Long-term welfare dependency declines despite rise in JobSeeker recipients

By Newsdesk

March 25 2024
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New research from e61 Institute has revealed that, contrary to popular belief, the number of people reliant on the benefit system in Australia has declined over the past two decades, despite an increase in long-term JobSeeker Payment (JSP) recipients.

Long-term welfare dependency declines despite rise in JobSeeker recipients

According to Dr Matt Nolan, Research Manager at e61, the number of unemployment benefit recipients who remained on the JSP for more than two years climbed from 150,000 to 500,000 between 2006 and 2023. However, this increase may be misleading when considering the benefit system as a whole.

"At first glance, the number of people receiving long-term JobSeeker Payments (JSP) increasing by such an amount would suggest a growing culture of welfare dependency," Dr Nolan said. "However, our research has delved below the surface and found that the headline increase may be misleading and that the relative number of people considered to receive long-term income support are at record lows."

The research found that over the past 20 years, substantial policy changes to both the types of benefit payments available and individual eligibility for those payments have led to individuals being shifted from, or deemed ineligible for, other benefit payments and folded into the JSP. This has made the JSP a 'catch-all' payment for many people who would have previously received targeted support.

"Overall, when we look more broadly at the integrated income support system, it appears that the long-term receipt of these payments has not been rising. However, more people who receive the payment long-term are transitioning from other benefits and onto the JSP which is a work-tested unemployment benefit," Dr Nolan explained.

The e61 research also measured how long individuals stay on the benefit and whether the rate of exit from benefits has changed. "If the magnitude of benefit dependence was increasing, we would expect to see a larger proportion of individuals staying on the benefit for longer," Dr Nolan said. "However, long-term recipients in recent years have been exited the benefit system more rapidly – with 53% of those who received the payment for a year exiting before the second year of payments."

The findings highlight the importance of a strong labour market in helping those with barriers to reemployment, such as being out of the labour market for an extended period, to find work again.

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