Saturday, March 25, 2023

Lindsay Mitchell: The disconnect between unemployment and welfare dependency

The disconnect between the unemployment rate (3.4% or 99,000) and the number of people on a benefit (11.3% or 353,904) has many scratching their heads. I get asked about it a lot. There are some differences in concepts, parameters and other nuances but keeping it simple...

At December 2022 the Jobseeker Work Ready (JS-WR) total was 98,766. Pretty well on the mark.

But this leaves a quarter of a million working-age people over and above the officially unemployed count and receiving an income from the state.

They are either too sick to work or have child-minding responsibilities.

Click graph to read

Now to put that into long-term perspective consider the following graph:

Click graph to read

In 2010, when the effect of the GFC was evident, just over 12% were on a benefit. Now it's 11.3% but the proportion made up by the underlying layers remains roughly the same (albeit with different labels.)

Most working-age welfare benefits were introduced in the late 1930s and for the next thirty years recipients comprised just 2 percent of the population and were overwhelmingly widows and invalids. The explosion in welfare began from the mid-seventies.

Getting to my point, while unemployment fluctuates the underlying core of sick people or sole parents is entrenched. The economy has to carry this population whether times are good or bad, whether there are jobs or not.

WHY this situation has developed - or been allowed to develop - could fill a thesis. But many of you will have lived through the entire period and can probably share some valuable observations. Feel free.

Lindsay Mitchell is a welfare commentator who blogs HERE.


boudicca said...

Perhaps the rest are sick and / or unemployable Lindsay

Robert Arthur said...

With the much promoted decolonisation attitude filtering to more and more maori, the quaint colonist concept of work is seen as more and more alien to culture. And with maori running their own health, and practitioners invariably Labour Maori or Te Pati supporters, instead of encouraging birth control to suit means, there is every incentive to encourge more births, with or without stable employed partner, or any earning abilities. So the DPB will continue ever upward. The DPB is now too cosy. A nice often near new heated and cooled dwelling maintained so nothing whatever to do is a strong lure. And in event of disaster, as the recent floods, huge rent discounts and a replacement found for you. Little wonder so many are keen to get into the system. if I was young and female and could be certain of a generous garage workshop I would be in myself.

Cara said...

The most striking feature of Lindsay’s second graph is the steep rise in the proportion of the working age population receiving the Domestic Purposes Benefit following its inception as a support for unmarried solo mothers. This continues throughout the 1970s and 80s, peaking in 1990, but not diminishing much thereafter.
The second obvious feature is the rise in the proportion receiving the Sickness & (especially) Invalid Benefit from 1990 to 2010. It’s tempting to theorise that we’re observing intergenerational dependency here, as an unintended consequence of the former trend. One would need more detail to substantiate a link between the two, but it is intriguing that both proportions seem to have remained undesirably high through good times and bad.