The Federal Government will outsource a number of its employment services contracts to offshore companies as the result of a process conducted by Julia Gillard’s Department.
Last year, the Department Employment, Education and Workplace Relations commenced a tender process for a new employment services program — the Universal Employment Program — which will replace the current Job Network services as of 1 July. Last week, successful tenderers were informed they had been chosen, as a prelude to final negotiations.
A number of current providers — non-government, not-for-profit agencies with very successful track records – were not contacted and accordingly are out of the running.
Instead, the UK companies A4E and Reed Employment are said to have been selected. The outcome will be announced at the end of the month.
The outcome means several NGOs and non-profit employment service companies will close, as they are dependent on Job Network contracts, throwing out of work hundreds of people. One provider alone is expected to lay off 400-500 employees.
Some may be picked up by the successful tenderers — A4E, possibly expecting success, approached a number of community firms and non-profits prior to the tender process to discuss partnerships. However, the irony of an employment services contract throwing hundreds of job provider employees out of work on the cusp of a recession won’t be lost.
More significant than the offshoring of the services is the likely switch to for-profit contractors, who will have a strong incentive to place clients at minimal cost. The smaller community firms that have missed out, or will now have to negotiate commercial sub-contracting arrangements with the successful tenderers, usually have strong local networks, or are church-based groups that link employment services to other forms of assistance such as counselling. These groups also plough profits back into services.
Many in the local employment services sector are furious, and there are claims that Therese Rein — who sold the local arm of her employment services company to a UK firm two years ago — must somehow be involved in the decision. However, the process was conducted by DEEWR bureaucrats with external probity auditors.
Greens Senator Rachel Siewert first began hearing from the sector last week and raised the issue in Parliament. The Government refused to respond, given the tender process is still officially continuing.
“We’re hearing at this point thousands of people will be made unemployed by offering these tenders to for-profit providers,” Siewert told Crikey. “At the time where we’re seeing the Prime Minister express a great deal of concern, we have actions of his own Government making a number of people unemployed who provide valuable services to our community.”
The timing of the decision, when the Government is significantly ramping up the role in training in helping combat the impact of the recession, could not be worse. Training will be the Government’s primary response to both minimising unemployment and making sure the unemployed retain and acquire necessary skills through a period of joblessness until the economy starts growing again. Whether A4E and Reed have the local skills to manage that remains to be seen.
The current tender process replicated two previous tenders for job placement services which have occurred since 1996, when the CES was abolished. If I recall correctly, about 300 organisations, including a small number of for profit firms initially won business. In the second tender (about 2005?) the number of winning organisations was reduced by about half and representation of for-profit operations increased.
The current tender was expected to further reduce the number of successful organisations, including for-profits. In fact, great swathes of the tender documentation were dedicated to processes by which organisations should merge, be taken over voluntarily or enter into sub-contract arrangements with smaller or specialist agencies for particular aspects of the task, such as assistance for job seekers with higher support needs.
All players in the sector knew that this was a make or break business defence and survival process. Unfortunately, community-based NFPs do not have a culture of operating in this way and limited ability to withdraw service delivery staff for the months required to bid effectively. The previous Government’s rationale was that it would pay only only for the outcomes it wanted. All three tenders since 1996 sought evidence of achievement of these results exclusively. The not-for-profit purpose or social mission of bidding organisations was irrelevant. The current process is therefore a legacy of the Howard Government’s approach to these issues.
The real problem is that the results-based model provides funding when a job seeker is found a sustainable job. It has never before been applied in an environment of rising unemployment or recession, only when the number of available jobs was increasing. I wouldn’t mind betting that cash flows of successful tenderers will become a real issue, especially as economic activity declines and employment rises. A poisoned chalice?
The hypocrisy demonstrated by this Government in moving from local non-profit groups to international for-profits is breathtaking!
Hands up anyone at all who believes that helping the unemployed to find work can be better achieved through a profit-driven corporation, rather than church and welfare groups, whose motivations are unquestionably more humanitarian.
Particularly given the GFC, Gillard et al are bonkers if they think they’ll get away without bloodied noses after this one hits the front pages. Malcolm must be giddy with antici…pation. Have at them Malcolm; they deserve it!
The hypocrisy demonstrated by this Government in moving from local non-profit groups to international for-profits is breathtaking!
Hands up anyone at all who believes that helping the unemployed to find work can be better achieved through a profit-driven corporation, rather than church and welfare groups, whose motivations are unquestionably more humanitarian.
Particularly given the GFC, Gillard et al are bonkers if they think they’ll get away without bloodied noses after this one hits the front pages. Malcolm must be giddy with antici…pation. Have at them Malcolm; they deserve it!