JSA agencies receive payment for each unemployed person
who signs onto the job-search plan. For Intensive Assistance providers (those that
provide education and training programs in addition to JSA), three payments are made at
different points of the process: “The up-front portion is made to the provider on referral;
an interim payment is made if the jobseeker significantly reduces drawings on social
security; and a final payment is made if benefit cessation or reduction continues over a
further 13 consecutive weeks.” 87 The profitability of an agency is therefore contingent
upon its ability to attract a large number of clients and to produce a desired outcome. The
money follows the client and clients have free choice among suppliers.
Although the reforms are still new, early evaluations suggest that they have produced
benefits for recipients and savings for the government. The previous “Jobs Club” system,
which provided services similar to the new JSA programs, cost A$2,510 per unsubsidized
employment outcome. In contrast, the JSA programs cost A$1,118 per unsubsidized
employment outcome. 88 The voucher programs are also more effective. “The most
prominent difference is that 31.7 percent of Job Club participants were in ‘further
assistance’ three months after leaving the program, compared to just 4.7 percent for those
assisted by the contracted providers.” 89 These results are encouraging and suggest that the
introduction of market mechanisms has already begun to achieve the desired effects.
Intensive Assistance results are more difficult to evaluate, principally because the
resources devoted to each participant and program are highly variable. However,
preliminary data suggests that IA is more cost-efficient than its predecessors. IA
providers receive approximately A$9,000 for successfully placing a client from the
hardest-to-place category. If it is assumed that these providers have the same success
rates as the old providers (and therefore do not receive full payment for all clients), then
the average payment received per client from the most disadvantaged group is A$4,550. 90
In contrast, the oldJobSkills program had a per-client cost of A$7,105 and the New Work
Opportunities program had a per-client cost of A$10,009. 91 Therefore, it seems likely that
IA is substantially more cost-effective.
The OECD estimates that the cost of Australian AMLP programs represented 0.8
percent of GDP in 1995/1996, but only 0.4 percent of GDP in 1998/1999. 92 These figures
suggest that preliminary findings of cost-effectiveness are not illusory, although other
factors such as an improved economy may weaken the argument. Clients also appear to
be satisfied with the services. A nationwide jobseeker satisfaction survey administered in
1999 indicated that over 75 percent of jobseekers were satisfied with their providers and
believed that their job prospects had improved as a result of their participation in the
program.
Designing a new system
Based on the experience surveyed above, we believe that there is reason to consider
enhanced reliance on vouchers for the delivery of government-supported labour market