Findings from the evaluation of the Flexi-wage expansion

The Ministry of Social Development (MSD) is responsible for the provision and delivery of supports and services which enable people to enter and remain in work. Flexi-wage refers to two subsidy programmes which help New Zealanders into work by either helping them to get the skills they need for a job by supporting employers to hire staff (Flexi-wage subsidy), or by helping them into self-employment by reducing the financial barriers to entry (Flexi-wage Self-Employment).

In 2021, the Government expanded the Flexi-wage subsidy (FWE) and Flexi-wage Self-Employment (FWSE) programmes as part of the COVID-19 economic recovery plan. The expansion sought to increase the scale of the programmes in order to support more New Zealanders into work. It included changes to the eligibility criteria to enable people who had not yet come onto the benefit to participate as well as increases to the subsidy amount paid to participants.

Evaluations were commissioned as part of the expansion, to ensure that the Government was positioned to learn from the response. These evaluations were conducted in 2023-2024, with the goal of understanding the effectiveness of the programmes and the implementation of the expansion settings.

Methods

Quantitative and qualitative methods were utilised as part of this evaluation package:

Impact analysis was conducted using Statistics New Zealand’s Integrated Data Infrastructure to examine the impact of FWE and FWSE on participant outcomes, including a comparison of the effectiveness of the programmes pre- and post-expansion.
Mixed-method case studies involving participant interviews, surveying, and document analysis to gain insight into the implementation of the expansion of FWE and FWSE.

An evaluation report for each programme was produced for each method, totalling four standalone findings reports. Key themes and headline findings from across all four reports were identified and summarised in an Evidence Synthesis report.

Key Learnings

The evaluation package found that:

As intended, the expansion led to increases in participation rates for both FWE and FWSE.
As part of the design, the average cost per-participant for both FWE and FWSE also increased.
FWE remains the most effective hiring subsidy administered by MSD, with the expansion maintaining the programme’s effectiveness in improving employment and income outcomes for participants.
The expansion of FWSE increased time spent in employment and net income over the subsidy period but these impacts were not sustained long term.
Further, only a small proportion of participants (33 percent) were successful in generating income from self-employment.
The Government’s expansion settings required MSD to rapidly scale up FWE and FWSE, which resulted in implementation challenges such as inconsistencies across regions, gaps in information received by participants, and a reliance on staff with ‘specialist’ skills.
Findings from the qualitative evaluation of FWE noted that majority of the challenges identified in the implementation of the programme could be addressed by improving internal communications and guidelines regarding the programme.
The qualitative evaluation of FWSE recommended that adjustments be made to the scope and scale of the programme to better align with the needs of its target cohort. Suggestions included:
- - Ensuring that the participants receiving FWSE are those who are best suited for a self-employment pathway
- - Scaling back the programme so that fewer participants receive more intensive support over a longer period
- - Reviewing what the appropriate level of investment is for individuals closer to the labour market versus those who require more intensive support

Limitations

It is important to note that there are limitations to both the qualitative and quantitative methods used in these evaluations. The qualitative evaluation findings reflect the views of the participants at the time they were collected. Because people self-selected to take part, the findings may not be applicable to other people or groups who participate in the programmes.

The impact evaluation method selects a comparison group matched to participants based on a large number of observed characteristics across many domains. While we are confident we have controlled for most differences between the two groups that affect future outcomes, we cannot rule out the possibility that differences remain and that these have biased the results. In addition, due to the small number of participants in FWSE, it was not possible to include subgroup analysis of specific communities as part of the impact analysis.

How the evaluations are being used

MSD continually improves its services based on evidence as it becomes available. This pack of evaluation reports have been completed over the course of three years, findings from which were made available internally once their robustness was validated.

Changes to improve the Flexi-wage Employment Assistance Programme took effect on 5 February 2024, which clarified definitions and provided examples to better support the use of Flexi-wage. The updated policy settings can be found here.