The Community Wage

Hon. Peter McCardle
Minister of Employment

The Coalition Government's new direction in employment treats job seekers as "people, not numbers", says Employment Minister Peter McCardle.

Mr McCardle today unveiled details of the Community Wage which will replace unemployment benefits from 1 October this year.

"It's a positive for the job-seeker because they will receive a community wage in return for participating in training, part-time community work, or other activities, where they are provided.

"It will maintain their motivation, dignity and skills as they move into paid employment.

"All job seekers receiving the Community Wage will have a contract which specifies their obligations, including being available for community work and actively seeking paid employment. There will be penalties for failing to comply.

"The penalties are based on the principle that if you are offered community work, training or organised activities and you don't participate, you don't get paid."

Mr McCardle said the Community Wage is a key part to maximising the number of job seekers taking part in community work, training or other organised activity in return for the income they receive from the State.

"This new direction is also about changing attitudes towards the unemployed. It will help keep job seekers connected to the workplace and community, to maintain their motivation, and prevent loss of confidence, skills and self esteem."

The philosophy behind the Community Wage is to treat job-seekers as similarly as possible to those in paid work, to maximise their employability and work-readiness.

The community work, training or activities offered to job seekers will be suitable and consistent with helping them return to unsubsidised paid work.

Ends

Contact: Helen Keir, press secretary
Phone: (04) 471 9366

Background Information

Employment Policy Economic growth is the key to reducing overall unemployment.

It is our economic environment that largely enables businesses to expand and prosper, providing the conditions for sustainable job growth.

In general, New Zealand needs around 3% GDP growth a year as a minimum, to both absorb the 20,000 plus job seekers added to the work seeking population each year, and to reduce the existing numbers of unemployed people.

While through economic and employment policies the Government does all it can to help create real jobs, the resources of the NZ Employment Service have a greater specific ability to cut the length of time people are unemployed.

The Coalition Government's Employment resources are focused on cutting long-term unemployment, and changing the way we treat job seekers while they are between jobs and receiving State support.

To achieve these objectives, the new direction for employment comprises four far reaching initiatives:

• Results, not activities, are the focus of our employment policy. Success will be measured by containing or reducing the numbers of long-term unemployed, and by building the number of job seekers active on the Community Wage in any one week.
• The integration of the three separate services of Income Support, the New Zealand Employment Service and the Community Employment Group into a one-stop-shop for job-seekers.
• The replacement of the Unemployment Benefit with a Community Wage.
• The introduction of Regional Commissioners to develop and introduce regional employment plans that deliver on the Government's employment goals.

Community Wage - A Summary

The Community Wage is about maximising the number of job seekers taking part in community work, training or other organised activity in return for the income that they receive from the State.

By viewing and treating unemployed job seekers as much like members of the paid workforce as is practically possible, they will maintain their work skills and self esteem, and therefore, improve their chances of moving rapidly into permanent paid work.

Key features of the Community Wage are:

• A single State income support payment, the Community Wage, will cover all job seekers and incorporate all existing unemployment benefits, including the training benefit.
• All unemployed job seekers receiving the Community Wage will have a contract which specifies their obligations to be available for community work, training or other organised activity.
• A set of sanctions, based on the principle that if you are offered community work, training or organised activities and you don't participate, you don't get paid.
• A job seeker facing a Community Wage reduction or suspension is able to regain access to the Community Wage by participating in one of an expanded range of activities.
• Sanctions will only be applied where job seekers do not have a "good and sufficient reason" for their failure to fulfill obligations.
• Staff of the new integrated employment and welfare department, sponsor organisations and training providers will receive material explaining their roles and responsibilities, including the use of sanctions where performance is unsatisfactory.
• Job seekers aged 60 plus will have the option of participating voluntarily in organised activities, but they will not be required to participate, and are therefore not subject to the reciprocal obligations and sanctions regime. Job seekers aged 55 plus will have the choice of not participating after 6 months registration.
• A community participation flat rate allowance of $21 a week will be paid, which is an increase on the existing Community Taskforce allowance. Additionally, up to another $20 is reimbursable, to assist job seekers who face particular extra "actual and reasonable" costs, above $21 a week.

Community Work - A Summary

One of the main activities in which Community Wage recipients will be required to participate, where it is provided, is community work.

Taking part in community work helps job seekers to maintain their work skills, motivation and self-esteem, while giving something back to the community that supports them.

