The Centre for Social Justice (CSJ), which was founded by work and pensions secretary Iain Duncan Smith, has criticised job centres for failing to help people find long-term work and leaving them "trapped in cycles of worklessness".
In the think tank's report it said the state-run Job Centre Plus (JCP) network should be remodeled on the market-based Australian system, which has proved a world leader in getting people back to work.
The CSJ's report, which is published today, found JCP focuses far too much on arranging benefits for claimants instead of identifying the factors that are preventing them from getting work and staying in work.
According to the report, 40% of those moving off jobseeker's allowance made another benefit claim within six months.
It called for local job centre managers to be given more flexibility in how much they pay staff to encourage the best advisers to stay on the frontline and not seek management positions.
Director of the CSJ Christian Guy said a new approach is needed if the UK is going tackle its unemployment problem.
"Huge sums of public money are being spent on a system that is missing the point - but much worse is the human cost of worklessness and the devastating impact it has on people and communities," he said.
"This report reveals deep-seated weaknesses within the JCP network. It does not prioritise getting people into lasting jobs and many become trapped in cycles of worklessness as a result.
Guy called for a radical new approach to tackle unemployment. "The state monopoly should be broken and innovative charities and private firms should be allowed to assist jobseekers who are crying out for help," he said.
The CSJ also called for an increase in pay for frontline JCP advisers. The report showed they are paid less than the national average wage, meaning good advisers move away from working with clients to earn more in management or elsewhere.
And it called for a new performance measure based on people finding work and staying in it, and the transfer of greater freedoms to JCP staff and local managers, including setting their centre's pay levels and structures.
A spokesman for the Department for Work and Pensions (DWP) praised JCP advisors in successfully helping people back into employment.
"Advisers are focused on making sure people get all the help and support they need to make the move into work.
"The flexibility given to JobCentre Plus managers means they can tailor the support they offer to local need, often using the expertise of local voluntary organisations."
