New Jobseeker Policy Sparks Concerns Over Youth Dependency

The New Zealand government announced a significant change to the eligibility criteria for Jobseeker benefits, impacting young adults aged 18 and 19. Starting November 2024, those whose parents earn more than NZ$65,529 will no longer qualify for financial support. This policy, outlined in the May budget, has raised concerns among social advocates and economists regarding its potential effects on youth dependency and family dynamics.

Social Development Minister Louise Upston articulated the government’s intention: “We want to be clear with young people, 18- and 19-year-olds and their parents, our expectation is that they are in further education, training or a job, and welfare should be a long way away from their first option.” Despite this assertion, the lack of a regulatory impact statement from the Ministry of Social Development has left many questioning the expected benefits of the initiative.

The previous regulatory impact statement highlighted that changes to housing assistance entitlements could disproportionately affect marginalized groups, including Māori, Pacific peoples, and young people. Critics argue that the new Jobseeker proposal could similarly impose unintended hardships on these communities.

The implications of the new income limit are particularly stark. For instance, a teenager living at home may qualify for NZ$268.13 per week in Jobseeker support if their parents earn just below the threshold. In contrast, if their parents earn even $1 more, that support vanishes entirely. This situation raises questions about the practicality of the income cap for families, particularly those with limited resources.

Consider the scenario of a single mother earning NZ$75,000 annually with two teenagers, one of whom is unemployed and 18 years old. Under the new rules, she would face a decrease in support from Working for Families and other benefits, effectively rendering her less than NZ$1,000 better off for an additional NZ$20,000 in earnings. Consequently, it might become economically viable for her to restrict her earnings to allow her child to qualify for Jobseeker support.

The introduction of a parental income test adds further complexity to the situation, particularly for families with separated parents or those unwilling to disclose financial information. Questions remain about how these circumstances will be managed under the new policy framework.

This change in policy comes just before the next election, and its timing raises political concerns. The Labour Party has criticized the plan but has not committed to reversing it. The government’s stated aim of encouraging young people into work may backfire, as low-income families could feel incentivized to reduce their earnings to maintain their children’s access to benefits.

As of June 2023, approximately 15,000 18- and 19-year-olds were receiving Jobseeker support, with around 4,300 expected to become ineligible due to the new income threshold. The overall unemployment rate in New Zealand stands at 5.2%, but youth unemployment is significantly higher at 12.2% for those not engaged in employment, education, or training.

As New Zealand faces economic challenges, it is crucial to support young adults in finding meaningful work rather than treating them as dependent children. Advocates like Susan St John from the Auckland Business School emphasize the need for investment, mentorship, and opportunities for young people to thrive in a competitive job market. The government’s new policy, rather than facilitating this growth, risks entrenching disadvantage among vulnerable populations.