Making a submission on the Social Security Amendment Bill

Or, why punitive welfare sanctions harm our most vulnerable

The next piece of government legislation closing this week is the rather boringly named “Social Security Amendment Bill” that aims to “support people into employment and off benefits by making changes to welfare settings.” Yet the proposed changes to anything but.

The Bill seeks to impose “non-financial sanctions” such as "money management and community work experience onto people in receipt of the Jobseekers benefit. It will also force people to reapply every 6 months for Jobseekers.

These changes include persons who receive Jobseeker Support (Health Condition or Disability) - or what some of us once knew as the ‘sickness benefit’.

Essentially, it is creating a whole heap of ‘busy’ work for people on Jobseekers, despite the evidence showing that these sorts of punitive practices drive negative health outcomes, have long-term negative consequences for employment, and disproportionately hurt those facing additional barriers to employment.

Imposing sanctions and forcing people to reapply every 6 months does not address any of the labour market issues faced or lack of suitable employment. Instead, the evidence shows that this approach is likely to drive poverty, increase stress, and cause harm.

You can submit on the Bill here. The closing date for submissions is 11.59pm this Friday, 10 January 2025.

Read on for a quick romp through existing evidence regarding the negative impacts of punitive welfare sanctions (both financial and non-financial):

Sanctions drive negative health outcomes

Studies on punitive welfare sanctions (both financial and non-financial) consistently show negative health outcomes. A 2020 UK-based study found that welfare sanctions caused symbolic and material suffering [1], sometimes with life-threatening effects. A 2022 systematic review [2] found a wide range of negative impacts, including the following:

• an increase in material hardship

• an increase in food deprivation

• an increase in the experience of financial hardships

• worse physical and mental health

• behavioural problems and poorer cognitive development in children

Sanctions result in poor long-term employment and financial outcomes

Studies on employment and financial outcomes consistently show long term negative impacts. Longitudinal data from the US [3] found that welfare sanctions resulted in a statistically significant negative effect on earnings, and that, long-term, sanctions did not reduce welfare use and the use of sanctions failed to improve earnings in marginalised families.

Imposing punitive welfare sanctions sees those receiving welfare scramble to find any available work, resulting in a short-term ‘bump’ in employment figures. However, over time, the opposite occurs: imposing sanctions leads to lower-quality employment [4], insecure employment, and poorer financial outcomes [5]. Within even two years, those who have been sanctioned are:

• significantly less likely to be employed,

• more likely to be in lower earning job,

• more likely to have shorter employment terms (i.e. leave jobs earlier),

• and/or be under-employed.

The detrimental impacts of sanctions are persistent and continue for several years.

To be clear, the use of welfare sanctions (both financial and non-financial) is a highly ineffective tool for facilitating people to move off welfare and into paid employment over time [6]. The evidence shows that better employment and financial outcomes occur without sanctions.

The use of sanctions against people on welfare drives poverty by forcing people into inadequate paid work and insecure employment terms while simultaneously undermining the positive social outcomes of employment and emphasising intensive job-seeking [7].

But poor-quality, discriminatory employments practices remain unchecked.

Sanctions disproportionately impact disabled people and families

Those who are in receipt of Supported Living Payment (SLP) do not currently have to look for work and may have obligations to prepare for work.

However, June 2024 figures show that there are 82,506 “non work ready” persons who receive Jobseeker Support (Health Condition or Disability)[8]. The Health Condition or Disability condition means that there are 82,506 people who are unwell and/or disabled - but have not been unwell long enough or with a severe enough disability to quality for SLP. This means that over eighty-two thousand unwell and/or disabled people are now subject to punitive sanctions, as are parents of a disabled child who may be in receipt of Jobseeker or Sole Parent Support (exact figures on this demographic are more difficult to source).

Welfare sanctions do nothing to address the structural barriers (e.g., disabling environments and discriminatory practices) that disabled people routinely face when looking for paid work [9].

Welfare sanctions do nothing to support a parent providing care to a child in hospital. There is no exemption for parents of a disabled child in the proposed legislative changes.

Welfare sanctions do not assist a disabled child to attend school full-time or address the lack of wider supports for disabled children and families.

Rather, the evidence tells us that welfare sanctions exacerbate existing illness and impairment [10], increase the social exclusion of disabled persons [11], and trigger negative health outcomes [12]. These all reduce the likelihood of employment for disabled people.

