More than 50,000 working households live in poverty, new report reveals

Sunday, 24 November 2019

New research finds 50,000 working households are living in poverty across Aotearoa.

Mareta Sinoti spent years of her life working through the night, vacuuming, spraying, and scrubbing the offices which keep New Zealand running.

A working day began at 6pm at the Wellington High Court. It was then a short midnight walk to her next job, at Parliament, where she cleaned the offices of politicians – even the prime minister's a few times – until 6am.

It was tough work. But 'a job is a job', she says, and with two children to clothe and feed, it's better than being on a benefit.

But for many workers like Sinoti, the wages aren't enough. A new study reveals 7 per cent of working households – more than 50,000 homes – are living in poverty.

Mareta Sinoti is a cleaner at the National Library on the minimum wage. Across the road, at the Beehive, a cleaner earns the living wage.

* Minimum wage to rise to $17.70 - what will it mean for you?

* New Zealand's 'working poor' and the push to understand how many are struggling

* When the wages aren't enough: Government commissions 'working poor' study**

The report, published by the Human Rights Commission on Monday, reveals who among us aren't earning enough to live, and how many are to falling below the poverty line – even just for a month or two.

In many ways, Sinoti, 47, is the kind of worker the report is talking about. She's a woman, she's from Samoa, she's a cleaner on minimum wage.

Those night-time cleaning shifts ended four years ago. Now, Sinoti works during the day, her sons are working and supportive, and her husband claims a pension.

A new report into 'in-work poverty' shows 50,000 working households are below the poverty line.

But at the National Library, she's on the minimum wage – $17.70.

It's a simple equation. Take home wages might be $500 a week. Rent is $300. A 10-trip train ticket from Porirua to the city is $51.

'Then you figure it out, how much you pay your power, your food, your phone … And then, there's no money left for the weekend.'

Frustratingly, a few hundred meters across the road, the cleaners now cleaning the Beehive earn the living wage – $21.15.

Food banks across the country say shelves are bare due to high demand. It comes are hardship grants needed at Work and Income offices escalate, but unemployment is very low. (file photo)

It's not fair, she says. They have the same job and, really, the same boss.

WORKING BUT POOR

The report makes clear the inequity felt by New Zealand's poorest workers. The headline figure shows 7 per cent of working households, or more than 50,000 homes, are living in poverty.

Poverty is measured in a few ways in New Zealand. The in-work poor report uses a poverty definition slightly higher than the target set by the Government's Child Poverty Reduction Act: a household earning beneath 60 per cent of the median income, before housing costs are subtracted from the equation.

Hundred of retails workers protest in favour of living wage, picketing outside St Lukes' Countdown, in 2019.

So, take median income – which in June 2019 was $1019 per week – draw at line at the 60 per cent mark (roughly $600 a week).

Of course, it's not as simple. Such a wage may have a single member household above the poverty line, compared to a family of four. The data of each household is first passed through a flattening formula, so the income of a small family is comparable to that of a large family, giving a group which falls below the line.

To then determine just which working households were below the line, Auckland University of Technology researchers took data from Census 2013 household data and linked it to anonymised Inland Revenue and MSD data.

Pensioners were subtracted, and self-employed households couldn't be counted. A working household was defined as having one adult working for any wages or salary, for seven months in a year.

The result: Four in five households are working, and 7 per cent of these below the poverty line.

Only 1 per cent of these households are below the line for a full year. Many, 20 per cent, fall below the line for one or more months in a year.

And one in 10 children in working households are living below the poverty threshold.

AUT professor of economics Gail Pacheco, part of the team who produced the report, says the in-work poverty rate can double for specific population groups.

More than 12 per cent of single-parent households qualify as working and impoverished, and without Government support this jumps to 21.6 per cent – one in five.

Equal Employment Opportunities Commissioner Dr Saunoamaali'i Karanina Sumeo says a new in-work poverty study shows that, in New Zealand, work won't always save you from poverty.

Families of Pacific and Asian ethnicity experienced above average rates of working poverty, at 9.5 and 9.4 per cent, compared to Pākehā families at 5.9 per cent.

'If you have a second worker in the household that reduces in-work your poverty rate quite substantially,' Pacheco says.

'Couples with children, if they have only one adult working, their in-work poverty right now is about 13 per cent, and this falls to about 2 per cent if both the adults are working.'

The overall in-work poverty rate hadn't change between 2007 and 2017, the report notes.

While the Census data used is now six-years-old (the more recent and compromised Census 2018 data wasn't available), other data points means an educated guess can be made about how low-paid working families have fared since.

