Contents Page: NZJER, 2013, 38(2)
Name

Title

Katherine Ravenswood

Editorial: Precarious work,
vulnerable workers and the Living
Wage
The human rights framework andequal pay for low paid female
carers in New Zealand

Judy McGregor

Page
Number
1-3

4-16

Erling Rasmussen andJens Lind

In support of a New Zealand‘living wage’: reflections on
Danish ‘working poor’ trends andissues.

17-32

Sarah Kaine andKatherine Ravenswood

Working in Residential Aged Care:
A Trans-Tasman comparison

33-46

Gail Pacheco andJessica Dye

Estimating the Cost of Youth
Disengagement in New Zealand

47-63

Annabel Newman

Precarious work and a living wage
in our communities

64-69

Deborah Littman

The living wage: an idea whosetime has come

70-77

Peter Skilling

Review Essay: Inequality and the
Living Wage

78-81

New Zealand Journal of Employment Relations, 38(2): 1-3

Editorial: Precarious work, vulnerable workers and the Living
Wage
KATHERINE RAVENSWOOD*
In February 2013 the living wage rate was launched at a symposium, Precarious Work andthe Living Wage at AUT University. The symposium was hosted by the Centre for
Occupational Health and Safety (AUT), the Council of Trade Unions and the Service andFood Workers’ Union. It attracted speakers and participants internationally from among
activists, unions, church and community groups and academics. Robust discussion fuelled thepassion and desire for change from all who took part in the two day symposium.
Conversations brought all these groups together, and this special issue of the New Zealand
Journal of Employment Relations continues some of the themes from the symposium andfurthers some of the debates and discussions that were held.
As Employment Relations and Human Resource Management academics, we tend to focus
on the workplace and on the individual while they are at work. Even topics such as work-lifebalance typically concentrate on work-life balance and the individual at work. We often
overlook what happens when those workers return from work to their home and communities.
The living wage movement calls upon us to recognise that workers belong to communities
and families. The living wage acknowledges that full participation in society is part of decent
work and decent pay (Standing, 2011), and that organisations should recognise this in theirremuneration of employees.
Several speakers at the symposium called to mind examples of the impact of work on the
lives of workers. Helen Kelly (President of the NZCTU) recounted the story of a youngforestry worker and his daily home life before a work accident took him from his family.
Malcolm Sargeant (Middlesex) also connected the workplace, in terms of OHS outcomes,
and the life of the workers at and outside of work. Workers working long hours, several jobs,
commuting across large suburbs for work, lacking in sufficient or adequate food, are further
disadvantaged in their health and safety at the workplace. Unions are a type of ‘community’
too, and their support for members’ participation and activism are crucial in the fight for
better wages and conditions for all workers, especially those who are ‘vulnerable’ or in‘precarious’ work.
New Zealand has a history dating back to the early twentieth century and before ofestablishing protections and social welfare systems for workers and their families (Lamm,
Rasmussen & Anderson, 2013; Anderson & Quinlan, 2008; Quinlan & Sheldon, 2011).
However, internationally legal minima only now provide “the most disadvantaged andvulnerable with a modicum of security at work and in living standards” (Sheldon & Quinlan,
2011: 1). We are now seeing a growing number of workers in precarious, low paid
employment with poor working conditions and fractured employment relationships (Burgess,Connell & Winterton, 2013; Standing, 2011; Weil, 2011; Fenton, 2011). The breakdown of
the traditional employment relationship along with pressure on traditional employment andsocial protections has an ongoing effect not just on paid work, but on workers’ lives,
impacting negatively on workers’ well-being and living standards (Cockfield, Buttigieg,*

Senior Lecturer, Management, AUT University

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New Zealand Journal of Employment Relations, 38(2): 1-3
Jerrard & Rainnie, 2011). There is an established connection between precariously, low paid
employment and poor working conditions and negative individual and community outcomes(ILO, 2012).
Workers in precarious, low paid employment with poor working conditions frequently findthemselves in a vulnerable position. Vulnerability is, as indicated by Reverend Unasa, acontested term whereby some people link it to the work itself, while others associatevulnerability with the workers themselves (also see Burgess et al., 013). Some workers will
be vulnerable in the labour market because of their ethnicity, age, gender or level of
education for example owing to systemic and individual discrimination (Burgess et al., 2013;
Piasna, Smith, rose, Rubery, Burchell & Rafferty, 2013). However, the Reverend Uefisili
Unasa reminded the audience that vulnerability and precariousness describes the form ofwork and the conditions of work. He noted that there are many examples of vulnerable
workers becoming empowered by joining together in their communities and working towards
change. He also argued that as a society we are judged by the work we do and not necessarily
by the role we play in our community. The fact that we place such importance on our
employment status further disadvantages and disempowers those workers in precarious, low
paid work. Thus, secure work at a living wage provides some dignity and respect tovulnerable workers.
Some of the key themes arising from the symposium included the necessity for us to build
bridges across communities, to collaborate and debate, and most importantly take action to
make sure that all workers have decent work and conditions that enable them to live as fullparticipatory citizens in our societies. Speakers at the symposium brought international
knowledge and experience (Guy Standing (UK), Malcolm Sargeant (UK), Deborah Littman(Canada), Iain Campbell (Australia) ) that complemented a wide variety of perspectives andcommunities in New Zealand, including Annie Newman (SFWU), Rev Uesifili Unasa(University of Auckland) and Professor Judy McGregor (AUT University). In the spirit ofongoing discussion across communities and disciplines, this special issue brings together
multiple perspectives and knowledge of precarious work, vulnerable workers and the living
wage: a human rights perspective to the discussion of equal pay for low paid women workers(Judy McGregor); a comparison of Danish flexicurity and the working poor with the New
Zealand living wage movement (Erling Rasmussen and Jens Lind); a Trans-Tasmancomparison of low paid work in residential aged care (Sarah Kaine and Katherine
Ravenswood); discussion of youth who are not in training, education or employment (Gail
Pacheco and Jessica Dye) along with comments from Annabel Newman on the New Zealandliving wage movement and Deborah Littman on the living wage movement in Vancouver,
Canada. We also have an extended review on a recently published book on inequality in New
Zealand (Peter Skilling).
As guest editor of this special issue, I would like to conclude this editorial with my own
exhortation to you to remember those less fortunate among us who work hard in paid andunpaid work and do all they can to barely keep their and their family’s heads above the water.
A living wage acknowledges that a decent standard of pay and decent standard of living
should allow for more than barely surviving. It should enable families and communities togrow and support each other. For those of us who are not struggling, perhaps it is now our
responsibility to ensure that the living wage movement, the research, experiences andknowledge shared at the symposium in 2013 and in this special issue of the New Zealand
Journal of Employment Relations are carried with us everywhere we go, into ourcommunities and networks in New Zealand and globally.
2

New Zealand Journal of Employment Relations, 38(2): 1-3

References
Anderson, G. & Quinlan, M. (2008). The changing role of the state: Regulating work inAustralia and New Zealand 1788-2007. Labour History, 95(November): 111–132.
Burgess, J., Connell, J. & Winterton, J. (2013). Vulnerable workers, precarious work and therole of trade unions and HRM. The International Journal of Human Resource Management,
24(22): 4083-4093.
Cockfield, S., Buttigieg, D., Jerrard, M. & Rainnie, A. (2011). Assessing the impact of
employment regulation on the low paid in Victoria. Economic and Labour Relations Review,
22: 131-152
Fenton, D. (2011). Insights into Contracting and the Effect on Workers. New Zealand Journalof Employment Relations, 36(3): 44-58.
International Labour Organisation. (2012). World of Work Report 2012 “Better Jobs for a
Better Economy” [Report]. Geneva: Author.
Lamm, F., Rasmussen, E. & Anderson, A. (2013). The Case of the Disappearing Departmentof Labour: Whither goes state protection for vulnerable workers. In M. Sargeant and M. Ori.
(eds.) Vulnerable Workers and Precarious Working. (pp. 184-219). Cambridge Scholars
Publishing: Newcastle upon Tyne
Piasna, A., Smith, M., Rose, J., Rubery, J., Burchell, B. & Rafferty, A. (2013). Participatory
HRM practices and job quality of vulnerable workers. The International Journal of Human
Resource Management, 24(22): 4094-4115.
Quinlan, M. & Sheldon, P. (2011). The Enforcement of Minimum Labour Standards in an
Era of Neo-Liberal Globalisation: An Overview. The Economic and Labour Relations
Review : ELRR, 22(2): 5-31.
Sheldon, P. & Quinlan, M. (2011). Minimum Labour Standards and Their Enforcement. The
Economic and Labour Relations Review : ELRR, 22(2): 1-4.
Standing, G. (2011). The precariat. The new dangerous class. London: Bloomsbury
Academic.
Weil, D. (2011). Enforcing Labour Standards in Fissured Workplaces: The US Experience.
The Economic and Labour Relations Review: ELRR, 22(2): 33-54.

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New Zealand Journal of Employment Relations, 38(2): 4-16

The human rights framework and equal pay for low paid female carers
in New Zealand
JUDY McGREGOR*
Abstract
This article explores the paradox of New Zealand’s officially expressed commitment to thefundamental human right of gender equality internationally, despite the lack of progress in theimplementation of equal pay and pay equity for low paid female workers domestically. New research
funded by the New Zealand Law Foundation is assessing the impact of New Zealand’s implementationof international human rights treaty body obligations. The article examines the State party reports on
equal pay and pay equity to the United Nations (UN) Committee on the Elimination of Discrimination
Against Women and the Committee’s responses. It also uses material drawn from the New Zealand
Human Rights Commission’s (NZHRC) national inquiry into equal employment opportunities in theaged care sector to examine the actions of non-governmental actors. The two sources of information
show that women’s progress in closing the gender pay gap in New Zealand at a governmental level ismarked by the ebbs and flows of political will. It is argued, too, that there is currently a revival of
advocacy by non-governmental actors using a human rights framework to apply pressure for change on
pay equity breaches.

Introduction
Successive governments have believed that New Zealand is a good nation state with a strong andprincipled record in human rights since 1948, when it was involved in developing the Universal
Declaration of Human Rights. This self-belief has been bolstered by scholarship identifying New
Zealand’s early political support for international human rights through Prime Ministers, Peter Fraser
and Walter Nash, that Lauren (1988) described as “far out of proportion to the size or strength of theircountry” (p.167). Consistent and conscientious reporting by successive New Zealand administrations
to the international human rights treaty bodies is another expression of global governmental
commitment. However, new research shows that there is a difference between national self-regard
about New Zealand’s obligations and the realisation of human rights in everyday lives. This isdemonstrated in close analysis of New Zealand’s periodic reporting to UN human rights agencies on
women’s rights and equal pay in the past 25 years.
The article also suggests that there is a revival of advocacy using the human rights framework to apply
on-going international and domestic pressure on the government to fulfil its obligations for equal pay
and pay equity. The advocacy acknowledges that in liberal democratic societies, such as New Zealand,
the State is central to determining the degree of gender equality in employment. A catalyst for thisadvocacy was a national human rights inquiry into low paid, predominantly female aged care workers,
published in the report, Caring Counts (New Zealand Human Rights Commission, 2012).
*

Professor and Head of School of Social Sciences and Public Policy at AUT. She was Equal Employment Opportunities
Commissioner with the New Zealand Human Rights Commission, 2002-20124

New Zealand Journal of Employment Relations, 38(2): 4-16

Equal pay in the International Bill of Human Rights and other treaties
The importance of the treaty body system in implementing human rights, including gender equality, hasbeen recognised since the 1960s. The UN Secretary-General Ban Ki-Moon stated in a 2011 report onstrengthening the treaty body system:
The treaty bodies stand at the heart of the international human rights protection system asengines translating universal norms into social justice and individual well-being. Using a
growing set of tools, this system provides authoritative guidance on human rights standards,
advises on how treaties apply in specific cases, and informs State parties of what they must do
to ensure that all people enjoy their human rights (Pillay, 2011: p.7)
Equal pay is a fundamental tenet of gender equality and was first outlined in the Universal Declarationof Human Rights 23(2) which stated: “Everyone, without any discrimination or distinction of any kind,has the right to equal pay for equal work”. It is referred to in other major treaties, such as theInternational Covenant on Economic, Social and Cultural Rights (ICESCR) (Articles 3 and 7a). The
International Convention on the Elimination of All Forms of Discrimination Against Women(CEDAW). Article 11 reads:
State Parties shall take all appropriate measures to eliminate discrimination against women in
the field of employment in order to ensure, on a basis of equality of men and women, the samerights, in particular: (d)…the right to equal remuneration, including benefits, and to equal
treatment in respect of work of equal value, as well as equality of treatment in the evaluation of
the quality of work.
Various International Labour Organisation (ILO) Conventions such as ILO C100, Equal Remuneration
Convention and ILO C111, Discrimination (Employment and Occupation) Convention also specify
equal pay and pay equity obligations. Both the treaties on racial discrimination, the International
Convention on the Elimination of all Forms of Racial Discrimination (CERD) and on the rights ofdisabled people, the Convention on the Rights of Persons with Disabilities (CRPD), also refer to equalpay. New Zealand has ratified all of these conventions since the late 1960s. In the case of the mostmodern convention, the CRPD, it helped lead the international community in the development andacceptance of the treaty, further evidence of its positive self-image as a human rights leader.
What are New Zealand’s obligations under such treaties? The Office of the UN High Commissioner for
Human Rights states that the obligations are often expressed under three headings: to respect, whichmeans refraining from interference with the enjoyment of the right; to protect, which means preventing
others from interfering with the right, and to fulfil, which requires the State party to adopt appropriate
measures towards the full realisation of the right. In several human rights treaties, such as ICESCR(Article 2(1), the concept of progressive realisation is referred to as a core aspect of States’ obligations
in relation to economic, social and cultural rights. This means the State taking appropriate measures
towards the full realisation of rights, such as equal pay and employment rights, by all appropriate
means including legislation to the maximum of its available resources.
While this means that a State’s compliance with the obligation is assessed in the light of financial andother resources, a lack of resources cannot justify inaction or indefinite postponement of5

