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Social Wellbeing

SOCIAL ISSUES
What is policy issue arising?

Government data released each quarter continues to show marked socio-economic disparities presenting between Māori and other New Zealanders.

What is background context?

Government data released each quarter continues to show marked socio-economic disparities presenting between Māori and other New Zealanders. Statistics New Zealand and Ministry of Social Development datasets reconfirm proportionally lower Māori levels of workforce engagement than others, lower Māori employment levels than others, and that proportionally more Māori are in receipt of welfare. Key statistics are that:

  • circa 104,000 Māori (aged 18-64 years) and their household whānau are welfare reliant – this is about 26% of working age Māori adults; and
  • circa 9% of Māori in the labour force are unemployed, (31,600 people). By comparison the New Zealand overall unemployment rate is half this – at 4.5%.

(Figures are rounded, precise figures are provided within Pānui editions.)

During 2018 the Government announced a number of employment policy changes, including an increase to the minimum wage (directly increasing wages for circa 28,000 Māori), work on pay equity matters (wāhine Māori are one of the lowest paid groups in the workforce), changes to the 90-day employment trials, and changes to the Employment Relations Act (to improve collective bargaining).  Many of these changes have the potential to better support the 174,000 Māori in low paying occupations.

The Ministry of Business, Innovation and Employment (MBIE) published a number of items relating to Māori employment matters.  A new item was research on how to measure low pay – two approaches were elected, both showing the percentage of Māori on low wages is significantly higher than that of all New Zealanders.  I.e. 31% of Māori workers (83,800 tangata) earn less than the minimum wage, compared with 22% of all New Zealanders.  Another MBIE item specifically on Māori employment matters shows clear linkages between age and unemployment – for example the unemployment rate for Māori aged 15 to 24 years is a staggering 20%, but for those over 35 years it is more stable at around 7%.  (This youth unemployment rate is linked to leaving school without qualifications.)

Ngāi Tahu commissioned new research which showed the cumulative effect of the pay disparity between Māori and non-Māori.  The researchers calculated it at $2.6 billion per annum – i.e. the extra amount of wages payable if Māori were paid what non-Māori earn (on average).

The Ministry of Business, Innovation and Employment’s published research shows 19% of Māori leave school with no qualifications, and 74% leave with NCEA level 2 (the minimum required for most tertiary study).  Better than in the past but having one in five Māori school leavers without qualifications is still unacceptably high.

We also advise during the quarter ending 30 September 2018 data and research relating to post-school outcomes was released, separately and without coordination, by various Government agencies.

The Ministry of Education released research indicating that after schooling, only 50% of Māori youth go straight onto tertiary education (twelve percentile points below the average for all learners).  Adding to this conundrum, the research identifies that Māori school leavers who do go to tertiary study are more likely to be enrolling in lower level certificate programmes than others – i.e. enrolling in courses that are below trade, technical or degree/professional qualifications.[1]  In short, we estimate of the circa 13,700 Māori school leavers each year only around 5,200 go straight into tertiary study that leads to proven employment linked qualifications.

Research released by the Treasury found that  lower level tertiary qualifications – which come from tertiary education programmes over populated with Māori youth – do not lead to higher workplace earnings than that gained by others who do not hold these qualifications.[2]  That is, no qualifications and low qualifications both effectively lead to unskilled, minimum wage (or near to) earnings for those who enter the workforce.  In our view this brings into question whether such programmes of study should be eligible for Government student loans and allowances – i.e. why allow young adults to get into debt for study that has no financial outcome for them?  This seems to be against the very purpose of the student loan scheme, and this data indicates Māori are more vulnerable to this undesired negative result than others.

The Treasury also produced another report on the wage gap between Māori and non-Māori – which on average is 18 cents in the dollar (i.e. for every hour of work undertaken, Māori earn an average of 82 cents for every dollar earned by Pākehā).  We had previously identified that, but the new useful aspect of this report was studying the drivers of this; i.e. what is really causing the difference in pay?  The report finds by far the largest contributing factors are differences in qualifications and related occupations (not age, location, nor different prejudices).  Therefore The Treasury finds the best way to reduce the income gap is to simply ensure more Māori have higher tertiary education qualifications.

The Ministry of Social Development released its research on ‘welfare return’ – i.e. what happens to people who leave a benefit for work and/or training?  This research finds 18 months after exiting a benefit the majority of Māori beneficiaries, 55%, are back and re-dependent on welfare; compared with only 40% of non-Māori.   In other words, the low skilled work or low-level tertiary courses undertaken to exit welfare are simply not sufficient to retain Māori in sustainable employment settings.[3]

During the quarter the Government held a major criminal justice summit; which covered the topic of Māori imprisonment in depth – as it should, given that Māori comprise 51% of all prisoners, but only 15% of the adult population.  A point made was that most prisoners have low formal qualifications; with poor literacy and numeracy presenting as a consistent factor.  We have noted this in earlier Pānui (28/2018 refers).  That is, there is a clear linkage between levels of criminal activity and education outcome disparities, hence the proposition that reducing criminal activity and reoffending rates likely involves educational programmes centred on improving employment engagement opportunities.

Our Summary Policy Assessment

These statistics again highlight that education, qualifications and income matter for socio-economic wellbeing, and hence to change Māori employment and household income levels a prerequisite step must be an unrelenting focus on improving educational outcomes for Māori (including youth pre-workforce,adults within the workforce, and imprisoned Māori) . Further information and discussion is provided within the Pānui policy papers.

[1] This research indicates 25% of Māori school leavers who go on to tertiary study directly will enrol in level 1 to 3 tertiary qualifications.

[2] Note the report did find a higher likelihood of gaining some employment for those who completed these courses.

[3] Further analysis of this report is provided in the appendices.