The Front Page: Unemployment remains at record lows - so why are so many Kiwis on the benefit?

Unemployment remains incredibly low, but many New Zealanders are still on the hunt for jobs. Photo / Getty Images

Unemployment might be at a record low and businesses are crying out for workers, but New Zealand still has many people on the jobseeker benefit.

While this might seem anomalous, Infometrics principal economist Brad Olsen tells the Front Page podcast this isn't surprising when observing the actual market conditions.

"There are still people out there who are keen to get jobs, but often what we find is that the skills those people have and what employers are looking for don't fully cross over," Olsen explains.

"It's not that we don't have any more people available to put into the labour market. It's that the interconnection between what businesses are looking for and what some people have to offer right here, right now don't fully overlap."

Businesses have also told Olsen that some of their potential candidates sometimes also face simple problems like getting transportation to arrive at work on time.

"We've gotta do a lot more work to get people into that work-ready position so that they can get into employment and they can continue to flourish."

Olsen also stressed that around 9 to 10 per cent of Kiwis currently receiving JobSeeker do work part-time, but need additional support because they haven't been able to find full-time employment.

Olsen says there are about 171,000 New Zealanders who are on JobSeeker support at the moment. This figure is up from about 139,000 in July 2019, before the pandemic.

"You're looking at roughly 32,000 more people on jobseeker support compared to pre-pandemic, and around 23,000 or so of those are work ready," says Olsen.

At the National Party Conference over the weekend, party leader Christopher Luxon said that young people who don't want to work will have their "free ride" end under a National government.

The inference here is that some young people were choosing to remain on the benefit rather than joining the workforce.

This suggestion was quickly slammed by other political parties and also by New Zealanders who are currently receiving the JobSeeker benefit for myriad reasons, including health and disability.

Asked if there was any objective way to measure whether people were staying on the benefit rather than joining the workforce, Olsen said it was difficult to provide a definitive answer because this issue was so subjective.

"We do know two things: you do earn more money from joining the workforce, so there's always a natural advantage to get into work," he says.

"But we also know that, depending on your personal circumstances, getting into work doesn't always provide as much of an additional benefit as people might think. And that's because of some of the abatement rates. For instance, when you start earning money, you start losing some of your Jobseeker support."

Olsen adds that it's also important to look at the personal circumstances of those who have been on the benefit for a long time.

"There's a real challenge in asking what settings aren't currently working to get these people back into employment. Sometimes this is about health and disability, but we also see concerns among people who don't have transportation or the right skills to get back into employment."

Olsen says it surprised him to hear the suggestion of sanctions for those who are currently receiving jobseeker assistance.

"We know, talking to businesses and communities, that there are people who are currently receiving JobSeeker that aren't currently able to jump right back into employment for a range of reasons," says Olsen.

The economist did, however, add National's idea for job coaching could be a step in the right direction in terms of identifying reasons why some people are currently not able to return to the workforce.

"This is about ensuring that people get a proper assessment of what barriers they might have to find work. Is it a driver's licence? Is it something to do with training?

"Instead of waiting 12 months to do those assessments, we should be doing them a lot earlier."

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