Australia’s labour market reforms over the past 15 years have boosted employment and cut welfare benefit dependency.
This report on the recent Australian experience with activation policies contains valuable lessons for other countries that need to improve the effectiveness of employment services and control benefit expenditure. It provides overview and assessment of labour market policies in Australia including the main institutions, benefit system, training programmes, employment incentives, and disability employment assistance.
Australia is unique among OECD countries in that its mainstream employment services are all delivered by over 100 for-profit and non-profit providers competing in a “quasi-market”, with their operations financed by service fees, employment outcome payments, and a special fund for measures that tackle jobseekers’ barriers to employment. In most other OECD countries, these services are delivered by the Public Employment Service. In the mid 2000s, several benefits previously paid without a job-search requirement were closed or reformed, bringing more people into the effective labour force.
Australia now has one of the highest employment rates in the OECD and this report concludes that its activation system deserves some of the credit for this relatively good performance. The Job Services Australia model, introduced in 2009, reinforced the focus on employment outcomes for highly-disadvantaged groups. This report assesses the latest model for activation and puts forward some recommendations to improve its effectiveness.
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This model shows that a large scale role out of the activation program decreases welfare, while a standard partial microeconometric cost-benefit analysis would conclude the opposite.
OECD Employment Outlook 2012: chapter summaries
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The US labour market continues its slow recovery from the 2008-09 recession, but the unemployment rate remains significantly higher than before the financial crisis
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The UK economy has been broadly flat over the past two years. Employment has risen slightly, while the unemployment rate has stayed close to 8%. Projections in the 2012 OECD Employment Outlook foresee some increase in the unemployment rate that could even reach 9% in 2013.
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Despite some decline in the number of registered unemployed in June, high levels of unemployment in Spain are set to persist in the short-run, given its weak economic growth prospects.
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Mexico has experienced a stronger economic recovery than most other OECD countries accompanied by strong employment growth.
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The Korean labour market continues to perform well after a quick recovery from the global economic crisis. Korea’s unemployment rate was 3.2% in May 2012, 0.2% point lower than a year earlier, and nearly down to its pre-crisis level of 3.1%.
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The labour market recovery in Japan began strongly but has weakened since.