This is the third paper in Per Capita’s series examining the operation and effectiveness of Australia’s employment services system, known as Jobactive, in the context of the profound labour market disruption caused by the COVID-19 pandemic.

It follows Redesigning employment services after COVID-19, an analysis of the capacity of Jobactive to respond to the surge in unemployment after the onset of COVID-19, which was published in April 2020; and an assessment of the fairness of the mutual obligation system, Mutual obligation after COVID-19, published in June.

With the Mutual Obligation system set to return on 28 September 2020, this briefing provides an update on our earlier estimates of the cost of Jobactive given the significant increase in the number of unemployed people needing assistance, and reflects on how the system has adapted so far to the unforeseen surge in case numbers.

This briefing paper finds that there is likely to be substantial inflation in the cost of Jobactive, necessitating the allocation of additional government funding for employment services, unless there are radical changes to the Jobactive model.

This briefing paper concludes with observations on the likely impact of recent policy initiatives such as JobTrainer and the new Local Jobs Program, and a number of policy recommendations that would strengthen the capacity of Australia’s employment services system to provide useful and tailored support for Australians seeking to return to the labour force after the widespread loss of work since early 2020.