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Home > Reports > An unnecessary penalty: Economic impacts of changes to the Status Resolution Support Services

An unnecessary penalty: Economic impacts of changes to the Status Resolution Support Services

Findings: Work

Government income support can reduce the negative impacts of unemployment by enabling recipients to meet their costs of living and search for stable job opportunities. Social benefits allow people seeking asylum to remain engaged in short-term or casual jobs while their immigration status is resolved, and they seek more secure employment.

Conversely, poverty and situations of desperation can force people to accept substandard employment options, with associated risks of underpayment and labour exploitation. The significantly restricted SRSS eligibility criteria that people need to meet now also mean that people may not be able to leave dangerous and exploitative work conditions, as it is highly unlikely they will be accepted into the program.

Supporting evidence shows negative impacts of sanctions on workforce participation

There is no doubt that successful work participation makes a big difference to both people seeking asylum and to eventual settlement outcomes. However, evidence from studies in European countries shows that penalising people who are not able to find jobs damages (rather than enhancing) their employment prospects.
The Economist has recently criticised policy initiatives that claim to encourage work effort through cutting benefits. It argued “benefit sanctions may do more harm than good”.
Several European studies have documented poor outcomes from more punitive measures, such as benefit withdrawal on workforce participation.

In 2018, Taulbut and colleagues studied the British use of sanctions to encourage greater workforce participation by people on unemployment benefits. They found, at best, only short-term job participation, with no longer term impacts. Even the short-term benefits were rare for more disadvantaged workers.

Patrick Arni and colleagues found similar results in a 2015 study. Looking at Active Labour Market Programs in Switzerland, they contrasted the better results from supportive (carrots) rather than the poorer outcomes from restrictive (sticks) programs. Dutch researcher Eleveld took a broader view in a 2017 study comparing policies across 25 European welfare states. As with the Arni study, Eleveld found considerable differences in the outcomes of supportive programs and the use of sanctions. Where sanctions were imposed, more disadvantaged workers saw little improvement in job prospects, but significant increases in poverty.

These patterns were also found in the UK by Rachel Loopstra and colleagues in 2015. They studied an increase in usage of Food Banks in the UK since 2009. Not surprisingly, the overall state of the economy had a strong influence, but the researchers also found a significant impact from the toughening of sanctions for unemployment recipients. Instead of the new regime encouraging more employment activity, it increased the numbers of people in severe hardship, having to rely on food banks.

Research from the United Kingdom has also shown that cutting financial support or implementing ‘benefit sanctions’ is ineffective in ‘activating’ migrants into paid employment. Poverty inhibits effective work search activities and compounds social and economic isolation for vulnerable groups, with their income usually falling far below the poverty line after work-related sanctions.

In 2016 an IMF report found that assistance programs for humanitarian migrants in Europe returned 1.8 Euros for every 1 Euro of cost. The corollary of this is that not providing such assistance programs, as the Department is implementing with the withdrawal of SRSS, has negative effects for both humanitarian migrants and the public purse.
Under these conditions, vulnerable migrants may resort to working in the informal or ‘grey’ economy, doing underpaid, dangerous and exploitative work to survive, further exacerbating their risk of social and economic marginalisation.

The Government’s decision to reduce the SRSS program defies substantial research evidence. The decision is unlikely to produce good employment outcomes. At the best, it will force ill-prepared people seeking asylum into unskilled, temporary and marginal jobs. Even that outcome is unlikely for most, who will have no means of support and will increasingly rely on other services, provided by other government agencies and NGOs.

Pie chart showing surveyed employment status

Penalising people with limited capacity to work will make finding a job more difficult

People seeking asylum in Australia typically face a range of complex barriers that prevent them from finding stable employment. Many people seeking asylum have limited capacity to work as they do not have access to secure housing options and may be dealing with trauma and mental health issues as a result of their forced migration journeys. For those who are able to work, most have limited support or resources to seek employment while they wait for the resolution of their immigration status.

While the federal government has indicated that people who are exited from SRSS may be referred to jobactive, these services have been demonstrated as inadequate even for refugee and humanitarian entrants who have access to more comprehensive support services, including intensive English language support. People seeking asylum who are referred to jobactive are only eligible for Stream A (limited) support, entailing access to a computer and internet to search for jobs. Even with support, a number of barriers to employment remain. They include short-term visas, low levels of English language proficiency (people seeking asylum have limited access to government support to learn English), lack of Australian workplace experience, unrecognised or undervalued qualifications, employer bias and discrimination.

Our survey asked representatives of support organisations to indicate the current employment status of people seeking asylum in their caseloads. Approximately 48% of all people seeking asylum in respondent caseloads were reported as unemployed, and 21% were not in the labour force at all (see Figure 3 below). (According to the ABS classification, ‘unemployed’ refers to those who are economically active but do not have work. People who are ‘not in the labour force’ are counted separately and considered inactive, such as stay at home parents or retired people. People who are not in the labour force are not considered job-seekers.)

This means that more than two-thirds of people seeking asylum in our respondents’ caseloads did not derive any income from employment. Only 8% were working the full-time equivalent of more than 35 hours per week.We also asked respondents to estimate the proportion of their clients who could be considered ‘job ready.’ Job readiness is a subjective assessment made by caseworkers in support organisations, referring to clients who are considered to have fewer employment barriers than others in the same situation. On average, only 20% of people seeking asylum across respondents’ caseloads were considered ‘job ready.’ Half (50%) were considered not to be job ready at all, while 30% were only partially job ready (see Figure 4 below).

Evidence from evaluation studies (for example, by the Brotherhood of St Laurence and Settlement Services International) and scholarly research in Australia has shown that, given the multiple employment barriers they face, a combination of tailored jobseeker support and brokered contact with employers is the most effective solution for people seeking asylum to find work. Only eight of the 24 organisations we surveyed, however, were providing employment-related services to their clients. Tailored employment programs for people seeking asylum do exist but, in the absence of federal resources, are dependent on investments made by state governments, philanthropic organisations, community donations and volunteers.

Pie chart showing job readiness

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