The National Work Experience Program plan to allow jobseekers to do a part-time month of unpaid work experience might be a step in the right direction to get long-term unemployed into the job market. However, there needs to be safeguards to avoid abuse and maximise the chance of leading to a permanent job. We cannot have a situation where unscrupulous employers are able to exploit a conga line of free labour from desperate jobseekers.

The NWEP consists of an $18 million, five-year job activation plan allowing unemployed people aged 18 and over to do up to 25 hours per week of unpaid work experience for up to four weeks. During the 'working trial' period, the jobseeker will continue to receive income support, and a fortnightly $20 supplement to cover transport. Most importantly, the NWEP will be voluntary, whereas the current work for the dole, introduced back in 1998, is not. The current scheme largely relies on the mutual obligation concept, under which unemployment assistance is conditional (i.e. compulsory) on activity tests such as gardening and maintenance works or warehouse duties — strictly at not-for-profit organisations and government agencies.

In contrast to the original work for the dole, participants have a genuine chance to be hired by learning useful skills and proving their abilities to a potential employer. Credit:Mayu Kanamori

However, the difficulty with most activity tests lies with what economists call the principal-agent problem: the mismatch of incentives for contracting parties. The government (the principal) wants to nudge the dole recipient to get back to the workforce, penalising welfare rent-seeking behaviour.

Some — yet by no means necessarily the majority of — welfare beneficiaries (the agent) will do the bare minimum to continue qualifying for the dole; especially if there is no real prospect of getting hired or, some might argue, even gain effective employment skills.