Carrots rather than sticks

In 1993 I was made redundant. At the time I had a middle management position in the public sector, and to be fair I had to pull some strings to be made redundant, but the package that the government had put on the table was simply too good to refuse, and I had a plan.

For much of my working life my job had entailed demonstrating to people the benefits to Australia of cultural diversity. I had written countless speeches for Ministers and senior public servants that presented detailed arguments why our linguistic and cultural diversity represented was an under utilised resource – it was a gold mine that no-one seemed interested in mining. My plan was to set up a business and start working that gold mine.

It turned out I was right about the gold mine – within three years of starting with a debt of $40K the business was employing 15 staff and had a turn over of close to a million per annum. By our crass commercial standards the business was a roaring success. But in the process I witnessed first hand the failure of those government institutions charged with looking after the unemployed. At the time I was dealing with the Department of Education, Employment and Training.

When I refer to the failure of government institutions such as these I need to make it clear that this is not a complaint about the public servants; on the contrary responsibility for the failure rests with our political culture and the baying of the tabloid press that make it very difficult for our politicians to make the necessary changes.

As a result we have a system that the people who work in it on a day by day basis know can be readily transformed and improved but the political risk of making the changes are simply too great so we continue to muddle along.

So how did working my little goldmine give me insights into the way we fail the unemployed? Prior to setting up my little business I had been doing my homework.  Sounding out opportunities and reading up about doing business. As I was eligible for unemployment benefits I registered for the dole and soon found myself queuing up every fortnight to hand in my form. It was here I learnt my first lesson.

Signing on for benefits is a very good way to destroy people's self-belief and confidence. You come into a depressing world where in order to get your benefits you have to prove that you are not cheating the system; it seems as if everyone assumes that you are a thief about to steal from the taxpayer.

No doubt it was more noticeable coming into the system for the first time – since then I have learnt that the long term unemployed simply accept it as going with the territory but as will become clear, it does have an adverse impact on our ability to get people back into work.

I registered for the dole for two reasons. Firstly in order to set up my business I needed to make what little money I had last and secondly because of the New Enterprise Incentive Scheme (NEIS) scheme – one of the jewels in the crown.

NEIS is one of the most successful programs that we have, and of which we should be very proud. Starts up businesses suffer a high failure rate – only about 20 per cent of start up businesses survives beyond five years. Part of the reason for that is in order to survive you need not just a good business plan but you need good legal and accountancy advice.

The problem is that advice is expensive and you need it most in the start up phase, just when money is tight. NEIS firstly helps people develop a business plan and then provides twelve months of support both financial in the way of the dole (no longer a need to hand in forms) and in the provision of an advisory service. The aim is that at the end of twelve months you are able to stand on your own two feet. The result is that NEIS businesses enjoy close to an 80 per cent success rate.

For my business it meant that small contracts started to trickle in. But it was the big contract that opened my eyes to the problems with the way our institutions manage the problem of unemployment.

In the last years of the Keating government the forerunner of what was to morph into the Job Network was set up. I won a contract to look after the needs of the long-term unemployed from Non English Speaking Backgrounds (NESB): one of the most difficult groups of people to place in employment.

Over the period that we held this contract we looked after about 3000 people as our income was closely tied to our success rate I monitored this section of the business closely. There was an incentive for us weed out any dole bludgers. I found a grand total of two who could be described as dole bludgers and they knew the system so well that they were virtually immune.

Consider this example. One of my case managers came to me very proud about finding a job for a client. This young Vietnamese guy had come in and said that he wanted to work in a Vietnamese bakery. My case manager knew all about bakeries – his parents having migrated to Australia as bakers. Because we were aware that language problems could play a part in preliminary interviews, we had staff that between them spoke about ten languages.

More often than not the offer to conduct the interview in their first language was rejected as it was with our young baker. After the client left my case manager had got busy on the phone and found a Vietnamese bakery that would take him. To make sure he could get to and from work he was able to get some financial assistance and so contacted him that day, got him the interview, and he was to start the following day. But he did not show.

