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Employment Services is changing. What we know so far..


In 2022, the Employment Services market is set to be shaken again. To what extent will be revealed in the soon to be released discussion paper from the Department.

The Welfare to Work ‘alchemists’ have been busy again – for the first time in 20 years, Government will be stepping back into direct service delivery. Government, like most businesses, has accelerated it’s move to online servicing in response to COVID-19.

The digital transformation has already started. Government has brought forward the wider roll out of the Online Employment Services System.

COVID-19 is allowing Government to ‘stress-test’ the new system. As a result, a much larger number of job-ready job seekers will be supported digitally.

The shift has begun and will continue apace.

What do we know?

What do we know so far about the New Employment Services model and how the learnings from the trial regions are being applied?

Focus on the most disadvantaged job seekers

  • Providers will only deliver services to the long-term and very long-term unemployed, identified highly disadvantaged cohorts, and job-seekers with significant non-vocational barriers
  • The most ‘job ready’ job seekers will be removed from the provider caseload and serviced digitally by Government – this represents approximately 50% of the current market

Specialisation will be key

  • Specialist providers, with expertise servicing an identified cohort, will be highly regarded.
  • The Department has indicated that cohort and location specialisation, may make a return to Employment Services. Providers focusing on specific major infrastructure projects might even be considered.

A licensing system

  • Procurement will be based on a licensing model. Current high performing providers will be offered an initial license with potential new entrants invited to apply via an RFT process in late 2021
  • The Department will manage the market by restricting the number of licenses in each Employment Region.  Providers who are granted a license and caseload flow will have some assurance of revenue from this initial market share allocation.  This assurance will be short-lived, with future caseload highly dependent on performance.  

Outcome payments

  • Payments to providers will continue to be heavily geared towards outcomes – or payments by results. Providers will receive an initial, upfront payment or Engagement Fee with further outcome payments made as the job seeker progresses and achieves education and employment milestones.
  • Education outcomes delivered through related entities will be subject to close scrutiny.
  • Additional incentive payments for the most disadvantaged job seekers and Very Long-Term Unemployed job seekers are likely.

Employment Fund

  • The Employment Fund is expected to be maintained, allowing providers to offer eg. wage subsidies and training and purchase personal protective equipment for job seekers.
  • Access to the Employment Fund will remain highly regulated and closely monitored

What does it mean?

What’s certain is that providers will play a critical role in supporting job seekers hardest hit by the labour market impacts of COVID-19.   

Now, more than ever, the employment service system will be front and centre for many individuals, households and families. Job seekers will need quality services and support to re-skill and ensure they are job-ready as the economy recovers.  

Our work in the sector assures us that providers are well placed to meet this challenge.  

However, the challenging economic environment emerging from the pandemic will increase the risk of delayed outcome payments.  

Providers should prepare for the next iteration of Employment Services with a view to multiple strategic horizons (short, medium and long term) as the model is embedded, confidence returns and recovery takes place.  

i-exchange will be closely following developments and assessing the Discussion Paper.

We can assist with realigning strategy, priorities and focus to help your organisation thrive in the new environment.

Contact i-exchange today for a confidential discussion.  

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Post Author: Michelle Thomas-Kerr