New Zealand Journal of Employment Relations, 38(2): 4-16
implementation. This is particularly so when discrimination exists. The Committee on Economic,
Social and Cultural Rights (2009) has said that the failure to remove differential treatment on the basisof a lack of available funds is not an objective and reasonable justification unless every effort has been
made to use all resources that are at a State party’s disposal to eliminate the discrimination, as a matterof priority. Despite the incrementalism inherent in the idea of progressive realisation, the HighCommissioner for Human Rights indicates that States must also take immediate action, irrespective of
the resources they have, in relation to some rights. Article 7(a)(i) Equal remuneration for work ofequal value without distinction of any kind, is one example.
The Committee is also categorical about non-retrogressive measures and says that States should notallow the existing protection of economic, social and cultural rights to deteriorate unless there arestrong justifications. It is argued later that this is relevant to repeal of the Employment Equity Act in
1990, the closure of the Department of Labour’s Pay and Employment Equity Unit and thediscontinuing of two equal pay investigations, involving support workers working with special needs
children in the Ministry of Education, and social workers employed by the Ministry of Social
Development, in February 2009.

New Zealand’s reporting on equal pay to UN treaty bodies
In light of New Zealand’s ratifications of human rights treaties such as CEDAW and its self-regard as aleader in global human rights consciousness, what is its record in reporting on equal pay?
Feminist academic, Prue Hyman (2008; 2010), has usefully chronicled the painful and slow history ofequal pay implementation in New Zealand. In her article looking at developments from 2008-2010, she
concluded that New Zealand’s move from a relatively equal society to one of its most unequal madelabour market protections, including equal employment opportunities, of even more importance than in
the early days of awareness and policy making. She was concerned that complacency, backlash andslippage too often impeded equal opportunity for all groups in the labour market.
New research funded by the New Zealand Law Foundation allows a preliminary analysis of what New
Zealand has told the UN about its progress in implementing equal pay and pay equity since it began
reporting on CEDAW in 1987. New Zealand’s seven periodic reports (Third and Fourth reports werecombined) to the Committee on the Elimination of Discrimination against Women have been examined
for reference to Article 11(d) in this research. They show that equal pay and pay equity have been
central to the reporting process since 1986. This alone invites analysis both of what was said, how it
was framed and the impact.
The next section summarises the relevant equal pay-related comments made by the State party, and theconcluding observations and recommendations back from the Committee to New Zealand.
Retrogression and progress in relation to equal pay is then discussed.

First report, 1986
New Zealand‘s first periodic report to the Committee on the Elimination of Discrimination Against
Women in 1986 stated that there was no overall differentiation by sex in New Zealand law and that, in
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New Zealand Journal of Employment Relations, 38(2): 4-16
employment and in society, women were increasingly taking opportunities (New Zealand’s First
Report, 1986). The report highlighted the Government Service Equal Pay Act 1960 and the Equal Pay
Act 1972, covering the private sector. It also outlined sections of the Human Rights Commission Act
1977, section 15, which covered the prevention of sex discrimination in employment. New Zealandsaid, while societal attitudes were not static, it could not be said that women and men themselvespractise full equality in the workplace. The report stated that women still tended to choose certain typesof employment, the majority in clerical/secretarial work and other traditional occupations, such as
nursing and garment manufacturing.
The difference between defacto and de jure sex discrimination was noted by the Committee in its
concluding comments back to New Zealand (Committee on the Elimination of Discrimination against
Women, 1988). Despite the absence of legal barriers in New Zealand to equality between men andwomen, and although women had acquired the right to vote in 1893, in practice, the barriers created bytradition, history and structures still existed.
The Committee said that job sexual segregation seemed to cause problems with regard to equal pay. It
asked how those problems had been dealt with, whether gender-neutral job evaluation schemes had
been of use, whether wage differential studies had been carried out, whether cases on wage
discrimination based on sex had been raised and, finally, how wages were set and what was the role ofthe trade unions in wage negotiations.

Second report, 1993
The government reported that, during the reporting period (1986-1992), women had continued to earnsignificantly less than men (Committee on the Elimination of Discrimination against Women, 1993a).
While the pay gap between male and female earnings closed from 72 percent to 79 percent between thepassage of the Equal Pay Act 1972 and its final implementation date in 1977, it had risen by only two
percentage points to 81 percent in the past 15 years. The report said that, despite the existence of theEqual Pay Act, the distribution of market income in New Zealand was heavily weighted in favour ofmales. Provisional 1991 census results showed males were still receiving more income than females inall groups over $20,000 a year, and that 60 percent of all people earning $20,000 or less were female.
The report referred to the effectiveness of the Equal Pay Act in light of the breakdown of collective
bargaining that began with the Employment Contracts Act 1991. It said the practical application of theEqual Pay Act remained unclear in the case of individual contracts as no cases had been taken.
The introduction and then quick repeal of the Employment Equity Act 1990 was referred to in New
Zealand’s report. It said that, in the 1980s, some test cases under the Equal Pay Act confirmed that the
courts interpreted the provisions of the Act to apply only where men and women were doing the sameor substantially the same work. Many groups recognised the need for wider legislation to cover pay
equity or equal pay for work of equal value, and to address the differing pay rates of women and men
in predominantly single sex occupations, such as nursing and police work, which many considered
carried equal levels of responsibility but not equal levels of remuneration. The report noted astrengthening of the equal pay campaign by civil society and government initiatives to respondincluding the Employment Equity Act 1990, covering both pay equity and equal employment
opportunities. The Act was described as legislation constructed within the industrial relations
framework prevailing at that time.
7New Zealand Journal of Employment Relations, 38(2): 4-16
In its response the Committee noted, as one of several principal areas of concern, that women’s annual
income was not equal with that of men for many reasons, particularly because of their need toaccommodate family responsibilities (Committee on the Elimination of Discrimination against Women,
1993b). Although the government had taken measures to improve women’s income, it had abolished
pay equity legislation during the reporting period. More efforts needed to be taken to alleviate theburden on women in that respect.
The Committee urged additional affirmative action by the government in cooperation with the private
sector to help women cope with family and work responsibilities. It noted its concern that changes to
employment legislation were likely to weaken the trade union movement. Without strong union
support, women in paid employment would lack the means to negotiate better work conditions with
their employers.
The Committee recommended that, in its next report, the government provide more detailed
information about the obstacles, which still existed and prevented women from achieving full equality.

Third and Fourth reports, 1998
The government told the Committee in this report that women’s average hourly earnings were 81.2
percent of men’s in August 1997(Committee on the Elimination of Discrimination against Women,
1998).This relativity had remained almost unchanged since the implementation of the Equal Pay Act.
Part of the difference was attributed to longer hours of work and more overtime by men. The report
noted that the gender pay gap was worse in the public sector at 76.2 percent than the private sector at80.2 percent (Committee on the Elimination of Discrimination against Women, 1998,). Research by the
New Zealand Institute of Economic Research indicated that the gender pay gap was unlikely to narrow
over the next five years if the recent industry trends continued. This reflected the concentration of
women in industries, such as business and financial services, where the gender earnings gap was
predicted to grow, and above-average wage growth in industries where women were under-represented.
Other significant factors affecting earnings were the level of seniority, levels of skills, experience andjob-related training, and the duration and continuity of employment. It was difficult to quantify theeffects of these factors due to the paucity of data.
The report noted that the Ministry of Women’s Affairs was responsible for a research programme on
the gender pay gap and that the New Zealand Council of Trade Unions was developing a three-year
campaign to achieve equal pay to mark the 25th anniversary of the Equal Pay Act 1972.

Fifth report, 2002
New Zealand told the Committee that legislation providing for equal pay for work of equal value had
been repealed in 1990, and the labour market had been deregulated (Ministry of Women’s Affairs,2002). It said that after entering office, the new government had begun to reverse the effects of thatderegulation by establishing a Pay and Employment Equity Task Force to promote equality in public
sector jobs. The Task Force was due to establish a five-year plan of action by 1 December 2003. It was
8New Zealand Journal of Employment Relations, 38(2): 4-16
hoped that in demonstrating the value of equality policy, the plan of action would also serve as a modelfor the private sector.
Committee members requested additional information on the measures the government had taken toeliminate horizontal and vertical employment barriers and pay gaps (Committee on the Elimination ofDiscrimination against Women, 2003a). Clarity was sought also on whether cases of pay gaps had beenreferred to a court and, if so, whether the employer or employee bore the burden of proof. The
Committee chairperson ended the dialogue with New Zealand with the comment that the Committee
hoped that effective action would be taken to deal with the country’s gender segregated labour market
and wage disparities between men and women. In its press release after it examined New Zealand’sreport, the Committee listed the financial repercussions of wage gaps between men and women, as anarea requiring further attention (Committee on Elimination of Discrimination Against Women, 2003b).

Sixth report, 2006
The Committee expressed concern that, while New Zealand law recognises the principle of equal pay
for work of equal value, the mechanisms for implementing this principle in the private sector, such asindustry wide job evaluations to ensure equal pay for women performing work of equal value, had beenabolished (Committee on the Elimination of Discrimination against Women, 2007). It also stated thegovernment lacked the authority to implement and enforce equal employment opportunities policies in
the private sector.
It recommended that the State party enact and implement comprehensive laws guaranteeing thesubstantive equality of women with men in both the public and private sectors, especially in regard toequal pay and equal opportunity in employment.

Seventh Report, 2010
Given that the New Zealand government had dismantled the majority of its equal pay machinery in
2009, it is instructive to note how the State party reported on the gender pay gap to the Committee ayear later and the nature of the Committee’s latest response.
First, New Zealand acknowledged that the gender pay gap remained stubborn and its causes werecomplex and there were no simple solutions (Committee on the Elimination of Discrimination against
Women, 2010). The gender pay gap of 11.3 percent was the lowest recorded since the New Zealand
Income Survey first measured the pay gap in 1998, but it had moved very little in the last decade.
The Department of Labour’s Pay and Employment Equity Unit (PEEU) designed and produced pay andemployment equity toolkits and other practical assistance for state sector employers in New Zealand tohelp them assess pay and employment equity issues within their workplaces. Pay and employment
equity reviews in the public sector were conducted between 2005 and 2009. All reviews except one
found gender pay gaps, which varied in size between three to 35 percent. PEEU’s obituary wasconsigned to a single sentence in the report: The work of PEEU was discontinued in 2009.

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New Zealand Journal of Employment Relations, 38(2): 4-16
In the most explicit urgings made by the Committee on the Elimination of Discrimination Against
Women in its reports to New Zealand, four recommendations related to equal pay and pay equity:
These were:






Enact appropriate legislation that guarantees the operationalisation and implementation of theprinciple of equal pay for work of equal value in line with Article 11(d) of the Convention.
Effectively enforce the principle of equal pay for work of equal value, through establishingspecific measures and indicators, identifying time frames to redress pay inequality in different
sectors and reviewing the accountabilities of public service chief executives for pay policies.
Adopt policies and take all necessary measures, including temporary special measures inaccordance with Article 4, paragraph 1, of the Convention and the Committee’s generalrecommendation No 25 with time-bound targets, to eliminate occupational segregation, bothhorizontal and vertical.
Ensure that there is a monitoring institution for gender pay inequity within the State party’s
administration despite the closure of the Pay and Employment Equity Unit in the Departmentof Labour (Committee on the Elimination of Discrimination against Women, 2012).

