Businesses have been saved from a deluge of uninspired job applications after Tony Abbott backflipped on forcing jobseekers to apply for 40 positions a month.

The prime minister defended Tuesday's decision to maintain the status quo of 20 applications, saying he was just listening to feedback.

But Opposition Leader Bill Shorten says the proposal was destined to fail.

"Small business couldn't believe it when they heard the government come up with this stupid idea. It was clearly going to become a bureaucratic nightmare," Mr Shorten said.

Jobless figures for June show there were 543,000 jobseekers on the Newstart Allowance.

That suggests that before the backdown, businesses across the country were facing the prospect of an extra 11 million job applications per month.

Employment Minister Eric Abetz said the government acknowledged the policy would have put a burden on business and possibly diminish the value of job applications.

He maintains it should be the full-time job of the unemployed to gain employment and believes the 40 job application target would not have been too onerous.

Australian Chamber of Commerce and Industry boss Kate Carnell said the government's decision to revert to 20 job applications was a step in the right direction.

"The fact is they listened," Ms Carnell told reporters in Canberra.

The chamber was one of 60 organisations that put in a submission to the government over the issue.

"We made it clear ... 40 was not doable, it was silly really," she said.

Opposition employment spokesman Brendan O'Connor said the government's backdown was embarrassing.

"What we say to them is in future when seeking to craft social policy or economic policy consult with the stakeholders, talk to Labor before flying such terrible kites," he said.

Greens Leader Christine Milne says the government must now also abandon plans to force under-30s to wait six months before they can claim the dole.

The government plans to extend the work for the dole program.

Those under 30 will have to complete 25 hours a week of the program while older job seekers between age 30 and 50 will have to complete 15 hours.