The disconnect between the unemployment rate (3.4% or 99,000) and the number of people on a benefit (11.3% or 353,904) has many scratching their heads. I get asked about it a lot. There are some differences in concepts, parameters and other nuances but keeping it simple...
At December 2022 the Jobseeker Work Ready (JS-WR) total was 98,766. Pretty well on the mark.
But this leaves a quarter of a million working-age people over and above the officially unemployed count and receiving an income from the state.
They are either too sick to work or have child-minding responsibilities.
Now to put that into long-term perspective consider the following graph:
In 2010, when the effect of the Global Financial Crisis was evident, just over 12% were on a benefit. Now it's 11.3% but the proportion made up by the underlying layers remains roughly the same (albeit with different labels.)
Most working-age welfare benefits were introduced in the late 1930s. For the next thirty years recipients comprised just 2 percent of the population and were overwhelmingly widows and invalids. The explosion in welfare began from the mid-seventies.
Getting to my point, while unemployment fluctuates, the underlying core of sick people or sole parents is entrenched. The economy has to carry this population whether times are good or bad, whether there are jobs or not.
WHY this situation has developed - or been allowed to develop - could fill a thesis. But many of you will have lived through the entire period and can probably share some valuable observations. Feel free.
Lindsay Mitchell blogs here
In 1960 a great number of our beneficiaries were in that position as a result of World War 2. Both Widows, invalids and sickness benefits made up the bulk of our payments. Move forward 60 peaceful years (no World War) and low and behold , widows benefits (difficult to fake) have dropped dramatically as one would expect but sickness and invalids benefits have increased very significantly and in addition another easily arranged condition with Domestic Purposes Benefits has grown exponentially. Forget unemployment benefits they come and go and only a small portion of them is Structural unemployment which needs Government services to alleviate. The issue is the sickness and invalids benefits which despite the lack of a World War can…
Hey my old Comrade Lindsay! Glad to see you are still in the melee!
Hope you are well.
Regards Tim Wikiriwhi.
the spike in unemployment ('85 - '90) relates primarily to the restructuring of the economy (rogernomics) when government departments (railways, nz post, electricity, and so on) were closed / sold off. most, if not all, had been absorbing low skilled / unskilled labour for decades. the job market during that period was very tight, and unemployment was primarily structural rather than frictional.
this trend appears to have continued even tho the opportunities (vacancies) rose. what we now see clearly there is an inter-generational welfare dependence.
of note is the significant increase in sickness / invalid benefits. cynically, one can conclude from that new zealand is not a healthy place! but, realistically, is this a reflection of a succession of governmen…
Labour governments? Or am I missing something?
Let's be quite honest: The numbers are almost meaningless. What Labour is trying very hard to do is to tip the scales in their favour. Get themselves voted back in power so they get another term. These people aren't smart enough to figure this out, and will only vote for another free lunch, regardless of the long-term consequences. They don't even realize that free money simply leads to inflation which simply means they can afford less and less. I hate to say it, but maybe we need a bad recession where there is no free money floating around, and all of this corruption can end.