“It all went to shit”: Why aren’t small businesses using the PaTH internship program?

Small-business owners and advocates say big changes need to be made to the federal government’s Youth Jobs PaTH program before business participation in the scheme will substantially increase.

Answers to questions on notice filed by the Department of Jobs and Small Business late last year show in October 2018 only 3,645 businesses had signed up to the government’s $840 million program to get long-term unemployed youth back into work.

That’s well short of the 18,000–20,000 businesses the department has previously estimated it needs to achieve its annual intern placement target of 30,000 per year.

When the program was announced in 2016, it was welcomed by small business advocates, including Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong.

But two years later the low rates of uptake are prompting questions about why so few businesses are signing up to participate in the program.

Business owners SmartCompany has spoken to about their participation report finding the process of hiring PaTH interns difficult to navigate, while others said general awareness of the program is lacklustre.

Yvette Salvaris, owner of an education consultancy and family daycare business in Melbourne, says she managed to hire an intern, but soon found they were poorly prepared.

“We were given three people to interview, we ended up choosing one that presented really well. Their CV was perfect,” Salvaris says.

“Then it all went to shit, they had the right skills but their work ethic started to go downhill after three to four days.

“We made it very clear we wanted someone permanent part-time after the internship … but it lasted three weeks and in that time they turned up to work maybe four times.”

Youth Jobs PaTH is a three-step program designed to provide unemployed youth with a financial incentive to get back into the workforce.

Prospective interns participate in a six-week training program, which is often carried out by third-party training providers, before being made eligible for four- to 12-week internship placements in businesses, which run between 15-25 hours a week.

Interns are paid $200 per fortnight in addition to their existing government income support for participating, while businesses are given $1,000 for hosting an intern.

Stage three of the program provides businesses with wage subsidies of between $6,500 and $10,000 for hiring a young job seeker who has been in employment services for at least six months.

Of the more than 50,000 participants in the program, just over 8,000 had commenced an internship as of October 2018, while less than 3,000 were employed by their host business after their internship.

The department said it expects the rate of take-up in the program to continue to increase in 2019 as “employer mobilisation efforts continue and awareness of the program improves”.

Strong blames larger education providers who have signed on to facilitate the first stage of the PaTH program for its ineffectiveness, arguing interns aren’t being given appropriate skills for local businesses.

“The service they’re getting from the job network providers is not very good,” he tells SmartCompany.

With the federal election slated for later this year, Strong says it will be incumbent on the coalition to seize on a recent review of employment services late last year to take steps to reform the system.

That review, titled I Want to Work: Employment Services 2020, found just 4% of employers used the jobactive system, of which PaTH is a part, in 2018.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell, who was on the review panel, says the current system isn’t working for SMEs.

“Businesses were saying they’d like to take on long-term unemployed youth, but the problem was a lack of training,” Carnell tells SmartCompany.

“PaTH was put together to solve that problem and deliver those benefits … but what’s bad is the bureaucracy around it and sometimes the lack of support for smaller businesses involved.”

Carnell says PaTH and similar programs need to be digitised and centralised so it’s easy for SMEs to find candidates that meet their specific criteria.

“I sometimes call it the eHarmony for small business — you get people coming to your jobs that meet your criteria,” she says.

Lawyer Alan McDonald, managing director of McDonald Murholme, was initially critical of the PaTH program when it was announced and says the PaTH program should be scrapped altogether.

“This program has a demoralising effect on interns who go in eyes wide open hoping to secure a full-time job … they feel used,” he tells SmartCompany.

The PaTH program has previously been criticised as a method for businesses to get low-cost labour with no intention of keeping interns on.

Fast-food company Hungry Jacks came under fire several weeks ago over advertisements for PaTH interns over Christmas, which the Retail and Fast Food Workers Union said showed the program was being taken advantage of.

“The Federal Government’s $4 per hour ‘internships’ were not supposed to swallow up jobs. This year Hungry Jacks literally replaced its Christmas casual hires with the taxpayer-funded internships,” the union said.

While Department of Jobs and Small Business figures show just 0.55% of the businesses who have participated in the PaTH program have been found to be in breach of their agreements, the maximum number of internships a business has hosted without providing employment is 17.

That business has since been suspended from the program and 12 of the participants have found employment with other businesses.

Australian Retailers Association executive director Russell Zimmerman, who signed on as a training provider for the PaTH program last year, said there aren’t many small businesses engaging with the PaTH program for a variety of reasons.

He says it has been difficult for SMEs to liaise with training providers, which are varied across the country with different processes and standards.

“You have providers that have taken value out of their programs and are churning people through … that means you have poorly informed job seekers,” he tells SmartCompany.

Zimmerman says the principle of the PaTH program is right, but in practice, more resources need to be committed to providing job seekers and small employers with better information and an easier framework to participate in the scheme.

“I’m not going to say it has failed, but it hasn’t done very well,” he concedes.

The federal opposition, which has criticised PaTH as ineffective in the past, committed to an overhaul of the entire job active system last week if it wins the next election.

The reforms, which have the support of both Carnell and Strong, will seek to retain mechanisms to incentivise people to get back into the workforce but will put a renewed focus on quality training.

What do you think about the PaTH program? Let us know news@smartcompany.com.au.

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