Source: Radio New Zealand
Social development minister Louise Upston. RNZ / Samuel Rillstone
Beneficiary numbers have soared to a 12-year high, under a government that promised a reduction.
They were the highest both by volume and percentage of the working-age population since at least the 2013 welfare reforms.
Social development minister Louise Upston said in 2024 – less than three months after taking office – that the government was taking action to “curb the surge in welfare dependency” that ocurred under the former Labour government.
But the most recent Ministry of Social Development data revealed that was yet to take hold.
As of December last year, 427,236 people – about the population of Christchurch – were receiving a main benefit.
That was 13.2 percent of the working-age population, the highest recorded since at least 2013, when reforms replaced multiple benefits with three main benefits: Jobseeker, Sole Parent Support and Supported Living Payment.
More than half of beneficiaries – 223,512 people, or 6.9 percent of the working age population – were on the Jobseeker benefit. That was also a record.
Soon after taking power the government set a target of 50,000 fewer people on the Jobseeker benefit by 2030.
So far, there had been an 18 percent jump: from 190,000 in December 2023 to 223,500 in December last year.
The 18 to 24-year-old age group on the Jobseeker benefit had grown the most in that period, rising 32 percent.
Minister blames former Labour government
Upston said the numbers were a result of the coalition inheriting “difficult economic conditions and a tough labour market” from the former Labour government.
“Unemployment has been rising since 2021 and is always one of the last things to improve after a recession,” she said.
“We know there is more work to do to grow the economy, fix the basics and build a welfare system focused on getting more people into work.”
More than 83,500 people came off a main benefit and found work last year, she said.
The government’s initiatives to curb benefit numbers included the traffic light system which was working well to ensure jobseekers were fulfilling their obligations, she said.
In Parliament on Wednesday, Labour’s Willie Jackson grilled Upston about rising Jobseeker numbers.
Upston said Labour’s increased spending during the Covid-19 pandemic drove up inflation, leading to higher unemployment.
“That’s why the forecast has always been due to get worse before it gets better,” she said.
Labour’s social development and employment spokesperson Willow-Jean Prime said the Prime Minister Christopher Luxon needed to take responsibility.
“It’s been more than two years since National took office, their excuses are getting old and shows just how out of touch they are,” she said.
“Christopher Luxon promised to fix the cost of living. He hasn’t just failed – he’s made it worse.”
Labour’s social development and employment spokesperson Willow-Jean Prime. VNP / Phil Smith
High unemployment driving benefit dependency, but set to improve – economist
The rise was largely driven by a weak labour market, said Infometrics principal economist Brad Olsen said.
“There has been a larger proportional increase in Jobseeker support benefit requirements compared to all other benefits on average,” he said.
The government had options to intervene but they were not all politically or socially palatable, Olsen said.
That included clamping down access to benefits.
Infometrics principal economist Brad Olsen. RNZ / Samuel Rillstone
“Which could well reduce the overall numbers, but would likely leave a number of New Zealanders out in the cold and facing very challenging circumstances at a time when we know that the number of jobs being advertised in the economy are still 25 percent lower than pre-pandemic and the unemployment rate is at a 10-year high.”
The government could also try to create jobs but that was expensive and could lead to higher inflation, said Olsen.
“The government doesn’t have a lot of spare money to all of a sudden magic up a whole bunch of jobs there in the short term without generating other economic challenges in other areas.
“So at the moment, our expectation would more be that the government will look to try and reduce the number of beneficiaries over time as the labour market improves, and we do expect that will happen over the next couple of years.”
Although unemployment was high, there had also been a 0.5 percent expansion in the number of jobs which was the largest in about two and a half years, he said.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