Community work is currently based on the Community Taskforce scheme, which has an established sponsor base, and has successfully provided over 50,000 job seekers with community work experience since 1991.

Community work is unpaid work that is of benefit to the community or the environment, rather than to private businesses or individuals. It is underpinned by a number of policy principles, which Regional Commissioners will be guided by when they develop their strategies at the local level to reduce long-term unemployment.

For example, community work should not displace current or future paid workers. It should be work that benefits participants by developing or maintaining their self esteem, motivation, work disciplines and ethic.

It should, as much as possible, resemble a paid work environment. However it should not reduce the incentives of individuals to move into paid work, and it should not be used when there are other options available to move a job seeker more quickly and cost effectively into work.

The key features of the Community Work programme are:

• Any job seekers for whom Community Work is part of their action plan may be required to participate in community work.
• Community work is unpaid work of benefit to the community or the environment.
• No-one will be financially worse off as a result of being required to participate in community work.
• In addition to their Community Wage, participants will receive a participation allowance of $21 a week, with up to $20 further being available for actual and reasonable extra costs, above $21 a week.
• Job seekers facing a full-time work expectation may be required to work up to 20 hours per week in community work, and job seekers facing a part-time work expectation may be required to work up to 10 hours per week in community work. This is to allow job seekers time to also seek paid employment.
• The work can be spread over any days excluding Sunday, by agreement between the job seeker, the sponsor and the new department.
• Sponsors can employ job seekers to work paid hours in addition to their community work placement. Any extra paid work will be in the nature of an employer-employee relationship, and is therefore governed by employment legislation. Income from such work is taxable, and may potentially result in abatement of the Community Wage.
• Paid work, both part-time and full-time will take precedence over community work.

Receipt of the Community Wage carries with it a number of obligations. Job seekers are expected to be available for and actively seek paid work, and to participate in community work, training or organised activities when required.

While it is expected that job seekers will volunteer to participate in those organised activities which are deemed appropriate for them, it will be possible to require participation where it is considered to be in a job seeke's best interests.

Refusal to carry out these obligations carries a penalty, in much the same way that workers who don't turn up for work don't get paid.

The sanctions have been designed to be broadly consistent with the severity of the breach, and to encourage job seekers to rapidly recomply with their obligations.

Question and Answers

1. What is the Community Wage?
   The Community Wage is one of the key measures which will assist in achieving the Government's primary employment policy objectives of reducing the length of time people are unemployed and keeping job seekers active.

   Under the Community Wage unemployed job seekers receive a "wage" from the State in return for certain obligations, including being available for and actively seeking paid work, and participation in community work, training or organised activity, where it is provided.

   The Community Wage will help job seekers maintain their work skills and self-esteem, and therefore, improve their chances of moving into full or part-time paid work.

2. When will the Community Wage policy be implemented?
   The Community Wage will be implemented and effective from 1 October 1998.
3. How will it work?
   The Community Wage will be the income support payment a job seeker receives from the government. When a job seeker applies for income support, they will enter into a contract (Job Seeker Agreement) to actively seek paid work, and to be available for any appropriate organised activity which is provided. In order to receive the Community Wage, the job seeker must sign the contract, and fulfil the obligations contained in it.
4. Will the new rules apply to existing or only new job seekers?
   Existing job seekers will not be required to sign a job seeker's agreement immediately, although new job seekers will do so. In the usual course of interviews, existing job seekers will be required to sign the new job seeker agreement.
5. What Unemployment Benefits does the Community Wage cover?
   The unemployment benefits the Community Wage applies to include the current Unemployment Benefit, Young Job Seekers Allowance, 55 Plus, the work-tested Independent Youth Benefit and Emergency Unemployment Benefits, and the Training Benefit.

   Job seekers over 60 years of age can volunteer to participate in organised activities, but they will not be required to participate. Those aged over 55 will be treated the same after 6 months of registration.

6. Will the Community Wage concept apply to sole parents, widows, and sickness and invalids beneficiaries?
   Reviews of the treatment of these beneficiary groups are the subject of Benefit Reform work under the Minister of Social Welfare. Announcements on the outcomes of these reviews will be made in the Budget.
7. What type of Community Work will participants be required to take part in?
   Job seekers can be directed to participate in a number of organised activities of benefit to the community and which will help them to acquire skills and experience that will assist them into paid employment.
8. Will job seekers be forced to do work they are not suited to?
   Job seekers will be matched to work and training suitable to them and which is consistent with assisting them into paid work.

