What happened to people who left the benefit system during the year 30 June 2016

What happened to people who left benefit system du…
01 Feb 2020
01 Feb 2020
01 Feb 2020


Understanding what happens to people when they leave a main benefit, and whether and how outcomes for people who exit a benefit have changed over time, will help MSD and the wider social sector improve supports for people leaving the benefit system. This is important because we want people to be supported into sustainable outcomes that improve their own and their whānau’s life.

The analysis in this report is a descriptive exploration of trends and patterns observed only. It aims to provide a starting point from which targeted research questions and analysis can be built. Further analysis is required to understand why there are differences in the experiences of different groups and how the Ministry of Social Development (MSD) could respond to these.

We focused on people exiting from a main benefit as this represents a change in a person’s primary source of income. They may still be receiving supplementary benefits even after leaving a main benefit.

This report analyses a group of people exiting main benefits in the year ended 30 June 2016, and:
• compares outcomes with those of prior investigation periods (section 3)
− Did the reasons that people exited a benefit change?
− Did what happen to people after exit change?
− Were there changes for different groups of people?
• looks at seasonal employment (section 4)
− How did outcomes differ for people who exited benefit to employment in seasonal industries compared to non-seasonal industries?
• examines differences in types of training and education (section 5)
− How did people’s outcomes differ by subject and qualification level?
• looks at the impact of mental health (section 6)
− How did outcomes after exit differ for people who accessed mental health and addiction (MHA) services?


There is no one methodology to define the study population and assign reasons for exit or people’s statuses over time. We have broadly adopted the methodology used in the 2018 MSD report, to enable meaningful comparisons to be made. Exit reasons are defined in Table 8. Changes to the methodology are explained and their impacts quantified in Appendix 1: Data and methodology. The Reliances and limitations section below outlines some of the limitations of the methodology adopted.

Due to the way data is structured in the IDI, a calendar-month view has been used. Earnings data in Inland Revenue’s Employer Monthly Schedules is only available by calendar month. This means that a person must have been off benefit for a full calendar month before being included in the study population. People who exit and return to benefit in a shorter period are consequently excluded. Readers should keep this in mind when considering the results in this report. See Appendix 1: Data and methodology. 

We also examine how long people who have exited from benefit have remained off benefit support or have maintained earnings above a threshold and how earnings have developed over time. We used a threshold of earnings of $1,260 per month (indexed to December 2017 dollars). This amount was chosen as it is approximately equivalent to 20 hours per week at minimum wage. Twenty hours per week is the minimum hours of work required for a sole parent to qualify for the In-Work Tax Credit.

Due to the way we’ve defined exit reasons, some of the people who are designated as having left benefits for reasons other than employment may also have earnings in excess of $1,260 per month. For example, someone may have left for tertiary education and have income above $1,260 per month – they would be classified as leaving for tertiary training rather than employment. It is also possible that some of the people assigned to Other earning categories for less than $1,260 per month may in fact have substantial earnings, for example if they have significant self-employed earnings.

The analysis in this report represents the key features and points of interest of this work. Also published with this report are electronic appendices containing raw data for researchers to use in their own work.

Key Results

Just over half of all people who left benefit in 2015/16 remained off benefit for all 18 months. This hasn’t changed materially since 2010/11 but a higher proportion are now going to employment.

Close to one third of people who left a benefit for employment in 2015/16 remained employed for all 18 months. This hasn’t changed materialy since 2010/11.

Of the people who exited a benefit to employment and initially earned more than $3,000 per month, 40% remained employed for 18 months. 

People who remain employed for 18 months had good earnings progression.

While Māori who leave benefit to employment have similar initial earnings to other New Zealanders, and Māori who remain employed for 18 months have good earnings progression, employment sustainability is not as high as non-Maori.

Around a quarter of people who leave to employment go to a seasonal industry.

People who have accessed a Mental Health and Addiction (MHA) service within three years are less likely to exit benefit and less likely to stay off benefit.

Just under half of people who leave a benefit for industry training or tertiary education remain off benefit for 18 months. This hasn’t changed materially since 2010/11.

Page last modified: 13 Oct 2023