Other countries tried Ford’s for-profit welfare scheme – it hurt the most vulnerable
The Progressive Conservative government in Ontario is moving ahead with its for-profit welfare plan. The pilot program, launched in February, would see the employment services used by welfare recipients outsourced to private contractors.
This privatized model for welfare services is not unique to Ontario. It has been tested in other jurisdictions like the United Kingdom and Australia. The results from these overseas experiments should give pause to the Ford government’s insistence to go forward with their for-profit scheme.
What happened in the United Kingdom?
In 2011, the Conservative-led coalition government introduced the Work Programme, a “payment-for-results welfare-to-work” program. The scheme saw employment services outsourced to non-government – mostly private for-profit – providers. This new model for addressing unemployment was supposed to be efficient and less costly.
The outcome was not as stipulated. Not only was the program ineffective at getting welfare recipients stable employment, it offered virtually no cost savings. An external study also found that the for-profit scheme resulted in a practice called “creaming and parking,” whereby contractors only helped the most job-ready and ignored the most disadvantaged.
What happened in Australia?
In Australia, the centre-right coalition government introduced the Jobactive program back in 2015. Similar to the U.K. and Ontario schemes, income support recipients’ employment services were outsourced to for-profit providers.
The privatization of welfare has had some terrible results down under.
Welfare recipients were forced to “work for the dole,” or face having their benefits stripped. Service providers were incentivized to push people into precarious work, sometimes work that was just for a single day or hour. The government even introduced a “demerit system,” whereby welfare recipients could be kicked off their benefits for refusing to partake in this system.
In 2019, a scathing Senate report described Jobactive as a “harsh bureaucratic nightmare” that was “grossly unfair” and “punitive” to unemployed Australians. The program is now earmarked for review, with contracts to providers set to expire this year.
The for-profit welfare experiments in Australia and the U.K. should serve as a warning for the possible consequences of privatizing welfare service delivery.