There's been a boost in the minimum wage, and unemployment is low at 4.2 per cent.

Workplace Relations Minister Iain Lees-Galloway says a report into 'in-work poverty' shows the Government promises Fair Pay Agreements are required. But he's been accused of kicking the can down the road, as it looks as if such agreements won't be instated in this term of Government.

But the cost of living keeps rising. Hardship grants given out by MSD are escalating sharply – a $167 million bill in the past four months. Food banks across the country are reporting high demand, and empty shelves.

A QUESTION OF FAIRNESS

Equal Employment Opportunities Commissioner Dr Saunoamaali'i Karanina Sumeo says the study shows that in New Zealand work won't save you from poverty – and she says it won't have improved since 2013.

'The struggle is real for many of our families … They're on the edge. And remember, we're talking about poverty here, so there'll be lots more families living in hardship.'

In her role at the Human Rights Commission she's particularly focussed on discrimination, and she says the report proves what they suspected and fits with other statistics.

There's a increasingly discussed gender and ethnic pay gap. Māori and Pacific workers feature heavily in the 295,000 'underutilised' workers counted by Statistics NZ – meaning they're not getting the work they want.

Sumeo was surprised by the number of working households who fell into poverty for a month, and the high-rate of Asian families working but in poverty.

Social Development Minsiter Carmel Sepuloni has boosted Working for Families, a tax credit which a new 'in-work poverty' report shows saves many from working families from falling below the line.

'That may be a blind spot that we didn't see before,' she says.

She's not optimistic that wage increases will have sizably changed the fortunes of low-income workers.

But Sumeo is encouraged by conversations she's having with Kiwi businesses like Sky City, The Warehouse, BNZ, and insurance firm AIA, about pay equity.

'There are lots of different things that we need to do, and it's not just up to Government … some businesses are well ahead on this,' she says.

'Attitudes are shifting.'

E Tū assistant national secretary Annie Newman is pushing for attitudes within Government to shift faster.

The union has lobbied numerous Government ministers in recent months, reminding them of their promises: a living wage for its workers and Fair Pay Agreements.

'Public servants are being paid poverty wages. They may have a different employer, but they are delivering a service to the public,' she says.

'When that police station is cleaned, thats a service to the public. When somebody is standing outside a WINZ office, protecting staff and the public, that is a public service.'

NO FAST FIX

In the Beehive, Government ministers are unsurprised about how many working families are living in poverty.

Workplace Relations Minister Iain Lees-Galloway says the report showed why Fair Pay Agreements, which would compel unions and employer associations to negotiate industry-wide collective agreements, were needed.

'These are long term problems that have developed and built up over decades,' he says.

He says this was 'urgent work' for the Government.

But unions say the Government has delayed the process, and with a new round of consultation due to wrap up next year it appears the agreements won't be in place by the 2020 election.

Social Development Minister Carmel Sepuloni says the report is historical and from the time of the previous Government.

'The report reinforces that the government's priorities are in the right places.'

The Government has boosted funding to schemes such as Working for Families, which the report says keeps many working families above the poverty line. Sepuloni says the Government's $5.5 billion boost will lift 50,000 or more children from poverty.

Economic Development Minister Phil Twyford, responsible for Government procurement, says work has started on extending the living wage to 'vulnerable contractors such as cleaners and security guards'.

Sinoti was at the E Tū meetings with Government ministers. She says her colleagues gave her a hard time for talking so bluntly.

'Too many times we are coming to Parliament asking about living wage,' she says.

'IN-WORK POVERTY' BY THE NUMBERS

* 7 per cent of working households, more than 50,000, fell below the poverty line.

* 1 per cent of these households fall below the line for a full year. 20 per cent fall below the line for one or more months in a year.

* After housing costs, 9.2 per cent of households – 67,000 homes – fell below the poverty line.

* In-work poverty increases to 9.2 per cent when Government support, Working for Families and Accommodation Supplement, are excluded.

* One in 10 children in working households are living below the poverty line.

* Pacific and Asian households had above average rates of working poverty, at 9.5 and 9.4 per cent.

* New Zealand European families were lower at 5.9 per cent.

* North-East Asian working families were 7.4 per cent above the average, and British migrants were 1.7 per cent below.

* Northland and Gisborne had the highest rates of in-work poverty; Wellington and Bay of Plenty had substantial pockets.

* If the measure favoured by Government is used (50 per cent of median income) the number of working homes living below the poverty shrinks to 4.7 per cent.

* The report was commissioned by the Human Rights Commission, and also funded by the Ministry of Social Development and Ministry of Business, Innovation and Employment.