Back to Work: Australia: Improving the Re-employment Prospects of Displaced Workers

143 Pages·2016·3.257 MB·English

by  Oecd Organisation For Economic Co-Operation And Development

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Chapter 1. Job displacement in Australia and its consequences r
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Chapter 2. Mainstream income support and re‑employment services for Australian -e
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Chapter 3. Labour adjustment programmes for displaced workers in Australia o
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Back to Work: Australia
IMPROVING THE RE‑EMPLOYMENT PROSPECTS
OF DISPLACED WORKERS
This work is published under the responsibility of the Secretary-General of the
OECD. The opinions expressed and arguments employed herein do not
necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status
of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2016), Back to Work: Australia: Improving the Re-employment Prospects of Displaced
Workers, Back to Work, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264253476-en
ISBN 978-92-64-25343-8 (print)
ISBN 978-92-64-25347-6 (PDF)
Series: Back to Work
ISSN 2306-3823 (print)
ISSN 2306-3831 (online)
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli
authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights,
East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
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FOREWORD

Foreword
OECD labour markets are characterised by their dynamism. Each year,
more than 20% of jobs, on average, are created and/or destroyed, and around
one-third of all workers are hired and/or separated from their employer.
These large job and worker flows are driven by a continuous process of
labour reallocation, both across industries and between declining and
growing firms within the same industry. This reallocation is an important
source of productivity gains, since more productive firms expand at the
expense of less productive firms and earnings rise on average for workers
changing jobs, particularly workers who voluntarily quit one job in order to
move to another. However, high job turnover is also a source of insecurity
for workers, especially those who are displaced from their jobs because their
employer downsizes its workforce or goes out of business altogether.
A common challenge facing OECD governments is thus to nurture labour
market dynamism while keeping the adjustment costs that are borne by
displaced workers as low as possible.
To address this issue the OECD Employment, Labour and Social Affairs
Committee is carrying out a thematic review of policies to help workers who
lose their jobs for economic reasons or as a result of structural change to move
back into work. Nine countries participate in this review: Australia, Canada,
Denmark, Finland, Japan, Korea, New Zealand, Sweden and the United States.
This report on Australia was prepared by Ann Vourc’h, economist from
the OECD Employment, Labour and Social Affairs Directorate, with editing
and comments provided by Paul Swaim, and under the supervision of
Christopher Prinz (project leader). Statistical assistance was provided by
Sylvie Cimper and Agnès Puymoyen with editorial assistance by
Gabriela Bejan and Marlène Mohier. Valuable comments were provided by
Mark Keese. The report benefited greatly from discussions with various
Australian experts, officials, employer federations, trade unions, academics
and businesses during an OECD mission to Australia in March 2013, and
from detailed comments provided by several ministries and stakeholders.

BACK TO WORK: AUSTRALIA – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016

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TABLE OF CONTENTS

Table of contents
Acronyms and abbreviations .......................................................................................... 9
Executive summary ........................................................................................................ 11
Assessment and recommendations ............................................................................... 13
Chapter 1. Job displacement in Australia and its consequences ............................. 23
The Australian labour market context .......................................................................... 24
Displaced workers: Incidence and characteristics ........................................................ 30
Labour market outcomes following displacement ....................................................... 35
Wages and job characteristics following displacement ................................................ 39
Skill use of displaced workers ...................................................................................... 43
Conclusion ................................................................................................................... 47
Notes ............................................................................................................................ 48
References .................................................................................................................... 51
Annex 1.A1. Supplementary table .............................................................................. 53
Chapter 2. Mainstream income support and re-employment services
for Australian displaced workers ............................................................ 55
Income support available to displaced workers............................................................ 56
General re-employment services available to displaced workers ................................. 67
Counter-cyclical policies for displaced workers: The Jobs and Training Compact ..... 85
Conclusion ................................................................................................................... 90
Notes ............................................................................................................................ 94
References .................................................................................................................... 97
Chapter 3. Labour adjustment programmes for displaced workers
in Australia .............................................................................................. 101
Prevention of dismissals ............................................................................................. 102
Support to displaced workers that is provided through structural adjustment
programmes ................................................................................................................ 109
Conclusion .................................................................................................................. 126
Notes .......................................................................................................................... 131
References .................................................................................................................. 134

