The recession will be a good time to reform welfare

If there was any doubt that welfare in New Zealand needed reforming, a recent picture told a thousand words. It was of a mother of a mongrel mob member, herself on the Invalid’s Benefit attempting to wrestle a group of police officers to the ground. Obviously this is not typical of many benefits recipients who are deserving of the support they receive. But it did affirm that now is the time for the government to stand strong and follow through with its election promises to reform welfare policy. The slowing economy may mean that people lose their jobs, but it is important that those on welfare do not get left behind.

It is a scandal that people have been left out of the gains of the recent era of economic growth in New Zealand. In December, when the labour market was still extremely tight, 8.6 percent of the working age population depended on the state for their primary source of income.

In a recent address to the Salvation Army social services conference, Minister of Social Development Paula Bennett stated that that ‘we know getting people work … means more to an individual, a family and a community than just an income. It instils self-respect, pride and a sense of achievement.’ Hopefully this belief of the new government will translate into meaningful policy.

The idea that dominates the welfare debate in New Zealand is that welfare recipients are victims of unjust forces beyond their comprehension and control. These people are regarded as unfortunate to have been laid off, become sick or incapacitated in some way that does not allow them to work. Little credence is given to suggestions that some welfare recipients may be capable of working and should be compelled to seek work at every possible opportunity.

In fact, such is said to be the victimhood of the poor defenceless welfare recipients, that imposing too many obligations on them is cruel. Initiatives such as workfare schemes, compulsory job training and time limiting benefits are said to be ‘stigmatising’ or ‘victimising the weakest in society.’ This seems counterintuitive – stigmatising someone is leaving them to languish on welfare rolls and denying their capacity to provide and to contribute to society on an equal basis as other New Zealanders. This approach does not recognize that people wish to be valued and that with the right incentives most are capable of getting a job and keeping it. It is our attitude that is to blame for leaving welfare recipients without opportunities, not their abilities or ‘disabilities’.

The victimhood discourse that dominates the social policy debate in New Zealand. Official unemployment numbers have dropped significantly over the past decade, true. However, this has been matched by a high growth or no movement in numbers of the so-called ‘hidden unemployed’ on sickness benefits and invalids benefits, the DPB and other miscellaneous payments. Indeed, at least 7.7 percent of the working age population are on one of these alternate benefits.

This victimhood idea has been rejected by much of the Western world, and yet New Zealand is lagging behind.

Advanced economies have been consistently bringing in work-first approaches to welfare provision. The methods used overseas now include time limiting of benefits, asking single parents to return to the workforce part-time once their youngest child is starts school, obligations to accept employment as long as you aren’t away from home for 12 hours. Workfare schemes are also part of obligations to keep up work habits, learn new skills, and be involved in projects that benefit the community. All this is happening even in the ‘universal welfare state’ Scandinavian countries.

Workfare policies reduced welfare rolls in Germany from 5 million to 3.5 million in two years. In the Scandinavian nations it has increased workforce participation among the working-aged population. In the United States, Bill Clinton’s reforms have had great success in returning many people to the labour market. These reforms are not about saving taxpayer funds, as the emphasis is on training and getting people into work.

Getting welfare reform policies right is crucial as New Zealand heads further into recession and what may be years of moribund growth. If large scale redundancies occur it is critical that people do not lose touch with the world of work. During the high levels of job losses that occurred in the 1980s and '90s this is precisely what happened. Large tracts of the population on welfare benefits were forgotten. Demoralised and unable to respond to demands of a changing workforce, many did not have the confidence or support required to return to the workforce for many years. A high ‘natural level’ of unemployment was assumed by many.

This experience is not unique to New Zealand – it happened all around the world as many struggled to come to grips with the new employment marketplace created by the structural reforms of the 1980s and 1990s. Intergenerational joblessness and many of the social problems that accompany it plague certain parts of Britain, and the government is just now launching these types of reforms. Workfare schemes, job training and time limiting of benefits are in. There is even an extreme proposal to compel solo parents back to work when their youngest child turns one. All with a mind to keep people in touch with the world of work

A ‘hand-up not a hand out’ is an overused saying, but that doesn’t make it any less valid in the case of welfare provision. Although it has only announced baby steps toward reform, the government has signalled that it is heading in the right direction. Adopting the right mixture of hassling and helping every person who is able to work into work should be a central ambition of the government’s welfare policy. It is a goal which should be pursued with even more vigour during a time of recession.

Luke Malpass is a Policy Analyst with The Centre for Independent Studies, his paper Ending No.8 Wire Welfare: Why New Zealand is Lagging Behind was release by CIS in April.