FAQs

For more than a decade, Australia has struggled to close the disability employment gap.

Despite multiple reforms, new programs, and significant public investment, including the transition from Disability Employment Services to the new Inclusive Employment Australia (IEA) program in November 2025, people with disability remain unemployed at around twice the rate of other Australians. Across 32 OECD countries, the employment rate gap between people with and without disability sat at 27 percentage points in 2022 (OECD, 2022) and has not shifted over the preceding decade.

NESA’s latest report asks a challenging question: are we focusing on the wrong part of the problem?

The research paper, Employer Strategies to Increase Disability Employment in Australia, reviews international best practice and Australian policy developments to examine what drives the persistent disability employment gap, and what a coherent employer engagement strategy could look like. It is released at a pivotal moment for employment services reform, with IEA now in full implementation, broader system reforms, and the sector considering what genuine disability workforce participation will require beyond program design alone.

Why Do People with Disability Experience Higher Unemployment in Australia?

What is the disability employment gap?

The disability employment gap refers to the persistent difference in employment and unemployment rates between people with and without disability. In Australia, people with disability experience an unemployment rate approximately twice that of other Australians (AIHW, 2025). The gap is not primarily explained by the capabilities or motivation of workers with disability, the evidence across multiple decades and multiple countries is consistent on this point.

Why does disability employment remain low despite programs?

NESA’s review of international evidence points to demand-side constraints as the central barrier: employer uncertainty about productivity, accommodation costs, legal obligations, and management complexity, not the capabilities of workers with disability, is what drives the gap. Yet Australia’s employment services system design, across successive program cycles including Disability Employment Services and now IEA, has remained heavily oriented toward preparing job seekers for employment rather than transforming employer behaviour and workplace conditions.

NESA’s analysis highlights a recurring pattern across Australia and overseas. Employment systems have traditionally focused on preparing jobseekers for work while investing considerably less in building employer capability. The international evidence suggests that lasting improvement in disability workforce participation requires both, and that the current balance is misaligned.

What Works in Disability Employment? The International Evidence

What employer strategies increase disability employment?

NESA’s review of international evidence identifies several approaches with consistent, meaningful results.

Intermediaries that go beyond placement

Systems that fund providers to coach supervisors, facilitate workplace adjustments, provide job carving expertise, and build lasting employer capability produce more durable disability employment outcomes than those treating providers primarily as placement agencies. Where employment service providers are funded as placement agencies, employer relationships remain transactional. Where they are funded to understand and address operational risk, they become trusted partners in workforce development.

Business-case framing over compliance

Employer engagement literature consistently finds that productivity, retention, and workforce strategy arguments are more effective motivators than compliance-based approaches (Bonaccio et al., 2020; Nagtegaal et al., 2023). A systematic review found positive workplace accommodation outcomes in the majority of studies examined, including improved retention (89% of studies), productivity (72%), and attendance (56%). Employers without good information consistently overestimate adjustment costs and underestimate the cost of replacing experienced workers, which is precisely where well-resourced employment service providers can make a material difference.

Do wage subsidies increase disability employment?

The evidence on wage subsidies and workplace adjustment funding is nuanced. These instruments are most effective when they are sufficient to offset real employer costs, simple to access, and linked to ongoing in-employment support rather than offered as standalone instruments. Australia’s Employment Assistance Fund (EAF) and the IEA wage subsidy of up to $10,000 per participant provide a reasonable financial foundation for employer engagement. However, EAF uptake among small and medium enterprises (SMEs) remains low. A 2023 JobAccess national survey found 60% of Australians were unaware that workplace adjustments exist at all, a significant awareness gap that limits the reach of available support. The EAF’s reimbursement-after-purchase model also creates a cashflow barrier particularly acute for smaller businesses without dedicated HR functions.

What is customised employment and does it work?

Customised employment involves restructuring roles to match individual capabilities through employer negotiation and worker discovery, a more intensive and individualised approach than standard placement. Growing evidence from randomised controlled trials in the United States and Spain finds that participants in customised employment are significantly more likely to secure competitive, integrated employment than those receiving standard placement approaches. The evidence base continues to develop, but the direction of findings across multiple study designs is consistent and the approach is increasingly applied in Australian practice.

