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Lindsay Mitchell: Glossing over growing benefit numbers


Finance Minister Grant Robertson makes frequent self-serving references to New Zealand’s low unemployment rate of just 3.2 percent. He does not talk, however, about the Jobseeker dependency rate which is much higher at 6 percent.


In absolute numbers 93,000 people are officially unemployed according to Stats NZ but there are 188,000 on a Jobseeker benefit.


It is unusual for the gap between the two numbers to be so large.


Four years ago, the respective numbers were close at 128,600 and 123,039.


To understand the growing gap, we need first to understand the definition of ‘unemployed’ used by Stats NZ which is:


- has no paid job

- is working age

- is available for work, and

- has looked for work in the past four weeks or has a new job to start within the next four weeks.


In contrast not all people on a Jobseeker benefit are required to be available or looking for work (a small fraction has part-time or seasonal jobs but that has long been the case.)


A crucial reason for the growing divergence is work obligations have reduced under the Labour government. The use of sanctions – the tool used to impose obligations – has dropped 66 percent in the same four-year period to December 2021.


Number of sanctions for unfulfilled work obligations during the last six December quarters


Covid had some bearing but the reduction in sanctions pre-dates the pandemic. (Labour’s support partner, the Greens - who appear allergic to the idea of personal responsibility – would like to see sanctions abolished altogether.)

Without pressure to do so, some beneficiaries stop looking for work. If they aren’t looking for work, by Stats NZ definition they cannot be unemployed.


When Labour took over from National, they were intent on making the benefit system ‘fairer’ and set about diverting resources into contacting beneficiaries to check they were getting their full and correct entitlements. The answer to poverty was not a paid job – a 180 degree departure from predecessors Clark/Cullen - but getting more money out of the benefit system.


Resources were diverted from employment case management.


According to MSD’s 2018/19 annual report, “… only 20 percent of engagements with clients in June 2019 had an employment focus, the lowest proportion since 2014."


This month another MSD report which monitors the effectiveness of EA (Employment Assistance) interventions contained this graph:


The values are not CPI adjusted. If they were the declines would be steeper.


Furthermore, the commentary reads,


“...the total level of expenditure in the effective and promising categories has decreased since the high point of 2013/2014 ($192.3 million). In the last four years the fall in effective expenditure was led by the reduction in spending on Training for Work and Flexi-wage (Basic/Plus).”


So not only is less being spent on employment assistance, but what is spent is less effective.


Another example of de-emphasising employment is the reversal of National’s subsequent child policy. To discourage sole parents from having more babies to avoid a job, National legislated that the parent would only get the post-birth year free from work-testing.


Labour abolished that rule. Now, as long as a sole parent continues to have children, she will not have to find work. The numbers on a sole parent support benefit are once more on the rise.




The Labour government has also discouraged full-time work.


For instance, they significantly raised the amount someone can earn without losing any of their benefit. While this superficially sounds ‘kind’ it risks an increase in people who get by on part benefit/part income from work. It doesn’t incentivise risk-taking, ambition or independence. It actually makes it harder for someone to get off a benefit.


Right now there is a desperate need for skilled and unskilled labour in this country.


Yet more people - and more children - are on welfare than when Labour became the government.


In December 2017 123,039 people were on the Jobseeker benefit and 289,788 people were on any main benefit.


By December 2021 the respective numbers had risen to 187,989 and 368,172 - increases of 53 and 27 percent.


There is one major reason for these increases.


It’s not covid.


It’s politics.



Lindsay Mitchell blogs here


3,387 views26 comments

26 commentaires


joanna.taupo
joanna.taupo
04 avr. 2022

While on the subject of unemployment numbers ----- I heard all the BS about the apple growers in Hawkes Bay, having their crop rotting on the ground, because they can't get labour ??? They can't get enough Islanders brought in to do the picking and sorting.

Excuse me??

Why aren't the unemployed sent over to work? I'm sure it can't take too much training to pick and sort apples.

Doesn't make sense to me.


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Solo View
Solo View
01 avr. 2022

At what point was the Job Seeker benefit changed to include (under a new title) the Sickness and Invalids benefits? A lot of comment about the Job Seeker benefit, but no explanation of how the coverage of this benefit has changed.


Sickness and Invalid benefits now come under Jobseeker Support – Health

Condition and Disability.


I note that when Jobseeker Support - Health Condition and Disability are removed that Jobseeker support - Work Ready is quite close to the Stats department unemployed figures.


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Administrator
Administrator
01 avr. 2022
En réponse à

Good question.

National's 2013 reforms combined unemployment and sickness benefits into jobseeker. The thinking was that not enough resources (or expectations) were put into helping people on the sickness benefit.

The invalid benefit was re-named the supported living payment. It was not folded into the jobseeker benefit.

Your observation is correct that the jobseeker 'work ready' total is closer to the number officially unemployed.

But going back to 2017, the same 'explanation' doesn't apply.

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tjalling.jonker
tjalling.jonker
31 mars 2022

correct. that hobbit uses the household labour force survey as, in his words, it is an internationally recognized standard. nonsense, utter rubbish. it allows for making literally thousands "disappear".


the real measure should be the number of people registered as 'job-seeker' by the msd rather than that household labour force survey.


however, a few months ago, as actual registrations for the job-seeker benefit increased (mainly due to the pandemic) he needed desperately a further reduction in the number of 'registered unemployed' as that number had begun to increase dramatically. so, the obligation of solo-parents to become job-seeker once the child turned a certain age was removed and that delivered him a nearly 90,000 reduction in job-seeker numbers. i have no…


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ron
ron
31 mars 2022

Those comparative figures and analysis thereof are useful to know. However I find it difficult to get overly exercised, as being soft on bludgery has always been a feature of Labour parties. No, the damage done pales into insignificance alongside vigorous promotion of anti-democratic, ethno-nationalism and the destructive harnessing of climate alarmism as a weapon with which to bash our farmers and those of us who are out of 'socialist' favour for not being poor enough, uneducated enough, or using public transport enough, or whatever.

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krjames987
krjames987
30 mars 2022

The main facts are incontestable but I would like to suggest that the term 'bludger' be applied to those companies that make use of the system to keep lots of low skilled workers on zero contracts. These employers are gaming the welfare system right royally knowing that the taxpayer will make up the living cost deficit.. From my personal experience a lot of the workers in this position are young and inexperienced, they have never had a permanent job and don't understand the idea that they can plan their future (which a permanent job and regular pay make possible). Just about by definition they weren't successful academically so the info on careers went over their heads. Now they don't have…

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