The New Zealand government is expanding its beneficiary traffic light system by introducing two new non-financial sanctions aimed at increasing workforce participation. Social Development and Employment Minister Louise Upston announced the changes, which will take effect on May 26, 2025, as part of broader welfare reforms designed to hold job seekers accountable while maintaining their financial support.
Changes to the Traffic Light System
The traffic light system, introduced in 2024, categorises beneficiaries with work or social obligations into three groups:
- Green: Compliant with obligations.
- Orange: Obligation failure, with five working days to respond.
- Red: Active sanction for continued non-compliance.
Previously, sanctions under this system primarily involved financial penalties. However, following select committee hearings, the government is now introducing non-financial alternatives to encourage job seekers to remain engaged in the workforce while retaining their full benefits.
New Non-Financial Sanctions
The two additional sanctions are:
Report Job Search – Beneficiaries must complete a minimum of three job-search activities each week for four weeks and report their progress to the Ministry of Social Development (MSD).
Upskilling – Beneficiaries must participate in employment-related training for at least five hours per week over a four-week period.
The new sanctions join the Money Management and Community Work Experience requirements introduced last year, further tightening welfare rules. Beneficiaries sanctioned under the new measures must provide evidence of their activities to return to green status.
Political and Public Reactions
The opposition has strongly criticised the government’s approach. Labour leader Chris Hipkins condemned the policy, calling it “punitive” and arguing that it “kicks people when they’re down” rather than helping them find employment. Green Party spokesperson Ricardo Menéndez March went further, describing the changes as “cruel policies” that “inflict pain and misery” on those struggling with poverty.
But Upston defended the reforms, citing early signs of success. Between July and December 2024, over 33,000 people moved off Jobseeker Support into work, a 22% increase compared to the same period in 2023. This coincided with 15,600 additional benefit sanctions, representing a 126% increase.
Future Implications
With the government aiming to reduce the number of Jobseeker Support recipients by 50,000 by 2030, these new measures mark a significant shift toward a more work-focused welfare system. Supporters argue that the reforms promote personal responsibility, workforce readiness, and economic growth by ensuring that those who can work are actively seeking employment or upskilling.
The government maintains that by providing clear expectations and support mechanisms, the new approach will not only reduce long-term benefit dependency but also empower job seekers with the tools and opportunities needed to successfully enter the workforce and contribute to New Zealand’s economy.