The Welfare Working Group and the work test police

One of the cornerstones of the recommendations of the Welfare Working Group’s report (PDF) is sanctions against beneficiaries who “fail” work tests. Their thesis is that work will set you free from “welfare dependency” and if you fail to actively seek work your benefit should be cut for your own good!

The concept of “failing” work tests in a recession is a great red herring in the context of a tight labour market. However, the Welfare Working Group doesn’t discuss the reality of the current economic conditions for people looking for work, let alone admit to the economic benefits to employers of maintaining high levels of structural unemployment.

Their rhetoric is insidious because of course its bloody hard to live on benefits, and most people want a job with a living wage and the respect of a community that defines human worth through paid work.

But who decides that a beneficiary (or a “Jobseeker”, to use the Welfare Working Group’s terminology) has failed a work test? I presume it’s the Case Manager, whom they suggest should be called a “co-ordinator”, from the new “Employment and Support New Zealand” bureaucracy the Group proposes be created.

Whoever it is will have the power to cut peoples benefit by 25% after the first “failure”, 50% after the second and 100% after the third. Work testing will no doubt require people to demonstrate they have attended endless seminars on job readiness when jobs are scarce, and show that they have applied for as many jobs as possible, whether suitable for their skill set or not,  and irrespective of their chances of actually obtaining a job. And the Welfare Working Group seems to think this will make the jobs magically appear.

An unrelenting round of rejections for scarce jobs will place beneficiaries, including those whose job search efforts and job choices are hampered by childcare commitments or mental or physical impairments, at risk of “failing” a work test.  Becoming too disheartened to try will definitely result in severe sanctions including, eventually, the 100% benefit reduction proposed which Paula Bennett refuses to rule out.  The implications for beneficiaries’ children are unthinkable.

The herding of the majority of beneficiaries into the “work test” corral smacks of scapegoating and dog whistles to the human dislike of anyone getting a “free ride”. This culture of punishment beneath the “wraparound support” promised by the reformists is not new for people who have spent time on a benefit.

But this is a new era and those who work at home as sole parents or who are discriminated against by a disabling world will have to beware. The “failure” police are about to be unleashed.

43 Comments Posted

  1. I think the process needs to change from kicking people off welfare to training them up in desired job-related skills and finally matching them to a job. Of course this would require the cooperation of job seeker agencies at the least.

  2. kerry says “Still less than 3% start as teenagers …”

    Wrong. 3% are CURRENTLY teenagers.

    As they are far more likely to still be on the DPB a decade later, many of those on the DPB in their 20s and 30s started as teeneagers.

    Kerry says “Total benefit fraud .1% and almost 1/10th by one person alone.”

    Thats a ten times increase just since last night (according to your figures then).

    So with around $50 million spent in benefits every day, 0.1% fraud is “only” $50,000 per day.

    I’m not trying to claim it’s widespread, but neither is it insignificant.

    Just that fraud like this need to be investigated.

    And if they are caught – the fraudsters should be blamed – not the people catching them, like frog was doing.

  3. Even the WWG says that improving work capability comes before extending work testing, so government has to focus on this and being able to deliver on this first.

    In saying that, with the increasing average age of employees in virtually every sector, there will probably need to be a massive training push anyway, and that is where the unemployed could come in (although I do see the dangers in training for the sake of training).

  4. It’s only relevant if/when there is a shortage of labour.

    There is of course also the report of the Child Commissioner referring to offering support to non working parents with partners equivalent support to the child care subsidy available to them.

  5. What if any real economic benefits are there to forcing parents into work, just to substitute the parenting they provide for dollars a day on the DPB with State paid childcare at $15 hour.

    Another reference. See the DOL on barriers to mothers entering the workforce.

  6. Work testing is irrelevant while there are people with skills to the job unemployed and looking for work.

    It’s a sideshow, only relevant once we have full employment. It’s a waste of resources in the short-term term – what is appropriate is developing services to improve work capability.