Employment is riddled with barriers. The disability gap 2018 gives us a snapshot of life for disabled New Zealanders, including key facts about work, social, and economic realities. The economic measures show that disabled people are three times more likely to be unemployed, twice as likely to be underutilised, and 2.5 times more likely to not have sufficient money for their everyday needs. Disabled people told researchers commissioned by the Ministry of Social Development that attitudes towards disabled people, such as the hassle of employing disabled people, lower productivity, higher absentee rates and additional costs, were barriers to employment in their own workplaces.

screenshot showing disabled vs non-disabled employment rates

The employment challenges faced by people with poor health and/or disability are poorly served by unnecessary administrative exercises that fail to address either the health challenges faced, or employment barriers encountered.

Sanctions do not address lack of suitable employment

People’s ability to access or increase their hours of paid work routinely has little to do with their behaviour [13]. Rather, employment hours and levels reflect wider societal supports, labour markets, and/or employer workforce needs.

There are more effective solutions

If this government truly wanted to support people into employment and off benefits they would work to ensure that employers were supported to offer the type of high quality, flexible working arrangements that have been shown to create positive outcomes [14]. They would address the structural barriers and discrimination that disabled people face in the workforce [15]. And they would stop implementing failed policies that don’t work [13].

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[1] Wright, S., Fletcher, D. R., & Stewart, A. B. R. (2020). Punitive benefit sanctions, welfare conditionality, and the social abuse of unemployed people in Britain: Transforming claimants into offenders? Social Policy & Administration, 54(2), 278–294. https://doi.org/10.1111/SPOL.12577

[2] Pattaro, S., Bailey, N., Williams, E., Gibson, M., Wells, V., Tranmer, M., & Dibben, C. (2022). The Impacts of Benefit Sanctions: A Scoping Review of the Quantitative Research Evidence. Journal of Social Policy, 51(3), 611–653. https://doi.org/10.1017/S0047279421001069

[3] Fording, R. C., Schram, S. F., & Soss, J. (2013). Do Welfare Sanctions Help or Hurt the Poor? Estimating the Causal Effect of Sanctioning on Client Earnings. Social Service Review, 87(4), 641–676. https://doi.org/10.1086/674111

[4] Wolf, M. A. (2024). Persistent or temporary? Effects of social assistance benefit sanctions on employment quality. Socio-Economic Review, 22(3), 1531–1557. https://doi.org/10.1093/SER/MWAD073

[5] van den Berg, G.J., Uhlendorff, A. and Wolff, J. (2022), The Impact of Sanctions for Young Welfare Recipients on Transitions to Work and Wages, and on Dropping Out. Economica, 89: 1-28. https://doi.org/10.1111/ecca.12392

[6] Dwyer, P., Scullion, L., Jones, K., McNeill, J., & Stewart, A. B. R. (2022). The Impacts of Welfare Conditionality. The Impacts of Welfare Conditionality. https://doi.org/10.2307/J.CTV28HJ3BZ

[7] Jones, K., Wright, S., & Scullion, L. (2024). The Impact of Welfare Conditionality on Experiences of Job Quality. Https://Doi.Org/10.1177/09500170231219677. https://doi.org/10.1177/09500170231219677

[8] https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/statistics/benefit/2024/benefit-fact-sheets-snapshot-june-2024.pdf

[9] Dwyer, P., Scullion, L., Jones, K., McNeill, J., & Stewart, A. B. R. (2022). The Impacts of Welfare Conditionality. The Impacts of Welfare Conditionality. https://doi.org/10.2307/J.CTV28HJ3BZ

[10] Ibid

[11] Reeves, A., & Loopstra, R. (2017). ‘Set up to Fail’? How Welfare Conditionality Undermines Citizenship for Vulnerable Groups. Social Policy and Society, 16(2), 327–338. https://doi.org/10.1017/S1474746416000646

[12] Dwyer, P., Scullion, L., Jones, K., McNeill, J., & Stewart, A. B. R. (2020). Work, welfare, and wellbeing: The impacts of welfare conditionality on people with mental health impairments in the UK. Social Policy & Administration, 54(2), 311–326. https://doi.org/10.1111/SPOL.12560

[13] Dwyer, P., Scullion, L., Jones, K., McNeill, J., & Stewart, A. B. R. (2022). The Impacts of Welfare Conditionality. The Impacts of Welfare Conditionality. https://doi.org/10.2307/J.CTV28HJ3BZ

[14] https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/journals-and-magazines/social-policy-journal/spj35/35-making-it-work.html

[15] Woodley, A., & Metzger, N. (2012). Employer attitudes towards employing disabled people. Ministry of Social Development. Wellington, NZ. Retrieved from https://www.odi.govt.nz/support-and-services/guidance-and-resources/resources-for-employers/employer-attitudes-toward-employing-disabled-people