Analysis of CEDAW reports on equal pay
Analysis of the reports, then, shows that the Committee has noted retrogression relating to equal pay
and pay equity in the second, sixth and seventh reports. In the second report in 1992, it noted therepeal of the Employment Equity Act in 1990, and in the sixth report it was concerned about theabolition of mechanisms, namely the Pay and Employment Equity Unit. The seventh report explicitly
urged legislative change relating to equal pay for work of equal value; indicators, timeframes andimproved accountabilities in the public service; and the use of affirmative action to eliminate
occupational segregation and effective monitoring of the gender pay gap.
Human rights scholars Christof Heyns and Frans Viljoen (2001: 483) state that the “success or failureof any international human rights system should be evaluated in accordance with its impact on humanrights practices on the domestic (country) level”. As they indicated, the challenge is to ensure that thepromises contained in the treaties and affirmed through ratification are realised in the lives of ordinary
people, and in the case of equal pay in the lives of thousands of low paid women in New Zealand,
including those working in the aged care sector. This study shows that, to varying degrees, successive
New Zealand government reports to the Committee on the Elimination of Discrimination Against
Women have acknowledged equal pay and pay equity as significant, systemic and continuing barriers
to gender equality. The reports also reflect the peaks and troughs of active and passive politicalcommitment to addressing the gender pay gap domestically. In response successive UN committees
have increased the tempo on equal pay. What distinguishes the last report in 2010 from the Committee
to the State party is the degree of specificity of the recommendations and a move from rhetoricalencouragement to active identification of instrumental actions that need to be taken.

The ebb and flow of political will
So what are the prospects then of the political tide turning as a result of increasing international
encouragement to address equal pay and pay equity for low paid female workers? The question is10

New Zealand Journal of Employment Relations, 38(2): 4-16
addressed first by considering several existing constraints to the increased exercise of political will toclose the gender pay gap. The article then uses the NZHRC’s national inquiry into equal employment
opportunities in the aged care sector to discuss a confluence of factors pushing up from below throughjudicial intervention and social activism that may result in increased politicisation of equal pay.
First, the limitations of current human rights treaty body implementation in the New Zealand context.
New Zealand’s international obligations do not have primacy over New Zealand law nor do they bindthe State party to a particular way of doing things, such as implementing the principle of pay equity asa mandatory requirement through legislation, for example. When the National government dismantled
the Pay and Employment Equity Unit in 2009 and discontinued two pay investigations, it used therationale that the unit had a five year life only, and there were other ways of closing the gender pay
gap. These included a reliance on market forces, the use of toolkits, employer education, public sector
chief executive accountability, plus the usual political fall-back position of more research.
The New Zealand parliament also demonstrates a traditional indifference to its obligations to promote
and publicise international treaty body reports such as CEDAW. The NZHRC states that, currently,
New Zealand’s human rights treaty body reports and recommendations are seldom tabled in Parliament(New Zealand Human Rights Commission, 2011). The recommendations of the Committee on the
Elimination of Discrimination Against Women, for example, are relatively invisible, and are rarely
formally debated, unless raised during question time in an ad-hoc manner by an opposition member ofparliament. In 2012, the Minister of Women’s Affairs, Hon. Jo Goodhew, wrote to all Members of
Parliament with a link to the seventh periodic review but the report was not subject to parliamentary
oversight through tabling or debate.
Even more problematic for women’s rights is that CEDAW reports are prepared by the Ministry of
Women’s Affairs (MoWA) with help from other government departments. The MoWA reports to theGovernment Administration Committee, the select committee that has a grab-bag of responsibilities
ranging from civil defence to the Prime Minister and Cabinet, statistics, fitness and sport, parliamentary
affairs, racing, youth and women’s affairs. All other employment issues, for example, are consideredby the Transport and Industrial Relations Select Committee, whose members build expertise and an
oversight of the labour market frameworks and employment issues in New Zealand.
This limits the political opportunities should individual members of parliament be interested in or
knowledgeable about the international treaty body responsibilities and what they mean for the humanrights of New Zealanders. In turn, this results in negligible media coverage that could potentiallystimulate general public debate. The very limited domestic political contest and the absence of media
scrutiny by the parliamentary press gallery closes a circle of silence reinforcing political apathy andcomplacency about human rights such as equal pay.
The NZHRC has advocated for the establishment of a separate Human Rights Select Committee. This
could address the significant gap in parliamentary scrutiny of human rights issues, enhanceparliamentary oversight and strengthen accountability. The Commission also promoted the tabling of
all Treaty body reports, such as those from the Committee on the Elimination of Discrimination
Against Women, as an effective way for government to meets its responsibility to publicise treaty body
recommendations. Promotion of treaty obligations to the wider community, such as non-governmentalorganisations, researchers and policy makers allows third parties to set their own human rights agendas
as well as hold the State party accountable. This, the Commission believed, would increase the11New Zealand Journal of Employment Relations, 38(2): 4-16
likelihood of public engagement on human rights issues (New Zealand Human Rights Commission,2011).

Stakeholders and the human rights framework
There are influential stakeholders other than the government and parliamentarians who have the ability
to leverage the human rights framework so that rights are realised. An analysis of the NZHRC’s inquiry
into equal employment opportunities into the aged care sector allows for some reflection on whether
best use is being made of human rights frameworks by organisations and individuals other thanpoliticians to progress equal pay.
The inquiry’s major findings were uncontested. Thousands of New Zealand’s lowest paid and mostvulnerable women workers, carers in residential facilities and community-based home settings, are paid
$3 to $5 an hour less than their counterparts for much the same work in the 21 District Health Boards(DHBs). All three sets of workers are paid by public monies from Vote Health, although carers inresidential facilities and working in the homes of older people are paid by providers contracted to
DHBs rather than directly employed by DHBs. The employment model, with its structural and systemic
pay inequalities, is driven by the funding model, which is the State’s responsibility. As Australianacademics Palmer and Eveline (2012) point out, the payment of care is critically dependent on politicalwill. In New Zealand as elsewhere, there is no market mechanism for care workers to price themselvesin a manner that reflects the value of their contribution (England & Folbre, 1999).
Caring Counts is the latest of a long list of reports exposing pay inequities in the aged care sector.
However, the inquiry was primarily based on international treaty body standards and was undertaken
by an A-accredited Paris Principles compliant national human rights institution. It is only the third
national inquiry conducted by the Commission in the past 10 years. The inquiry received significant
media and public interest. It found that it would cost $140 million, approximately one percent of thehealth budget, stepped over three years, to fix the pay discrimination, and that fair travel policies were
urgently needed. The Prime Minister Hon. John Key told Television 3 News that carers’ pay was“unequal” but New Zealand could not at the moment afford to fix it (Television 3, 2012).
There are currently, then, three ways in which the human rights framework is being leveraged toincreasingly politicise equal pay. This is bringing pressure on a State party that continues to reframe
progressive realisation and that has been arguably complicit in retrogression.
First, the international human rights framework was utilised in the 2013 Employment Court caseinvolving interpretations of the Equal Pay Act 1972. Caring Counts was a catalyst for this firstsignificant test of New Zealand’s equal pay legislation in 30 years. Many of the interveners in the highprofile case involving Lower Hutt carer, Kristine Bartlett, including the NZHRC, unions and equal pay
campaigners confirmed New Zealand’s obligation to implement Article 11(d) relating to equal pay, andreferred the court to the treaty body reports including CEDAW.
The case turned, in part, on an assessment of the scope of s 3 of the Equal Pay Act 1972, which sets out
the criteria to determine whether an element of difference in remuneration based on sex existed. Ms
Bartlett was claiming, on behalf of female caregivers, that they were being paid a lower rate of pay thanwould be the case if caregiving of the aged were not so substantially female-dominated. The judgmentof the full Employment Court referenced the Inquiry report’s conclusion that aged care workers in New
12

New Zealand Journal of Employment Relations, 38(2): 4-16
Zealand were amongst the lowest paid in the country for physically, mentally and emotionallydemanding work. The Court referred to the frequent statements in Caring Counts that the work was
undoubtedly gendered and that the low pay was directly related to it traditionally being women’s work.
In its judgment, the Court stated that section 3(1)(b) requires that equal pay for women for work
predominantly or exclusively performed by women is to be determined by reference to what men
would be paid to do the same work abstracting from skills, responsibility, conditions and degrees ofeffort as well as from any systemic undervaluation of the work derived from current or historical or
structural gender discrimination. The Court dismissed the defendant’s suggestion that gardeners, who
tend to be male, might be an appropriate comparator group to female aged care workers and noted that,ironically, gardeners received NZ$16.56 per hour as opposed to the carers at NZ$13.75-$15 per hour.
Dismissing the argument of crippling fiscal impact should carers be paid fairly, the Court said
History is redolent with examples of strongly voiced concerns about the implementation of antidiscrimination initiatives on the basis that they will spell financial and social ruin, but which
proved to be misplaced or have been acceptable as the short term price of the longer term social
good. The abolition of slavery is an old example, and the prohibition on discrimination in
employment based on sex is both a recent and particularly apposite example (Service and Food
Workers Union Nga Ringa Tota Inc v Terranova Homes and Care Limited, 2013).
Second, there has been a renaissance of civil society interest in monitoring New Zealand’s progress in
responding to the Committee on the Elimination of Discrimination Against Women’s latest
recommendations. A coalition of 28 women’s groups, the CEDAW Coalition of New Zealand NGOs,
was formed in Auckland in 2012, and in 2013 submitted to the forthcoming Universal Periodic Review(UPR). The UPR is the process whereby other countries question New Zealand on its overall humanrights progress. The UPR is increasing in international reputation because it provides a detailed accountof the human rights situation on the ground.
The CEDAW coalition submission recommended that the New Zealand government work withwomen’s groups to develop an action plan for New Zealand Women withauthentic targets and accountabilities. This should target violence against women, pay
inequality and inequity (emphasis added), the status of Māori and Pacific women and theimportance of welfare and employment related reforms on the lives of women and their families(CEDAW Coalition of New Zealand NGOs, 2013).
The Coalition also supports the establishment of a human rights select committee.
Third, there is a marked increase in the use of “public voice” by low paid female carers telling theirown stories as opposed to reliance on elite expert voices to speak for them. These narratives have been
framed in terms of the human rights of carers to equal pay as a measure of the value placed on older
people in New Zealand society, and not in terms of the traditional discourse of “ethic of care” and“women’s work”. The use of personal narrative by carers themselves has given “power to thepowerless” and is creating a new and revitalised political constituency around the plight of carers witholder people and their families, as well as the aged care industry. The personal narratives were asignificant feature of the report Caring Counts. They were dominant voices in the 2013 launch of the
Living Wage campaign in New Zealand, and have a primary focus in the continuing television, radio
and print stories on Kristine Bartlett’s equal pay case.
13New Zealand Journal of Employment Relations, 38(2): 4-16

Conclusion
The two data sets used in this article show that, at a governmental level, New Zealand is struggling toconvince successive UN committees that it is making significant progress in closing the gender pay
gap. On the other hand, a number of elements have come together in the past two years to increase thepublic policy visibility of equal pay and the plight of low paid but vital female workers, particularly inthe aged care sector. They include a high profile national human rights institution inquiry, litigation
around equal pay, a civil society coalition around CEDAW implementation, the Living Wage campaign
and greater mobilisation and visibility of low paid female carers as a result of strategic trade unionintervention.
To these elements can be added a confluence of factors, including the demographics of ageing, the riseof the private sector aged care industry and its relationship to public funding, and a predicted global
shortage of health care workers that will impact on New Zealand as elsewhere. The case for redressing
political commitment and addressing low pay for low paid women workers, such as those in the agedcare sector, then becomes indisputable.
Human Rights academic Samuel Moyn (2010) notes that history shows human rights have stood abetter chance when social activism has surged from below and helped refresh legal agendas. As
pressure builds, the implementation of equal pay for aged care workers could well become a priority
fiscally as well as a matter of social justice. At some point soon, it will become politicallyunsustainable not to pay decent wages to women for heroic work.
The paper uses data gathered in the New Zealand Law Foundation funded project “Assessing the
Impact of New Zealand’s Ratification and State Receptivity of the Major International Human
Rights Treaties”. The three year project’s research team comprises the author, Professor
Margaret Wilson of the University of Waikato, and Sylvia Bell, the principal legal and policy
analyst of the New Zealand Human Rights Commission.