    Even the WWG says that improving work capability comes before extending work testing, so government has to focus on this and being able to deliver on this first. But this costs money and the government has to cut back on spending – so if therefore cannot afford to implement the expansion of work testing that the WWG advocates.

  7. toad, one of the real successes of our corporate capitalist culture is that we’ve somehow come to identify with billionaires instead of our own neighbours. A point made well by Bill Maher http://www.youtube.com/watch?v=g0EVLrIut5E. This is so complete that we’re happy to let those perpetrating the biggest fraud off (can’t be down on the entrepreneurs, you know), while taking part in a witch hunt over the comparatively tiny amounts of benefit fraud.

  8. “And I think you’ll find your 3% figure for the dpb is for 18 and 19 year olds – not those right up to 25”.

    Not from the stats I am looking at. One lot says 3.1% under 25 and another 2.9% under 20 for 2008 so I won’t argue about that. Does not change my point anyway. It is a small number.

    Still less than 3% start as teenagers and some of these were in stable relationships which broke up.
    The hordes of solo mothers having kids is a RW myth.

    Even the hordes of DPB recipients is crap. 113000 out of over 4 Million people.

    If Photo was really worried about them he would be advocating giving them better options than the dole, crime, the DPB or subsidising McDonalds.

    Total benefit fraud .1% and almost 1/10th by one person alone.

    Are you aware of the rate of tax fraud, whitecollar fraud and tax dodges which should be illegal.

  9. @photonz1 12:46 AM

    Gordon Campbell debunks the benefit fraud scaremongering pretty well photonz1:

    The evidence for the existence of widespread benefit fraud is paltry to non-existent – despite the fact that a special fraud intelligence unit was set up in the Social Welfare department in 2007 to detect it. Last year, the department checked 29 million records, and found the benefit fraud rate (as a proportion of the total benefits paid) was a miniscule 0.10 per cent. A declining number of prosecutions – from 937 in 2009 to 789 last year – resulted. …

    Moreover, other forms of unacceptable behaviour leave benefit fraud far behind in the dust without attracting the same negative stereotypes. The major foreign owned banks for instance finally agreed in late 2009 – and only after being pursued at great expense through the courts by the IRD – to cough up $2.2 billion of what they owed in unpaid taxes. Meaning : the settlement figure this case alone was about 140 times greater than the total amount lost in benefit fraud last year…

  10. Kerry says “Total fraud was less than .01% and most was by staff.”

    The link you give shows .01% defraud level ($3.4 million) is by JUST ONE PERSON – it’s not the total.

    And I think you’ll find your 3% figure for the dpb is for 18 and 19 year olds – not those right up to 25.

    And they are significantly more likely to
    a/ still be on the dpb a decade later, and
    b/ have more children while they are on the dpb.

    So there are a lot of people on the dpb in their 20s and 30s and 40s who started on the dpb as teenagers.

    Those who come on it later with older children (i.e. because of a marrage split) are on the dpb for a much shorter time – on average only half the number of years.

    And they are a massive 7 to 15 times LESS likely to have another baby while on the benefit.

    So there are two distinct groups – those who need temporary assistance, and get work as soon as they can, and those who CHOOSE the dpb as a lifestyle, often from a young age.

  11. Even in the middle of the recent bubble, where there were shortages of workers across the country, we still had 3-4% unemployment.

    The government of the day called that “essentially zero unemployment”.

  12. And how many unemployed tradespeople were there then? My pick would be none, apart from a few in particular locations that didn’t have skill shortages but from which their personal circumstances precluded them from moving.

    The trades skill shortages were caused by the failure in the 1990s to train sufficient apprentices and the fact that tradespeople could (and still can) get far better money in Australia.

    The overall point is that there was a shortage of workers in some fields, so there was no excuse for an unemployed person to not upskill themselves in a field where there were shortages. Even now, there is no excuse for an unemployed person to not upskill themselves given the looming shortages in many fields.

