Government wage subsidies are financial incentives available to encourage businesses to hire and retain new employees, particularly those facing greater disadvantage.
Greater take up means more people into work.
Behavioural Economist Bruce Cunningham said they looked at ways employment service providers and employers interact around wage subsidies, to pinpoint which improvements would have the most impact.
‘The way a decision is framed often plays a significant part in determining our responses,’ Bruce explained.
The trial, with the involvement of jobactive provider, Mission Providence, in south-west Sydney, focussed on psychological barriers that might affect the choices of employers and service providers to use wage subsidies.
Prior to the trial, there was a user research phase to better understand the barriers to higher take up of wage subsidies. This phase investigated the process used by employment service providers in delivering the wage subsidies program.
‘It is really important to get the perspective of front-line staff,’ Bruce said.
‘So the research team undertook a series of in-person consultations with jobactive providers and employers, and conducted a number of focus groups.’
The team then used insights from this research, plus behavioural economics principles, to trial small, cost-effective improvements to the wage subsidies process to see if they would increase take-up.
The improvements they trialled included moving the application process online, providing more effective promotional and training materials, and making a different default setting for payment instalments.
‘Results of the trial suggested not only an increase in take-up of wage subsidies, but also a reduction in the time taken to finalise an agreement and a significant increase in promotional activity by front-line staff,’ Bruce said.
‘Based on an improved understanding of employers’ preferences and the behaviour of staff at jobactive providers, the trial showed that small changes to existing practice can have a significant effect.’
Results from the trial were used to fine-tune the final design and implementation of operational policy changes to wage subsidies in 2017.
Read the full report: Applying Behavioural Economics to Increase the Take-up of Wage Subsidies
Find out more about wage subsidies.
Behavioural economics helps the Department of Jobs and Small Business realise its objective of supporting Australians in finding and keeping employment in safe, fair and productive workplaces. A realistic understanding of the behaviours and decision-making of job seekers and employers is vital to our work.
Behavioural economics can help identify and address otherwise hidden psychological obstacles that might affect the choices of job seekers, employers, service providers and employees.