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$27 Million to get beneficiaries into work

19 January 2005

$27 Million to get beneficiaries into work

$27 million will be invested to get more long-term unemployed into work and help more Sickness and Invalid's beneficiaries get jobs, Social Development and Employment Minister Steve Maharey announced today.

"With unemployment at just 3.8% and employers calling out for workers, the government is stepping up its efforts to get as many beneficiaries as possible back into the workforce," Steve Maharey said.

Long-term unemployment is being targeted with several initiatives that include hiring incentives and work training.

"In just five months between June and November 2004, the number of people unemployed for longer than three years plummeted by 1,400 – the figure now stands at just 7,300," Steve Maharey said. "That's rapid progress, but with current labour market conditions there is no reason we can't do even better."

To achieve further reductions in long-term unemployment, Cabinet has agreed to initiatives that include enhanced wage subsidies for employers taking on people who have been unemployed longer than three years, intensive case management, home visits for long-term unemployed and increased availability of training. (See attached for further information.)

Changes to the Sickness and Invalid's Benefit service were also announced today. The New Service for Sickness and Invalid's Benefit Recipients, piloted last year, is now being rolled out in regions across the country.

The New Service includes initiatives designed to cut case manager loads by more than half, provide assistance to beneficiaries to have their medical needs addressed so that they can return to work, advise employers on the hiring and retention of staff with ill health or disabilities and tailor career services and skills identification to the specific needs of people on Sickness and Invalid's Benefits.

"Increased numbers on Sickness and Invalid's benefits are being seen across the world," Steve Maharey said. "The programmes we piloted last year have shown that we can make a difference for people on these benefits – in one pilot area we saw a 17% increase in beneficiaries moving into full-time work in just six months - and we're eager to help as many as possible get back to work.

"This is a proactive, world-leading approach. The New Service will now allow us to take what we've learned and put it into action across the country."

New initiatives to lower long-term unemployment

Unemployed 3-4 years in Wellington, Manukau and Northland

This programme is aimed at preventing unemployed clients in three regions from hitting four years on unemployment benefit.

Clients continuously unemployed for three years in Wellington, Manukau and Northland make up 48 percent of all clients in this group nationally. A programme is underway now providing intensive case management to approximately 1,700 clients who are likely to surpass three years on unemployment benefit in these regions.

These clients will have access to intensive work-readiness training, increased contact with their case managers and be provided with intensive assessments to identify serious barriers to employment. Clients in the three areas who have not been placed in work by October 2005 will be placed into jobs with an enhanced wage subsidy programme. The subsidy will be available to employers involved in socially useful activity, like community or local authority work. It must be project based and additional to the employing organisation’s normal activities.

Employers under this enhanced scheme can receive up to $380 (GST inclusive) per person (3-4 years unemployed) per fulltime week for up to nine months (an increase of three months).

Urban Employment Service An urban employment service is being established nationwide that aims to see all urban, working age clients, who have been unemployed longer than three years, visited in their homes. 23 Work Brokers will be mobilised to work intensively to provide services and information on available jobs to these clients. This group makes up about 14 percent of the total number of people on unemployment benefit under the age of 60.

This service complements the other programmes targeted towards long-term unemployed clients including Jobs Jolt initiatives and the Pacific Wave Strategy. The New Service for Sickness and Invalid's Benefit Recipients

Enhanced Case Management The dramatic fall in unemployment since Labour took office – 100,000 people have come off the unemployment rolls since 1999 – has meant that the Enhanced Case Management practice can now be extended to Sickness and Invalid's Benefit recipients. Resources have been reallocated nation-wide to allow case managers to better assess and remove the obstacles that keep beneficiaries from returning to work.

Work and Income is now moving towards a national goal of 225 clients for every Sickness and Invalid's case manager – down from the previous average of 350. Already in the 14 Jobs Jolt concept sites, which include Hamilton, New Plymouth and Greymouth, the case management load is down by over half to 160.

Health Services A key component of the New Service is the innovative PATHS (Providing Access to Health Solutions) programme. PATHS was successfully piloted in Manukau last year, launched in Wellington in December, and Cabinet has now agreed to the concept being extended to a further four regions with Western Bay of Plenty being first on the list.

The programme works by helping beneficiaries identify all of the health treatment options available to them and by providing access to crucial services that will enable them to get back to work – these include physiotherapy and fitness programmes.

Employment Programmes Tailor-made programmes are now available for people on the Sickness and Invalid's Benefits that will help overcome workplace barriers to work. These programmes include Workwise (a programme for people with long-term severe mental health conditions) and Kaleidoscope (designed for people with spinal conditions).

