Welfare-to-work has its serious challenges

Kieran Madden – 

Just where do people go when they move off a benefit?

It is a serious question that demands an answer.

Why? Because while the Government often pats itself on the back for reducing the number of working-age people on a main benefit, this alone does not tell us whether the people that moved off are any better off in the long-run.

The government is making progress towards its 2018 goal of reducing ‘Working age client numbers by 25% to 220,000 from 295,000 as at June 2014.’

Moving people off benefits is a part of the government’s focus on ‘reducing long-term welfare dependence.’

Lifting standards

This is, according to the ‘Better Public Services’ website, “About supporting people to better their lives, managing the government’s future financial liability and supporting our economy by ensuring we have a skilled and productive workforce.’ But what if those who move off the benefit are not supported towards better lives?

We have not had the technology to answer this question, earlier.

After the government fired up its new linked-up data infrastructure (called IDI) to track 140,000 people who moved off benefits between July 1, 2010 and June 30, 2011, we received an important piece of the puzzle.

The data showed that 75% of the study population were not on a benefit two years later. In other words, 25% returned to a benefit. About 33% were in employment two years later, 16% had a change in life circumstance (retired, moved overseas etc.), and 8% were in education or training.

This left a troubling 18% whose outcomes after two years were unknown.

The report says that most of this group had low or non-existent income, potentially supported by a partner, ineligible for benefits or moved overseas. Thankfully, the Social Development Ministry intends to investigate this further.

Off-and-On Benefit

People who left to start a job were less likely to slip back onto a benefit than those who left for education. Of the 38% of people who left a benefit because they had scored a job, roughly a third of them were back on a benefit two years later. Comparatively, of the 11% of people who left a benefit to pursue tertiary study, two-thirds were back on a benefit after two years.

Interestingly, the report claims that “The most important factors in moving into employment long term are the person’s familiarity with being in the workforce and the quality of their employment,” underscoring how important it is to support people into sustainable work as soon as possible.

Most of those who returned to a benefit did so within the first year, suggesting that this is a danger zone where support needs to be greatest.

So, overall, many remain in long-term work; but, perhaps, not as many as one might guess. While offering some answers, this research raises more questions about how we can increase the strike rate from ‘welfare to work.’

What we do know, however, is that just shifting people off welfare is not good enough. If this is about better lives, maybe the government needs a new target.

Kieran Madden is a Researcher at Maxim Institute based in Auckland.

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