  13. Three year benefit payouts was $36 billion in benefits to more than 800,000 people over the three year period of offending.
    Total fraud was less than .01% and most was by staff.

    http://www.msd.govt.nz/about-msd-and-our-work/newsroom/media-releases/2007/pr-2007-10-12-d.html
    The benefit fraud team claim a 95% success rate.

    From your figures 50 million a year in fraud over total ACC payments.

    http://www.acc.co.nz/about-acc/media-centre/frequently-asked-questions/ABA00105#P4_96

    Over 2.42 billion in claim costs for 2007.

    Fraud was less than 2%.

    The huge number of benefit fraudsters is a myth.

    As is the teenagers breeding for the DPB. Less than 3% of DPB recipients under 25. Most are older women whose relationship has broken up. Where is the husbands contribution?

    How many tax payers used trusts, residency and other fiddles to cut their tax bill?

    A lot more than 50 million dollars worth a year.

  14. frog says “Prof. Des Gorman, Occupational Medicine Specialist, who has a reputation for providing medical reports that ACC use to boot injured people off weekly compensation and/or deny them cover in the first instance.”

    The first few case I found on him, he did the opposite – ordered more compensation and help fromm ACC.

    However with the ACC fraud unit investigating 5000 cases over five years and finding $150 million dollars of fraud, they need some doctors who will stand up to fraudsters – see

    http://www.scoop.co.nz/stories/GE0807/S00075.htm

  15. Here are the others, Phil:

    – Paula Rebstock, Chair – former Chair of the Commerce Commission.

    – Prof. Des Gorman, Occupational Medicine Specialist, who has a reputation for providing medical reports that ACC use to boot injured people off weekly compensation and/or deny them cover in the first instance.

    – Catherine Isaac, former President of the ACT Party. Need I say anything more!

    – Prof. Kathryn McPherson

    – Associate Prof. Ann Dupuis

    I don’t know much about the last two. Maybe the token academics to try to give it some credibility.

  16. thanks for that frog…

    how many people are on the task-force..?

    and what are the bio’s for them..?

    if you know..?

    i’ll do my little bit…

    and do a story on it tomorrow…

    that’d be like having pig farmers on animal welfare boards..

    oh..!..that’s right..!

    phil(whoar.co.nz)

  17. Okay, here you go Phil:

    Sharon Wilson-Davis

    Ms Sharon Wilson–Davis is currently CEO of Tamaki Ki Raro Trust. …

    The Trust has developed into an accredited provider of employment, training and social services.

    Adrian Roberts

    Mr Adrian Roberts is the founder and Managing Director of In-Work New Zealand, a provider of employment services for people on benefit who have a repeated history of unemployment. In-Work New Zealand works with all clients in receipt of Unemployment Benefit as well as specialising in supporting Sole Parent clients into employment.

    Enid Ratahi Pryor (QSO)

    Ms Enid Ratahi Pryor, is Chief Executive of Te Tohu O Te Ora O Ngati Awa, a Maori social and health service provider based in Whakatane.

    Ms Ratahi Pryor provides practical expertise on the social and health barriers that exist for beneficiaries in returning to the workforce.

  18. “..That is hardly surprising, given that several of the members of the Welfare Working Group have pecuniary interests in New Zealand’s job placement agencies,..”

    you know/can prove that frog…?

    where are the screaming headlines about a conflict of interest as obvious as a wart on yr nose..?

    where are the questions in parliament..?

    why are you/the green mp’s not screaming from the rooftops about this..?

    phil(whoar.co.nz)

  19. Thanks for you comment (6:14 PM NZDT) Chad.

    It is great to have some international perspective on it.

    What you say happened in Victoria is exactly what our Government-appointed Welfare Working Group is proposing here in New Zealand – corporate welfare for the job placement agencies.

    That is hardly surprising, given that several of the members of the Welfare Working Group have pecuniary interests in New Zealand’s job placement agencies, and therefore a blatant conflict of interest.