   In making a decision about suitable activities, front-line staff of the new integrated employment and welfare department will consider whether it is fair and reasonable to require participation in a particular activity.

9. Are Community Wage recipients able to pursue their own community work, training or organised activity?
   The fundamental change from the Unemployment Benefit to an "on-call" Community Wage allows job seekers to better use their Community Wage to seek suitable community work or training that fits within the Department's conditions and rules.

   They will have to seek prior formal approval by the Department of their work or training, to access the community participation allowance.

10. How many hours will Community Wage participants be required to work?
    Full-time work tested beneficiaries may be required to undertake community work of up to 20 hours per week.

    Part-time work tested beneficiaries may be required to undertake community work of up to 10 hours per week.

    These maximum hours have been designed to ensure job seekers have time for job search.

11. What about travelling costs and other costs when job seekers take part in Community Work?
    A community participation flat rate allowance of $21 a week will be paid, which is an increase on the existing Community Taskforce allowance.

    Additionally, up to another $20 is reimbursable, to assist job seekers who face particular extra "actual and reasonable" costs, above the $21 per week.

12. How will the contract between the new Department and the job seeker work?
    On applying for the Community Wage, a job seeker will be required to enter into a contract to be available for and to undertake any organised activity (eg training or community work) to which they are directed in addition to being available for and actively seeking paid work.

    In order to maintain eligibility for the Community Wage, the job seeker must sign the contract, and meet its terms and conditions.

13. What will happen if a person refuses to fulfil their Community Wage obligations? Will they lose their income?
    As part of the Community Wage approach, a job seeker may be directed to participate in an organised activity, including community work, in order to assist them towards paid work.

    If a person fails to participate as directed (eg refuses to participate, quits or is dismissed from an activity, turns up late), they will face a sanction of either a Community Wage reduction, or a Community Wage suspension.

    If a person refuses to undertake, leaves or is dismissed from community work, training or other work test activities without good reason, the Community Wage will be suspended until the job seeker recomplies.

    However if they recomply within the five day notice period there will be no penalty (first offence). Where this is a second offence, there will be a minimum one week income suspension. For a third offence, there will be a 13 week non-entitlement period, which can be reduced to 4 weeks by participation in a "clean slate" activity.

    If a person participates in an activity for less than the required number of hours, their benefit is reduced for the relevant period by an appropriate amount, of up to 40%. They then receive the full Community Wage for the next "pay period", unless they again fail to participate as required.

14. What else is provided to ensure long-term job-seekers are fairly treated?
    To ensure fair and reasonable treatment for a job seeker who fails the work test, but who then fulfils their obligation for a lengthy period, an 18 month amnesty of work test failures will be provided.

    This will not end any sanction that is in place when the 18 month duration is reached, but will allow a job seeker to effectively start anew after that period.

15. What about income support for dependent spouses and children, if the job seeker loses their income for failing to comply?
    Dependent spouses will continue to have access to recoverable special needs grants, subject to strict criteria and a maximum amount equivalent to approximately half the weekly rate of the Community Wage.
16. Will other options be considered, before sanctions are implemented?
    A handbook for sponsors will be produced to explain the principles by which the new sanction regime should be guided.

    As a general rule, job seekers performance should be treated as similarly as possible to the workplace situation. Improving Community Wage recipients standards of attendance, behaviour and attitude are an important part of the Community Wage concept.

    Accordingly, the imposition of financial sanctions should be a last resort. Other practical strategies for unsatisfactory performance, such as making up time are simple examples of the "close to the workplace" approach intended by the Community Wage.

17. Who/what are sponsors?
    Sponsors are organisations, such as community organisations or work trusts who take on a job seeker to do Community Work.
18. What information will sponsors and training providers be given?
    The sponsoring organisations will be provided with a Handbook providing details of the Community Wage, its purpose and details. This will be available before implementation on October 1.

    The handbook will include the important principle that sponsors treat job seekers as similarly as possible to the work situation. Financial sanctions ought to be seen as a final resort, following the exhaustion of more common paid work options for addressing unsatisfactory performance.

19. How will the Government ensure real jobs are not lost?
    One of the key principles underpinning Community Work is that it does not displace members of the paid work force and does not take away work from the private sector.