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(forthcoming)
Committee on the Elimination of Discrimination Against Women. (1993a). Second Periodic Report ofState Parties. (CEDAW/C/NZE/2): New ZealandCommittee on the Elimination of Discrimination Against Women. (1993b). Concluding Observations.
(CEDAW/C/SR): New ZealandCommittee on the Elimination of Discrimination Against Women. (1998). Third and Fourth Periodic
Report, New Zealand. (CEDAW/C/NZL/3-4): New Zealand

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Committee on the Elimination of Discrimination Against Women. (2003a). Summary record of the624th meeting. (CEDAW/C/SR 624). New York
Committee on the Elimination of Discrimination Against Women. (2003b). Concluding comments of
the Committee on the Elimination of Discrimination against Women: New Zealand. Fifth periodic
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(CEDAW/C/NZL/CO/6): New ZealandCommittee on the Elimination of All Forms of Discrimination Against Women. (2010, November).
Consideration of reports submitted by States parties under article 18 of the Convention on the
Elimination of All Forms of Discrimination against Women, Seventh periodic report, New Zealand.
(CEDAW/C/NZL/7): New ZealandCommittee on Economic, Social and Cultural Rights. (2009). General Comment No 20, Non
Discrimination in Economic, Social and Cultural Rights (Art.2, para 2 of the International Covenant
on Economic, Social and Cultural Rights. (EC 12 GC/20): Geneva
Committee on the Elimination of Discrimination Against Women. (1988). Seventh session, 16
February-4 March 1988 Concluding Comments of the Committee on the Elimination of Discrimination
Against Women. Initial report. (Supplement no. 38 (A/43/38)): New ZealandCommittee on the Elimination of Discrimination Against Women. (2012, July 9-27). Concluding
Observations of the Committee on the Elimination of Discrimination Against Women.
(CEDAW/C/NZL/CO/7): New ZealandEngland, P. & Folbre, F. (1999). The Costs of Caring. The Annals of the American Academy of
Political and Social Science, 561(1): 39-51.
Heyns, C. & Viljoen,F (2001). The Impact of the United Nations Human Rights Treaties on theDomestic Level. Human Rights Quarterly. 23: 483-535.
Hyman, P. (2008). Pay Equity and Equal Employment Opportunity in New Zealand: Developments
2006/2008 and Evaluation. New Zealand Journal of Employment Relations, 33(3): 1-15.
Hyman, P. (2010). Pay Equity and Equal Employment Opportunity in New Zealand – developments
2008/2010 and Evaluation. Labour, Employment and Work in New Zealand 2010 Retrieved fromhttp://www.victoria.ac.nz/som/industrial-relations-centre/irc-events/lew-conference-welcome/lewpapers/N11_Hyman_LEW_Final.pdf
Lauren, P.G. (1998). The Evolution of International Human Rights: Visions Seen. Philadelphia:
University of Pennsylvania Press.
Ministry of Women’s Affairs. (2002). The Status of Women in New Zealand 2002: The Fifth Report on
New Zealand’s Progress on Implementing the United Nations Convention on the Elimination of All
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Forms
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Press of Harvard University Press.
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New Zealand Human Rights Commission (2011). Strengthening Parliamentary Democracy: A
discussion paper. Wellington: Author
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Care Workforce, Wellington: Author
Office of the United Nations High Commissioner for Human Rights. (n.d). Frequently Asked Questions
on Economic, Social and Cultural Rights. (Fact Sheet No.33). Geneva: Author
Palmer, E. & Eveline, J. (2012). Sustaining Low Pay in Aged Care Work. Gender, Work andOrganization, 19(3): 254-275.
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NZEmpC 157 ARC 63/12.
Television 3 News (2012, May 28). Government won’t increase aged care pay. Retrieved fromhttp://www.3news.co.nz.

16New Zealand Journal of Employment Relations, 38(2): 17-32

In support of a New Zealand ‘living wage’: reflections on Danish‘working poor’ trends and issues.
ERLING RASMUSSEN* and JENS LIND**
Introduction
In May 2012, a campaign started in support of a New Zealand living wage. Initiated by the Service
and Food Workers Union Nga Ringa Tota (SFWU), Living Wage Aotearoa New Zealand has
grown into a broadly based community and union campaign with over 100 organisations endorsing
a call for a living wage by late 2012. The campaign is partly a response to the growing concerns
about low-wages in New Zealand where many workers and families are struggling financially, andit partly builds on similar campaigns in other Anglo-American countries (for example, USA, UK,
Ireland). There are particular New Zealand factors at play as the country seeks to counter the fallout
from the global financial crisis, high youth unemployment, and an exodus of skilled workers tooverseas labour markets. In particular, the limited growth in statutory minimum wages has had anegative impact on low paid employees as have the government’s reduction in employee
entitlements and its emphasis on work, even very low paid work, being a way to deal with
employment and welfare issues (Fletcher, Hanna & Andersen, 2012; Hanna, Fletcher & Andersen,2013).
However, wider international concerns about unemployment, low-wages and employee rights
indicate that important underlying structural and political issues are associated with the type ofwork and labour markets being created (Andress & Lohmann, 2008). It is well-known from several
OECD countries that the recent growth in low paying jobs has been associated with job growth inlow-wage service sector employment in areas, such as hospitality, cleaning, aged care and retail(Dølvik, 2001; Rampell, 2012). This growth has also coincided with a decline in union membershipand collective bargaining, a rise in atypical employment patterns and a stronger
employer/management focus on costs and labour market flexibility (Appelbaum, Bernhardt &Murnane, 2003; Rasmussen & Andersen, 2006). Overall, it has made wage and income inequality,
and its positive and negative effects a major media and research focus. While the extent and actual
impact across economies is still debated, there are clearly concerns that growing inequality canbring about economic and social inefficiencies (Fallow, 2013; Rashbrooke, 2013). It is particularlyinteresting that key supporters of more ‘market’ and ‘deregulation’, (such as the OECD, 2012;
Politiken, 2012; the Economist, 2012), have recently voiced concern over the continuous rise ininequality.
With the growth in low-wage service sector employment and changes in employment relations andemployment patterns, there seems to be no stopping the incidence of the ‘working poor’ rising.
While low-wage employment can be contained through legislative and collective bargaining
interventions, this has been met with fierce employer and political resistance in many OECD
countries. Social welfare interventions to mitigate the income deficiencies have also been faced*

Professor Erling Rasmussen, AUT University,erling.rasmusssen@aut.ac.nz
Professor Jens Lind, Aalborg University, Denmark. jlind@socsci.aau.dk**

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New Zealand Journal of Employment Relations, 38(2): 17-32

with the fallout from the post-2008 global financial crisis, which has put pressure on public budgets(Leschke & Jepsen, 2012; Schick, 2009). New Zealand’s limited changes to statutory minima andrecent welfare and public sector reforms fit well with that international picture.
While low-wage work has become a concern in many OECD countries, the recent growth in the‘working poor’ is not inevitable and it is a key argument of this article that a living wage is possible
and compatible with a highly efficient and competitive economy. In support of this argument, wedraw on recent research which has been funded by the Russell Sage Foundation. 1 This research has
used the standard European definition where low-wage workers or ‘working poor’ is defined as“anyone who earns less than two-thirds of the national median wage” (Solow, 2008: 5). This meansthat the number of ‘working poor’ will be influenced by the dispersion of the wage distribution,
particularly the compression of the wage distribution for low-wage work. It will also be influenced
by the level of the national median wage, which will indicate whether a country has comparatively alow-wage economy (as discussed below).
The Russell Sage Foundation research has found a wide range of incidences of ‘working poor’ in
the relatively few OECD countries its research has investigated. This is a clear indication thatdifferent countries deal very differently with low-wage work.
Here are the basic facts. In 2005, the incidence of low-wage work was 25 percent in the
United States, 22.1 percent in the United Kingdom, 20.8 percent in Germany (2004), 18.2
percent in the Netherlands (2004), 12.7 percent in France (2002) and 8.5 percent in
Denmark (Solow, 2008: 6).
In this paper, we will focus on Danish trends since Denmark has obviously had a very low
incidence of ‘working poor’ (Solow, 2008). It is an example, therefore, of our argument that
restricting low-wage work is possible. This restriction is also compatible with a competitive
economy since the Danish economy has been regarded as rather successful in recent years.
Interestingly, a relatively low level of ‘working poor’ has even been recorded in several Danish
service sectors; sectors normally renowned for their propensity to create low paying jobs (Bosch &Lehndorff, 2005; Eriksson & Li, 2008). The Danish way of restricting low-wage work also appears
to fit well with the voluntary, bargained approach taken by the New Zealand campaign for a living
wage. Finally, the mobility out of low-wage work is also high in Denmark (as discussed below)
meaning that individuals are far less likely to become continuously stuck in low-wage work. Thus,
the Danish ‘case’ can provide interesting counter-arguments when dire economic and employmentoutcomes are raised as obstacles for introducing a living wage in New Zealand.
However, we are also mindful to avoid presenting an unrealistic Danish ‘fairytale’. The paperquestions, therefore, the long-term viability of the ‘Danish Model’ of employment relations. Several
critical arguments from recent research are canvassed, such as the ‘Danish Model’ being based on
an open labour market with large in and outflows of migrants, and with a reliance on collective
bargaining/agreements, with limited state regulation and, in particular, no statutory minimum wage
(Knudsen & Lind, 2012; Lind & Rasmussen, 2013; Smith, 2011). Finally, we end with a brief
discussion on the relevance of the ‘Danish Model’ and its ability to contain the incidence of‘working poor’ in respect of New Zealand public policy, bargaining trends and employer and union
attitudes.

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New Zealand Journal of Employment Relations, 38(2): 17-32

The ‘working poor’ and the ‘Danish Model’ of employment relations
In recent years, the so-called ‘Danish Model’ and, in particular, its promotion of ‘flexicurity’ has
attracted substantial overseas interest (Andersen & Svarer, 2007; Begg, 2012; Due, Madsen, Jensen& Petersen, 1994). While the emphasis on a flexible labour market and social welfare security has
been a key driver of the ‘Danish Model’s notoriety, it has also been used in promoting a ‘ThirdWay’ or Social Democracy approach to economic, social and labour market policies, and has been
seen as a positive example in the move towards the high-skill, high-wage economy, and an
inclusive labour market (Campbell, Hall & Pedersen, 2006).
Denmark and New Zealand are seldom the subject of mainstream comparative research (but see
Markey, Harris, Lind, Busck & Knudsen, 2010; McLaughlin, 2009; 2010). However, it is obviousthat the two countries, despite some similarities in terms of historical developments (Lind &Rasmussen, 2006), have followed rather different public policy paths over the last two to three
decades.
Radical changes have been the hallmark of the ‘New Zealand experiment’ where so-called‘Rogernomics’ started a fundamental economic and social transformation, which ‘opened’ the New
Zealand economy and implemented adjustments across most public policy areas (Kelsey, 1997). In
particular, the public sector and labour market reforms have gained international notoriety (Boston,
Pallet & Walsh, 1996; Dannin, 1997). The welfare support to and prevention of low-wage work
became more evident under the Labour-led governments (1999-2008), where major increases instatutory minimum wages, enhanced employee rights, social welfare changes and housing subsidies
shifted the goalposts for the ‘working poor’ (Haworth, 2004; Rasmussen & Walker, 2009).
However, collective bargaining levels have been stagnant in the new millennium and this has
clearly been problematic for many low-wage service sector jobs where collective bargaining is ararity (Blumenfeld, 2010). Finally, there has been a move towards a more neo-liberal, punitive
approach in the post-2008 period. Currently, it appears that employment, even low paid
employment, is seen as a key public policy target and most public policy changes (for example,
taxation, social welfare, employment minima) have done preciously little to limit inequality(Rashbrooke, 2013).
Although Denmark has implemented considerable changes to its economic and social structures, thechanges have been less radical and phased in slowly. This has meant, as pointed out below, that
there are now systematic Danish-New Zealand differences across a range of public policy areas andwith considerable variation in key economic, social and labour market indicators. The limited riseof ‘working poor’ as a proportion of the workforce in Denmark is probably also the reason why
Denmark, despite the considerable international debate of inequality, has yet to experience strong
research and media focus on low-wage work. While the discussion above has mentioned that
Denmark has had a low incidence of low-wage work and has also had high mobility out of lowwage work, it has not really said much about how this situation has come about and whether it canbe sustained. These questions are dealt with in the article’s next two sections.
Besides the low incidence of low-wage work, there are two other key characteristics which
influence the experience of low-wage workers in Denmark. First, there is considerable mobility outof low-wage work: “…of every one hundred Danes who were low-wage workers in 1995, only
about ten remained in that status five years later. If there is a chronically low-wage population, it
appears to be quite small.” (Solow, 2008: 14). Many of the low-wage workers are students who
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New Zealand Journal of Employment Relations, 38(2): 17-32

accept low-wage work as long as this fits with their studies. Many of these students will move tomore highly paid jobs when their studies have ended (Westergaard-Nielsen, 2008). Another majorgroup is immigrants and temporary foreign workers who are now becoming a public policy concern
as will be discussed below. Second, there is also considerable support in terms of active labour
market and social welfare measures. These are features which set the Danish approach apart frommost other OECD countries, as highlighted below. While it has provided some impressive
employment results in recent years, it has made the Danish approach very expensive: “Danish
welfare policies are comprehensive, and state expenditures on labor market programs are high; as aresult, Denmark spends more on these programs than any other country” (Westergaard, 2008: 32).
To really understand national differences, it is necessary to investigate how low-wage work istreated in particular countries, industries and firms. The Russell Sage Foundation research has
opened for further investigation thereof.
One interesting hypothesis that emerged from this work was the notion that employers havesignificant discretion about the way they organize their used of low-skilled workers and thevalue they put on the continuity and productivity of their work force. The extreme versions
came to be labelled “low-road” and “high-road” modes of organization. /…./ Of course, thenature of technology and the competitive intensity in the industry are important determinantsof labor-market outcomes. That is not in doubt. In some situations, however, there may be
scope for several levels of wages and job quality for unskilled workers. /…./ It then becomes
important to the researcher to understand the broad factors that govern the typical choices
made by employers (Solow, 2008: 3).
The quote highlights how there appears to be systematic differences even when industry location,
occupational patterns and organisational size are adjusted for. As such, the Russell Sage Foundation
research is consistent with other comparative employment relations theories and/or models, whichhave tended to place Anglo-American countries in a different category from Denmark. One canpoint to neo-corporatist analyses of the 1980s (Schmitter, 1981; Crouch, 1985), the so-called
Calmfors-Driffill hypothesis of the late 1980s (Calmfors & Driffill, 1998), the Strategic Choice
Model of the 1980s and 1990s (Katz & Darbishire, 2000; Regini, Kitay & Baethge, 1999) and the
Variety of Capitalism of the 1990s and 2000s (Bamber, Lansbury & Wailes, 2011; Campbell et al.,2006). All of these theories and models put a lot of emphasis on institutional factors and they often
place labour market and employment relations processes and outcomes at the centre of their
discussions. It is clearly a crucial institutional feature that Danish unions have maintained industry
collective bargaining as a norm-setting mechanism for low paid jobs, and it is this norm-settingcollective bargaining which is currently under some pressure (Knudsen & Lind, 2012; Lind &Rasmussen, 2013).