What Does the Evidence Say Does Not Work at Scale?

NESA’s analysis of international evidence is equally clear about approaches that have not produced expected results in disability employment policy.

Mandatory quota systems consistently fall short of target levels without strong enforcement and do not in themselves change workplace culture. Anti-discrimination legislation establishes important legal rights but does not, on its own, change employer capability or produce measurable improvements in disability employment rates. A systematic review of employer-focused interventions across OECD countries found that anti-discrimination legislation has no measurable effect on disability employment rates (Derbyshire et al., 2024).

Voluntary accreditation schemes present perhaps the most sobering finding. Research on the United Kingdom’s Two Ticks scheme and its successor Disability Confident consistently finds that certified employers are no more likely to employ people with disability than non-certified employers, and disabled employees in certified organisations report no better workplace experiences (Hoque et al., 2024). The central design failure is the absence of external validation: both schemes relied on self-assessment, creating a reputational signal with no performance obligation attached. Accreditation schemes are more likely to drive disability employment outcomes when linked to procurement advantage, subject to external validation, and tied to meaningful performance reporting.

Time-limited pilots without governance: Promising pilot outcomes do not produce durable system change without formal accountability structures and industry co-investment that survive the funding cycle. This is particularly worth considering in the Australian context, where several disability employment pilots have demonstrated proof-of-concept without translating into lasting structural change.

What Does This Mean for Employment Services Reform?

IEA providers already hold established relationships with thousands of employers across Australia. NESA’s analysis identifies this as a significant and currently underutilised asset for disability workforce participation.

The challenge is that current outcome-based funding and placement-volume incentives within the employment services contracting model can actively undermine sustained employer partnerships. Research on employer engagement with Australian employment services finds that providers have progressively reduced their employer contact over time, and that competitive retendering exacerbates this by disrupting accumulated trust and local knowledge at each procurement reset (Ingold et al., 2023). The OECD similarly finds that contracted provider markets produce difficulties at each reset, with placement rates improving only in subsequent contract periods as providers rebuild operational capacity and employer relationships from scratch.

In the context of the current Workforce Australia redesign and ongoing employment services reform discussions, this evidence raises a fundamental question about contracting model design: is the current re-tendering model compatible with the sustained employer partnerships that the evidence shows are essential for durable disability employment outcomes?

NESA considers this one of the most important, and least discussed, structural issues in disability employment policy. Provider continuity, employer relationship depth, and procurement design are not peripheral concerns. They are central to whether Inclusive Employment Australia will produce different outcomes than the Disability Employment Services program it replaced. Contracting model reform, not just program content reform, is likely to be necessary.

The employer relationships that underpin genuine capability building are built on trust accumulated through repeated, consistent contact between a known provider and an employer, not through a single placement transaction. For intensive support models to function effectively, this relational infrastructure needs to be preserved and resourced, not disrupted at each tender cycle.

Five Reform Directions: What NESA’s Analysis Identifies

NESA’s analysis of the international evidence identifies five mutually reinforcing reform directions for Australian disability employment policy. All build on existing infrastructure rather than requiring new program design. All are relevant to the design and implementation of IEA.

1. Government as the First Employer of Choice

The Australian Public Service (APS) disability employment target of 7% remains unmet. Formal HR disclosure sits at 5.8% as at June 2025 (APSC, 2025), although anonymous APS Employee Census self-identification is considerably higher at 12.5%, a gap that suggests a workplace culture in which employees do not yet feel safe identifying as having a disability. NESA’s analysis suggests a target is necessary but not sufficient: proactive recruitment, visible executive accountability, and genuine cultural change are required alongside it. National Partnership Agreements offer an underexplored mechanism to extend disability employment accountability to state public sector employers, among the largest employers in Australia.

2. Resource IEA Providers to Build Employer Capability

IEA provider contracts and funding should support providers to deliver job coaching, job carving, and supervisor engagement, not just placement volume. NESA’s analysis raises questions about whether the competitive retendering model is compatible with the sustained employer relationships the evidence shows are essential. The Centre for Inclusive Employment (CIE), established in 2025 with $23.3 million over four years, has an important role to play, but its value will ultimately depend on whether providers are adequately resourced to apply its guidance on the ground.

