MSD sanctions double, impact on employment unclear

MSD sanctions are designed to ensure compliance with benefit obligations. Photo / Liam Clayton

• The number of benefit sanctions rose to 13,485 in the March 2025 quarter, up 79.6%.
• MSD says sanctions ensure compliance but can’t confirm if they lead to employment.
• Critics argue sanctions may unfairly penalise people facing barriers like childcare and access issues.

By Susan Edmunds of RNZ

The Ministry of Social Development (MSD) cannot say whether an increased level of benefit sanctions is leading to more people going into work.

The agency says sanctions are designed to ensure compliance with benefit obligations, which then should help people find work, rather than directly helping people into employment.

The number of benefit sanctions for missed MSD appointments rose to 9042 in the March 2025 quarter – more than twice the 4356 in the same quarter last year. There were a total of 13,485 sanctions in the quarter this year, up 79.6% year-on-year.

Data released to RNZ after an Official Information Act request shows that there were 3015 times that a client was sanctioned, then recomplied with their obligations and then left the benefit to work.

There were 210 times when a client was sanctioned and then left for work, then recomplied with their obligations. That could include people who found work and then ended up back on the benefit.

Graham Allpress, group general manager of client service delivery, said sanctions and obligations were one part of a broader picture that could contribute to a jobseeker finding work.

He said MSD could not provide data about sanctions that led to someone re-engaging and then finding work because it could not link the sanction and the person finding a job.

“People get jobs because they apply for them, and because they take steps to become ready for work.

“We use sanctions as a last resort if someone is not meeting their obligations, to encourage them to engage with us and get back on track by re-complying their obligations.

“In 2024, 92.8% of sanctions were lifted after the client re-complied with their obligations and got back on track. That is the purpose we use them for.

“If someone gets a benefit and they have work obligations, one of the main things they agree to do is regularly apply for suitable jobs. By meeting their obligations, they maximise their own opportunity to get a job and ‘exit to work’.

“We are engaging with more jobseekers more frequently through proactive appointments and Kōrero Mahi seminars. Our support for jobseekers includes training, work assessments or work experience, and help with CVs and applying for jobs.”

In 2018, the then-Labour Government produced a paper on the effects of work-related sanctions.

‘Real barriers’

It said that regimes less severe than New Zealand’s were effective in increasing movement from benefits to work. But evidence from the UK and US was that very harsh sanctions could have adverse effects that drove people away from employment.

Isaac Gunson, spokesperson for the Child Poverty Action Group, said it was unlikely that so many more people had started missing appointments.

“What seems more likely is that MSD has become quicker to cut people off, despite the very real barriers many face in attending.

“These are people doing their best in tough circumstances. They may not have access to childcare, a working phone, or may simply be confused by the system.

“Pushing people off income support doesn’t make the job market fairer or more accessible. It just assumes success is possible while unemployment rises and support systems become harder to navigate.”

Economist Shamubeel Eaqub said there should be clearer ways to determine whether sanctions were having the effect intended.

“How can we be confident they are doing their job?

“I have no problem with them pulling these levers if they’re effective. If they’re creating a better outcome then of course we should be doing it. But we shouldn’t just punish people.”