How has Denmark limited a rise of ‘working poor’ as a proportion of theworkforce?
Since the 1950s, Denmark has developed an economy, a social welfare system and an inclusive
labour market which have been admired by overseas commentators (Auer, 2000; Campbell et al.,2006). In the process, it has transformed itself from a relatively low-wage country to a high-wage,
high-skill, internationally integrated economy. There are many reasons for this development andone has to be careful in taking a short-term or simplistic view as it has not been a smooth path.
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New Zealand Journal of Employment Relations, 38(2): 17-32

Denmark has had its fair share of international pressures, economic downturns, public policy ‘soulsearching’, and some adverse economic and social changes. Thus, any brief explanation for thissuccess will be superficial and, in the following, we will highlight only a few key features and, inparticular, those that can be used to compare and contrast New Zealand issues and trends.
The transformation towards high-wage, high-skill economy was part of the social democracy
economic and social approach, which promoted a strong economy and high productivity through anemphasis on education and upskilling, workplace democracy (employee ‘voice’ and influence) andequality and equity. The post-1950s economic upswing was characterised by investments in
education, public sector activities (including kindergartens to facilitate women joining the labour
market) and localised active labour market programmes. Similar public policy approaches could befound in other European countries and in New Zealand, but there was a unique Danish approach
which gave rise to the notion of the ‘Danish Model’ of employment relations. It was a strongly
solidaric approach which was built around the traditional self-determination of employers andunions, and emphasised the role of ‘solidaric wage bargaining’ and income compression (Due et al.,
1994; Due & Madsen, 2008). Thus, while the state was active in developing welfare measures(including income redistribution through taxes and transfer payments), education and training
programmes, and massive infrastructure projects, there was limited intervention in the labour
market (Andersen & Svarer, 2007; Due et al., 1994). Labour market regulation was mainly built oncollective agreements and, to a very limited degree, on state intervention (which was normallyprompted by joint employer-union suggestions). Compared to employment relations in New
Zealand, the lack of legislative underpinnings is remarkable.
Besides this ‘voluntarist nature’ of employment relations, it is important to consider the importanceof comprehensive state intervention in supporting economic and social mechanisms.
The Danish “flexicurity” model has achieved outstanding labour-market performance. The
model is best characterised by a triangle. It combines flexible hiring and firing with agenerous social safety net and an extensive system of activation policies. The Danish model
has resulted in low (long-term) unemployment rates and the high job flows have led to highperceived job security (Andersen, Bosch, Deelen & Euwals, 2011: 1).
The comprehensive role of the social safety net means that most low paid employees will seldom
suffer a drastic income reduction in the short-term, and many important employment entitlements
are only partly dependent on having continuous employment. This creates a highly mobile
workforce and many Danish workers will change jobs and experience short periods of
unemployment. In that sense, labour market mobility is similar to the US patterns, where an
economic down or upturn prompts an immediate employment reaction (Westergaard-Nielsen,
2008). The average unemployment duration in Denmark tends to be less than four months and while
this has drifted upwards following the global financial crisis, average unemployment duration is still
low: “Still, workers that lost jobs in the midst of the recession found employment rather soon: 60%
after 13 weeks and 80% after 26 weeks.” (Andersen et al., 2011: 3). While the ceiling on
unemployment benefit payments provides a financial incentive to rejoin employment for higher
paid workers, the activation measures are very important for low paid workers, and there is aconsiderable degree of compulsion (financial punishment) to be actively involved in thesemeasures.

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New Zealand Journal of Employment Relations, 38(2): 17-32

As neo-liberal thinking has permeated public policy approaches in many OECD countries in the
new millennium, the Danish/Scandinavian approach has stayed remarkably different and successful:
Despite high taxes, high unionization rates, and egalitarian income distribution they
demonstrated from the mid-1990s to 2008 that it was possible to improve competitiveness,secure macroeconomic balances, lower unemployment, and engage a high proportion of
women, youngsters, and senior people in economic activity, while state institutions played alarge role in the economy (Kristensen & Lilja, 2011: vii).
In fact, the Danish data shows several trends contrary to neo-liberal thinking becoming more
embedded in the post-1980 period: union density peaked in the mid 1990s, the public sector was
still expanding post-2000, and high income tax rates and significant public transfers are still inplace. Thus, even with the various current ‘pressures’ on the Danish approach highlighted below,
this is still a paradoxical model for many outsiders as it is so different, and yet successful with the‘wrong’ public policy approach.
As described, the incidence of low-wage work is partly influenced by the ‘Danish Model’ and its‘flexicurity’ approach, but is also partly influenced by common understandings built over a longtime amongst the key decision-makers. In particular, there appears to be a common state-employerunion understanding that continuous adaptation (to adjust in light of prevailing economic and social
issues), and a focus on productivity is necessary and this understanding influences national
collective bargaining as well as bargaining at organisational level (Lind & Rasmussen, 2006).
Productivity measures are often implemented at workplace levels where shop stewards and work
councils can have considerable influence, and employees’ positive contributions are, therefore,
important in generating flexible and effective workplaces (Kristensen & Lilja, 2011; Rasmussen,
O’Neil & Chalmers, 2006). The connection between high wage work and productivity can also befound in the unions’ rather positive approach to outsourcing/offshoring of low-wage work. Whilejob protection is part of the unions’ strategic approach, it sees the containment of low-wage work as
an important part of its solidaric wage bargaining. It also appears that Danish employers are very
vigilant in ‘policing’ and advocating against low-wage work with adherence to collectively agreed
norms being taken quite seriously by employers and their associations.
However, the Danish approach is not without its problems. There have always been areas,
especially in construction, retail and hospitality, where collective agreements do not cover work andemployees (Scheuer, 1996). These areas are clearly problematic for unions as they can undermine
minimum wage norms. As will be discussed below, there are some serious doubts about including
the areas outside of collective agreement coverage. Another problematic issue is how to fit people
with low skills, low engagement or with physical and/or mental constraints into workplaces which
are driven by high labour costs and international competition. There have been some serious public
policy debates about the many people who cannot get a permanent position in the Danish labour
market and the many people who have been ‘retired’ temporarily or often permanently from thelabour market through various sickness and pension schemes (Velfærdskommissionen, 2004;
Møller, Lind & Hansen, 2008). Finally, this is a very expensive system which tends to put pressure
on employers, employees and particularly state expenditures. The high level of Danish taxation,
driven by high income taxes, local taxes and a 25 percent VAT rate, often astounds foreignobservers. While social welfare, health and education account for a large part of expenditure, theactive labour market measures and the wider context of extensive free education and training
opportunities are very expensive to run (Westergaard-Nielsen, 2008).
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New Zealand Journal of Employment Relations, 38(2): 17-32

Still, as Kristensen and Lilja (2011) have illustrated, the rather large and expensive welfare state canpositively support organisational adjustments and allow for continuous upskilling and learning.
Under increasing international competition, organisations and individuals have to experiment withnew business models, new working arrangements, and new career and living patterns. This demands
high levels of flexibility and connectivity, especially of the many small-to-medium sized Danish
firms. In this volatile labour market, individual workers have to rely on more than just traditional
supports, such as crèche and kindergarten facilities, paid parental leave, and protected jobs. In order
to incorporate new family patterns and continuous upskilling requirements, new welfare and active
labour market measures have involved the development of individualised employment planning,transfer/job change supports, temporary leave schemes, individualised social services and so on(Kristensen & Lilja, 2011).

Can the Danish Model continue in a globalised/international labour market?
Despite its remarkable success in the last couple of decades, there are doubts whether the ‘Danish
Model’ is viable in a globalised labour market. As it is based largely on collectively agreed
arrangements, it demands a consensus approach and comprehensive coverage of collective
agreements and arrangements. This cannot be taken for granted. Interestingly, the other two aspectsof ‘flexicurity’ – state support of incomes and active labour market interventions – have only had
minor adjustments in the new millennium and, if anything, have been seen as even more importantin order to deal with a more fluid labour market and with the demographic pressures of an ageing
workforce. There have been some adjustments to deal with the costs associated with stateinterventions, and a tightening of unemployment and benefit regulations (Andersen, Olsen, Ploug &Juul, 2012; Møller et al., 2008). This has meant that the unemployed and beneficiaries have faced
tougher times, but has yet to prompt a public debate about the ‘working poor’ or a living wage,
despite the unions trying to engage young people and unorganised employees in a wider discussion
about how to prevent low-wage work. This public debate may still surface as there has been
considerable media and political debate about the growing inequality in Denmark (Politiken, 2012).
However, inequality is still far from American proportions as the Danish Gini coefficient2 has
increased from 20.6 to 24.3 over the last 15 years as the economic upswing has benefited highly
paid employees most (Economist, 2012; Lind & Rasmussen, 2013; OECD, 2012)
Thus, the main doubts about the viability of the ‘Danish Model’ are linked to collectively agreed
arrangements. Danish research has pointed to three trends which could threaten the sustainability of
the Danish Model (Due & Madsen, 2008; Knudsen & Lind, 2012; Lind & Rasmussen, 2013):
 Decentralisation of collective bargaining Union density decline and less comprehensive collective bargaining
 European Union regulations and migrant labour
Over the last couple of decades, there has been a decentralisation of collective bargaining. This
process, often called “managed decentralisation” or “centralised decentralisation”, has made the key
national peak employer and union organisations (DA and LO) less important. Instead, employer
associations and unions at the industry level – the next level down from the national peakorganisations DA and LO – have gained in importance, and are now the key parties concludingcollective agreements (see Lind & Rasmussen, 2013). At the same time, collective agreements havebecome less prescriptive and many important employment conditions, including wages and working
23

New Zealand Journal of Employment Relations, 38(2): 17-32

hours, are often negotiated at workplace level. This has clearly opened for more employerdetermined flexibility, but with strong union and employee influence on workplace decisionmaking, it is a far cry from employer-determined flexibility in New Zealand. It has also yet to resultin a strong growth of ‘working poor’ as, despite the growing importance of workplace wage
negotiations, wage differentials have not increased considerably.
The ‘Danish Model’ assumes that collectively agreed arrangements will cover the labour market ina nearly comprehensive fashion. This assumption has been questioned since research by Scheuer(1996), and it is estimated that around 60 percent of the private sector workforce are currently
covered by collective agreements (LO, 2011a). With over a third of the private sector workforce
being without collective bargaining coverage, some of these workers could face low-wagesituations since there is no Danish statutory minimum wage. The key role of collective bargaining
and union membership in containing low-wage work may be one reason why there has not been astrong decline in union density in Denmark as in other countries. As can be seen from Table 1
below, Danish union membership is roughly as high as it was in the 1980s.
Table 1: Members of trade unions in Denmark (in thousands)
1985
Workforce*
2.434
LO
1.119
FTF
309
AC
74
Outside the Peak 198
Organisations
Union members
1.700
Union density
70

