MSD reports record number of Kiwis moving off benefits and into work

Two new reports from the Ministry of Social Development show a record number of New Zealanders have moved off a benefit, and into work, following the Covid-19 pandemic.

The shift to alert level 4 in March 2020 saw a sharp increase in the number of people accessing benefits. But in 2021 and 2022, numbers began to recover.

In the year to June 2022, 113,400 people came off a benefit and into work, the highest number since electronic records began in 1996.

Read a summary of the report (PDF:225KB)

The ministry said this was “better than expected,” and touted its “sustained focus on supporting people into work, the tight labour market, and the overall performance of the economy”.

The changes in the numbers were largely due to fewer people accessing the Jobseeker Support benefits.

Around 23,900 fewer people were receiving the Jobseeker Support – Work Ready benefit in June 2022 than in June 2020, or 19.3 percent.

Jobseeker Support – Health Condition or Disability numbers were down 10,300 people, or 12.7 percent between January and June 2022, though this was partly driven by people transferring to the Supported Living Payment, and the resumption of Work Capacity Medical Certificate reassessments.

“Covid-19 had a significant impact across the benefit system in 2020 and saw a substantial increase in the number of New Zealanders needing support. However, this most recent report shows the system recovered faster than expected, and we did not hit the level of unemployment predicted at the start of the pandemic,” Minister for Social Development and Employment Carmel Sepuloni said.

Focus on youth workers

File photo. The Apprenticeship Boost programme, He Poutama Rangatahi, and Mana in Mahi are among initiatives to get young people working.
Photo: 123RF

One of the reports contains a series of insights into youth receiving benefits.

Read the full report (PDF: 385KB)

Covid-19 was found to have accelerated the number of young people (aged 16 to 24) receiving a benefit. The number peaked in December 2020, then decreased in 2021 and 2022.

At June 2022, the bulk of young people accessing a benefit were receiving the Jobseeker Support – Work Ready payment (48.6 percent). Young people can also receive other benefits such as the Youth Payment and Young Parent Payment.

Carmel Sepuloni
Photo: RNZ / Angus Dreaver

Sepuloni said while there was a significant increase, it peaked lower and decreased faster than during the global financial crisis. Youth benefit numbers were now closer to pre-Covid levels than other age groups.

“The GFC was the last time we saw a shock to the benefit system like this and it’s pleasing to see we have applied the lessons learned during that crisis well.”

However, the report found young people currently receiving a benefit were estimated to receive one for longer in the future compared to the wider youth population.

“While the rapid decreases in young people supported by the benefit system are pleasing, the report also shows that young people who are receiving the main benefit tend to have more complex needs than the general youth population and they will need more support,” Sepuloni said.

Young people receiving a benefit at the end of the September 2021 quarter were 2.4 times more likely to have interacted with Oranga Tamariki in childhood.

They were also twice as likely to have been hospitalised for acute care in the past three years, 4.3 times more likely to have a youth justice history, and 2.2 times more likely to have achieved less than NCEA level 2 or equivalent.

“Young people tend to be a group severely affected by economic shocks, which reflects their more vulnerable position in the labour market. They are more likely to have lower skill levels, more casual employment arrangements, and high levels of employment in sectors like the service industry, which are more exposed to the effects of economic downturns,” one of the reports said.

The ministry and minister touted the work done to get people into work, such as the Apprenticeship Boost programme, He Poutama Rangatahi, and Mana in Mahi.

“The government and MSD will continue our focus on assisting New Zealanders into jobs and supporting businesses to find the workers they need,” Sepuloni said.

The reports did, however, acknowledge there were emerging risks in the economy that could affect future numbers.

It said year-on-year reductions in benefit numbers and work exits started to slow through 2022, which could have been due to continued uncertainty associated with Covid-19 outbreaks, and high inflation. It expected benefit numbers to increase from mid-2023, in line with Treasury forecasts.

MSD acknowledged many people who came onto benefits in 2020 had no previous benefit history, and therefore were able to find work more easily than those who had been on benefits long-term.

“The spread of Omicron also partly contributed to the increased difficulty finding unskilled labour as there is limited availability to work from home in many of the lower skilled roles,” MSD said.

The reports do not show, however, what jobs the former beneficiaries were heading into.

MSD periodically reports on what happens to people once they exit the benefit system – but has not done so since 2020.