Skills identification Preparations are now underway for a national rollout of Preparing for Work - an assessment tool that enables Work and Income case managers to identify the skills and abilities of clients who want to work. A pilot of Preparing for Work has been successful in over 16 sites across the country.

Services to employers A new project has been approved that will provide support and information to employers that will help them hire and retain staff with ill health or a disability. This new initiative complements work that is already underway to identify the barriers faced by employers in hiring such staff.

Sickness Benefit and Invalids Benefit: Issue Profile

New Zealand compares well with most western countries in terms of the numbers of working age people receiving sickness and disability related benefits. Recent growth in sickness and invalids benefit numbers is in line with other OECD countries, who are experiencing continued and at times dramatic growth in this area. At five percent, the proportion of our working-aged population receiving these benefits is amongst the lowest across OECD countries.

In New Zealand, the growth is primarily driven by rising numbers of grants to new beneficiaries. The principle reasons for the increase are:

The ageing population and the increase in the age of entitlement to National Superannuation - since 1999, half of the increase in SB and IB numbers have been in the fifty-plus age group

lagged health effects of long-term unemployment - this may particularly be the case for middle-aged people (30-49) who lost their jobs during the economic restructuring of the 1980s and early 1990s

particularly rapid growth in IB numbers for psychological disorders (depression, stress and bipolar disorder) and for the musculoskeletal category. For SB the growth was largest for people with of psychological conditions. Prior to 1995, there was no ‘stress’ category for disability-related benefits, so part of this increase is about more accurately identifying the reason for people’s entry to benefit

Ensuring full and correct entitlement and active case management – this means that people are now getting the correct benefit, appropriate to their health conditions.

The ‘typical’ IB client is likely to be between 40 and 64 years of age. They are slightly more likely to be male than female. The most common condition for this group is a psychological or psychiatric disorder, followed by intellectual disability and musculoskeletal system disorders, and are most likely to have been receiving their current benefit for between one and four years.

The ‘typical’ SB client is most likely to be 40-54 years. They are slightly more likely to be male than female. The most common condition is a psychological or psychiatric disorder, followed by a musculoskeletal system disorder. Just over half of this client group will receive SB for less than one year.

The record low levels of unemployment creates an opportunity to work with people on SB and IB who want to work to assist them into sustainable employment. This is the basis of the New Service for these clients being delivered by MSD. This new service includes active case management with a focus on employment, working more closely with medical professionals to ensure access to health services and develop rehabilitation plans, and working with employers.

Long-term unemployment: Issue Profile The decreasing numbers of unemployed and the current tight labour market provides an opportunity to capitalise on the gains made and achieve even better employment outcomes for difficult to place clients. Long-term unemployed clients have a complex range of barriers to employment.

There is also strong evidence that long periods of unemployment result in people losing confidence in their employability and losing work habits and skills. Additional assistance is required to identify barriers, overcome problems and re-integrate these clients into the labour market, which will complement the current range of initiatives and strategies aimed at assisting the long-term unemployed.

We have developed a model to prevent people reaching 4 years and beyond on benefits. Long-term unemployed clients will be intensively managed. They will have increased contact with case managers, the opportunity to participate in work readiness training, and undergo vocational assessments and other measures as appropriate to assist them into employment.

If after a period of intensive case management these clients have not obtained employment, they will be provided with suitable employment through subsidised placements, to help reintegrate them into the workforce and regain the skills they need to achieve sustainable employment.

Incentives will be provided to employers to encourage them to provide long term unemployed clients with an opportunity to gain the skills they need to achieve sustainable employment.

It is important that employers also ensure that these people become engaged in work without displacing other people in the labour market, It is anticipated that more than 6,400 clients will be managed through this new process in three regions over the next three and a half fiscal years. We estimate that the net cost to government will be in the vicinity of $8m (cost of services and subsidised work, less benefit savings).

This does not include the long-term savings of these clients staying off benefits or the social benefits of breaking the welfare cycle, increasing people’s participation in work and society, and improving their standard of living.

The typical long-term unemployed client is male, unmarried, with no dependent children and no formal qualifications. He is most likely to rent a home in urban New Zealand. With a fairly even distribution of ages in the range of 20 and 59 years for this population group, there is an equal chance that this client is aged between 20-30, 30-40 and 40-50 years, and a slightly higher chance that he will be aged between 50 and 59 years. This client has a history of being on benefits, and when registering for benefits during this particular duration, has stated that they are looking for work as a labourer.


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