Making Work Pay

PEOPLE WITH LIMITED WORK EXPERIENCE, SKILLS and qualifications struggle to find work that pays a decent wage.

Too many people feel that they are better off with the security of a benefit rather than moving to the insecurity of a low-paying and uncertain job.

When they examine their options, they often find that going to work simply does not pay. This may be because they are in a low paid or unstable job.

The monetary gains of being in work can be minimal once other costs, such as childcare, are included. Furthermore, job opportunities in areas where rents and housing costs are low, are often limited. The availability and cost of transport is another big factor in making low-paid work an unattractive option.

In some areas seasonal work is the only unskilled/semi-skilled work available. Wages for these tasks are often low and the work is shortterm. Current benefit rules do not always help people take on seasonal and other casual work.

The Government is determined to develop a system that actively assists people to make an effective transition from the benefit to the workforce.

First and foremost, such a system must provide security for people when work is low paid or uncertain. At the same time, it is vital that the system encourages and provides opportunities for beneficiaries to improve their levels of education and training so they can aim for higher-paying jobs.

Many beneficiaries also do not realise what help is available to assist them enter the world of work.

How we assist people to make the transition to work and to make work pay also needs to reflect the realities of where people are living. In Auckland it could mean help with transport, housing or childcare; in Gisborne, the assistance might come in the form of an initial income supplement to on-the-job trainees or an ‘into work’ grant. This flexibility is important if we are serious about addressing people’s individual needs.

THE NEW APPROACH

The Government will help make work pay by:

• Spending $9.4 million over the next four years on a package of initiatives to extend current assistance to beneficiaries with transition-towork costs, streamline access to family support payments, and provide information on in-work assistance. It will double the maximum payment of the Work Start Grant to $500 and extend the New Employment Transition Grant to married people with children. It also provides up to $500 a year for people who are required to take unpaid leave during their first six months in employment.
• Reviewing the rules that govern access to the benefit system (e.g. stand-down periods, treatment of holiday pay, payment of benefit in arrears) to ensure that they are not discouraging people from taking up work opportunities.
• Looking into the amount that people can earn before they lose their benefit (abatement).
• Improving the current complicated linkages between the taxation and benefit systems.
• Reviewing current arrangements around seasonal work to reduce barriers to taking on this kind of employment.
• Investigating ways to stem the rising tide of benefit debt. Our first focus will be to prevent new debt being established, and then to see how we can help those already struggling with debt to improve their circumstances.
• Seeing what others are doing overseas – what works and what doesn’t to better make work pay.

This Government has increased the minimum wage and lowered the age of eligibility for the adult rate from 20 to 18. It has increased the earnings of an 18-year-old worker on the minimum wage from $4.20 to $7.70 an hour, an increase of $140 gross a week. For an adult working 40 hours a week and earning the minimum wage, the increase in the minimum wage to $308 gross represents an increase of $28 a week.

Investing In People

One of the best way to make work pay is to ensure that all New Zealanders have the skills to participate in the labour market, and to keep those skills current. By building people’s capacity to work, they will be in a much stronger position to take advantage of opportunities as they arise.

This Government has made upskilling the nation one of its highest priorities. This recognises that a skilled workforce is vital to our economic growth, our standard of living and our international competitiveness. Disturbing numbers of New Zealanders do not have even the basic levels of literacy and numeracy essential for most jobs. This situation must be addressed.

The Government is implementing economic and employment strategies that are designed to promote steady growth and a better matching of skills and jobs. This is already well underway and it is vital that the benefits of this growth are shared throughout the community.

Even when they have skills, we recognise that beneficiaries may need other assistance to make a successful, sustainable transition to employment. This may take the form of job placement services, and in-work training and support.

THE NEW APPROACH

Voluntary Work Recognised: Doing voluntary work can help beneficiaries get ahead. There are many voluntary jobs in the community that can help beneficiaries build up work skills and experience while they look for paid work. From April, voluntary work that helps towards the goal of finding paid work has been acknowledged as meeting part of their work test.

Modern Apprenticeships: We are providing more opportunities for young people to gain the skills they need to enter the workforce. We are expanding the Modern Apprenticeships programme and expect to have up to 3,000 young people in Modern Apprenticeships by the end of 2002.

The Training Opportunities Programme (TOP) is being reviewed so we can improve the education and employment prospects for those with low skills and qualifications.

Raising the skill levels of New Zealanders is an important focus of the Industry Training Review and the work of the Tertiary Education Advisory Commission. Resulting initiatives will make tertiary and workplace learning more accessible to a broader range of New Zealanders.

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