Andrew Leigh puts employment services on notice

Dr Leigh is planning to use a major speech to set out the federal government's goal to reform the employment services system to deliver better outcomes for those hunting for work and better value for taxpayers.

The government is due to spend $7.3 billion on employment services over five years from 2022-23, making it the government's largest non-defence procurement, Dr Leigh says.

A parliamentary inquiry into the system is due to be completed by the end of the year, but the ACT-based minister is expected to say that it is clear the system needs to change.

He will say the fact that current data collected about the system focused on whether or not a client was still receiving government support rather than what sort of job they were in highlighted the shortcomings of the current approach.

"Because what gets measured gets managed, this data limitation ends up pushing policy towards 'any job' rather than 'the right job'," his speech says.

Such an approach, he will say, can lead to underinvestment in education and training, with long-term consequences for improving the nation's productivity.

The nation's jobless rate held steady at 3.5 per cent last month. Dr Leigh will say that though such low unemployment is welcome, it means a bigger share of those still looking for work are "people with significant barriers to employment, or whose skills don't match the available jobs".

He will say shortcomings in the current system, including limited opportunities for social enterprises to work with the most disadvantaged jobseekers and inflexibility, do not help in this environment.

READ MORE:

Dr Leigh plans to use evidence from randomised trials - testing how people benefit from a new approach compared a randomly selected control group - to develop and assess reforms to the system.

"By applying randomised trials we will increasingly build a robust evidence base around what does and doesn't work," he will say. "We will also be able to know with confidence who benefits most from programs."

The federal government has established the Australian Centre for Evaluation to advise on assessments like randomised trials and to conduct its own studies.

Dr Leigh will say a rigorous evaluation of the employment services sector is well overdue.

"The system has been set up as though we already know everything about how to help people find work," the minister is due to say.

"If the challenge was simple, prolonged joblessness would be non-existent. The fact that long-term unemployment persists in the current labour market suggests that we would be better served by a system that is grounded in modesty, evidence, and continuous improvement."