Fewer people reliant on income support despite cost-of-living pressures

The rising cost of living has become a major discussion point in recent years. Despite the economic turmoil we’re experiencing, reports have revealed that fewer people are reliant on government monetary support.

This may come as a surprise to some, especially as we’ve just gone through the pandemic, where government payments such as JobSeeker were crucial for many families without work.

“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,” commented e61 Institute research manager Dr Matt Nolan.

“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 last two decades, according to e61, has seen a sharp decrease in people receiving long-term income support.

One reason for this happening is the reduction of targeted support. Payments like the NewStart allowance, paid parenting payments, and disability support pensions have reportedly been folded into JobSeeker payments.

“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,” Nolan said.

“If the magnitude of benefit dependence was increasing, we would expect to see a larger proportion of individuals staying on the benefit for longer. However, long-term recipients in recent years have been exited the benefit system more rapidly – with 53 per cent of those who received the payment for a year exiting before the second year of payments.”

“This highlights the importance of a hot labour market getting those with barriers to re-employment, such as being out of the labour market for an extended period of time, back into work.”

Commenting on the research, e61 said: “While the number of unemployment benefit recipients who remained on the unemployment benefit long term (for two or more years) has climbed from 150,000 to nearly half a million between 2006 and 2023, most of the increase in long-term JobSeeker Payment (JSP) receipt can be explained by policy changes.”

“Individuals are being shifted from, or deemed ineligible for, other benefit payments. This has made the JSP a ‘catch-all’ payment for many people who would have previously received targeted support. Accounting for these policy changes, we find that long-term benefit receipt rates are historically low.”