15 Oct 2020

Jobseeker benefit figures up more than 40 percent on past year

From Checkpoint, 5:40 pm on 15 October 2020

The number of people on the jobseeker benefit continues to climb - and is now up more than 40 percent compared to the same time last year.

Man trying to find work with online job search engine on tablet.

Photo: 123RF

Thousands more people are out of work as financial support offered to businesses starts to run out.

According to the Ministry for Social Development, in the three months to September the number of people receiving a main benefit was up 23 percent - for those on the job seeker benefit the rise was even steeper, up nearly 43 percent.

That translates to an increase of 13,660 people on the jobseeker benefit over the past three months and 61,185 over the past year.

Victoria University senior policy researcher Michael Fletcher said while the increase wasn't a surprise, it certainly wasn't good, with numbers now nudging those seen during the Global Financial Crisis.

"We've got 369,000 working age people who are receiving a benefit, and that doesn't include their partners or the rest of their family... so that's almost 12 percent of the population - that's a big number."

Stats NZ benefit fact sheet for September 2020.

Photo: Stats NZ

It comes as Infometrics chief forecaster Gareth Kiernan forecasts a 'double dip' recession to hit next year.

"We've had a recession already this year with a contraction in the economy in both the March and the June quarters so that meets the official definition of a recession - however the economy has bounced back in the September quarter.

"We're expecting, however, more negative quarters of growth or contractions to come through in 2021 so effectively you've got a down, an up, and a down again."

By June 2021, Kiernan predicts there will be a drop of 186,000 jobs compared with pre-pandemic levels.

"We are expecting more job losses to be coming through in the early part of 2021 and we think that will have quite a big negative effect on people's willingness and ability to spend.

"Given that household spending makes up 60 percent of the economy, we see that as being bad news for overall economic growth through the course of next year."

Kiernan said there was still a lot of concern about the labour market, especially with wage subsidies and support mechanisms that have been in place now running out.

Michael Fletcher said that would only add to the latest benefit numbers.

"We had 373,000 jobs on the wage subsidy in August and that's down to 95,000 [now]. The great majority of those 95,000 will end in the next few months and we've yet to see how many of those people become beneficiaries."

But Fletcher said the benefit uptake wasn't the only notable figure out today - nearly a quarter of a billion dollars was spent helping out with urgent bills over the past three months.

"$215 million just in hardship grants and that's an indicator of the inadequacy of the core benefit rate that people have had to go and ask for third-tier hardship assistance to that extent."

National Leader Judith Collins said the boost in beneficiaries was concerning - and she was worried the government had no plan to get them back into work.

But Social Development Minister Carmel Sepuloni said the increase in people receiving the main benefit wasn't surprising given the unprecedented circumstances.

She said the September Quarter saw 22,290 people leaving a benefit for work - the highest number of people per quarter since March 2017.

"The fact that over 22,000 people who were previously on the benefit found employment shows that our economy is doing well in very challenging times."