Five problems with the current incentives

Having complained about the perverse incentive arrangement for Disability Employment Services (DES) in the past, I feel the need to explain the numbers behind the complaint.

Bear with me. It’s complicated and unbelievably silly.

Problem 1:

DES providers are not necessarily rewarded for finding full-time work, no matter how capable the job candidate. We’re rewarded according to the number of jobs found. This creates the next problem.

Problem 2:

The benchmark for provider payments for people on Disability Support Pension (DSP) is eight hours. This means employment providers for people in receipt of the DSP get paid the same amount of money for filling an eight-hour position as they do for a 38-hour position. Does eight hours provide a living wage? No.

Problem 3:

More people may be employed, but a large number are underemployed and all because splitting the position maximises return to the provider.

Problem 4:

Not only are providers who split positions rewarded financially, they are also rewarded in the service ratings, making the incentive so strong that the DES industry has a name for the splitting of one position into several. ‘Carving’ is the act of dividing one job into more to increase the return to the organisation.

Problem 5:

Because, with the right support, the vast majority of jobseekers with disability are capable of more than minimum-hour roles (and all need closer to full-time work to live, survive and thrive), not fulfilling potential reiterates low expectations.

By sheer determination, hard work and organisational incentives that encourage staff to do their best by job seekers, NOVA Employment is both a 5-star-rated company and provides people with disability the service they deserve. As you can see from my list of problems, this does not happen by default.

‘Maximum work participation’ is a key performance indicator in NOVA’s business plan. Despite our regulator’s insistence that eight-hour positions are the minimum, at NOVA jobs with fewer than 15 hours employment per week do not count towards annual staff bonuses. As well, we provide additional incentives for anyone who achieves an apprenticeship or traineeship for their job seekers.

NOVA-placed workers gain at least 50 per cent more employment (hours and money) than our competitors. The average hours for all NOVA placements is 22 per week. However, in our current system such figures do not count towards service ranking or allocation of business.

This is the nasty end-point that comes from Government disincentive to support capable people to find award-wage work that can sustain them.

- Martin Wren