All sorts of excuses but after spending a week trying to get him to actually show up for work we made the decision to breach him: this would effectively take him off the dole. He appealed and after six months of appeal hearings he won his case. He had played us like a fish, and it turned out that this was not the first time he had been breached and had successfully appealed. He had leartthe system and will no doubt be drawing down the dole until he becomes eligible for the pension.

So here was my first lesson: all the punitive provisions are powerless against the genuine dole bludgers.

Lesson number two concerned how we place people in work. When you are unemployed it is your responsibility to find work: any job that is available you must take: if you don’t you can be breached. This provision is rarely questioned but is also the biggest weakness in our system.

Consider this case. I was scheduled to interview a new client. The appointment was for 10 am and he arrived fifteen minutes early. Smartly dressed, suit, tie polished shoes. One of our policies was that we gave new clients at least a twenty-minute interview but it could go for as long as an hour. The reasoning was simple, these people were long term unemployed, they had been in the system for at least three months and I had witnessed at first hand how your self respect and self confidence suffers under those circumstances. 

At this first interview they were able to tell their story, we would offer no false hope all that we could offer was our willingness to work along side them and help them succeed.

It was very clear why he had been unemployed for so long. He had worked for twenty years in a small firm as a technician repairing washing machines. That firm had been bought out by an interstate company that had taken the customer list, and closed the business down. After twenty years he was on the street with no experience in looking for work and every job he went for seemed to be taken the moment they saw his age on the application form. Older employees are perceived as a work cover risk, they run the danger of driving up premiums.

Of course I had no jobs for technicians but I did have lots of onion picking jobs. Strictly speaking I should have directed him to one of those. This is the first weakness in our system. There are lots of unemployed people with no skills whatsoever. If the unskilled have to compete for jobs with people who are skilled and can work in more skilled occupations then it has two effects: we are making it harder for the unskilled to get into the workforce (and there is by no means an abundance of unskilled work available); and secondly we are deskilling people who can work in skilled occupations. This is not a good way to manage your human resources.

The story does have a happy ending. I had previously interviewed another person who was an excellent sales person. I put the two together to go on NEIS. They were going to set up their own white goods repair service. The sales person did the marketing and he went back to working with his machines.

So what is the solution? The first thing we need to do is acknowledge that for the bulk of the population what gives meaning to our lives is work: it makes us a valuable member of the community. It gives us self-respect and a sense of belonging. When you next see one of these programs about dole bludgers, recognise them for what they are – an aberration – for this is what stimulates our interest; you could not imagine anyone being content to eke out their existence on benefits and so you get annoyed that there are people who have so little personal pride that they are prepared to just take. It is precisely because most of us think like that these programs get an airing.

We can do something about dole bludgers. We could have a two-stream dole system.  Stream one does not require the person to look for work. However, all their financial affairs are constantly under scrutiny, they are assigned a case worker with the task of doing weekly spot checks to make sure that they are not working illegally. 

The second stream is designed for people returning to the workforce. These people will get 80 per cent of the average wage as their benefit. And will be given all the assistance to get a job at a level appropriate to their skills.

We know from overseas experience that countries with low unemployment rates also tend to have in place a very good support system for the unemployed. In the Netherlands people’s dole was set at 80 per cent of the salary they had when they became unemployed. The last time I last looked, the Netherlands had one of the lowest unemployment rates in the E.U.

The third change I would advocate is to expand NEIS. We worry about losing our manufacturing base but we tend to overlook that most people are employed in small and medium enterprises. NEIS investment for me meant that 15 people had full time employment in addition I had about 60 staff on short-term contracts. As I had a policy of recruiting from the ranks of the unemployed, the taxpayer got a very good return on its investment in my training. I would expand NEIS so that it is open to anyone who wants to take the risk and start up a business.

We need to recognise that people are our most valuable goldmine. It is people that create a common wealth so instead of blaming the unemployed for their fate and treating them with little or no respect we should be shifting the focus on ensuring that their skills and talents are valued and employed to enrich all of our lives.