Labor wants to overhaul the system aimed at helping Australian job seekers find work, with businesses reportedly backing the reforms.

The $6 billion Jobactive system has become a "box-ticking" exercise, according to Labor's employment services spokeswoman Terri Butler.

Under the current system, a network of employment service providers assist employers and job seekers, with many of those looking for work and receiving the dole required to meet some "mutual obligations".

The obligations can include applying for up to 20 jobs per month and taking part in the Work for the Dole program for six months each year.

AAP

In an opinion piece in The Australian, Ms Butler says there's growing evidence Jobactive isn't working, with the number of employers involved with it dropping from 18 per cent in 2007 to four per cent last year.

Job seekers are also being churned through the system, Ms Butler says, with about 5000 landing more than one job through Jobactive.

She said a better system would give Jobactive providers more time to find people long-term work by dealing with their underlying issues such as homelessness, along with building relationships with employers.

That could be achieved if providers were freed from having to tick boxes for overly prescriptive jobseeker obligations, such as applying for 20 jobs per month, which may not be getting results.

"There's no point just having people jump through hoops for the sake of it. That just costs the public purse money and doesn't get anyone anywhere," Ms Butler told ABC Radio National on Tuesday.

Many employers reject the applications sent in by job services providers because of their unsuitability.

Council of Small Business of Australia chief executive Peter Strong said the process was an "absolute waste of time".

"We are creating millionaires on the back of the long-term unemployed by paying providers to offer a failed service," Mr Strong told the newspaper.

But Liberal Senator Eric Abetz said the current Jobactive system had helped create about one million new jobs in the past five years.

"They're the sort of statistics, they're the figures, that talk about the social and economic benefits of job placements," Senator Abetz told ABC Radio's RN on Tuesday.

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He said people who get multiple, short-term jobs through the system were more likely to wind up in long-term work.

Labor's proposed reforms will only harm the employment rate, the senator argues.

"They're going to go back to the bad old days of when Bill Shorten was employment minister and we had a burgeoning unemployment rate."