Unemployment is a Billion-Dollar Industry

In the public interest.


Australia’s New Digital Workhouses

Unemployment has become a billion-dollar industry where private firms are turning massive profits for placing precarious workers in bullshit jobs.

People walk into a Centrelink office on March 21, 2016 in Sydney, Australia. (Matt King / Getty Images)

In Australia, decades of public funding have led to the creation of a multibillion-dollar industry that produces no value, manufactures no products, and employs no labor. These late-capitalist enterprises instead profit by not employing labor. It’s the business of unemployment — and business is booming.

Australia is witnessing the rise of the new digital workhouse. Unlike the workhouses of old, the digital workhouse of today is an invisible web of algorithms, e-government websites, and scattered “Work for the Dole” sites, managed by anonymous bureaucrats and owned by private employment service providers. It’s a uniquely neoliberal form of decentralized coercion, and it has two purposes: to discipline and punish unemployed workers, and to privatize what remains of the welfare state.

With 1,635 outlets nationally, there are now more employment service providers than the total number of McDonald’s franchises in Australia, New Zealand, and South Korea combined. The industry’s primary resources are virtually limitless: for any single job vacancy, 15.71 workers apply. Over three million people want work or want more work, and nearly one in five unemployed fifteen to twenty-four year olds today have been out of work for fifty-two weeks or more.

From Pauper to Dole Bludger

There’s a myth that nineteenth-century Australia was a “working man’s paradise,” but in many ways it mirrored the conditions of the British society it broke off from, with its Poor Laws and workhouses. Workhouses of this era were usually government-run or publicly funded institutions offering limited indoor relief, housing, and employment to the poor — with strict conditions. Only the “deserving poor” were allowed entry.

This was justified by two guiding principles: the first was the Benthamite maxim of “less eligibility” which stipulated that the terms and conditions offered in the workhouse should be undeniably worse than the lowest-going wage on the market. The second was the work test, a daily labor activity required of applicants, to demonstrate that their unemployment was genuine.

In order to prevent “pauperization” — another Victorian myth that lives in the modern conservative imagination as “long-term welfare dependency” — tasks set by workhouses were designed to be tedious and unattractive. This work was seen as reformatory, transforming the pauper into the ideal, subordinate worker. If the workhouses found no work for their inmates, they were required to smash rocks or pull saltbush from sunrise to sundown, like their convict forebears. From Perth’s “Mount Eliza Depot” to Sydney’s “Benevolent Asylum,” the workhouse policed the economic margins of respectable colonial society, a lynchpin in the colony’s struggle to discipline labor.

To prevent seasonal workers from starving, rioting, or eking out other means of survival between stints on government work gangs — that is, to preserve the value of their labor power — the workhouses were to be disciplined. The Adelaide Destitute Asylum, for example, was modeled on the factory system. Rooms ran according to a clear division of labor, and applicants were assigned on the basis of work history.

Inmates were supervised at all times and adhered to an hour-by-hour timetable defining their tasks and responsibilities. For workers both inside and outside its barrack-like walls, the workhouse was a symbol of everything awful about unemployment: poverty, futility, and the crushing loss of dignity.

Welfare 2.0

Today’s digital workhouses comprise a system of means-testing, compliance, surveillance, and work-test activities that are mandatory for individuals who want to claim unemployment benefits (“JobSeeker Payments”). They are managed by the unholy triumvirate comprising government, the private employment services industry, and businesses that run sites that absorb some of the reserve army of labor at a profit.

While the digital era has not diminished Bentham’s principle of less eligibility, it has transformed the way it is applied. No longer may the unemployed walk into a Centrelink office (the department responsible for social services) and apply for benefits in person. Brick-and-mortar offices are glorified self-service spaces, auxiliary to the online services, accessed by browser or app.

To apply for welfare, you must create an online account with Centrelink and upload a sweeping array of personal information, including employer separation certificates, bank statements, proof of all your education attainments, and other arbitrary documents. Couples are required to notify Centrelink of their relationship; if one partner has work, the other can become ineligible and by implication, dependent. It isn’t hard to see how this reinforces sexism. At times, it is even more explicit. Mothers applying for the single parenting payment must have a “referee” sign a legal document verifying that they are, in fact, single.

Once you’ve provided all the information, an algorithm-powered review process begins to match your data against means-testing criteria. It’s designed to be inflexible, frustrating, and dysfunctional. Repeated errors mean that it takes weeks, sometimes months, for an application to be granted. Many thousands of applications are rejected in error, leaving the unemployed with no support at all.

