Report

Going off Welfare in NZ – The highest rates of exiting benefits were men, young people, Asian and Pacific peoples, and people who had less history

Taylor Fry were commissioned by Superu to look at where people go when they move off benefit in New Zealand. We used the linked administrative datasets available on Statistics New Zealand’s Integrated Data Infrastructure (IDI) to examine the characteristics of, and outcomes for people who move off a benefit.

We looked at people who moved off a bene t from the 1 July 2010 to the 30 June 2011

Over the study period, approximately 160,000 people moved off a benefit. We are most interested in those who had been receiving benefits for some time. Therefore we selected the 140,000 people who had been in receipt of a bene t for at least three months. We chose July 2010 to June 2011 inclusive as the study period because this was before the implementation of the Government’s substantial 2012/13 welfare reforms, which means these results could provide a useful baseline for examining post-reform behaviour.

Going to employment was the most common reason for people moving off benefit
Our analysis found 38% of those who transitioned off bene t left to start employment. Eleven percent left to commence an education course (part – or full-time tertiary, or training) and 15% in total left due to a change in life circumstances – they moved overseas (6%), retired (5%), entered detention (3%) or died (2%). We could not identify from the IDI a clear reason for exit for the remainder (approximately a third of people who left bene t). When we cross-referenced with Ministry of Social Development (MSD) data, we found that about a third of this group were no longer eligible for benefits (e.g. because of a change in family circumstances or they failed to meet their obligations), and another third had reportedly left to take up employment or go overseas, but there was no record of this activity on the IDI.

Rates of leaving benefit and reason for exit differed by benefit type

We found that rates of leaving benefit and reason for exit differed by benefit type. Those receiving (what is now known as) ‘Jobseeker Support – Work Ready’ had the highest rate of people exiting (93% per annum), followed by those receiving Emergency Benefit (72%), and ‘Jobseeker Support – Health Condition, Injury or Disability’ (43%). Those receiving ‘Supported Living Payment – Health Condition, Injury or Disability’ were the least likely to exit bene ts, with only 10% per annum of these bene ciaries transitioning off benefits.

Those receiving Jobseeker Support – Work Ready (JSWR) were most likely to transition into employment (41% of people on a JSWR benefit transitioned to employment), followed by those receiving Emergency Benefit (24%), Jobseeker Support – Health Condition, Injury or Disability (14%) and Sole Parent Support (8%).
Those receiving Jobseeker Support – Health Condition, Injury or Disability (JHD) had a comparatively high transition rate into detention (3%). Further investigation shows that approximately 25% of the transitions to detention from JHD were by those whose incapacity type was coded by MSD as ‘substance abuse’, and that the transition rate for these people was around 10%. Around 40% of the transitions to detention from JHD had an incapacity type indicating a mental health issue.

The people with the highest rates of exiting benefits were men, young people, Asian and Pacific peoples, and people who had less history with the benefit system
Overall, the highest rates of exit from benefits were for males (with a 54% annual exit rate), younger people (ages 16–29: 65%), Asian and Paci c peoples (47%), and people who had less history with the bene ts system (three to six months in the current benefit spell at the time of exit: 108%). By comparison, the overall population exit rate was 42%.

The highest transition rates into employment were for younger people, males, people of European descent, people who had less history with the benefits system, and people who had signi cant recent work experience prior to transition. The highest transition rates into education were for younger people, males, Māori, migrants, and people from the Bay of Plenty, East Coast, Waikato and Wellington regions.

The highest transition rates into other activities – i.e. a robust data-sourced reason could not be found for their transition – were for younger people, males, Pacific peoples, and people from the Bay of Plenty, Auckland and Wellington regions.
The highest transition rates into detention were for younger people (aged between
18 and 39 years), males, Māori, people who have had greater recent contact with the detention system, and people who have had less recent employment. Seventy percent of the transitions into detention were for people who already had spells in detention over the past five years.

After 24 months most people were in substantial employment, back on bene ts, or in an unknown activity with very low income

Twenty-four months after moving off benefit, most people were in substantial employment (30%), back on bene ts (25%) or in an unknown activity with monthly employment earnings/income of less than $100 (18%).

Those most likely to be employed after 24 months were those whose reason for exit was to start employment, followed by those who left to attend education. Those who left to enter detention were least likely to be employed 24 months after transitioning from bene t, followed by those for whom a clear exit reason could not be identi ed from the data and who had no (or very low) employment income immediately afterwards.

Those most likely to return to benefit after 24 months were those whose reason for exit was to enter detention, followed by those who commenced a full-time or part- time tertiary course, and those for whom a clear exit reason could not be identi ed from the data and who had no (or very low) employment income immediately afterwards. Those who left to go overseas were the least likely to have returned to bene t after 24 months, followed by those who left to start employment, and those who enrolled in a training course.

Proportions in substantial employment or back on bene ts stabilise after 12 months
Approximately 39% of people who transitioned off bene t were in substantial employment during their rst month of no bene t receipt. This proportion gradually declined to around 30% after 12 months and then remained stable. Most people who did not remain employed returned to bene ts. Around 25% of transitions off bene ts returned to bene ts after 12 months – that proportion stayed almost constant through to 24 months.

Education outcomes are one area for more analysis

Of those who leave bene ts to take up tertiary education, 34% return to bene ts at
24 months. This is the highest proportion by reason for exit except for Detention.
Only 24% are in substantial employment at 24 months. However, these gures do
not take account of the characteristics of those bene ciaries who leave to take up tertiary education, whether they completed the course or the level of education achievement. For instance, they are likely to be younger than average and may have other characteristics that put them at an increased risk of poor outcomes. So we cannot conclude that leaving bene ts to take up education is itself a risk factor for poor outcomes. Further investigation about the effectiveness of different types of education programmes, which assist people into employment, is needed to understand what may be driving this result.

Benefit, employment and Child, Youth and Family service histories, as well as age, were risk factors for returning to benefit

Regression analysis revealed that durations of current and any previous benefit spells were strong risk factors for returning to benefit, with longer durations implying a greater risk of returning to benefits.

For those that left to take up employment, the risk of returning to a benefit was reduced for people that had been employed in the 24 months prior to transition and had a relatively high employment income immediately after moving off a bene t. This suggests that bene ciaries’ familiarity with being in the workforce and the quality of the post-transition employment are important in achieving sustained post- exit employment.

Youth, those close to retirement age (65 years) and those with previous interactions with Child, Youth and Family services were at a greater risk of being back on bene ts. Of those who left bene ts for employment, 15% had previous interactions with CYF (21% for those who leave for Other reasons).

Off-benefit transitions: Where do people go?

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