Unemployed Australians are relying on “punishingly low” support payments as job opportunities continue to decline, according to a new report.

The “mismatch” when it comes to entry-level jobs has locked more people into relying on income support long-term, the report by the Australian Council of Social Service (ACOSS) said.

ACOSS’s Faces of Unemployment report also revealed a total of 557,000 people have been receiving unemployment payments for more than a year, and 190,000 for more than five years.

The report called for a “complete overhaul” of the employment services system, accusing it of “harming” Australians with “unrealistic” requirements and failing to get them into sustainable jobs.

ACOSS chief executive Cassandra Goldie AO told the ABC the organisation had seen “very little” done to “genuinely tackle the level of poverty” in Australia.

“We’re very worried that we’ve already had another 100,000 people lose their job since interest rates went up,” she said.

“The reports are all there, the advice is very clear and we are urging the government to act.

People relying on ‘poverty level’ payments to survive

Australia has the lowest unemployment payment of all 38 OECD countries — currently just $56 a day, a figure Dr Goldie labelled “poverty level”.

“We urge the government to raise the rate of the unemployment payment to at least the pension rate, that’s just $82 per day,” she said.

Of the 557,000 who have been receiving unemployment payments for more than a year, half have a health condition, according to the report.

The majority are women, and almost a third are older than 55.

“One of the biggest changes in the past 10 years has been the shift of people with disability or chronic health conditions from the Disability Support Pension (DSP) to unemployed payments,” the report said.

“Four in 10 people receiving JobSeeker have a partial capacity to work, with many unable to secure sufficient paid work to sustain a living.

“Approximately 44 per cent of all DSP claims were rejected in 2023-24, with many claimants ending up receiving unemployment payments instead.”

The longer a person has been receiving income support, the less likely they are to transition out of it.

Only 8 per cent of people receiving support for more than five years, and 14 per cent receiving it for more than a year, leave the support program.

Those who do move into employment are often transitioning into “part-time or temporary employment”.

Last month Australia’s employment rate remained steady at 4.1 per cent, but has been forecast to creep up to 4.3 per cent by the end of this year.

Employment growth is also tipped to slow down in the same time frame.

Unemployment services giving ‘little practical help’ with ‘onerous’ rules

Australia is not only falling behind “other wealthy nations” when it comes to support payments, according to ACOSS.

The organisation said Australia was also behind in its spending on programs to boost employment.

The report said people receiving unemployment payments were generally required to meet “onerous” requirements for fear of losing their support.

“Most are required to join the Workforce Australia employment services system which enforces compliance with activity requirements,” the report said.

“[It] provides some limited assistance to secure employment such as help with resumes and advice on jobs available locally.

“In practice, Workforce Australia focuses mainly on compliance [and] offers most people little practical help to secure employment.

Many relying on Workforce Australia have “relatively low” levels of formal qualifications, according to ACOSS.

A total 256,000 (38 per cent) reported having less than year 12 qualifications, and 106,000 (16 per cent) had only completed year 12 in September of this year.

Between July 2022 to March 2024, only 12 per cent of those using Workforce Australia services transitioned to sustained employment.

“We have been cautioning the Reserve Bank repeatedly to make sure that we don’t continue to plan for a rising level of unemployment,” Dr Goldie said.

‘Complete overhaul’ of unemployment system needed, says ACOSS

ACOSS made multiple key recommendations in its report, including asking for increased payments, commitments to reform and employment targets, and ending the “automated payment suspensions” in use by employment services.

It also called for an “independent quality assurance body” for employment services, and trialling partnerships between providers, training organisations, government and community services to assist people in finding sustainable work.

Dr Goldie said first Australia needed to fix “the adequacy of [its] unemployment payment”.

“It must be raised to liveable rate so that people can afford to house and feed themselves while they are trying to get back into the labour market,” she said.

“Secondly we need to fix the employment service system, which is seriously broken.

“The compliance system is brutal and harsh, it’s harming people and making them unwell. And at the same time, we’re not providing anywhere near the support that’s needed for people to reskill and get a chance to get back into a job.”