  20. I’ll tell you what will happen.

    A series of private companies will be engaged to ‘get people working’. These placement companies will be paid for each contact they arrange between jobseeker and employer. So for them won’t matter if poor old jobseeker is right for the job or even qualified, they’ll still get paid. Poor old jobseeker will exhaust themselves running from interview to interview, often arranged at the last minute, (don’t be late or no dole for you sonny!), and it won’t be in the placement companies’ interests for the jobseeker to actually find a job. If the poor bugger does land a job, it will be a temp job. This suits both the employer, (as the dosh will come out of a seperate ledger account not wages), and the placement company who will receive a bonus for actually getting someone a job. When the temp position finishes the placement company will have the jobseeker back to make money from by sending her off to another round of pointless interviews.

    Government gets to point to the stats and the churn makes it look like they’re actually achieving something.

    Huzzah! as they say in the boardrooms.

    Watched it happen in Victoria.

  21. Photonz is there a shortage of workers for this work at the moment? Care to show some evidence of this, if this is your claim?

    We were discussing the time a few years ago when it was decided to allow migrant labour to come here to do temporary harvest work as this was a more convenient arrangement for employers – not enough local labour, nor a permanent workforce with expertise available each year.

  22. wow spc – that’s about the weakest reason you’ve come up with so far for not working – it’s not harvest work.

    There’s all sort of work available in horticulture – picking, sorting, packing, prunning, driving, fencing, planting, spraying, irrigation…….that employers can’t find enough New Zealanders to do.

  23. Well I thought the issue was those temporary jobs that could not be filled locally, that required migrant labour – the permanent jobs are clearly not harvest only work OK. There would be extra workers taken on for harvest work.

  24. spc asks “What harvest work is permanent?”

    Vineyards.

    From the Central Otago website
    “Work opportunities on Central Otago orchards and vineyards are available throughout the year”

  25. What harvest work is permanent? I don’t know of any of the migrant labour being allowed 52 week visas to work here, just temporary periods.

  26. SPC asks “Can’t they find permanent work?”

    For some it IS permanent.

    For others studying, there’s work any time they want it, for however long they want it, as many days a week as they want.

  27. @john-ston 3:57 PM

    Virtually all the trades had shortages prior to the recession; it was getting to the point that wages were going through the roof and so was the amount you paid to get a plumber to check your toilet.

    And how many unemployed tradespeople were there then? My pick would be none, apart from a few in particular locations that didn’t have skill shortages but from which their personal circumstances precluded them from moving.

    The trades skill shortages were caused by the failure in the 1990s to train sufficient apprentices and the fact that tradespeople could (and still can) get far better money in Australia.

  28. SPS – you always come up with a reason or five not to work.

    I have family who work in the fields you insinuate are little more than slave labour with poor accommodation, and it’s nothing like you describe.

  29. There will always be shortages of some trades skills at the peak of a housing bubble, especially one coinciding with a government investing in infrastrucuture (let alone workers moving to yet higher wage rates in Oz).

    And remember the OCR was raised to counter the inflationary impact of all this and that took the economy into recession – this is why some see 3-4% unemployment as full employment (transition between jobs with lowish longer term unemployment) – the total on the dole was 19,000 at its lowest point.

  30. What shortage of workers existed when we had 3-4% unemployment – short term harvest labouring jobs in the provinces?

    Virtually all the trades had shortages prior to the recession; it was getting to the point that wages were going through the roof and so was the amount you paid to get a plumber to check your toilet.

    Even in the middle of the recent bubble, where there were shortages of workers across the country, we still had 3-4% unemployment.

    Nearly all that unemployment was short term; the number of unemployed for six months or more was either close to or under 10,000 at one point.

  31. What shortage of workers existed when we had 3-4% unemployment – short term harvest labouring jobs in the provinces? Where some of the locals were unable to do labouring work and there were not enough of them anyway. The employers preferred people who would develop experience and be available in following seasons in sufficient numbers – they now have a scheme that provides the labour for that and would not want it amy other way.

