Minister of Social Development and Employment, Louise Upston.
Photo: RNZ / Samuel Rillstone

The Coalition government has been warned that jobless work programs do not increase the chances of people leaving welfare and working, documents reveal.

The Cabinet has agreed to introduce a set of new obligations and sanctionsincluding community work experience (CWE), for those seeking employment next year.

Official advice, obtained by the Greens under the Official Information Act, shows that the Ministry of Social Development warned against CWE in May.

“As described, CWE is essentially a work unemployment program if it were mandatory,” the department report said.

“Most evidence shows that work-based unemployment benefit programs do not increase the probability that participants leave the benefit and enter employment.

“Instead, participants remain receiving benefits longer than they otherwise would (known as a lock-in effect). Investing in other employment supports may be more cost-effective.”

The ministry said evidence showed CWE worked best for people with limited work experience or preparation and was already offered in some regions on a voluntary basis for clients who met eligibility criteria.

“Staff also exercise discretion as to which clients they recommend for these supports, especially in cases where there is a funding limit.

“Some programs also have low uptake and/or limited funding, and some regions choose not to offer these programs and there is little awareness among frontline staff.”

Job seekers will face more penalties starting next year.
Photo: RNZ

The ministry said it could take steps to “increase the likelihood of effectiveness” by using discretion and eligibility criteria for clients, restricting the duration and times of placement, and requiring evidence of job search during participation.

“As the evidence indicates, the success of CWE depends on its discretionary application by those who would benefit most from it.”

The ministry also warned that it would be necessary to create a new program, or significantly change an existing one, to implement mandatory CWE.

“This would take time and resources to analyze operationalization considerations and risks, which could divert attention from other aspects of the traffic light system.

“As a result, you may want to prioritize other CWE results.”

Green Party social development and employment spokesman Ricardo Menéndez March said the government was ignoring official advice and evidence.

“(Minister for Social Development and Employment) Louise Upston’s complete disregard for the evidence only shows that she is not really interested in improving employment outcomes and, rather, all she wants to do is continue to hit beneficiaries.” with repeated policies of the 90s that did not support people for employment or to meet their aspirations.”

He said the coalition should keep the community work experience as a model of voluntary participation, rather than a penalty, to help people get off benefits and into work.

“Louise has talked a lot about stopping people on benefits for a long time and yet her own advice shows that dole-work schemes being made compulsory could do exactly the opposite of what she is trying to achieve.” Menendez March said.

Ricardo Menendez March.
Photo: RNZ / Samuel Rillstone

Responding to RNZ, Upston said the government was focused on reducing welfare dependency which had worsened since National was last in office.

“Community Work Experience will be another tool at MSD’s disposal to keep job seekers on the path to employment when they have not met their obligations to prepare for or find work.

“We will design our own form of Community Work Experience that works for our welfare system. The experience will develop the skills and confidence job seekers need to help them gain employment in the future.”

Upston said it was possible to mitigate the negative effects of CWE so people could gain connections and experience in the community while also focusing on seeking paid work.

“As officials have noted, there are ways to mitigate the ‘lock-in effect’ associated with these types of interventions by only applying it to beneficiaries when it makes sense given their circumstances and by applying it for a relatively short duration of four weeks, which will both be characteristic of this sanction.

“Those who are required to perform community work under our system will also be required to continue seeking work while carrying out the sanction. The hours of community work they will be required to perform will be set at a level that allows this.”

The Ministry of Social Development is expected to implement new sanctions by July 2025 and the legislation will be presented to the House before the end of the year.

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