The role the benefit sanctions are playing in moving people off benefit

Sometimes when I hear news items, in my head I am going “hang on a moment” – because what is being said does not sound quite right.

I had a “hang on a moment” situation a few weeks ago when the Minister of Social Development put out a press release saying that the benefit sanctions (the traffic light system) they had introduced was working to get beneficiaries into employment because 2457 more people had gone off the job seeker benefit since they came into force than previously. The press release claimed a correlation between the 133% increase in benefit sanctions and the 18% increase in people who found employment between July and September this year.

If those 16,000 people who have cancelled their benefits have gone into secure employment that pays them a living wage, then of course that is a good thing. But, hang on a moment, did the benefit sanctions really have anything to do with this, and is this the full story about what is happening with benefits?

The reality is there are 23,000 more people on the Jobseeker benefit now, than a year ago, and the total number on welfare support, at 391,222, is higher than in 2020 – when we were at the height of the Covid crisis. Jobseeker benefits are now 12% of the working age population – not quite as high as the historic peak in the 1990s but about the same as when we had the Global Financial Crisis.

These statistics demonstrate what much of the research has shown down through many years – that benefit sanctions have very little to no impact on whether people go on or off the benefit. Far more important is what is happening to the job market, and right now, many New Zealanders have faced job losses, including thousands of civil servants and people in manufacturing.

What the benefit sanctions do contribute to is greater hardship for people, including children. Sanctions are also frequently incorrectly applied, and often reversed – but meanwhile people have reduced incomes. A brief analysis of cases on our internal system shows instances of clients reaching out for food support who had been sanctioned incorrectly but could not feed themselves while they waited for MSD to sort it out.

Of course we want people who can work to find employment, and government should be involved in helping people to do so. But the data shows that sanctions are not the answer. We wish those who have found employment well, but the data shows that it is likely that for most, the benefit sanctions had little to nothing to do with them finding a job.