1995
2.547
1.208
332
132
190

2000
2.614
1.167
350
150
203

2005
2.640
1.142
361
163
227

2009
2.677
987
358
**133
**340

2010
2.676
955
358
137
354

2011
2.655
917
356
139
366

1.809
73

1.802
72

1.799
72

1.665
68

1.631
67

1.603
67

53
20
8
19

52
20
8
20

Members of Peak Organisations as percentage of all union members (%)
LO
66
65
62
60
54
FTF
18
18
19
19
20
AC
4
7
8
9
7
Outside the Peak 12
10
11
12
19
Organisations
Source: LO, 2011b*Self-employed are not included**These changes were prompted when two member organisations (‘Ingeniørforeningen’ and‘Landinspektørforeningen’) decided to leave AC.
LO is the traditional, mainly blue-collar, peak organisation, FTF mainly organises white-collar
workers while AC have academically educated employees as members.
Table 1 indicates that there has been a relatively small drop in union density, and there is still a very
high level of union density compared to most other countries. However, there have been several
important distributional changes. LO has lost some of its previous dominance as it has lost
members. To a large degree, this has been driven by changes in the workforce composition as
24

New Zealand Journal of Employment Relations, 38(2): 17-32

service sector and white-collar jobs have grown. As the peak union organisations often work
together in securing the key employment conditions and arrangements, this has had less impact oncollective bargaining outcomes as could have been the case. The peak union organisations are all
advocating a strong position on the ‘working poor’ and they are often supported by peak employer
associations as organised employers are trying to avoid being undercut by ‘cheap labour’
employers. However, the rise in union members outside the peak union organisations is rather moredangerous as this is partly built on the popularity of so-called ‘discount unions’ (Ibsen,Høgedahl &Scheuer, 2011; 2013). Normally, these unions have rather weak bargaining positions or nocollective agreements at all, which opens up for low-wage work. While there has been a strong
growth in ‘discount unions’ over the last six to seven years, the full effect of this growth on lowwage work is yet to manifest (Navrbjerg & Larsen, 2011).
European Union membership means that the Danish labour market has become part of the ‘free
mobility of capital and labour’ within EU countries. EU nationals can legally work in any Danish
company, and will be subject to the same rules and conditions as Danish nationals. However, when
under the employ of a foreign owned company operating in Denmark, the employment relations isregulated by the Posted Worker Directive, which is implemented via Danish legislation. According
to this legislation, a foreign-owned company must follow Danish legislation and agreements that
regulate the working conditions of particular jobs. In both cases, there are clear prescriptions where
legislation stipulates the appropriate regulations (such as safety at work, holidays, legislation on
white-collar workers, equal treatment of men and women and equal pay). This is less clear cut if thecollective agreements do not stipulate wage levels, working time arrangements, and so on. Thesesituations could easily allow strong growth in the ‘working poor’ as there is no statutory minimum
wage as a default option.
Finally, there have been several cases reported in the media where Danish and foreign-owned
companies have ignored Danish legislative or collectively agreed regulations when employing nonDanish workers (for example, in the construction sector). In most of the reported cases as well as in
the limited research done so far, migrant workers have been lower paid than Danish workers, theywork longer hours, their working environment is sub-standard, and the work intensity is higher(Hansen & Hansen, 2009; Arnholtz & Hansen, 2011; Pedersen & Thomsen, 2011). This could
become a considerable issue since there has been strong growth of foreign workers in the Danish
labour market, rising from 40,000 to 60,000 workers during 2008-11 despite rather low levels of
economic activity (Arnholtz & Hansen, 2011).

Discussion
In respect to the living wage campaign, the Danish example provides an encouraging picture. Itshows that it is possible to limit the ‘working poor’ in an open, flexible economy and, equallyimportant, many employees leave the ‘working poor’ status after a relatively short period. As withthe living wage campaign, the Danish approach rejects low-wage work as a solution to
unemployment or activation of social welfare recipients and this provides a strong guideline forpublic policy-making. The Danish approach also aligns with the living wage campaign where theemphasis is on collectively agreed solutions where the consideration of other workplace measuresfor example, changes to work organisation, can make wage increases for low paid employees lesscostly for employers. However, the New Zealand living wage campaign needs to tackle two
25

New Zealand Journal of Employment Relations, 38(2): 17-32

important issues in order to align with the ‘Danish Model’: the strategies of the current National-led
government and the low level of collective bargaining.
The economic, social and labour market approaches of the current National-led government contrast
with the negative image of low-wages found in the ‘Danish Model’ and the living wage campaign.
One can point to the limited rises in the statutory minimum wage since 2008, the recent welfare
reforms and their pressure on beneficiaries to take on any type of job, or the insufficient support ofvocational training and labour market transitions of young people (Fletcher et al., 2012; Hanna etal., 2013). There is a considerable gap between such approaches and the fundamental ideas andinterventions of the ‘Danish Model’ and ‘flexicurity’. Although the living wage campaign has
succeeded in building grass-root support across community organisations, religious groups andunions, the 2014 General Election will be a litmus test whether this has been sufficient in shifting
the balance of the public policy debate. Without broad political and social support, it would be
difficult to imitate the Danish approach.
Another problematic issue is the reliance of the ‘Danish Model’ upon collective bargaining as this is
no longer relevant in many New Zealand workplaces. While public support from other grass-root
organisations is important in persuading employers to agree to the living wage approach, the Danish
approach is clearly based on comprehensive collective bargaining. There are debates of how tocreate more comprehensive collective bargaining in New Zealand, but making it happen is the key
test. Recent union discussions of making collective bargaining more comprehensive have focussed
on extending key bargaining results across industry groups (Harré, 2010; Kelly, 2010). This appears
to be slightly different from the historical awards and blanket coverage provisions with its focus on
key collective agreements being trendsetters. However, it is also different from the Danish approachsince it still seems to rely heavily on legislative backing and less on collective action. Furthermore,
it appears to assume that any widespread collaboration with employers is of limited use. While
Danish employers and employer organisations play a crucial role in enforcing collectively agreed
norms, this is unlikely to be the case in New Zealand. New Zealand employer organisations seldom
assume any enforcement role and their support of more ‘flexibility’, also in terms of wage-setting,broadly fits their constituency: most employers tend to support more employer determined
flexibility and less collective bargaining (Foster, Rasmussen, Murrie & Laird, 2011; Foster,Rasmussen & Coetzee, 2012). Thus, unions need to establish more widespread collective
bargaining and to overcome employer hostility to align with the Danish approach.
Finally, there are several areas where more government intervention could improve the quality oflabour market outcomes. Under the previous Labour-led government, workplace partnership wasseen as a way forward towards a high wage, highly productive economy (Haworth, 2010). This
collaborative approach facilitating higher productivity and wage levels has been in place inDenmark for some time where workplace partnership is built around extensive workplaceparticipation structures (Markey et al., 2010; Rasmussen et al., 2006; Rasmussen & Lind, 2003).
While workplace partnership is no longer part of public policy in New Zealand, this could beresurrected. Besides comprehensive workplace participation structures, Danish workplacepartnerships also benefit from continuous upskilling which is, as mentioned above, highly
expensive for both taxpayers and employers. In New Zealand, there are issues surrounding funding,
structures and workplace buy-in which have made skills shortages, import of skilled labour andupswing ‘bottlenecks’ a perennial problem for many employers (Rasmussen & Walker, 2009).
Furthermore, there are considerable concerns about New Zealand management approaches andskills (Birchfield, 2011; Haworth, 2012; Matheson, 2009). While the current National-led
26

New Zealand Journal of Employment Relations, 38(2): 17-32

government has recently highlighted major shortfalls in the education and training areas (Cochrane& Piercy, 2014), it will probably take a very substantial effort to bring New Zealand closer to theDanish level of upskilling.

Conclusion
The concerns about ‘working poor’ have grown in the new millennium as the wider impact of
globalised capitalism and labour markets has created considerable wage differentials, and large
sections of the workforce are struggling financially in many OECD countries. The fallout from theglobal financial crisis has added further impetus. These concerns are also associated with othereconomic and social issues, such as the wider impact of inequality, the ability to move out of lowwage work, restricted education and upskilling opportunities and, overall, the creation of a lessinclusive society.
It is possible to contain low-wage work and create a virtuous circle where a lower proportion of‘working poor’ leads to positive economic and social dynamics. It also important to ensure thatmobility out of low-wage work is high. The low incidence and duration of low-wage work are thekey indicators which make the ‘Danish Model’ and its ‘flexicurity’ and active labour market
programmes stand out internationally. Although this has been and still is a rather successful
approach one cannot take for granted that positive outcomes will continue. The Danish Model has
already had to be adapted on a continuous basis in face of economic, social and employment
problems and radical international market changes. Currently, there are clear warnings signs that the‘Danish Model’ is struggling in face of changes to union membership, less collective bargaining
coverage, and the integration of the Danish economy and labour market in the EU ‘free market’
zone.
While the New Zealand living wage campaign can take heart from the Danish experiences, we havepointed to several institutional underpinnings of the Danish success in containing the ‘working
poor’ which are not in place in New Zealand. There will need to be considerable public policychange and enhanced collective bargaining if New Zealand wants to pursue a Danish-inspired
approach. Overall, this makes us cautious about future trends, both in terms of whether the ‘Danish
Model’ will, once again, be able to withstand external and internal pressures through adaption andwhether the living wage campaign will result in adequately containing the extent of ‘working poor’in New Zealand. It also indicates that further comparative research is needed on how ‘decent work’,including higher wages, can be created in employment growth areas such as retail, hospitality,
logistics and transport, health and personal care.

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Notes
1

An overview of the low-wage research funded by the Russell Sage Foundation as well as thegeneral purpose of the Foundation can be found on www.russellsage.org with details publishedunder the section: RSF Case Studies of Job Quality in Advanced Economies. Research approaches
and findings have been published in several reports and books (for example, Appelbaum et al.,
2003; Gautié & Schmitt 2010; Westergaard-Nielsen, 2008).
2

The Gini coefficient is used to measure income distribution or inequality by national andinternational statistics, where a growth in income inequality is signalled by a growth in the Gini
coefficient. While there has been a growth recently in the Danish Gini coefficient, it is still low byOECD standards (see OECD, 2012)32

New Zealand Journal of Employment Relations, 38(2): 47-63

Estimating the Cost of Youth Disengagement in New Zealand
GAIL PACHECO * and JESSICA DYE **Abstract
Youth exclusion, disengagement, and overall underutilisation in the labour market are associated withserious economic and social costs. In this research we project the loss to productivity, measured inforegone wages, and the expected cost to public finances for New Zealand (NZ) and Auckland youth
aged 15-24 not in employment, education, or training (collectively known as NEET). We estimate theexpected per capita cost of each NEET youth in NZ is approximately $21,969 over the next one tothree years. The analogous cost for the Auckland cohort is higher, due largely to greater foregone
wages. Closer inspection reveals that Auckland NEET youth of Maori and Pacifica descent areassociated with relatively high per capita costs compared to their NZ European counterparts. Thisfinding is driven by the greater propensity of Maori and Pacific Peoples to disengage from theeducation system earlier, withdraw from the paid workforce due to caregiving responsibilities at a
younger age, and to experience longer durations of unemployment than their NZ European
counterparts.
Keywords: NEET, youth disengagement, economic productivity, labour market, transition to work
JEL Classification: J64, J24

Introduction
There has been growing interest in recent years in the labour market issues that youth face. A wide
range of empirical evidence suggests that young people out of employment or education are likely tohave a lifetime of poorer outcomes in terms of future unemployment (e.g. Gregg, 2001; Maloney,
2004; Mroz & Savage, 2006), lower future wages (e.g. Gibson, 2000; Gregg & Tominey, 2004;
Cruces, Ham & Viollaz, 2012), increased criminal activity (e.g. Carmichael & Ward, 2000;
Fergusson, Horwood & Lynskey, 2006; Wu & Wu, 2012), and even reduced happiness and health(e.g. Fergusson et al., 1997; Clark, Georgellis & Sanfeym, 2001; Blakely, Collings & Atkinson, 2003;
Blanchflower, 2010). For example, Maloney (2004) finds evidence that labour market inactivity of
New Zealanders at an earlier age is associated with inactivity at a later age, while Fergusson et al.
(1997) and Fergusson et al. (2006), respectively, present evidence to suggest that young New
Zealanders exposed to unemployment have higher rates of substance use and anxiety disorder, andincreased levels of youth offending.
Such research indicates that youth disengagement from the labour market and education system has
both short run, as well as serious long-term consequences for the individual and the economy. In
2004, to better understand this segment of the youth population, Statistics NZ began to measure andpublicly report the numbers of youth that were neither employed, nor in education or training – thisgroup is collectively known as NEETs. While the concept of NEETs is related to the measurement ofyouth unemployment, there are some important differences that need to be recognised. A person isdefined as being unemployed in NZ if they do not have a paid job but were available and had been
actively looking for work in the previous four weeks. Therefore, unemployment figures exclude*

Associate Professor, Department of Economics, AUT University. Email: gail.pacheco@aut.ac.nz
Department of Economics, AUT University**

47

New Zealand Journal of Employment Relations, 38(2): 47-63
individuals who were available for work but are not actively looking. In contrast, NEET statistics
include some of the economically inactive, i.e. individuals that are not looking for work, and may or
may not be in caregiving roles. For this reason, NEET rates are a common measure of non-utilised
youth labour market potential.
While there is considerable literature studying the consequences of youth disengagement, remarkably
little research to-date has attempted to quantify the associated individual, social, and economic costs.
We contribute to this gap in the literature by estimating the expected economic cost of NEET youth in
NZ. Specifically, we project the short-term (one to three years) loss to productivity, measured inforegone wages, and the expected cost to public finances associated with the youth NEET cohort aged
15-24 years, as at December 2012. We conduct this analysis at both the aggregate country level aswell as for the largest urban area of NZ, Auckland. A priori, we expect that the cost of NEET youth in
Auckland will be higher than that for NZ, largely due to the higher foregone wages in Auckland. We
also further devolve our analysis by ethnicity to compare the cost of NEET youth that are Maori,
Pacific Peoples, and NZ European. Such sub-group analysis is important in informing policy, suchthat intervention in the youth labour market can be better targeted.
The remainder of this paper is as follows: Relevant literature establishing the negative consequencesof youth becoming NEET to individual wellbeing, as well as to wider society is reviewed. Then,
information on NEET trends in NZ is presented, followed by our methodological approach tocomputing the economic cost of NEET youth. Finally, a discussion of results is presented.

