Govt Expands MSD’s Traffic Light System to Boost Workforce Participation

Two New Non-Financial Sanctions Introduced to Encourage Job Seekers.

The Government is strengthening the Ministry of Social Development’s (MSD) Traffic Light System by adding two new non-financial benefit sanctions to encourage more job seekers to enter the workforce. Social Development and Employment Minister Louise Upston announced the initiative, highlighting its role in driving economic growth by incentivizing employment participation.

Encouraging Workforce Participation

“Our economy is stronger when more people are in work, and as we look to unleash economic growth, it’s important that as many Kiwis as possible share in the benefits,” Minister Upston stated.

“It’s essential that beneficiaries who are capable of working take reasonable steps to secure employment or remain work-ready. For those who fail to meet these expectations, there must be clear and meaningful consequences.”

The two new sanctions aim to enhance accountability and skill development for job seekers:

1. Report Job Search – Job seekers will be required to perform a minimum of three job-search activities every week for four weeks and report back to MSD. This measure ensures job seekers remain actively engaged in finding employment.

2. Upskilling – Beneficiaries must attend and actively participate in one or more employment-related training courses or programs for at least five hours per week over a four-week period. This initiative is designed to equip job seekers with the skills necessary to secure and maintain employment.

A Balanced Approach to Welfare Accountability

Minister Upston emphasized that while enforcing accountability within the welfare system is crucial, reducing benefits is not always the best solution. These new sanctions complement existing non-financial measures, offering alternatives to financial penalties for first-time obligation failures while ensuring job seekers remain engaged in employment-related activities.

“These sanctions are in addition to the new Money Management and Community Work Experience sanctions set to take effect later this year. We are positioning the welfare system to take full advantage of the anticipated economic growth, equipping MSD with the necessary tools to reduce welfare dependency and facilitate greater workforce participation.”

Positive Impact on Employment

The Government’s approach has already yielded promising results. Between July and December, over 33,000 people transitioned from Jobseeker benefits into employment—an increase of 22 percent compared to the same period in 2023. This surge coincided with a significant rise in benefit sanctions, with approximately 15,600 issued during that timeframe—a 126 percent increase.

“The evidence is clear: reinstating consequences for job seekers is having a positive impact. More people are moving off welfare and into work, which ultimately benefits both individuals and the broader economy.”

Implementation and Legislative Changes

The newly introduced non-financial sanctions will be included in the Social Security Amendment Bill, currently under parliamentary consideration. Beneficiaries subjected to these sanctions must provide verifiable evidence of their job search or training activities to return to ‘green’ status within the Traffic Light System.

By reinforcing these measures, the Government aims to create a more accountable and supportive welfare system that empowers job seekers, strengthens the labor market, and contributes to sustained economic growth.