Once deemed deserving, unemployed workers are referred to one of the 1,600-plus private employment service providers to undertake activity-testing. Unemployed workers are responsible for managing and submitting records of their activities online. This can include entering a daily code confirming attendance at job service providers, recording details of jobs applied for (regardless of whether they are available or appropriate), and reporting fortnightly income. Thus, the administrative burden of work testing is shifted to the unemployed. This in turn allows providers and government to cut staff, generating more unemployment.

A Billion-Dollar Industry

“Job-active” offices are parodies of white-collar workplaces with a disciplinary culture halfway between a school and a factory. You must dress for office work, be punctual, speak in a deferential way to staff, and demonstrate prudence and eagerness to work while undertaking mandatory activities. At your first appointment, you are expected to sign a “job plan” — a mock contract outlining your “mutual obligations.” Caseworker appointments parody performance reviews, often with an inquisitorial element designed to flush out the work-shy.

Given the shortage of jobs, their real purpose is to discipline the reserve army of labor. The majority of employment service providers are for-profit companies; in exchange for obliging their unemployed clients to achieve “employability outcomes,” they are paid by the government. These outcomes may include participating in a training course, doing Work for the Dole, or finding a job, even if only for an hour a week. It’s only on rare occasions that employment service providers actually help unemployed workers to access training so as to meet shortfalls in certain industries.

The big money is paid when workers are placed in employment, no matter how bad or insufficient. Based on the 2018 figures, a “partial outcome” (for example, placing someone in a Work For the Dole scheme) can net providers up to $2,000 in rural areas. A “full outcome” (for example, placing a worker in a three-month temp job) can net a provider as much as $6,250.

Whether the job is sufficient is not the point: approximately a quarter of JobSeeker Payment recipients are underemployed and rely on the payment to supplement their income. Refusing to accept a terrible job results in sanctions or cessation of payments. The result is a churn and burn where unemployed workers are shunted into casual and short-term jobs while their providers make big money.

The federal government pays around $1.6 million a year to maintain this rort. But as complete figures aren’t made publicly available, this is almost certainly an understatement. The Australian Unemployed Workers’ Union (AUWU), working in conjunction with the progressive think tank Per Capita, produced a study estimating that the sector has made at least $10 billion over the last five years.

Money like this means that employment service providers have an incentive to disregard unemployed workers’ rights. A 2019 Senate inquiry noted that unemployed workers have been coerced into signing away their right to privacy and undertaking noncompulsory free labor. A 2016 report authored by senior academics found that instead of canvassing the labor market, case managers — who are burdened with key performance indicators (KPIs) of their own — spend the majority of their time focusing on penalties, administration, and compliance. The air is tense, the staff turnover high, and coupled with the caseloads of over 150 people, the concept of an individual “caseworker” becomes farcical. This has led, over the years, to a number of whistleblowers revealing the system’s inner workings and leaving in disgust.

In short, it’s an artificial multibillion-dollar market in which providers compete to game the system by dealing in make-work and waste. A further $6 billion has already been budgeted for the next four years alone. Instead of raising unemployment benefits or reducing unemployment, the Liberal Party (with ALP support) has created an industry-empire of unemployment.

In addition to receiving government payments, the businesses that manage Work For the Dole sites are allowed to super-exploit the unemployed workers who are placed with them. Despite this, there is no requirement that the work performed is value-creating. Rather, these employers are supposed to offer workers experience — “try before you buy,” as former prime minister Tony Abbot put it.

Work for the Dole activities vary quite widely, from sorting clothes at thrift stores, to working as a kitchen hand, laying paving at the zoo, or cleaning the showgrounds. At times, Work for the Dole has included ridiculous “training courses” offering no credentials or, for that matter, training. In one case, an unemployed worker was forced to undertake a month-long “coffee-making course” without ever coming into contact with a coffee machine. Perhaps the most scandalous example is a youth Work for the Dole program named “PaTH,” in which workers under twenty-five years old were given internships with major chain restaurants for as little as $4 per hour — amounting to over $15 under the legal industry minimum.

Worst of all, Work for the Dole sites are often dangerous. An Ernst & Young audit found that 64 percent of sites did not meet appropriate safety standards. When the unemployed are required to work up to fifty hours per fortnight, six months of the year, in businesses which only survive via handouts and super-exploitation, tragedy is inevitable. And indeed, tragedy did strike in 2016, when eighteen-year-old Josh Park-Fing died while undertaking compulsory Work for the Dole at the Toowoomba showgrounds.

By forcing precarious workers to choose between the digital workhouse or whatever job is on offer, no matter how bad, the unemployment industry is undermining the historic wages and conditions won in the twentieth century. This is an industry set on exploiting unemployment for its own profit, and it will be the task of all workers — whether employed or unemployed — to begin the work of dismantling it.