Literature Review
There are a range of negative consequences associated with young people being NEET. Not only arethese consequences borne by the individual, they also generate costs to society in terms of lost
productivity and public finances, as well as having other wider social implications. The internationaland domestic literature suggests that these costs broadly include: scarring, in terms of future
employment prospects and wages (i.e. reduced economic productivity); increased crime; and reduced
quality of life.
Scarring – Future Employment Prospects and Wages
There is considerable evidence to suggest that inactivity at an early age is associated with higher
probabilities of inactivity at a later age, as well as lower wages later in life (e.g. Ellwood, 1982;
Arulampalam, 2001; Bynner & Parsons, 2002; Maloney, 2004; Gregg & Tominey, 2004; Mroz &Savage, 2006; Cruces et al., 2012)1. For example, Gregg (2001) finds that, even after controlling forrisk factors likely to raise the probability of an individual experiencing unemployment, British youth
who experience unemployment (compared to those who do not) disproportionately go on toexperience further periods of being out of work (either unemployment or inactivity) in their prime age
adult years (28-33 years of age). This path dependence is found to be significantly more pronounced
for men than for women. Likewise, in NZ, Maloney (2004) finds evidence of path dependence, in thatindications of inactivity during youth are associated with higher probabilities of inactivity at a later
age.
Prior literature also documents the existence of a scarring effect on the future wages of youth thatexperience early disengagement (e.g. Ellwood, 1982; Arulampalam, 2001; Gregg & Tominey, 2004;
Mroz & Savage, 2006; Cruces et al., 2012). When these individuals do return to the labour market,
they may find work of a lower skill level than their non-NEET counterparts. This results in a wage
differential between youth workers that had a period of being NEET (i.e. those who had a longer
48

New Zealand Journal of Employment Relations, 38(2): 47-63
transition period into the labour market) versus those that have no NEET history. Gregg and Tominey(2004) find evidence in the UK of scarring in the form of persistently reduced wages, stemming froman individual’s youth unemployment experience. They find a sizeable wage scar for males andfemales at age 23, followed by a 10 year recovery period, as long as no further unemployment spells
are experienced. They also find evidence of a smaller residual wage scar of approximately eightpercent that can persist for up to 20 years, even if there are no further unemployment experiences.
Mroz and Savage (2006) find qualitatively similar results for youth in the US, while Cruces et al.,(2012) present similar findings within the Argentinian and Brazilian context. Further, while Cruces etal. (2012) find that the wage penalty diminishes over time, their results also point to variations acrossdifferent skill groups, with low skilled individuals experiencing greater persistence in wage penalties
over time.
A factor likely to further accentuate the wage effect for NEET youth is lower educational attainment(Cruces et al., 2012). There is considerable evidence on the returns to education in terms of higher
wages. For instance, reviewing the international literature Psacharopoulos and Patrinos (2004) findthat the average rate of return for another year of schooling is slightly more than six percent per year
in OECD countries, while recent figures indicate the average private rate of return to education forOECD countries is as high as 12.4 percent2. Examining annual wage differentials in NZ, Gibson(2000) shows a high return to academic credentials, particularly for ethnic minorities such as Maori
and Pacific Peoples3. He posits that this wage effect is attributable to credentials signalling worker
productivity to employers4. Our empirical analysis takes this factor into consideration as we explicitly
account for the likely impact of educational underachievement on wages in the next one to three years
for NEET youth in NZ.
Increased Criminal Activity
Higher rates of youth inactivity and unemployment are also often seen as precursors to rising crime
rates (e.g. Chiricos, 1987; Carmichael & Ward, 2000; Fergusson et al., 2001; Fergusson et al., 2006;
Wu & Wu, 2012). Carmichael and Ward (2000) find a systematic positive relationship between
burglary rates and male unemployment rates in England and Wales. While their results areirrespective of age, they find a consistent, positive relationship between youth unemployment andcriminal damage and robbery rates. Additionally, making use of a NZ birth cohort sample (up to theage of 18), Fergusson et al. (2006) find an increase in the duration of unemployment is significantly
associated with rises in youth offending.
Reduced Quality of Life
Research in both the NZ and international context suggests that unemployment among young people
is associated with reductions in quality of life, particularly with regard to a rise in the prevalence ofmental health issues, such as depression, lower self-esteem, and anxiety (e.g. Feather, 1982;
Goldsmith, Veum & Darity, 1996; Mathers & Schofield, 1998; Clark et al., 2001; Fergusson et al.,
2001; Blakely et al., 2003; Gerdtham & Johannesson, 2003; Blanchflower, 2010), and substanceabuse (Fergusson et al., 1997; Fergusson et al., 2001; Blanchflower, 2010). Employing a longitudinalsurvey data set of young people in the US, Goldsmith et al. (1996) finds that youth, who experience
unemployment or time spent out of the labour force, can experience long-term harm to their selfesteem, suffering from depression, a sense of loss of identity (self-alienation), and anxiety. These
psychological impacts also place an increasing burden on the immediate family of unemployed youth.
For example, in a recent UK survey of young individuals, more than a quarter of those who had been
unemployed said unemployment was a cause for arguments with family, and 10 percent said it drove
them to drugs or alcohol (Prince’s Trust, 2010). With regard to NZ evidence, Fergusson et al. (1997)
find that young New Zealanders exposed to unemployment have higher rates of substance use and49

New Zealand Journal of Employment Relations, 38(2): 47-63
anxiety disorder later in life, while Blakely et al. (2003) find that unemployment in NZ is associatedwith a two-to-three-fold increase in the relative risk of suicide, compared with being employed.
Quantifying the Cost of NEET
The literature reviewed above highlights the wide range of costs associated with youth disengagement.
To date, however, there is limited work on actually quantifying these costs. Notable exceptions are
Godfrey, Hutton, Coles, Craig & Johnson (2002) and Coles, Godfrey, Keung, Parrott & Bradshaw(2010), which attempt to estimate the lifetime cost of NEET youth in the UK. The latter of thesestudies (an update of the former) estimates the average per capita cost of UK NEET youth (aged 16 to18) to be £16,649 in terms of welfare and productivity losses, and public finance costs (during thatthree year time period).
To our knowledge, this research is the first foray in NZ that explicitly constructs cost figures for youth
disengaged from education/training and the labour market. In forming our cost estimates, we would
ideally like to take into account costs relating to all of the potential consequences: direct and indirect
as well as immediate and delayed. Unfortunately, however, some costs are difficult to quantify due tothe unavailability of necessary data in many instances, and the inherent difficulty of estimating costsof an indirect nature. There are a couple of instances in past literature where researchers haveattempted to provide a loose framework with which to estimate the cost of outcomes such as poorer
health, and increased crime (see Godfrey et al., 2002 and Coles et al., 2010 for research in this vein).
However, by the authors’ own admission, data limitations lead to largely speculative estimates.
Additionally, their estimates rely heavily on assumptions derived from individual case studies andprior UK research which attributes specific outcomes to NEET versus non-NEET individuals. The
lack of such research in NZ further hinders our estimation of these indirect costs.
Therefore, this research focusses on the two costs that can be more readily quantified – lost
productivity (foregone wages), and the burden on the country’s public finances. Due to unavailabilityof appropriate panel data, we also restrict our purview to estimating short-term costs over a one tothree year time period. As a consequence, the costs estimated most likely underrepresent the true costof increasing NEET levels, but can nevertheless be viewed as lower bound estimates.

Background Context: NEET in NZ
As at December 2012, there were 88,600 NEET youth aged 15-24 in NZ (Statistics NZ, 2012a). Of
concern is that, while this figure equates to a NEET rate which is lower than the 2012 OECD average(~14 percent compared to ~16 percent), the number of NEET youth in NZ has increased 34.4 percent
since data for this group was first collected by Statistics NZ in March 2004. Also noteworthy is thevariation in NEET rates between genders, with females being more prevalent in the NEET statistics.
Specifically, the NEET rate for young women aged 15-24 was 17.7 percent as at December 2012,
while that for young men was 10.4 percent. Disaggregating by age, this result is driven primarily by
the 20-24 years old sub-group, with the NEET rate for females in this age group more than double thatfor their male counterparts (24.5 percent compared to 12.0 percent) due to significantly higher
numbers of young women classified as inactive and engaged in caregiving.
Of the total NZ NEET youth population (December 2012), 29,000 lived in the country’s economic
hub – Auckland. This figure equates to 13 percent of all young Aucklanders in this age group5, and~33 percent of total NZ NEET in this time period. As with NZ NEET more broadly, the total numberof NEET youth in this region has grown substantially (~46 percent) since March 2004. In both
50

New Zealand Journal of Employment Relations, 38(2): 47-63
instances, this upward trend is driven largely by a rise in the number of 20-24 year olds that are NEET
over the period 2004 to 2012 (see figures 1-4 below).
The gravity of the upward trend apparent in NEET rates is somewhat mitigated by the strong nationaland regional population growth experienced over the last decade (NZ > eight percent, Auckland > 10
percent) (Statistics NZ, 2012b). Nevertheless, the rising number of youth NEET pre and post the 2008
recession is indicative of wider issues affecting youth in NZ that are yet to be addressed, and likely toworsen as the age cohort of 15-24 year olds looks set to rise. Additionally, the Auckland NEET
average for youth masks significant differences among localities and ethnicities6. For example, theNEET rate for youth aged 15-24 in the Manukau district ward (which includes two of Auckland’s
lowest socio-economic districts, Mangere-Otahuhu and Otara-Papatoetoe) in September 2012 was~21.3 percent (Statistics NZ, 2012c), well above the national average of 12.6 percent. Similarly, youthof Maori and Pacifica descent are at greater risk of becoming NEET compared to their NZ Europeanand Asian counterparts. In December 2012, the NEET rates for individuals aged 15-24 were ~21.5
percent and ~20.9 percent for Maori and Pacific Peoples respectively, compared to ~10.4 percent and~11 percent for European and Asian individuals. The aforementioned statistics highlight that there are
ethnic subgroups within Auckland that require urgent attention/policy directed at improving theirtransitions between NEET status to the workforce, education, and/or training. Consequently, theresearch within this report is aimed at investigating both regional (by comparing Auckland with NZ),
and ethnic differences in terms of trends and the cost of being NEET.
Figures 1-4: Number of NEETs & NEET Rates, NZ & Auckland: 2004-2012

NZ: NEET Rates

NZ: Number of NEET

15-19 years

20-24 years

Rate %

20%
15%

10%
5%
Q1 '12

Q1 '11

Q1 '10

Q1 '09Q1 '08Q1 '12

Q1 '11

Q1 '10

Q1 '09Q1 '08

Q1 '07

Q1 '12

Q1 '11

Q1 '10

Q1 '09Q1 '08

Q1 '07

Q1 '060

Q1 '0610

20-24 years

25%
20%
15%
10%
5%
0%
Q1 '05Rate %

20

Q1 '05

Q1 '07

15-19 years

20-24 years

30

Q1 '04

Q1 '06

Auckland: NEET Rates

Q1 '0415-19 years

Q1 '05

Q1 '04

Q1 '12

Q1 '11

Q1 '10

Q1 '09Q1 '08

Q1 '07

Q1 '06

Q1 '050%

Auckland: Number of NEET

Thousands

20-24 years

25%

60
50
40
30
20
10
0
Q1 '04

Thousands

15-19 years

Source: Statistics NZ, Household Labour Force Survey.

