Unemployed Australians already facing barriers to enter the workforce are competing against at least five other people for every vacant low-skilled job.
A further 1.16 million people who are underemployed and looking for more hours or vacant full-time jobs, are also contesting the roles.
Anglicare's Jobs Availability Snapshot shows people living in regional areas, those without qualifications or work experience, older or indigenous Australians, refugees and those with a disability are the hardest hit.
"Our system is failing those who need the most help to find work," Anglicare's Kasy Chambers said on Wednesday.
Disadvantaged workers are competing for jobs such as cleaning or laundry work, office administration, farm work, food preparation, labouring and sales work.
While the national average is five, in Tasmania there are 14 disadvantaged job seekers contesting each suitable job, and in South Australia there are nine.
"This is time for us to actually stop to think about helping these Australians to get jobs, and to stop pitting Australian against Australian when the jobs simply aren't there," Ms Chambers said.
"In 2006, they (entry level jobs) made up 22 per cent of the job market. They're now down to 10 per cent."
Ms Chambers says the federal government's Jobactive systems needs to be reformed.
"We hear of people being pushed into things like a hairdressing course when they have a physical condition that means that they can't stand for periods of more than an hour at a time," she said.
More than 580,000 people had their Centrelink payments suspended for not meeting their Jobactive requirements.
But a Senate inquiry has heard the system is punishing people who do actually find work or try to learn skills.
"Many who are cut off from payments by their provider are later found to have done nothing wrong," Ms Chambers said.
Anglicare also renewed calls to raise the rate of the Newstart unemployment allowance.
"We hear that they're transitional payments. They're not. The people in this most vulnerable group are on Newstart for an average of five years," Ms Chambers said.
"That's five years of living well below the poverty line, and ... not being able to afford to remain ready to look for jobs."
Australian Associated Press