Welfare to work?
Just where do people go when they move off a benefit?
It’s a serious question that demands an answer. Why? Because while the Government often pats itself on the back for reducing the number of working-age people on a main benefit, this alone doesn’t tell us whether the people that moved off are any better off in the long-run.
The government is making solid progress towards its ambitious 2018 goal of reducing “working age client numbers by 25% to 220,000 from 295,000 as at June 2014.” Moving people off benefits is part of the Government’s focus on “reducing long-term welfare dependence,”which is, according the Better Public Services website, “about supporting people to better their lives, managing the Government’s future financial liability and supporting our economy by ensuring we have a skilled and productive workforce.”
But what if those who move off the benefit aren’t supported towards better lives? Are the people starring in the Government’s good news story actually living happily ever after?
We haven’t had the technology to answer this question, before now at least. The Minister for Social Development, Anne Tolley, asked Superu to get on with the job. In conjunction with actuarial consultant Taylor Fry, the Government fired up its new linked-up data infrastructure (called IDI) to track 140,000 people who moved off benefits between 1st July 2010 to 30th June 2011, we now have an important piece of the puzzle.
The data showed that 75 percent of the study population were not on a benefit two years later—in other words, 25 percent had returned to a benefit. As a headline figure, this seems promising. But only 33 percent were in employment two years later, alongside the 16 percent that had a change in life circumstance (retired, moved overseas etc.) and the 8 percent in education or training.
This left a troubling 18 percent whose outcomes after two years were unknown. The report says that most of this group had low or non-existent income, potentially supported by a partner, ineligible for benefits or moved overseas. Thankfully, MSD intends to investigate this group further to prevent them from slipping through the cracks of the social security system.
People who left to start a job were also less likely to slip back onto a benefit than those who left for education. Of the 38 percent of people who left a benefit because they’d scored a job, roughly a third of them were back on a benefit two years later. Comparatively, of the 11 percent of people who left a benefit to pursue tertiary study, two-thirds were back on a benefit after two years.
Interestingly, the report claims that “the most important factors in moving into employment long term are the person’s familiarity with being in the workforce and the quality of their employment,” underscoring how important it is to support people into sustainable work as soon as possible and if they lose a job, to keep them in contact with the workforce. Most of those who did return to a benefit did so within the first year, suggesting that this is a turbulent danger zone where support needs to be greatest.
While these results are certainly fascinating, they only tell part of the story. In a promising gesture, Minister Tolley has commissioned future research that will provide similar data for the post-2013 welfare reform period. Using the current research as a baseline, we will hopefully have a better idea of just how effective the controversial reforms were. I applaud the Government for asking the hard, and potentially politically-damaging, questions—for we will be better-armed with the evidence to respond well to the challenge of poverty.
So, overall, many remain in long-term work—but, perhaps, not as many as one might guess. While offering some answers, this research raises more questions about how we can increase the strike rate from “welfare to work.” What we do know, however, is that just shifting people off welfare isn’t good enough. Reducing long-term benefit dependence is part of the solution, but it isn’t the be-all-and-end-all of social development. If this is indeed about better lives, maybe the Government needs a new target.