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TABLE OF CONTENTS

Boxes
Key policy recommendations ....................................................................................... 22
Box 2.1. The evolvement of the Job Network ........................................................... 72
Box 2.2. The Job Seeker Classification Instrument: A profiling tool
to determine jobseekers’ access to Employment Services.......................... 75
Box 2.3. The Productivity Place Programme ............................................................ 82
Box 2.4. Some international evidence on the effectiveness of training programmes ...... 84
Box 2.5. Public training programmes for the unemployed in Japan ......................... 85
Box 2.6. Specific programmes for older workers: Examples from Canada
and Switzerland .......................................................................................... 93
Box 3.1. Targeted support schemes for displaced workers in Canada:
The examples of Ontario and Québec ...................................................... 112
Box 3.2. Support schemes benefiting workers displaced individually
or in small firms: The examples of France, Sweden and Québec-Canada ......113
Box 3.3. Supporting workers retrenched by paper mills
and other forestry industry businesses in Tasmania:
The Forestworks Workers’ Assistance Project ......................................... 118
Box 3.4. Bridgestone closure: Early intervention with co-ordination problems ..... 120
Box 3.5. The Retrenchment to Re-employment Response approach
to collective dismissals ............................................................................. 129

Figures
Figure 1.1. The labour market in Australia has been strong since 2000,
but somewhat less so since 2011 ........................................................ 25
Figure 1.2. Service sector employment has been growing fastest, but growth
in the mining sector was also substantial ........................................... 27
Figure 1.3. The good labour market performance translated
into continuous wage increases, except in 2009 ................................ 28
Figure 1.4. Part-time employment and casual employment are important
and strongly overlapping in Australia ................................................ 29
Figure 1.5. Nearly one in five Australians separate from their job every year ........ 31
Figure 1.6. Most workers separating from their jobs
would not be considered displaced workers ....................................... 32
Figure 1.7. The Australian displacement rate is high in international comparison ..... 33
Figure 1.8. The displacement risk is relatively high for men, less educated
and low-tenured workers, and those employed in manufacturing
or casual employment ........................................................................ 34
Figure 1.9. Compared with unemployed people, displaced workers
are typically older men with tertiary education and long tenure ........ 35

BACK TO WORK: AUSTRALIA – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016
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TABLE OF CONTENTS

Figure 1.10. Re-employment rates are relatively high in Australia,
but fell considerable during the global financial crisis....................... 37
Figure 1.11. Older, part-time and casual displaced workers struggle most
in finding a new job ........................................................................... 38
Figure 1.12. Job displacement has a significant impact on the income from work ...... 39
Figure 1.13. Wages in the new job are often higher than in the job
before displacement ........................................................................... 41
Figure 1.14. For those who face hourly wage losses, the size of the loss
is quite substantial .............................................................................. 42
Figure 1.15. In their new job, many displaced workers
are under casual employment contracts ............................................. 43
Figure 1.16. Between one-fifth and one-third of displaced workers
face skills switches ............................................................................. 44
Figure 1.17. For displaced workers, skills downgrading is more frequent
than skills upgrading .......................................................................... 45
Figure 1.18. Human capital loss concerns especially mathematical, verbal
and cognitive skills............................................................................. 47
Figure 2.1. The coverage rate of unemployed displaced workers
by unemployment assistance is low ................................................... 61
Figure 2.2. A non-negligible share of displaced workers is neither in employment,
nor retired, nor in full-time education, nor receiving income support ...... 62
Figure 2.3. Net replacement rate of unemployment benefits is relatively low
in Australia, although not among the lowest ...................................... 64
Figure 2.4. Net replacement rates are particularly low for singles ....................... 65
Figure 2.5. Unemployment assistance reduces the income volatility
of displaced workers who receive it ................................................... 66
Figure 2.6. Being displaced increases the probability of experiencing poverty .......... 67
Figure 2.7. Active labour market spending is low considering the level
of unemployment ............................................................................... 68
Figure 2.8. Very little is spent on labour market programmes, especially training ...... 70
Figure 2.9. Both the global financial crisis and the recent slowdown
in labour demand resulted in a strong increase in the number
of registered job-ready jobseekers ..................................................... 76
Figure 2.10. Participation and spending in training for the unemployed is low ............ 80
Figure 3.1. The protection of permanent workers against individual dismissal
in Australia is lower than the OECD average .......................................... 104
Figure 3.2. The length of the notice period in case of individual dismissal
in Australia is among the shortest in the OECD .............................. 104
Figure 3.3. Relatively high flows in and out of unemployment
result in low long-term unemployment incidence in Australia ........ 107

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Tables
Table 1.A1.1. Probability of being displaced and probability of being re-employed
if displaced ......................................................................................... 53
Table 2.1. Severance pay schemes interact with unemployment benefits
in some OECD countries .................................................................... 59
Table 2.2. Incentives to place Stream 1 jobseekers
under the Job Services Australia (JSA) were limited in the first year ...... 78
Table 2.3. The amount available in the Employment Fund
for job-ready jobseekers is somewhat increased under jobactive ...... 79
Table 2.4. Main initiatives for retrenched workers
in the Jobs and Training Compact ...................................................... 86

BACK TO WORK: AUSTRALIA – IMPROVING THE RE-EMPLOYMENT PROSPECTS OF DISPLACED WORKERS © OECD 2016