Thanks for an informative (if a little sour) reply.
I don't know if the Civil Service was "set up for veterans", but most public services do include some sort of preferential hiring of vets, as part of an ethical obligation. Whether they are always able to live up to that obligation is another thing.
In Canada, we find ourselves in a bit of a sticky predicament with respect to hiring vets at the moment. Medically discharged members of the Canadian Forces DO have what are termed "priority entitlements" that require managers to give them first consideration when hiring, so long as they meet the essential qualifications of the job. About 70% of them, historically, would get placed in the civilian side of the Department of National Defense.
Unfortunately, at the present time, the current government instituted a 7-10% workforce reduction in every federal agency. While "priority entitlements" for discharged vets ought to have helped them to get civilian jobs, agencies are having a tough time finding alternate placements for their own laid-off staff (which they feel ethically bound to help out, and rightly so). The priority entitlements of laid-off civilian staff are exactly equal to the entitlements of medically discharged vets. The net result is that vets are having a very tough time finding civilian jobs, simply because the policies intended to help them out, and make wise use of capable people, were predicated on agencies beyond Defense being in a hiring mood, and never envisaged the current circumstances.
One of the quirks in all of this is that "medical discharge" now includes PTSD. That is as it should be. Unfortunately, it is an invisible disability, and not the sort of thing that folks readily bring up in conversation ("Hi, I'm Bob. I wake up screaming in a cold sweat in the middle of the night because I've seen things no human should ever have to see. So don't get too freaked out if I get weird all of a sudden. Great to be working with you!"). Moreover, I'd imagine that even where hiring managers know, ethics obliges them to keep it confidential. When a vet shows up missing an arm or a leg or walking with a cane, folks understand, and are happy to make room for someone who has clearly sacrificed for their country. But when nothing is visibly wrong, or fully explained, it can sometimes create unnecessarily hard feelings on the part of those who can't justify to themselves why their manager's "retired" military buddy just sort of showed up one day.
How similar this is to your own context, I'm in no position to say. All I can say is that sometimes our best-intentioned policies just aren't enough.