Statement of Intent 2005 - Working Age People

High Level Outcome

People achieve economic independence throughout their working lives. They are able to participate in and contribute to society and have a sense of belonging.

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Context

Strong economic and employment growth

New Zealand’s economic growth has been among the highest in the OECD for the past three years, and growth is forecast to continue. At 3.6%, unemployment for the December 2004 quarter was the lowest in the OECD, and New Zealand’s lowest rate recorded since the labour force survey began in 1986.

Our active, work-focused service for Unemployment Benefit clients combined with strong economic conditions has resulted in record numbers of clients moving into employment.

Figures for Dec 2004 Quarter
Source: Household Labour Force Survey

Our working-age client base

At 31 March 2005, New Zealand had around 292,000 working-age clients (aged 18-64 years) receiving an income-tested benefit.¹ As in other OECD countries, the largest groups of beneficiaries are now sole parents and people with ill health or disability. The reduction in numbers of Unemployment Benefit clients is enabling us to target more of our resources towards these other groups, who have not traditionally been the focus of our employment services.²

The number of people receiving an Unemployment Benefit has fallen dramatically over the last five years. In total the number has decreased by more than 85,000, from 140,000 in March 2000 to under 55,000 in March 2005.

The Ministry’s active work-focused services play a key role in reducing the number of clients receiving an Unemployment Benefit.

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The number of Sickness Benefit and Invalid’s Benefit clients has been increasing since the mid 1990s. In March 2005, 116,000 people were on a Sickness Benefit or Invalid’s Benefit, compared with 76,550 in March 1997. In 2004 Work and Income implemented a Sickness and Invalid’s benefit strategy, which aims to broaden the services provided to this client group and support those people who want to work to move towards employment.

The number of clients receiving a Domestic Purposes Benefit (DPB) has decreased for the last seven years, after peaking at 114,665 in March 1998, of whom 108,770 were DPB – Sole Parents. In March 2005, 105,682 clients received a Domestic Purposes Benefit, of whom 98,091 were DPB – Sole Parents.

In 2002, the work test for DPB clients was removed and replaced with a longer-term work planning process, which involves the development of a Personal Development and Employment plan (PDEP), and enhanced case management. This approach recognises that these clients need to balance work and family responsibilities and that a plan for a longer-term return to work can be more appropriate.

On average, 93% of DPB clients have a PDEP in place. This individualised focus has contributed to the decrease in DPB clients.

Skills and labour shortages

Economic and employment growth has created the new challenge of labour shortages and skills gaps. Employers are experiencing difficulties finding both skilled and unskilled labour to fill job vacancies. Despite the number of working-age people receiving a core benefit, most regions of New Zealand are experiencing skills and labour shortages that are constraining business and employment growth.

In March 2005, 60% of firms reported difficulty in finding skilled staff, and 49% reported difficulty in finding unskilled staff. Twenty percent reported that labour shortages were a major constraint to their expansion. We need to enhance our services so that we can take advantage of a strong economy, provide the labour that employers have identified, and support those clients who can work into employment.

We work closely with employers, to identify the skills they need and the training required; to develop employment programmes that can respond to employers’ needs and regional circumstances; and to provide tailored support into employment for those clients with ill health or disability not traditionally seen as part of the labour pool.

This tailored support includes providing training and education for the existing and potential labour force. Financial barriers to work are also addressed, such as the cost of childcare.

Our role

To provide security and opportunity for our working-age clients, the Ministry provides:

• policy advice on labour market participation, skills and training and student support, and social assistance
• research and evaluation on significant social assistance and employment initiatives
• employment, training and development opportunities, coupled with income support and entitlements
• services to administer student loans and allowances and the Community Services Card
• services to protect the integrity of the benefit system by preventing and reducing benefit fraud and debt.

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Our focus for the next three years

We are committed to reducing the number of working-age people who need rely on a benefit. Our social development approach means that we provide working-age people with services that help them enter and stay in sustainable employment; and we provide social protection, in the form of benefits and entitlements until they are employed.

Work for those who can, security for those who can’t

Over the next three years, we will continue to implement and evaluate the Working for Families package. Working for Families is designed to make it easier to work and raise a family. It pays extra money to many thousands of New Zealand families. This increased assistance is delivered by Work and Income and Inland Revenue.

Specific initiatives include:

• increased help with childcare costs for pre-school and out-of-school care
• increased Family Support (a component of Family Assistance)
• increased Accommodation Supplement for more working families and many people without children to make housing more affordable
• a new In-Work payment for working families with children.

By 2007, around 300,000 New Zealand families will be better off as a result of Working for Families.

