The inadequacy of incomes is measured against the cost of meeting the most basic needs and being able to participate meaningfully in society. Having sustainable paid work is a route out of poverty. Moving to an economy that generates sufficient good and appropriate jobs that people are able to take up requires a system that is visionary and agile, and inclusive of those presently receiving income support.
A social security system can provide an opportunity to upskill people to participate more meaningfully in the economy, in their communities and with their families. It also provides an opportunity for people to contribute in other ways valued by communities when they are unable to be in paid work because of parenting or care-giving roles. More personalised employment services, along with adaptable education and workplaces, are required.
Our employment support system is not yet well placed to help people into work now or in the future, particularly when people will likely transition more frequently between jobs and need more help to shift to new occupations. The welfare system also provides support for people to get back into paid employment, yet spending on active labour market programmes is low compared with spending in other OECD countries.
Expectations to take up paid work have increased, but support to enter and remain in work has steadily declined over many years. This is reflected in a long trend of falling resources, lack of specialist and expert employment case management, limited access to case managers, and limited support for people entering work, or at risk of entering the benefit system. Large numbers of people receive very limited employment support despite facing explicit work expectations. These systemic weaknesses contribute to high rates of ‘churn’ where people enter work (or education) for brief periods before returning to the benefit system. This is especially true for young people, Māori, Pacific People and people with health conditions and disabilities. It is also particularly marked for those churning through the criminal justice system.
While we agree that people should undertake paid work where their circumstances allow, the evidence is mixed about how best to do this. Growing the skills of New Zealanders would contribute more to the New Zealand economy. No one action will lead to this improvement, but packages of changes can. Our whakamana tāngata approach assumes a whole-of-government, iwi, employer, union and community partnership that views people receiving a benefit as capable of contributing to society and the economy. This contribution may be as second-chance learners who upskill and retrain (especially on the job).
Functional illiteracy remains a major challenge for some people receiving a benefit. Increasing functional literacy (including digital and technological literacy) would create many advantages not just for the individual and their family and whānau, but also for employers and the economy.
Employment services need to intervene early and effectively. The Welfare Expert Advisory Group recommends rebuilding a core employment service that is embedded in a wider active labour market system, that emphasises early interventions (with key partners) and provides specialist employment support and ongoing pastoral support where needed.
The Welfare Expert Advisory Group also recommends revamping active labour market policies and other labour market, employment and training policies across government to make them coherent and effective. The Welfare Expert Advisory Group further recommends strengthening MSD redundancy support policies to better help those who lose their jobs.
We want to see better opportunities for young people to participate in healthy relationships with peers and in whānau life and to engage in education, training or work. Given the relatively young age structure of the Māori and Pacific populations, significant demographic dividends will be gained for the nation as well as individuals by improving outcomes for young Māori and Pacific People.
The income support system needs to support the outcomes of good and appropriate work by ensuring people are financially better off in paid work. This requires abatement rates (and effective marginal tax rates) to be reasonable, especially at the point when people are entering work.
The Welfare Expert Advisory Group recommends replacing the current work incentive tax credits with a new tax credit targeted at those on a benefit entering into paid work, including part-time work. Alongside an increase in various abatement thresholds, this will maintain the incentive to work that might otherwise be affected by increases in main benefit rates.