    There is no permanent accomodation for out of towners to use (besides they have residences elsewhere to pay for), the tourism crowd casuals use that provided for them and the migrant workers are given temporary accomodation that few locals would accept.

  32. Work testing is irrelevant while there are people with skills to the job unemployed and looking for work. It’s a sideshow, only relevant once we have full employment. It’s a waste of resources in the short-term term – what is appropriate is developing services to improve work capability.

  33. toad says “That’s just bullshit spin from the WWG”

    And you’ve read the research where this came from?

    Clue – it’s not the WWG.

    Typical – if you don’t agree with something, don’t research it – just abuse the messenger.

    All benefit numbers were droping strongly in 2003.

    It comes back to the simple fact – if you’re actively looking for work you’re far more likley to find it than if you sit at home and spend your time thinking of reasons why you shouldn’t have to.

  34. @photonz1 11:01 AM

    That’s just bullshit spin from the WWG. What they ignore is that when the work test for DPB was abolished in early 2003 the numbers in receipt of that benefit continued to drop – at an even faster rate than when the work test was in force – right through to the 2008 recession.

  35. toad says “The work-testing of the DPB from the mid-1990s didn’t make stuff all difference.”

    “Analysis of the 1998 Domestic Purposes Benefit reforms reported in the Options Paper found that a part-time work test increased employment rates by around 8 per cent.” from the WWG report.

    Similarly, when work testing for over 55-60 year olds was removed, their proportion of unemployed increased.

    Even in the middle of the recent bubble, where there were shortages of workers across the country, we still had 3-4% unemployment.

  36. @photonz1 10:40 AM

    In the past work testing has led to increase in employment in groups it was applied to, then an increase in unemployment to groups when it was removed. It’s pretty simple really.

    The work-testing of the DPB from the mid-1990s didn’t make stuff all difference.

    If you look harder for work, you are more likely to get it than if sit at home and spend your time coming up with reasons why you shouldn’t.

    Agreed, but unless there are more jobs created, if you get one it just means someone else misses out. And the WWG seems clueless as to where the jobs will come from for all the additional people who will be forced to look harder for one.

  37. toad says “Have you even read the report? Chapter 3, in particular. The work test will apply to all beneficiaries streamed into the “Jobseeker stream”. This will include most of those who currently qualify for DPB, many who currently qualfiy for sickness benefit, and even some who currently qualify for invalid’s benefit – ie it will apply to the majority of beneficiaries.”

    Yes – curently only 37% of beneficiaries are expected to look for work. I know poeple who are in a wheelchair and amputees who have good jobs, and people on sickness and invalids benefits who are far LESS disabled who don’t even look for work.

    The WWG is right. The focus need to change from 101 excuses not to work, to what abilities people do have.

    In the past work testing has led to increase in employment in groups it was applied to, then an increase in unemployment to groups when it was removed.

    It’s pretty simple really.

    If you look harder for work, you are more likely to get it than if sit at home and spend your time coming up with reasons why you shouldn’t.

  38. Their thesis is that work will set you free from “welfare dependency”

    In German, Arbeit Macht Frei

    Where did we see that before?

    Nuff Said

    [frog: Indeed. Let’s not go down that path.]

  39. Before the last Budget Jonny and Bill said their fiscal aim was to decrease consumption. (a destructive notion in it’s own right)
    What better way to do this than kill the poor?
    Flatulent Medical services – no Social Security…
    Get a job that isn’t there or else!!!
    Adolph would be proud!

  40. @photonz1 9:51 AM

    Have you even read the report? Chapter 3, in particular. The work test will apply to all beneficiaries streamed into the “Jobseeker stream”. This will include most of those who currently qualify for DPB, many who currently qualfiy for sickness benefit, and even some who currently qualify for invalid’s benefit – ie it will apply to the majority of beneficiaries.

  41. The work teat is for people who come up with every excuse they can think of for not working.

    If people actually want to work, and try to get it (like you say they do) then this is a non-issue.

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