The Tasmanian Jobs Programme Evaluation

Lessons learned and recommendations

There are a number of key lessons from the TJP, and suggested actions to improve the effectiveness of future initiatives.

The TJP was associated with positive secondary benefits, including higher sustained employment rates and reduced reliance on income support. These findings are consistent with evidence from other wage subsidies evaluations showing that, compared to unsubsidised jobs, subsidised jobs are more likely to be sustained and to be associated with higher off-income support rates (Department of Employment, 2016). This may also reflect selection of the most ‘job-ready’ candidates by employers and/or providers for subsidised placements. This evaluation was not able to assess the cost-effectiveness of the program as data was not available to enable robust comparison of income support savings to Government from these secondary benefits with costs of the program (including subsidy payments and other costs of marketing the program).

Employers report that wage subsidies have a considerable level of substitution and deadweight loss, and are unlikely to offset employers’ preferences for job seekers who are ‘job-ready’ and have relevant skills or training. However, evidence shows that for many unemployed people a casual or part-time job, such as might be obtained through a wage subsidised position that does not lead to sustained employment with the employer, may still improve long-term employment prospects.

The overall impact of the TJP was limited by low placement take-up rates. Future initatives should therefore address barriers to program take-up, by considering labour market conditions, improving program awareness by employers, job seekers and providers, and improving program design.

Previous evidence has suggested that wage subsidies are most successful in the early phase of a recovery, when job creation rates rise (Quiggin, 2001), and least successful during periods of recession where there is insufficient labour demand (Cook, 2008; Stretton & Chapman, 1990) (O'Neil & Neal, 2008; Stretton & Chapman, 1990). Most TJP placements occurred in labour market regions with higher unemployment rates and lower labour demand. Similarly, TJP and Restart wage subsidy take-up rates were marginally higher in Tasmania than in other states, despite its relatively high unemployment rate and low labour demand. While these findings might suggest that labour market conditions are relatively unimportant for the effectiveness of wage subsidies, it is important to note that wage subsidy take-up was very low (i.e. by approximately 1 per cent of all eligible job seekers) across all states. As such, to maximise the efficacy of any future wage subsidy programs, it is recommended that the timing of program implementation in relation to the economic cycle be carefully considered. In addition, complementary initiatives directed at improving the demand-side of a weak labour market (such as Tasmania’s) should be implemented at the same time as supply-side initiatives such as wage subsidies as part of a coherent strategy against unemployment.

To improve program awareness, surveyed employers suggested that information about assistance to employers should be more easily available and directly targeted at employers; for instance, through emails, presentations and printed booklets to employers and employer organisations.⁵¹ As Tasmanian employer preference for informal recruitment methods may also have been a factor against program take-up, the use of government funded employment services could also be better promoted as an efficient, cost-effective means of recruiting suitable employees. This employer preference features in the current jobactive campaign promoting government employment services.

Improvements to the programme’s design may also increase program take-up:

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  Only full-time placements were eligible for the program (until 12 May 2015) in order to address the relatively low proportion of full-time employment in Tasmania. However, as full-time positions may be relatively difficult to attain in the Tasmanian labour market, relaxing the eligibility criteria to include part-time placements is likely to have helped improve program take-up. As subsidised part-time employment can still improve job seekers’ long-term employment and income support outcomes (Buddelmeyer & Wooden, 2008; Department of Employment, 2016; Gerfin et al., 2005; Wolff & Stephan, 2013; Zijl et al., 2004), future wage subsidies should similarly be available for both part-time and full-time placement opportunities.
  
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  The payment amount offered (until 12 May 2015) may not have been enough to lower the cost (real or perceived) of recruiting the job seeker, or provided sufficient encouragement to hire LTU job seekers. Future initiatives should consider the level of subsidy offered and the incentive it creates for employers to hire subsidised staff. Paying a portion of the subsidy upfront may also assist with any upfront costs associated with recruitment and therefore increase employers’ willingness to hire.
  
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  Future initiatives should consider the target population to help improve program take-up and relevance to the target region and issues at hand. For instance, VLTU job seekers were less likely to commence a TJP placement than MTU and LTU job seekers, despite the proportion of VLTU job seekers increasing to almost half of the JSA caseload over the period that the TJP was in operation. Programs that are specifically targeted at the most disadvantaged job seekers (e.g. VLTU) may be required.
  
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  Finally, although this evaluation was unable to assess the relationship between business size and TJP take-up, small business owners in particular appear to have been deterred by some aspects of the TJP design. While small businesses are more likely to be the recipients of wage subsidies, they are also more sensitive to financial risk. In order to improve take-up while minimising deadweight loss, future initiatives should factor this in the program design.