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This story was originally posted on RNZ.co.nz and is being republished with permission.
The number of beneficiaries increased by 12 percent in April this year, the highest increase in the last 24 years and almost double the next largest increase.
A report, compiled by the Ministry of Social Development, evaluated the effect of Covid-19 on welfare recipients and compared it to other recent economic recessions.
It found that if the Treasury’s projections are correct and the percentage of the working population receiving benefits reaches 16.2 percent, it would be the highest number in history, far eclipsing the rate of beneficiaries during the Global Financial Crisis ( GFC), when it was at 12.4 percent.
It would see the country return at a similar rate during the economic recessions of the late 1980s and early 1990s.
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“That took us a decade and a half to get over it, in terms of the job market, and it affected a whole generation of people,” said Dr. Michael Fletcher, senior fellow at the Institute for Policy and Governance Studies at the University of Victoria.
“That was huge. In my opinion, that means that what the government does and how the recovery is going to be really important. “
The report also found that Covid-19 caused the largest individual increase in the number of people accessing social assistance in a month, than any other month in the last 24 years, and the increase is mainly due to people without work who They requested support for job seekers.
“That reflects the suddenness of the impact of Covid-19 and the lockdown,” Fletcher said.[That’s] despite the fact that the government had introduced the wage subsidy program to try to keep people working. “
The suddenness of the Covid-19 shutdown had a dramatic impact on the job market.
Increase in the number of community workers.
Those who help families and individuals apply for benefits are reporting large increases in the number of people they serve.
Serenah Nicholson, manager of Lower Hutt-based The Learning Center and Whānau Family Support, which provides comprehensive services to vulnerable people in the area, said they got busier in the middle of alert level 4.
“We have seen that many more of those whānau clients who come to us to develop financial capacity support have lost their jobs due to Covid level 4.
“Even today at level 2, we still have clients who are trying to make the profit right.”
People are turning to welfare for a variety of reasons, he said, whether it’s because they’ve lost their jobs; they cannot survive on the wage subsidy; or they never went back to work.
He said he knows of a family of six who are currently trying to access benefits, because the $ 585 per week wage subsidy is not enough.
“People’s spirits are broken,” Nicholson said. “People aren’t sure what to do, so what we’re trying to do is give them all that support through excellent negotiation with Work and Income.”
From the recession of the early 1990s, to the Asian crisis at the end of the millennium and the global financial crisis of 10 years ago, the economic impact of Covid-19 has been rapid.
“It is very different in speed and severity,” said economist Shamubeel Eaqub.
“We lost so many jobs in the space of the first four weeks of this crisis that we would normally expect in the middle of a recession.
“To give you a bit of context, across the entire GFC, we lost around 80,000 jobs in 18 months. This time, we have lost more than 60,000 jobs in the space of six months. “
Chris McKeen / Stuff
“We lost so many jobs in the space of the first four weeks of this crisis that we would normally expect in the middle of a recession.”
How will the figures be used?
Nicholson said they expected things to get worse before they got better, and more people were expected to apply for welfare.
“Someone has to take care of these families. These are families that used to have a job, and if they didn’t have savings, they have nowhere else to go, but instead make a profit ”.
With those numbers expected to rise, there are concerns about the ability of current systems to cope.
“My concern is that as the numbers increase, when contacting services to see a case manager, or by their 0800 number, things will fall apart,” said Graham Howell, advocate for the Benefit Rights Service.
There is some uncertainty surrounding the veracity of some of the numbers used in the report, with some of the numbers taken from Treasury forecasts put together in May.
It’s also important to note that wellness comparisons over time are difficult, depending on affordability and the type of benefit available.
That is not to say that the report should be thrown out the window.
“Historical comparisons are useful because we rely on past experience to frame our thinking and our decisions,” Eaqub said.
“If we know how to see the current recession [and] what the impact is, it gives a sense of urgency and scale, what the response should be. “
While the government has introduced measures that have been used in the past, the most notable being the wage subsidy that was also used after the Christchurch earthquake, Howell said a more fundamental reform of the welfare system was needed.
“In the long term, there must be a real realignment of the rates of the main benefits. Recommendations of the Advisory Group of Experts on Social Welfare should be adequately addressed [but] I know that’s on the to-do list. “
This story was originally posted on RNZ.co.nz and is being republished with permission.