Working for Families provides greater financial support to:

• almost all families with children earning under $45,000 a year
• many families with children earning between $45,000 and $70,000 a year
• people without children with higher accommodation costs.

The right job at the right time, right from the start

New Zealand’s economic and employment growth means we can tilt the balance of our services towards social investment, while still ensuring that people receive their full and correct entitlements. We aim to get people into the right job at the right time, right from the start, avoiding their need to apply for a benefit if possible.

Over the next three years, we will continue preparatory work for the launch of a Single Core Benefit in 2007. The Single Core Benefit will roll the current main benefits into one, and enable case managers to focus on employment support.

An evaluation of our new Work Services Model (WSM) will support our shift to the Single Core Benefit in 2007. The WSM involves Work and Income working with industry to establish their labour needs, providing clients with the appropriate skills, and providing employment services to more of our clients. In June 2005, we will trial a new service delivery model in 12 sites, also supporting our shift to the Single Core Benefit.

Many people on benefit would like to work, and would be better off if they were working. However, the current benefit system categorises whole groups of people as ‘unable to work’.

The Single Core Benefit will tap into the potential of people on benefit, recognise the diversity of people’s lives and circumstances, and provide tailored services that will support their return to work now or in the future.

The Single Core Benefit will also provide a simpler benefit system with fewer rules and a clearer work focus. It will be backed by assessments, with more flexible services tailored to individuals and matching services to the client rather than clients to the services

Planning for work as circumstances allow

Groups of clients such as sole parents and people with ill health or disability are not always ready to move into work straight away. Our work for these clients will involve:

• implementing and evaluating our new Service for Sickness Benefit and Invalid’s Benefit clients who want to and are able to undertake full-time, part-time, or intermittent work
• working with Domestic Purposes Benefit clients to plan for their return to work as their parenting responsibilities allow
• implementing the Jobs Jolt package of targeted employment initiatives for clients who experience disadvantage in the labour market
• providing financial security for clients through the timely and accurate payment of benefits and entitlements.

Initiatives such as the Working for Families package will help to remove financial barriers to employment, while clients who are unable to work at all will continue to receive social support services that enhance their participation in communities and their quality of life.

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Seeing results

The working-age client group is large and diverse, meaning we need a range of measures to identify how well we are achieving our high-level outcome. The results we want to see from our work are that:

• jobseekers achieve sustainable employment
• all our working-age clients: students, beneficiaries, and working people get the financial support they are entitled to
• our clients are aware of all their entitlements, including entitlements while working and during retirement
• benefit fraud is prevented, and detected when it occurs
• the debts of beneficiaries and former beneficiaries are minimised, and their debts are managed accordingly.

Each of our contributing outcomes is about achieving these results, and ultimately achieving our high-level outcome. As with all our outcomes, the contributing outcomes overlap with and support each other.

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Working age people able to work achieve economic independence through sustainable employment

For most working-age people, employment is the path to economic independence, and plays a central role in promoting self-esteem and social connectedness. We define sustainable employment as a shift from benefit dependence to paid employment. Our services are about getting people into full time employment, and helping them stay in employment for longer periods of time.

Our primary employment role relates to the states of job acquisition, transition and employment and job retention -getting people into the right job and helping them to settle into that job so they stay employed longer.

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Our implementation of Working for Families will help parents stay in employment by removing financial barriers to work and by providing more assistance to low-and-modest income families.

The introduction of the Single Core Benefit in 2007 will remove layers of administrative detail from the benefit system, enabling case managers to provide active employment support, while still ensuring clients receive their entitlements.

Encourage and enable participation in tertiary education that leads to successful educational outcomes and sustainable employment while minimising debt

Our StudyLink service line will continue to tailor its services for students with differing levels of need for financial and educational advice. To support students to make sound decisions and minimise the risk of taking out a significant loan for study they are not suited for, StudyLink will provide needs assessment, application assistance, appropriate referral services and post-payment support as required.

Working age people unable to achieve economic independence have adequate income, the opportunity to engage in paid work, and are able to participate in the life of their communities

Although social protection is an essential element of the social assistance system, we emphasise social investment as the pathway to employment, economic independence, and social participation.
Proactive employment support for jobseekers includes seminars, jobs matching, work planning, work development activities like CV writing and interview skills, and post-work support. We will further develop this approach over the next three years, in preparation for the launch of the Single Core Benefit.

