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Low Pay Research Released 02 February 2018 (Edition 2/2018)

Low Pay Research Released 02 February 2018 (Edition 2/2018)

The Ministry for Business, Innovation and Employment (MBIE) has published research it has commissioned on low pay. The research was undertaken by Auckland University of Technology, and is entitled, ‘Low Pay in New Zealand’.  The findings are derived from tax data MBIE accessed from Inland Revenue for 2015, so a much better source than other surveys.  The researchers use two definitions of low pay:

the ‘OECD method’ of anyone who earns less than two-thirds of the median wage (in 2015 the median wage was circa $23.50 per hour  so anyone who earns circa $15.65 per hour or less);

anyone who earns less than 120% of the minimum wage.  In 2015 the minimum wage was $14.75 per hour, so anyone who was earning less than $17.70 per hour at that time is included in this research definition.  (The minimum wage is now $16.75 per hour so it currently refers to people earning less than $20.10 per hour.)

Māori, Pacific and Asian workers are identified as groups with high proportions of low income earners (i.e. ‘being non-European’). Other linkages were shown with ‘being female’, working part-time, aged 20-29 years or over 65, and low education attainment.  As shown in the table below, the report indicates (in 2015) 31% of Māori earned less than 120% of the minimum wage.  We calculate that to be circa 84,000 tangata Māori.  Below is a table we constructed from data in the report, matched with Statistics New Zealand employment data.

Low Pay 2015 – Proportion of Employed
  All employed Māori* European NZ*
OCED low pay measure 11.1%  (206,300) 14% (37,900) 9% (158,100)
120% Min Wage low pay measure 24.9%  (463,000) 31% (83,800)


22% (386,600)
*Percentages herein are from a graph within the research report.  Numeric estimates are from Household Labour Force Survey September 2015 data. The Labour Force Survey counts people who were unemployed. I.e. 270,400 Māori and 1,757,200 European NZers.  The sources mean there will be small sample size differences.

Overall we advise this is a technical report, and the findings above perhaps says it all – one in three Māori are likely to be on low wages, compared with one in four non-Māori. We have no issues with the methodology, and the report is a useful contribution to employment and minimum wage policy debates currently occurring between political parties.

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