    Currently the New Zealand Employment Service ensures that Community Task Force programmes do not result in displacement through assessing the programmes prior to approval, in order to determine what the job is and who it is for.

    Sponsors are required to sign a contract stating that if it were not for the Community Task Force programme, the job would not be done. The number of workers on Community Taskforce programmes in the last ten months has risen by over 120 percent, without any evidence of displacement. Similar procedures will be used for community work.

    Regional Employment Commissioners will be expected to develop additional strategies to ensure displacement does not occur. For example involving employer or contractor representatives on Regional Committees in the process of monitoring community work projects should help ensure displacement does not occur.

20. What are flexible community work principles?
    Historically, New Zealand has had centrally created community work programmes. Under the Community Wage, Regional Commissioners will have greater flexibility to develop community work strategies suited to local conditions.
21. Will Community Wage participants have ACC cover?
    Job seekers receiving the Community Wage are covered through the ACC non-earners' account. Community Work sponsors are required to provide a safe workplace as specified by the Health and Safety in Employment Act, but they are not liable to pay ACC premiums for job seekers who participate in their Community Work projects.
22. What about sick pay, holiday pay and the Employment Contracts Act?
    The Community Wage is a State income support payment, so those receiving it do not get sick pay and holiday pay, even if they are participating in a work experience activity.

    The Community Wage recipient doing community work is not in an employer/employee situation, so the Employment Contracts Act does not apply.

23. What other protections will ensure job seekers are fairly treated?
    Maximum weekly hours of up to 20 for full-time work tested community wage recipients, and up to 10 hours for part-time community wage recipients have been designed to ensure job seekers have time for permanent job search.

    These hours have also been set to ensure that no job seeker will work for less than the minimum wage for the hours worked.

24. Can job seekers do extra work and get paid extra for it?
    In keeping with the Government's philosophy that paid work underpins economic independence, job seekers are encouraged to take up opportunities to do paid work. Therefore, job seekers and sponsors are free to arrange for additional paid hours to be worked, on top of any community work requirement.

    Any additional paid hours will be treated as earned income, and will therefore be taxable, and may potentially result in Community Wage abatement. The additional hours will also be governed by an employer-employee relationship, unlike the hours of community work. Therefore, employment legislation (Employment Contracts Act, Holidays Act, Minimum Wage Act, ACC provisions) will be applicable.

25. Will the organisations get any financial assistance for taking job seekers on?
    Sponsors that take on job seekers under the Community Work programme get the benefit of the work of a part-time employee whom they would not have been able to afford to pay.

    In return, they are required to contribute to projects by supervising participants, and providing necessary safety equipment and project materials.

    When groups of workers of four or more are involved in a project, supervisor assistance can be applied for.

    A full review of the expanded Community Taskforce Programme is due in December 1998, which will report on any issues which may have inhibited the expansion of community work numbers.

26. What legislative changes will be required for the Community Wage to take effect?
    The introduction of the Community Wage and the community work initiative will require substantial amendments to the Social Security Act 1964.
27. How many job seekers will take part in community work, training or organised activities?
    As an interim measure, the New Zealand Employment Service has expanded community work through the Community Taskforce programme during 1997/98. It is expected that approximately 10,000 job seekers will be participating in community work and approximately 9,000 in training, a total of 19,000 by the end of June 1998.

    When the new integrated employment and welfare department starts operating, Regional Commissioners will determine the mix of programmes in their particular region, depending on the needs of the local labour market, and of individual job seekers.

    Job seekers will be involved in community work, training or other organised activities where it is considered that participation is appropriate.

    The Government's goal is to continue to steadily increase the number of participants to the maximum possible.

28. Will job seekers receive a reference?
    In keeping with the positive intent of maximising the involvement of job seekers in suitable activities, including community work, the contracts with the sponsoring organisation will include a requirement for the provision of a reference for the job seekers at the end of their time with the sponsor, covering their attendance, attitude and other relevant employment related performance.
29. Is this process about hiding the numbers of unemployed?
    No, this change is not about hiding the numbers of unemployed. There will be no change to the way that unemployed job seekers are classified as a result of these changes, so there will be no direct effect on the statistics of registered unemployed.

    People doing community work on the community wage, will remain in the unemployment statistics, but will be recorded as participating in community work.

30. How will job seekers be advised of these changes?
    Job seekers will be advised by their local Income Support and NZES officers.