MSD Traffic Light System Lifts Compliance to 99%

“90 per cent of clients surveyed said they found the traffic light system helpful for understanding their obligations,” Ms Upston said.

A Government evaluation has found that nearly all Jobseeker Support recipients are now meeting their work-search obligations under the traffic light welfare system, with sanctions falling sharply and most clients reporting improved clarity about their responsibilities.

Social Development and Employment Minister Louise Upston says the Ministry of Social Development’s latest review shows the system is delivering measurable behavioural change just over a year after its introduction.

“90 per cent of clients surveyed said they found the traffic light system helpful for understanding their obligations,” Ms Upston said.“We’re also seeing nearly 99 per cent of clients fulfilling their obligations, along with a 10.6 per cent drop in sanctions between the September 2024 and September 2025 quarters.”

Resetting Welfare Expectations

The traffic light system, introduced in August 2024, categorises beneficiaries using red, orange and green indicators to signal whether they are meeting, at risk of not meeting, or failing to meet their work-search responsibilities.

It formed a central plank of the Government’s welfare “reset”, designed to reinforce conditionality and encourage faster movement into employment.

“The system was designed to reset expectations for those on welfare, and we now know this reset is having a big impact,” Ms Upston said.

Under the framework, beneficiaries must complete a range of employment-related activities, including job applications, seminars, interviews and engagement with employment case managers.

Sanctions Decline as Compliance Rises

The evaluation indicates that stronger upfront clarity around expectations may be reducing the need for punitive measures.

• 99% compliance rate with obligations

• 10.6% reduction in sanctions year-on-year (September 2024 to September 2025 quarters)

• 90% of surveyed clients say the system helps them understand requirements

The drop in sanctions suggests earlier intervention and clearer communication may be preventing breaches before enforcement action becomes necessary.

Frontline Investment and Incentives

The traffic light system has been backed by expanded frontline services and employment incentives.

Recent initiatives include:

• A phone-based employment case management service

• Increased frontline staffing for more frequent client contact

• Regular work-readiness seminars

• Expanded community job coaching

• Non-financial sanctions as an alternative compliance tool

In late 2025, the Government also introduced a $1,000 bonus for young people who transition from community job coaching into employment and remain off benefit for more than a year.

MSD has also enhanced collaboration with businesses to improve job matching and employer engagement.

Target: 50,000 Fewer on Jobseeker Support

The reforms are part of a broader goal to reduce long-term welfare dependency and achieve 50,000 fewer people on Jobseeker Support by 2030.

“Welfare dependency in New Zealand often begins when young and capable people don’t gain employment,” Ms Upston said.“Welfare is conditional on recipients meeting their responsibilities. Jobs are out there, and work will always be the best way for New Zealanders to support their families and get ahead.”

While acknowledging ongoing labour market pressures, the Government says the welfare system must remain “fair, firm and simple” as economic conditions improve.

The full evaluation report is available on the Ministry of Social Development website.