One of the major topics being debated during this election is the merits of having a liveable wage versus a competitive low wage economy.
Labour is proposing to lift the minimum wage to $15 an hour and remove tax from the first $5,000 of yearly income. National has rejected these suggestions as being dangerous to the economy and businesses and has instead suggested introducing a youth wage at 80% of $13 an hour, in addition to expanding their trial period policy of three months to six (this policy allows employers to fire employees without reason within the first three months of employment.) National is also tightening up welfare by increasing the work requirements for sole parents on the dole. If a solo parent has another child whilst on the dole they will have to seek work when the child turns one. Another change will be to stop benefit payments for anyone who fails a work place drug test. In contrast, Labour is pledging to encourage rather than mandate parents to work, to lift the Domestic Purposes Benefit by $10 a week and increase payments by $60 for families with children.
At the core of welfare reforms seems to be the argument from National that our welfare system is too passive and allows too many people to cruise on welfare, whereas Labour wants to continue in a more traditional manner but with more education and training to help lift people out of poverty, not force them.
So where does this fit into everything? Both arguments seem to have their merits but how does this equate into who we vote for? While I’m no expert at number crunching, I know a little about social policy and what has worked in some countries and what really doesn’t. Welfare in New Zealand is important, as is improving the living conditions of New Zealanders.
According to the OECD, Doing Better for Children Report, (2009) New Zealand ranks at 21 for material well being, 14 for housing and environment, 13 for educational well being, 29 for health and safety and 24 for risk behaviours. It’s not great. Furthermore, at the last census in 2006 the rate of children living in poverty was 22%. (N.B This could be considerably different today due to Working for Families and the global recession). Currently there are around 356,000 people (13% of the workable population) on the benefit supporting around 220,000 children. This media fact sheet from the Welfare Working Group gives a few more statistics on this subject.
Poverty is cyclical, children who grow up in poverty are more likely to go on to a benefit when they turn 18 and are likely to spend the majority of the next 10 years on a benefit. Furthermore, poverty is positively linked to instances of domestic violence. Lifting people out of poverty and off benefits is therefore not only important for the economy and our unemployment rate but also for the welfare of our people. The worse off our people are, the harder it is for them to get any better.
A major issue I therefore take with National’s proposed policies is the idea of having a mandate for solo parents on benefits to find work. I haven’t been able to find data on this off the bat, but my interpretation of it is that many solo parents on the Domestic Purposes Benefit would be young and with few skills. From experience, despite being a high achiever in high school and fairly presentable I could not obtain a job from the ages of 15 to 18 years because I lacked ‘experience.’ It seems that the business sector is obsessed with this idea of experience, but shies away from providing it, and our society has been trained even further to prefer ‘degrees.’ But how can a young solo parent obtain a job without any experience, let alone a job that fits into the requirements of being a parent and the constraints posed by the high cost of child care? Add to that our minimum wage and you have a pretty scary future for these young solo parents.
A close friend of mine, who is a student is currently struggling to pay his rent (which is usually covered by study link) over the summer months. He already works four nights a week on minimum wage and therefore must find another job or receive a supplementary benefit, but getting another job is easier said than done and applying for benefits and being eligible for them, well it’s easier to sell your own teeth. So this brings me to the question, if a young student is struggling to support himself whilst still fulfilling the social expectation that he increase his education, what chance does a solo parent have? And furthermore, what sort of childhood will that child have?
‘I’m a big believer in education. It is one of the fundamental tools for creating a society where all New Zealanders have an opportunity to succeed, no matter what their background…A high-performing education system is also vital for our success as a country.’
While I agree with these statements, it’s easier said than done. Benefits need to support people so that they can be both good parents and pull themselves out of poverty, but I don’t think that that can be forced.
The idea of having a living wage is therefore very attractive to me, but it’s also rife with difficulties. The Business Association claims that increasing the minimum wage will result in redundancies, but when no one has any money to spend, redundancies are sure to happen anyway. A view point I’ve found intriguing is the following posed by Gareth Morgan. Taking advice from the book, The Big Kahuna, Gareth Morgan reiterates the idea of not having a minimum wage but a minimum yearly salary, as an unconditional basic income. This makes sense because as he suggests when you have a low wage rate, you have to supplement people with benefits, and when you have a high wage rate, you have to provide benefits for the unemployed. It’s a catch 22 with no simple answer.
Poverty and incomes are a tumultuous area of policy. It strikes me as problematic that both major political parties have such opposite opinions on how it should be dealt with, as a lack of agreement could result in a simple upheaval of policies when governments change. Neither parties solutions are great, but it strikes me that National’s policies towards solo parents and people on benefits will do more harm than good. If you look at Sweden’s social welfare policies, such as allowing a years supported time out to retrain or have a break after a redundancy, it is clear why they do so well globally when it comes to health, welfare and consequently economically. We cannot simply transfer Sweden’s policies into a New Zealand context, but it’s aspirational. (This can be seen really well in the Unnatural Causes documentary – Not Just a Paycheck.)
At the end of the day what we need to do is support people, not stress them out. Because when you’re stressed, you have high levels of cortisol, and when you have high levels of cortisol you’re more likely to get sick and getting sick makes having a job and getting out of poverty pretty damn hard.
We can do better.