3. Convert Sector Pilots into Durable Compacts

The Career Pathways Pilot, involving Coles, Woolworths, Kmart, Target, and Compass Group, demonstrated that when major employers co-design employment pathways rather than simply receive referrals, meaningful career progression outcomes are achievable. The next step is exploring what it would take to convert time-limited pilots into durable compacts, with formal governance, public reporting, industry co-investment, and IEA provider integration, in sectors where traction already exists, such as retail, logistics, aged care, hospitality, and technology.

4. Use Social Procurement as a Commercial Lever

Government purchasing power is one of the most significant and underutilised disability employment levers available. Victoria’s Social Procurement Framework and South Australia’s Industry Participation Policy provide working domestic models. NESA’s analysis suggests a national social procurement framework applied to Commonwealth contracts, with specific measurable disability employment obligations, supply chain requirements, and independent verification, could create genuine commercial incentives at a scale, voluntary programs cannot reach. Procurement-linked employer accreditation, where certification carries a tangible tender advantage, could further amplify this effect.

5. Simplify Pathways for Every Employer

For disability employment to reach its full potential across the labour market, it needs to work for small businesses and local organisations as well as large corporates. SMEs consistently face three structural barriers: lack of HR expertise, fear of accommodation costs, and insufficient knowledge about available support. Differentiated delivery models, with distinct engagement approaches and support products for large employers and SMEs, are likely to reach more of the economy than a single program design. Reforming the EAF’s reimbursement-after-purchase model, with pre-approved funding pathways and faster processing, would reduce the cashflow barrier that currently deters smaller employers.

What Works for Different Disability Cohorts in Employment?

An important issue emerging from NESA’s research is that people with disability are not a homogeneous population, and the most effective disability employment interventions differ substantially across cohorts.

Individual Placement and Support (IPS), a place-first, intensive ongoing support model, has the strongest randomised controlled trial evidence of any disability employment intervention for people with psychosocial disability, with more than 30 RCTs conducted internationally. People with intellectual disability require long-term supported employment with ongoing job coaching, particularly post-placement, approaches that taper coaching after initial placement produce significantly worse retention outcomes. Structured onboarding, sensory workplace adjustments, and informed supervisor support are consistently associated with better employment outcomes for autistic workers. Workers who acquire disability through illness, injury, or degenerative condition generally require early intervention within the first six weeks of absence, well before they exit employment and enter the re-employment system.

Retention is also underserved in the current system design. Australia’s disability employment services architecture is oriented toward placement. Workers who acquire disability during employment, a growing share as the workforce ages, are largely outside its design logic. International approaches including graded return-to-work programs, partial sick leave schemes, and supervisor training have meaningful evidence but limited Australian application.

Benefit cliff interactions also warrant attention. Disability Support Pension taper rates and income support rules create financial disincentives to employment, particularly for people with episodic conditions. NESA’s analysis notes that disability employment policy reform cannot be fully effective if it operates in isolation from income support policy design.

Why This Matters for Job Seekers, Employers, and Communities

The disability employment gap is not simply an equity issue, though it is certainly that. It is also an economic and workforce development issue.

Australia faces intersecting labour market pressures, an ageing workforce, growing skills shortages, and significant underutilised labour supply. The business case for disability employment, framed around productivity, retention, and workforce strategy rather than social obligation, is increasingly compelling on purely commercial grounds. Employer engagement literature consistently finds that this framing is more effective in motivating sustainable employer action than compliance-based approaches.

For job seekers with disability, the gap between employment aspiration and employment reality has persisted for too long. NESA’s research suggests this is not because people with disability cannot work or do not want to, it is because the systems, incentives, and relationships needed to connect employers confidently with workers with disability have not yet been built at the scale required.

For communities, particularly those in regional and remote areas where disability prevalence is higher and support infrastructure thinner, closing the gap requires a whole-of-economy approach that goes beyond individual program design.

Frequently Asked Questions About Disability Employment in Australia

Why is disability employment lower in Australia?

