Business Council Launches New Directions Discussion Paper on Long-Term Unemployment

David Buckingham, Executive Director of the Business Council of Australia, today launched the third discussion paper from the BCA New Directions Taskforce, Pathways to Work: Tackling Long-Term Unemployment. The paper was prepared by The Boston Consulting Group on a pro bono basis.

‘Despite 10 years of economic growth,’ said Mr Buckingham’, ‘the level of long-term unemployment remains stubbornly high. The figures vary depending on how you cut them, but at least 190,000 Australians have been unsuccessfully looking for work for 12 months or more.’

‘The numbers are of great concern, particularly since long-term unemployment tends to become a self-fulfilling prophecy – the longer you’re unemployed the less likely you are to break the cycle. The costs of this cycle are significant, for government, society and the individuals concerned.’

‘Pathways to work explores ways of breaking the long-term unemployment cycle before it begins. It examines two transitions to work – from school and from termination of employment – where failures account for 50% of entries into long-term unemployment. The paper proposes strategies to minimise failure at these transition points.’

School to work transition

‘Given the widespread agreement on the importance of the school to work transition,’ says Larry Kamener, a Director of The Boston Consulting Group, ‘it’s extraordinary that accountabilities in this area are so unclear, particularly for early school leavers, and that measurement of outcomes is so lacking. There is a large number of initiatives targeting at-risk youth, but they are largely uncoordinated and there is no ‘knowledgeable buyer’ who can determine whether a particular group of young people requires more of a certain type of program or less of another.’

The paper’s central recommendation is the appointment of ‘Local Directors of Youth Futures’, working at the school cluster level and reporting to community boards made up of local business, school and community representatives. These individuals, working with their community boards, would focus on assisting young people in the local area to successfully make the transition from school to work, training or further education.

The paper also recommends the introduction of a new measure – ‘the youth participation ratio’ – to track outcomes for young people once they leave school. The improvement of this measure over time would be the primary goal of the Local Director of Youth Futures and an important additional performance measure for local schools (in conjunction with TER scores).

Finally, the paper recommends that responsibility for purchasing services and support programs for at-risk youth should be progressively transferred from government departments to Local Directors and their community boards, who, over time will become ‘knowledgeable buyers’ of these programs and services.

Termination back to work

A failed termination-back-to-work transition that ends up in an average stint in long-term unemployment, costs society in the order of $50,000 to $150,000 per person, depending on the age, salary level and family circumstances of the person whose employment has been terminated. And there is ample evidence of the personal suffering that many people in long-term unemployment endure.

Pathways to work focuses on reducing the delay between a company’s decision to terminate employment and the provision of intensive job search assistance to people at high risk of becoming long-term unemployed. Today, while very large sums of money are spent on providing intensive job search assistance to the long-term unemployed, a period without a job has already significantly reduced their chances of re-employment.

The introduction of a risk profiling tool, facilitated by Jobs Network members with the results confirmed by Centrelink, would allow people at high risk of long-term unemployment to be identified and assisted before their at-risk status is exacerbated by many months without a job.

‘Best practice’ corporates identify employees at high risk of long-term unemployment and provide job search assistance before their employment is terminated. The initiative described in Pathways to Work would help small and medium companies to provide similar assistance without additional costs to themselves.

‘Long-term unemployment is a complex problem,’ said Mr Buckingham, ‘and one that clearly requires action on many fronts. Pathways to Work points to potential solutions on just one of these fronts. The initiatives it describes are designed to minimise failure in two crucial transitions where we know that, for individuals, success means a share in Australia’s economic vitality and failure is likely to lead to ongoing marginalisation.’

Mr Buckingham said, ‘the Boston Consulting Group’s recommendations in Pathways to Work are consistent with broader thinking in government, business and the wider community. Community partnerships are enormously important and we all have an obligation to ensure early intervention, and that that scarce resources are allocated when and where they are likely to produce the most significant and lasting results.’