Scoop Election 08: edited by Gordon Campbell

On the Welfare Working Group’s latest round of welfare bashing

November 26th, 2010

welfareWell, in its Options report this week, at least the Cabinet-appointed Welfare Working Group was clear about whose interests it is there to serve: ‘The evidence on what is effective in helping beneficiaries into paid work is clear – effective interventions need to have a focus on employers and their needs.’ That would be fair enough if the focus on ‘employers and their needs’ actually meant a recognition that you can’t kick people off welfare without there being jobs for them to fill. But no, it doesn’t mean that at all. In fact, the WWG brushes that unfortunate reality aside in this bizarre paragraph :

Many submissions, while acknowledging the importance of paid work, expressed anxiety about the availability of jobs for people looking for paid work. On the other hand, many employers have told us of the difficulties they have had in recruiting people into entry-level jobs. While this problem was less pronounced during the recession, they indicate it is once again emerging.

So…. the overall lack of jobs in the current economy for the 338,000 people of working age on benefits is brushed aside with the non sequitur that some employers have been having problems in the past in finding people to fill some ‘entry-level’ jobs. Not recently mind you – but since the WWG believes that the recession and its impacts on employment are now allegedly over, this ‘problem’ about entry level jobs is now re-emerging. Really? The job market is picking up and people are turning down the jobs readily available to them? That’s a country I’d like to visit. But in the country that most New Zealanders inhabit, the job market hasn’t picked up, the recession’s impact on employment is ongoing, and – to take just a couple of examples during 2010 – public service restructuring in Wellington and local body restructuring in Auckland have been pushing people out of work, and onto an already crowded job market. Not that you’d know it from the WGG report.

The WWG has a core problem in selling the notion of a welfare system in crisis, and a nation lacking the motivation to work. Reality check: when work was available in the 2000s and job searches were being case managed, unemployment sank to record lows with fewer than 20,000 on the dole. Conclusion: when jobs are there, people work: and when they aren’t, they can’t. It’s not as if a motivational crisis has suddenly engulfed the country in the last two years, when none existed before the recession.

Not that the WWG seems interested in an honest evaluation of the statistics on employment anyway, and the academics on this panel should be ashamed at putting their names to the distortions used to support the report’s ideological bias. The panel is happy for instance, to trumpet a headline rate of 338,000 people of working age on benefits. Over at The Standard, there is an excellent unpicking of the ingredients of that figure: 85,000 have severe mental or physical disabilities. 58,000 have been documented by medical professinals as sick, 112,000 are raising children alone, and 65,000 are actively looking for work. As The Standard concludes :

In fact, when there were jobs for nearly everyone there were just 1,700 long-term unemployed who had been on the dole for over 4 years. If there are any bludgers they are a subset of those 1,700. Hardly worth turning the lives of 338,000 people and their families upside down over.

Currently, the Standard adds, even the harsh abatement rates for the income of those on benefits do not appear to sap the motivation of a large segment of beneficiaries from taking up part time work, when and where it is available. Nor is the cost of welfare prvision sopping up an intolerable share of the nation’s resources:

And let’s not forget that our society manages to support, via the benefit system, 12% of the working age population and their families by expending less than $5 billion on those benefits. That’s less than the income of the wealthiest 13,000 New Zealanders.

welfareSo…. we don’t have a welfare crisis. Nor do we have a motivational crisis revolving around our readiness to work. We therefore don’t need to stigmatise people who are already going through a hard time, though the WWG seems hellbent on doing so :‘[Reform] might involve delivering strong public messages about the use of the benefit system,’ Yep, branding the vulnerable as bludgers always helps. In reality, what we have is a job-creation crisis in the wake of a global recession, and the responsibility for dealing with that crisis rests with central government and, to a lesser extent, with employers and investors. They alone have the tools to bring about positive change in work creation. No amount of positive attitude by a solo mother is going to create a job in her local supermarket, when it is currently laying off staff. Why is this reality so hard for the Welfare Working Group to grasp – and why are they so willing to punish women bringing up children on their own?

One could go on, and pick apart the WWG’s casual denigration of the parenting work being done by sole parents. Elsewhere, WWG chair Paula Rebstock has expressed puzzlement at the relatively low ratio of sole parents in New Zealand in paid employment compared to other countries, as if this is evidence of some lack of national moral fibre. (Again, no consideration as to (a) the provision of childcare in those countries and (b) the social costs of enforced work requirements, in countries such as the US.) In line with its generally punitive approach, the WWG raises the prospect of term limits on welfare as a salutary motivational tool to get people into work, Again this is being offered without consideration of the consequences for children in families whose means of support would be terminated.

The WWG once again raises Rebstock’s pet project of unemployment insurance, along the lines offered in Canada. I’ve dealt with some of the hidden downsides of that Canadian system here.

Here’s an update of how badly Massachusetts is faring with a similar unemployment insurance scheme:

Businesses are facing rate increases of up to 40 percent to replenish the unemployment insurance fund, which is expected to end 2010 with a significant deficit…. Massachusetts’ average unemployment insurance of $646 per employee is scheduled to jump to $904 in January, adding hundreds of millions of dollars in additional costs to Bay State companies.“If it’s not a job killer, then it would at least stifle growth,’’ said Paul Guzzi, the president of the Boston Chamber of Commerce.

[Massachusetts Govenor Deval] Patrick has not indicated how he would deal with the problem. Earlier this year he signed legislation that froze previously scheduled rate increases, and a spokeswoman yesterday said another freeze is under consideration.

“The governor will focus on the need to maintain fund solvency, keep business costs down, and provide benefits to people who need them when weighing his options relative to another freeze,’’ said the spokeswoman, Kimberly Haberlin. The administration did not say what it would do if the unemployment fund runs a deficit.

Clearly then, during a recession, unemployment insurance imposes unsustainable costs on employers and on government. Just as the welfare system does. No magic bullet there. No ‘welfare crisis’ either. Just hard times, which we should be dealing with by other means than stigmatising the most vulnerable people in our communities. In a year’s time, will the government be willing to tell the Pike River families to get off their backsides and get off welfare?


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