The primary driver is demand-side constraints rather than supply-side factors. Employer uncertainty about productivity, accommodation costs, legal obligations, and management complexity leads many employers to avoid hiring people with disability, even when workers with disability have the skills and capability required. Australia’s employment services system design has historically focused on preparing job seekers rather than addressing these employer-side barriers.

What is Inclusive Employment Australia (IEA)?

Inclusive Employment Australia is Australia’s new disability employment program, which replaced Disability Employment Services on 1 November 2025. IEA introduced tiered support, removed time limits, broadened eligibility, and expanded wage subsidy arrangements.

What works in disability employment?

International evidence consistently supports three approaches: intermediaries that go beyond placement to coach supervisors, facilitate workplace adjustments, and build employer capability; business-case framing that positions disability employment as a workforce strategy rather than a compliance obligation; and wage subsidies and adjustment funding that are simple, sufficient, and linked to ongoing in-employment support. Customised employment, where roles are restructured to match individual capabilities, also shows growing evidence of better outcomes than standard placement.

Do wage subsidies increase disability employment?

Wage subsidies can be effective, but design matters significantly. They work best when they are sufficient to offset real employer costs, simple to access, and linked to ongoing workplace support. Australia’s Employment Assistance Fund (EAF) and IEA wage subsidy provide a reasonable financial foundation, but uptake, particularly among small and medium enterprises, remains low due to cashflow barriers, administrative complexity, and low awareness of available support.

How can small businesses employ people with disability?

Small and medium enterprises consistently face three barriers: limited HR expertise, fear of accommodation costs, and insufficient knowledge about available support systems. The evidence suggests that differentiated support, with simplified single-point access, pre-approved adjustment funding, plain-language guidance on legal obligations, and locally available intermediary support, is more likely to increase SME engagement than a one-size-fits-all program design.

What role do employment service providers play in disability employment?

Employment service providers are a critical and currently underutilised asset for disability employment. IEA providers already hold established relationships with thousands of employers across Australia. The evidence suggests they are most effective when resourced to build genuine employer capability, through job coaching, job carving, and supervisor support, rather than functioning primarily as placement agencies. Provider continuity and contracting model design are key factors in whether these relationships can be sustained over time.

What does the evidence say about employer engagement in disability employment?

The evidence is clear that sustained employer engagement produces better disability employment outcomes than transactional placement. Systems that fund providers to serve both the worker and the employer, coaching supervisors, facilitating workplace adjustments, and providing ongoing in-employment support, produce more durable outcomes. Employer relationships built on trust through consistent contact over time are significantly more effective than one-off recruitment transactions.

Does anti-discrimination law improve disability employment rates?

The evidence suggests anti-discrimination legislation alone does not produce measurable improvements in disability employment rates. A systematic review of employer-focused interventions across OECD countries found no measurable effect of anti-discrimination law on disability employment. Legal frameworks establish important rights but do not change employer capability, reduce operational uncertainty, or create the workplace conditions that support sustained disability employment.

Conclusion: A System-Level Problem Requires System-Level Solutions

As governments consider the future of employment services and workforce participation, disability employment cannot be treated solely as a jobseeker issue.

NESA’s research suggests that employers, workplace practices, procurement systems, and commissioning models all play a critical role, and that the infrastructure Australia already possesses could go much further with more deliberate connection, more appropriate resourcing, and more consistent accountability.

The challenge for policymakers is not whether more support is needed, but how to build a system that creates lasting demand for workers with disability. Five reform directions, government leading by example, resourcing providers to build real employer capability, converting sector pilots into durable compacts, using procurement as a commercial lever, and simplifying pathways for every employer, offer a mutually reinforcing path forward.

None of this requires rebuilding the system from scratch. It requires the political will to use what already exists more effectively.

Access the Full Research Paper

The full paper, Employer Strategies to Increase Disability Employment in Australia: Review of International Best Practice and Reform Directions (NESA, May 2026), examines the international evidence in detail, analyses the Australian policy context across IEA, the APS, social procurement, and sector partnerships, and sets out five reform directions with supporting analysis and practical design considerations.

NESA engages constructively with policy reform and values evidence-based approaches to improving outcomes for job seekers, employers, and communities. We encourage readers to access the complete research paper on the NESA website and to contribute to the discussion this research opens.