New public management and the rule of economic incentives: Australian welfare-to-work from job market signalling perspective

ABSTRACT

Australia’s welfare-to-work system has undergone radical changes since the 1990s, with service delivery fully privatized in 2003 and incentives of various kinds introduced to underpin jobseeker and employment consultant activation. Informed by New Public Management (NPM), the reforms are intended to improve effectiveness and efficiency by addressing the problems of information asymmetry at different levels of the system. However, operationalizing NPM principles generated technical and regulatory challenges, and in this case, the incentive framework undermines some of the reform’s basic assumptions. This can trigger jobseekers’ and consultants’ rational decision-making behaviours which run contrary to programme expectations, hence generating suboptimal performance.

KEYWORDS:

• New Public Management
• principal–agent incentives
• employment services
• job market signalling
• activation

Acknowledgments

The authors thank the Australian Research Council (ARC) and our industry partners: Jobs Australia (JA); the National Employment Services Association (NESA), and Westgate Community Initiatives Group (WCIG). The authors also thank all the employment services providers that participated in this research and the many frontline staff who took time out of their busy day to complete the survey. Finally, the authors thank the PMR editorial team and anonymous referees for their thoughtful feedback.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. ‘A flexible pool of fund held by the Department that providers can draw on for reimbursement for goods or services that genuinely assist eligible jobseekers to build experience and skills to get and keep a job’ (Department Of Employment 2016, 3).

2. Two other significant differences were excluded from the statistic due to sub-optimal post-hoc power values lower than 0.8.

3. Per survey participants’ responses.

4. Non-compliance among jobseekers persists, which, according to our survey data, increased from 23.90 in 1998 to 35.90 and 35.63 per cent in 2008 and 2012, respectively.

Additional information

Notes on contributors

Mark Considine

Mark Considine is Professor of Public Policy at the University of Melbourne and a Fellow of the Institute of Public Administration Australia and the Australian Academy of Social Sciences. His research areas include governance, comparative social policy, employment services, public sector reform, local development, and organizational sociology. He has produced six books and numerous journal articles and book chapters.

Phuc Nguyen

Phuc Nguyen is a Research Fellow in the School of Social and Political Sciences at the University of Melbourne. Phuc specializes in the welfare state, especially the delivery of employment services. She also has an interest in logistics and supply chain management. She has published three book chapters and several journal articles.

Siobhan O’Sullivan

Siobhan O’Sullivan is a senior lecturer in the School of Social Sciences at the University of New South Wales, Australia. She has a broad interest in the welfare state and mission drift. She also has an ongoing interest in animal welfare policy and environmental ethics. She has published books, book chapters and over 20 journal articles, and industry reports.