Question 13: Isn’t it necessary for there to be a big gap between benefit levels and wages to encourage people to get jobs?

20 Sep

This ignores the reality that during the decades of the 1960s and 70s benefits were higher than they are today relative to the average wage, yet the numbers on any sort of benefit other than for old age was tiny.

A Labour Department report notes that “On 31 March 1952, only two people were receiving the Unemployment Benefit, the lowest end-of-year number in the post-war period. The first substantial rise was in 1967/68, when numbers jumped from 230 to 4,424 before dropping in subsequent years. The number jumped again ten years later, rising from 3,651 to 17,497 in 1978. It has risen continuously since (apart from a pause in the mid 1980s) to a peak of 181,236 on 30 June 1993.” During the entire period of very low unemployment benefits were significantly higher as a percentage of the average wage than they are today.

The fact there is no evidence to connect the level of benefits to people’s willingness to work was confirmed in a 1988 study on the DPB by the Social Welfare Department. It noted that numbers on the benefit in New Zealand had risen at a time when its value fell in relation to the average female wage. It also explained that Sweden had the highest proportion of working mothers (86 percent) and also the highest benefit levels. “It appears the Swedish solo mothers do not require a great financial incentive to take up employment, only sufficient reason to do so.” A central difference between Sweden and New Zealand is the broad availability of affordable, quality childcare, which remains a central barrier to sole parents working in New Zealand.

If there was ever a scene which confirmed that there is nothing voluntary about being unemployed it was the sight in January of 2500 workers lining up at dawn for minimum wage jobs on offer at Countdown in Manukau City in January 2010.

Jobless queue outside Countdown store in Manukau, Auckland

(Part of a series of extracts from “Exposing Right Wing Lies” by Mike Treen, Unite National Director)

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