In-work poverty symptomatic of economic injustice

Media Release: The Aotearoa New Zealand Association of Social Workers (ANZASW)

November 26th 2019

A report on in-work poverty published this week by the Human Rights Commission (HRC) is a reminder that a fair pay is an absolute prerequisite to making progress on many of our country’s chronic social challenges.

The study revealed the scale of working poverty in the country, finding that 50,000 working households were deprived, with many more only just getting by. Women / wahine, minorities, the disabled and single-parent families / whānau were disproportionately affected.

“The government, which has made child poverty, equality and well-being centrepiece policy issues, should take note of this report and its very clear implications,” ANZASW Chief Executive Lucy Sandford-Reed said.

HRC’s report has clearly demonstrated how working poverty disproportionately affects children / tamariki, noting that 10% of children / tamariki living in working households are below the poverty line, compared with 7.2% of adults.

“So if we want to see better outcomes for children / tamariki in poverty, less inequality and poor social outcomes more generally it’s hardly controversial to note that earners in households need to be paid enough to avoid subsistence living, or worse, working full time and not even having enough,” Sandford-Reed said.

But it’s not just those on the lowest in-work incomes that are affected. The data in the report also demonstrates that government top-ups are keeping thousands more households only just out of reach of poverty.

Constant financial precarity can also significantly impact on the well-being of whānau / families and individuals.

Why does work not pay?

The wider question posed by this study is: why does work not pay for so many New Zealanders?

Changes in the economic environment suggest answers as to why such a large segment of the working population are not able to make ends meet.

Max Rashbrooke, senior associate at Institute for Governance and Policy Studies, has noted that the mismatch between growth in the overall economy and wage rises have left workers on average $11,500 worse off per year, with companies paying 10% less of their profits than they did decades ago.

The divergence began in the 1980s and accelerated in the decades afterwards, during a period in which neoliberal economics was in the ascendant across the western world, with Aotearoa New Zealand no exception.

As a result, inequality has risen to severe extremes: as noted by Oxfam NZ, the wealthiest 20 per cent of households in New Zealand hold 70 per cent of the wealth, while the top 10 per cent hold half the wealth; while two billionaires have a combined wealth greater than the bottom 30 per cent of the adult population of New Zealand.

“The impact of the neoliberal era on workers has largely been restricted wages, rising household debt and constant worry about making ends meet. Modest but welcome reforms only go so far; structural change is needed.

“Wages should keep pace with growth- this is a matter of fundamental economic justice,” Sandford-Reed concluded.