The new Service for Sickness and Invalid’s Benefit clients provides clients with benefits and entitlements while combining tailored case management, employment programmes, and access to health services to support clients into full-time, part-time, or intermittent work. The new service also works closely with employers to support them to hire someone with ill health or a disability, and supports people who cannot work at all to participate in their communities and have a better quality of life. Over the next three years, we will continue implementing, evaluating, and refining the service.

We will continue to provide enhanced case management and personal planning for Domestic Purposes Benefit clients, to sustain the progress we’ve seen in these clients moving off a benefit into employment as their circumstances allow.

People are supported to access health services for themselves and their families where barriers arising from cost, income and other family circumstances are high

Access to health services is important for a person’s personal wellbeing and for their ability to participate in their community and to enter and stay in employment. Providing access to health services is part of our holistic approach to social development.

The PATHS (Providing Access to Health Solutions) and ProCare initiatives, part of the new Service for Sickness and Invalid’s Benefit clients, are helping clients address the health barriers that can prevent their participation in work. We will continue to implement the initiatives in the current locations and identify appropriate new locations for implementation.

Our administration of the Community Services Card helps around 1.2 million New Zealanders access affordable health services. As the use of the Community Services Card is phased out following the introduction of Primary Health Organisations, we will continue to examine how clients can use the Card to access subsidised services in other areas

Working age people are prepared for successful transition to retirement

Sound decisions about savings and future work/life balance can help people prepare for a successful transition to retirement. We will continue to provide a comprehensive range of information about New Zealand Superannuation and other benefits, along with information about making private provision for retirement. Our aim is to help people make sound decisions about retirement, based on a good understanding of the assistance and services available. In particular we will work in partnership with the Retirement Commissioner to implement the Government's response to recommendations contained in the Periodic Review Group’s Report on retirement income. We will also assist the Minister for Social Development and Employment in his role as Minister responsible for the Retirement Commissioner.

The opportunities for fraud and abuse of the benefit system are minimised

Preventing and minimising fraud is essential to maintaining the integrity of the benefit system. Our Early Intervention Strategy will consist of a data-matching programme and client interviews and reviews, while our Benefit Control Investigation and Sanction Strategy will provide the framework for our processes for fraudulent debt recovery and prosecution. Over the next three years we will continue to minimise fraud by:

• Developing new data-matching programmes that will increase and refine our data matches. Matching on recently deceased clients began in September 2004, and further matches will include:
  • Student Allowance matches with Inland Revenue
  • Student Allowance and benefit matches with ACC
  • Married beneficiary matches with the Department of Internal Affairs.
• Using our new measurement framework to measure and report on our progress towards minimising fraud.
• Implementing our new three-monthly cycle of interventions that target specific areas of risk.

The amount of debt incurred by clients while on benefits is minimised. Debt balances are recovered at a rate that is acceptable to the Crown while not limiting client participation in society

Debt can lead to a lack of income, poor health, family stress and social exclusion. Debt can also be a deterrent to employment, as debt repayments usually increase when individuals move from a benefit into employment.

Our literature study When Debt Becomes a Problem estimates, for the first time, the size and scale of debt problems in New Zealand. It assesses the impact of debt on individuals and families and discusses possible approaches for tackling debt problems. It is an important resource for our work on preventing and minimising debt problems.

Active social assistance and case management can help to prevent and minimise debt, and reduce barriers to sustainable employment and economic independence. Over the next three years we will:

• Provide early intervention (including budget advice) services for at-risk client groups. We will pilot the Financial Planning 4 Change programme in three service centres, offering financial advice and education to help clients avoid debt problems.
• Lead the interagency Debt to Multiple State Agencies (DMSA) programme. DMSA aims to provide a sound basis for state agencies to establish and collect debt, reducing negative outcomes for clients and removing barriers to sustainable employment.
• Provide active case management to reduce unnecessary or uninformed student borrowing. StudyLink’s Student Finance Advisory service (Studywise) pilot helps to ensure that students understand the Student Loan scheme and have considered all options for funding their studies.

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Research and evaluation

Our Centre for Social Research and Evaluation (CSRE) provides the evidence base that tells us ‘what works’ to improve social outcomes, and informs the development of our policy and delivery. We pilot new solutions to improve outcomes and we evaluate our services in ‘real time’, meaning we evaluate as we implement, and we adjust our delivery according to what works. Significant research and evaluation projects over the next three years will include:

