The Spinoff: Ten things we could do to better support people into work

Read the original article in the Spinoff

During the nine months I recently spent researching our welfare-to-work system, one contrast jumped out at me. 

I’d heard an interviewee describing how her 40-year-old brother, a “typical” Samoan Kiwi, was working as a builder in Norway; despite needing a major operation, he’d wanted to carry on his hard, physical labour. The Norwegian equivalent of Work and Income, however, felt he should be contemplating another career. Having taken the time to deeply understand his background, skills and leadership qualities, they concluded he’d make an excellent teacher – and they’d pay him to retrain.

When, by contrast, I sat down with a group of beneficiaries in Nelson, I listened to a 60-year-old woman, previously a cleaner, talk about her dodgy knees and how she was no longer able to clean at the pace demanded by commercial firms. So what kind of employment did Work and Income keep pushing her way? Cleaning jobs, of course. There could be no starker contrast between, on the one hand, a system willing to spend money upfront to build a more highly skilled workforce, and, on the other, a system that takes someone’s CV as their destiny and pushes them into the first available job, regardless of suitability.

I heard these stories as part of the first research project carried out by the Institute for Democratic and Economic Analysis (Idea), a thinktank I helped launch last year. Improved living standards are a central focus for us, and we’d identified the welfare-to-work transition as a crucial – and neglected – area of policy.

One thing we quickly learned is that the Work and Income system doesn’t serve businesses’ needs any more than it serves those of jobseekers. When Work and Income doesn’t screen beneficiaries for their suitability for a position, businesses just spend precious hours interviewing individuals without the required aptitude or desire. Meanwhile jobseekers’ potential is left untapped. Even when they find work, it is often wildly out of line with their skills: between one-third and half of the workforce experience serious skills mismatches, with all the attendant problems that creates for productivity.

Such issues are especially relevant right now, as unemployment rises and people flock to Australia. When jobs are scarce, we should be investing massively in vocational education and mid-career retraining, both to give people reasons to remain here and to fit them for the positions that will appear when the economy recovers.

We should also provide all the other support – wraparound physical and mental health services, wage subsidies, even temporary public-sector job creation – that can help people move from welfare into paid employment, where that’s the right thing for them at that point in their lives. Idea’s report on this issue, launched last week, is called The Pipeline of Potential because that’s what the welfare system should provide: a steady stream of highly qualified staff, generated by investing in people at a crucial moment in their lives. Below are 10 key ways to make that happen.

1. Raise our game on spending. New Zealand currently spends half the developed-country average on supportive welfare-to-work schemes, known technically as active labour-market policies. Other countries spend more, and reap the rewards: people who get high-quality training, wraparound health services and other such support are significantly more likely to find employment and earn more. They also pay more tax and require less benefit spending.

2. Get to know jobseekers properly. Case managers need to deeply understand jobseekers’ history, skills, aspirations and needs, as a prelude to building them a tailored job plan. Although it gets crowded out by the focus on sanctions, the government is taking steps in this direction – even if Work and Income caseloads (and attitudes) remain a stumbling block.

3. Reduce case managers’ workloads. The typical Work and Income case manager, tasked with helping people move into paid employment, has a caseload of 110 jobseekers, implying they can give each one an average of 20 minutes’ attention each week. Providing tailored welfare-to-work support is, at those ratios, extremely difficult.

4. Set new targets. In the absence of other mandated goals, the government’s target to get 50,000 people off Jobseeker Support can reinforce the “any job is a good job” mentality described above. It needs to be balanced with meaningful targets to provide high-quality training and match the right person to the right job.

5. Connect companies and people. The employer-jobseeker relationship should be at the heart of the welfare-to-work system. Work and Income offices need to better understand what local employers are looking for, and equip jobseekers with those skills and attributes.

6. Provide more holistic support. In 12 of 19 health districts, people can access something called Individual Placement Support (IPS), a highly successful scheme that embeds employment specialists in community mental health teams, so individuals can get both kinds of help at once. IPS participants earn over $4,000 a year more than comparable non-participants. The scheme could be rolled out to the rest of the country for as little as $10 million a year.

7. Help jobseekers support each other. Several European nations have had great success with “launching pad” schemes that bring groups of jobseekers together, under the supervision of a trained job coach, to share life lessons, build self-esteem and develop plans for training, employment and entrepreneurship. By breaking down the isolation many jobseekers experience, and creating a supportive environment for skills-building, such schemes generate dramatic increases in employment.

8. Prevent workforce churn. Of the people who leave benefits, just 40% are still in employment 18 months later. We need a greater focus on matching people to the right job, more post-placement support for those new to the workforce, and a push to eliminate the worst forms of low-paid and precarious work.

9. Support people through redundancy. In mass redundancy situations, which may become more common owing to climate change and AI, trusted locals should be employed to help the affected people find new work. Employers and unions should also be funded to upskill staff ahead of such disruption.

10. Introduce a circuit-breaker job guarantee. Building on successful overseas models, New Zealand should offer a year-long job placement to any young person at risk of long-term unemployment. This would involve the government creating temporary jobs or paying for placements in firms, NGOs and local councils. By boosting people’s CVs, work habits and skills, and making a powerful statement that the government has their back, such schemes overseas have significantly lifted permanent private-sector employment for the under-25s.