• Working for Families - CSRE’s largest evaluation. This five-year evaluation will provide the evidence base for the ongoing development of Working for Families, investigating who is taking up the assistance available in the package, and what impact it is having.
• The 2002 Domestic Purposes and Widows Benefit reforms - the evaluation provides comprehensive information on the implementation of the reforms, helping Work and Income to target their interventions.
• Jobs Jolt -the evaluation identifies how well each of the Jobs Jolt initiatives is achieving its employment and fiscal objectives, enabling initiatives to be expanded, adjusted, or discontinued according to their performance.
• In 2004, our Living Standards Research Programme interviewed 5,000 New Zealanders on a wide range of areas relevant to social policy and planning. Areas included health status and health costs; accommodation costs and adequacy; work and social circumstances; budgeting skills; and issues such as substance abuse or gambling. We are compiling an update on changes in the distribution of living standards in New Zealand since 2000, and plan further work to analyse the factors that affect variations in living standards.
• We will undertake a joint Barriers to Employment survey with ACC that will:
  • identify the barriers to employment experienced by ACC claimants and Ministry clients
  • assess the similarities and differences between barriers for claimants and clients
  • assess how we can best assist claimants and clients to move into sustainable employment.
• Our study of low-paid workers will examine the nature of income disparity among the working-age population. The study will examine who low-paid workers are, where they are employed, what their family circumstances and incomes are, and the nature of their transitions into and out of low-paid work. This research will extend the knowledge base on low-paid workers and strengthen CSRE’s work programme across a number of areas, including sustainable employment and social assistance.
• Our two-phase project of Research into Debt to Multiple State Agencies involves a qualitative study, completed in 2004, of the effect on people of debt to more than one agency; and a quantitative study, being undertaken in 2005/06, to provide a research database that will help us quantify the scale and extent of the impacts of multiple debt.
• We are supporting our new Service for Sickness and Invalid’s Benefit clients with research into:
  • the changes that are driving the increase of overall numbers receiving these benefits
  • whether ‘clusters’ of clients have similar patterns of benefit receipt over time, and the affects of a client’s duration on a benefit.

We are also developing an evaluation plan that will include monitoring client and employer satisfaction with the new service, and the impacts it is having on our clients.

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Managing our capabilities

Managing our capability in policy and delivery will support us to achieve our contributing outcomes and our high-level outcome for working-age people.

Work-focused case management involves supporting clients to be prepared for work, helping clients get into the right job right from the start, and supporting clients once they are in employment. It means focusing primarily on the client’s abilities, rather than their barriers to work; identifying and meeting local labour market requirements; and supporting good practice for frontline staff.

To support the implementation and development of work-focused case management, we will:

• strengthen our understanding of client needs and requirements and meet these with more flexible client-driven services
• provide information and promote choices that will impact on longer term opportunities and wellbeing as part of our social investment strategies (eg retirement planning, reducing student debt etc)
• develop our capability to work more effectively with clients with high and complex needs, by working collaboratively with others
• develop our new assessment process, including an automated assessment and job matching tool for frontline staff, clients and employers
• increase our knowledge of the local labour market, matching training courses to local requirements and building relationships with industry and employers
• further develop our understanding of clients on different benefit types and determine some of the key drivers behind changes to these.

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Monitoring progress

Outcome indicators

Indicators - Working Age People Receiving Income Support
Indicator	Current	Trend
Percentage of total population aged 18-64 receiving an income-tested benefit	12.3% (2004)	Declining
Percentage of Maori population aged 18-64 receiving an income-tested benefit	28.1% (2004)	Declining
Percentage of Pacific peoples aged 18-64 receiving an income-tested benefit	16.9% (2004)	Declining
Percentage of population aged 18-64 whose current period on a benefit has lasted for two years or more	6.4% (2004)	Declining
Sources: Statistics New Zealand, population estimates and Pacific population projections; Ministry of Social Development
Indicators - Working Age People - Employment
Indicator	Current	Trend
Percentage of total population aged 15-64 employed	73.5% (2004)	Increasing
Percentage of Maori population aged 15-64 employed	61.7% (2004)	Increasing
Percentage of Pacific peoples aged 15-64 employed	60.5% (2004)	Increasing
Percentage of unemployed people who had been unemployed for six months or longer	23.5% (2004)	Declining
Source: Statistics New Zealand, Household Labour Force Survey, annual average for year ended December

1 Income-tested benefits include: Unemployment Benefit, Unemployment Benefits – Hardship, Unemployment Benefits - Training, Unemployment Benefits – Training Hardship, Independent Youth Benefits, Domestic Purposes Benefit – Sole Parents, Domestic Purposes Benefit – Caring for the Sick and Infirm, Domestic Purposes Benefits – Women Alone, Sickness Benefits, Sickness Benefits – Hardship, Emergency Maintenance Allowance, Invalid’s Benefit, Widows Benefit and Emergency Benefit.