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New Zealand Journal of Employment Relations, 38(2): 47-63

Figures 1 to 4 present NEET youth trends for NZ and Auckland over the period of 2004 to 2012. The
first observation is that the NEET rate is consistently lower for 15-19 year olds, relative to 20-24 year
olds. This is expected as this age group is more likely to have individuals participating in the
education sector, especially since the compulsory school leaving age in NZ is 16 7. All figures also
point to seasonal fluctuations in NEET numbers, particularly evident for 15-19 year old NEETs – withdrops in the NEET rate in quarter four (December) each year, followed by rises in quarter one(March). This is likely due to the rise in part-time and contract employment during the Christmas andsummer season. Finally, in line with prior evidence that young people are particularly sensitive tolabour market downturns (e.g. Kahn, 2010; Bell & Blanchflower, 2011; Fabling & Mare, 2012), there
is a rise in the number of NEET youth during the 2008/09 recession instigated by the global financial
crisis. With the exception of the Auckland 15-19 year old cohort, NEET numbers have remained atelevated levels since this time, courtesy of a subdued labour market. During recessionary periods, NZ
youth are not only competing for fewer jobs with older, more skilled/experienced workers, but theindustries their employment is typically concentrated in are most vulnerable to changes in economic
performance, such as hospitality, and tourism (Department of Labour, 2010).
Figure 5: Breakdown of NZ NEETs, 15-24 year olds

Source: Statistics NZ, 2012a
Figure 6: Breakdown of Auckland NEETs, 15-24 year olds

Source: ibid
Figures 5 and 6 present a breakdown of NEET youth in NZ and Auckland by unemployed andinactivity status. There were 29,400 (59,200) for 15-19 (20-24) year olds classified as NEET in NZ in
December 2012. Of these, ~54.7 percent (~39.2 percent) in the 15-19 (20-24) group were
unemployed, ~33.0 percent (~31.3 percent) inactive and not engaged in caregiving, and ~12.9 percent(~29.7 percent) inactive and engaged in caregiving. A comparable breakdown for Auckland reveals
similar proportions in the three sub-categories of NEET status (Figure 6) (Statistics NZ, 2012a)8.
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New Zealand Journal of Employment Relations, 38(2): 47-63
However, analogous breakdowns for Auckland NEET youth disaggregated by ethnicity (not shown
here for the sake of brevity, but see Pacheco and Dye, 2013) highlight distinct variation in NEET
status across ethnic sub-groups within Auckland. For example, the occurrence of NZ European
teenagers that are classified as unemployed is markedly higher than youth of Maori and Pacifica
descent, for which the propensity to become inactive is greater. The variation in rates of NEET youth
aged 15-19 classified as inactive due to caregiving activity is worthy of particular mention.
Specifically, the occurrence of Maori (Pacific Peoples) teenagers who are NEET falling into thiscategory is nearly three (two) times higher than their NZ European counterparts. This observation is
in-line with prior NZ evidence that teenage birth rates are significantly higher for youth of Maori andPacifica descent, compared to NZ European (e.g. Dickson, Sporle, Rimene & Paul, 2000; Families
Commission, 2011).

Methodology
To compute estimates of the associated costs for NZ NEET youth, the following analysis focuses on:i) youth NEET that are unemployed; ii) youth NEET that are inactive (i.e. neither employed nor in
education); and iii) youth NEET that do not reach their educational potential and, consequently, uponentering the labour force, underachieve.
We focus on NEET aged 15-24 years as this captures the transition into the labour market at different
points in a youth’s timeline9. Data is sourced from Statistics NZ for youth NEET aged 15-19 and 2024. Following Godfrey et al. (2002) and Coles et al. (2010), costs are defined as the excess cost of
being in the NEET group compared to the hypothetical situation that these youth would haveexperienced (on average) as their non-NEET counterparts. Wherever possible, we draw on recent
relevant NZ estimates from Statistics NZ data. Where this is not possible we use comparable figuresfrom overseas research and state these assumptions.
We estimate costs at the country-level (NZ) as well as at the regional level for Auckland. A priori, we
expect the economic cost of the latter to be higher than the former due to higher wages foregone. As
indicated earlier, Auckland youth of Maori and Pacifica descent are more likely to be NEET comparedto other ethnicities. There are also ethnic differences in terms of average wages foregone, durations of
unemployment, and educational attainment – we, therefore, make use of these variations whendisaggregate costs by ethnic sub-group in Auckland. In particular, we estimate separately the percapita cost of NEET youth in Auckland that are of NZ European, Maori, and Pacifica descent10
An overview of the methodology employed and assumptions made are provided in the threesubsections below.. For a detailed breakdown of calculations see Pacheco and Dye (2013).
Unemployed NEET
In order to estimate the cost of unemployed NEET youth in terms of foregone earnings (productivity)and public finance costs, we need to estimate the excess length of time they are unemployed. The
average duration of a single spell of unemployment for NZ (Auckland) youth aged 15-24 is 17.7
(17.9) weeks. Notably, the relevant average durations of unemployment in Auckland vary between alow of 16.4 weeks for NZ Europeans, and a high of 24.7 weeks for Maori11. As unemployed youth are
likely to experience more than one stint of unemployment over the short/medium-term (see literature
review where path dependency of youth disengaged from the labour market is discussed), we assume
these NEET individuals will be unemployed for ~50 percent longer than the average duration over the
next one to three years. We further assume that non-NEET 15-19 year olds do not experience
unemployment, while 20-24 non-NEETs will experience the average duration of unemployment at
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New Zealand Journal of Employment Relations, 38(2): 47-63
some point over the next one to three years. The latter assumption makes the unemployment costs
calculated for the older age group conservative in nature, the alternative being to assume non-NEET
20-24 year olds will not experience unemployment at any point during these years.
To compute the productivity cost, we also require assumptions regarding wages foregone based onage/region, and ethnicity of the individual. Based on data from the Household Labour Force Survey(Statistics NZ, 2012d), the average weekly income from wages for men and women in NZ aged 15-19(20-24) is $96 ($383). Data from the same survey indicates that analogous figures for Auckland youth
are ~11percent higher. NZ European youth are assumed to earn the average weekly earnings of
Aucklanders generally, while Maori (Pacific Peoples) average weekly earnings are 17 percent (28percent) lower.
As a result of lower earnings, there is a loss in tax revenue (both income tax and indirect tax). A
marginal income tax rate of 10.5cents (17.5cents)12 per $1 is assumed for foregone earnings for 15-19(20-24) year olds. There are also lost ACC (Accident Compensation Corporation) contributions fromthe employee (employer) of 1.70 percent (1.15 percent) of every $1 of taxable income not earned13. In
addition, Davidson (2005) illustrates that indirect taxes account for approximately 15 percent ofdisposable income, on average, for household income deciles one to five. Therefore, we also assume aloss in indirect taxes of 15 percent of the foregone disposable income of these NEET individuals14.
Finally, unemployment benefit payments also need to be taken into account. We expect the average
net unemployment benefit received by individuals aged 18-19 is $153.7215, while that for 20-24 year
olds is $170.8016.
Inactive/Not in the Workforce
As indicated in the literature review, NEET youth that do not fall into the unemployed category areinactive, and split into those that are (i) engaged in caregiving, and (ii) those that are not. Given thehigh teenage birth rates in NZ (Dickson et al., 2000; Families Commission, 2011), we assume thatcaregiving activity relates to childcare.
In estimating foregone earnings for inactive youth, we follow Godfrey et al. (2002) in assuming thatyoung parents that are NEET will be out of the workforce and education sector for 1.5 years(regardless of age group)17. For other inactive youth (excluding NEET parents), we assume that they
will be out of the labour market for one year.
As with unemployed NEET, foregone earnings for inactive NEET also results in lost direct andindirect tax revenues; the same assumptions with regard to the relative direct and indirect fiscal
incidence rates as outlined in the previous sub-section are employed here. The final assumption we
make here is that the net unemployment benefit received by young parents is the 2012 net benefit
payable to solo parents of $293.58 (WINZ, 2012).
Educational Underachievement
A final cost to consider is the productivity loss incurred due to educational underachievement – aconsequence of a period of youth unemployment and/or inactivity. As discussed, when NEET
individuals do return to the labour market they may find work of a lower skill level than their nonNEET counterparts, resulting in a wage differential between youth workers that had a period of being
NEET versus those that did not.
Recent information indicates that the proportion of NEET youth aged 15-24 in NZ that have noqualification, or school only qualification as their highest level of educational attainment is ~3654

New Zealand Journal of Employment Relations, 38(2): 47-63
percent and ~32.3 percent, respectively (Statistics NZ, 2011). With regard to the Auckland cohort,statistics disaggregated by age group reveal that ~20.5 percent (~29.5 percent) of NEET individuals
aged 15-19 (20-24) in Auckland have no qualification, and an additional ~49.4 percent (~26.1percent)have school only qualifications. We also have similar statistics disaggregated by ethnicity for the
Auckland cohort, which corroborate prior research that, in general, Maori and Pacific Peoples lag
behind their NZ European (and Asian) counterparts in terms of educational attainment at all levels(e.g. Pool, Baxendine, Cochrane & Lindop, 2005)18.
To estimate the loss in productivity associated with underachievement, we need to make assumptions
regarding the average level of qualifications for each age group and the likely qualifications and,hence, wages for their non-NEET counterparts. For example, for those with a qualification in the 1519 year old NEET group, we assume this is Year 1 and that their relative counterparts in the nonNEET group have at least Year 12 school certificate. This equates to an eight percent differential inwages between these two groups, as average wages of those with Year 11 is 92 percent of average
wages for those with Year 12. With respect to 20-24 NEET individuals who have at least school
qualifications, this results in a 24 percent differential relative to average national wages19. For bothage groups, we further assume that the counterfactual for those with no school qualifications is Year12, and this equates to a 32 percent differential in wages (Statistics NZ, 2012d).
In a similar vein to UK research by Godfrey et al. (2002), we presume that those who are NEET and
unemployed in the 15-19 (20-24) age group experience the wage differential for 18 (12) months, while
those that are NEET and inactive experience the differential for 21 (15) months.
As with unemployment and inactivity, reduced wages result in lost income and indirect tax revenue.
Therefore, the same assumptions outlined in the discussion of unemployed NEET are applied here as
well.

Results
Based on the assumptions outlined in the three previous subsections, a summary of the short-termcosts estimated for the various NEET cohorts (as at December 2012) is provided in Table 1. We
project that the potential foregone earnings for the NZ (Auckland) youth NEET group over the next
one to three years is $1,387,274,374 ($485,902,453). Over the same timeframe, the expected cost to
public finances for this group is $1,028,992,473 ($354,538,366).
It is important to view these estimates separately. Foregone earnings is, simply put, a proxy for thelost potential productivity of the NEET cohort and, therefore, foregone earnings include foregone tax
and ACC payments. However, in combining foregone earnings with the expected cost to publicfinances to attain a total expected cost, we deduct foregone tax and ACC contributions from publicfinance costs to ensure we do not double count these payments.
Based on cohort sizes as at December 2012, the total per capita cost of NEET in NZ over the next one
to three years is expected to be $21,969. As expected, the per capita cost for Auckland NEET youth of$23,661 is notably higher than that for NZ NEET. This is primarily due to the higher wages found in
Auckland relative to the rest of NZ. Significant variation in the cost associated with being NEET
across different ethnic groups within Auckland is also evident. In particular, the per capita cost overthe next one to three years is lowest for NZ European NEET youth at $18,178 and highest for Maori
NEET youth at $28,289, while that for Pacific Peoples NEET youth sits in between at $22,242.

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New Zealand Journal of Employment Relations, 38(2): 47-63
In terms of the ethnic sub-groups portrayed in Table 1, it is clear that differences across ethnicities are
driven by a number of factors. Given that the average wages for NZ European are higher than that for
Maori and Pacific Peoples, this would suggest the productivity loss in per capita terms would behigher for this sub-group. However, the counter balancing factor at play here is that the average
duration of unemployment for ethnic minorities is high, and this results in the per capita productivity
loss for Maori to be highest (at $16,759). Maori and Pacifica NEET also have higher proportions ofyouth that are inactive and engaged in caregiving, relative to NZ European. This leads to a greater
strain on public finances in terms of higher benefit payments, and these individuals are also expected
to remain out of the workforce for longer and, consequently, have lower productivity (higher foregone
earnings). NEET youth of Maori and Pacifica descent are further disadvantaged in the labour market
as they typically have lower educational attainment than their NZ European counterparts, meaning
they are also more likely to experience wage differentials when they do enter the workforce.
Table 1: Short-term costs over 1-3 years of NZ NEET by region & ethnicity
NZ*
Auckland* Auckland
AucklandNZ
MaoriEuropean
Number of NEET 15- 88,600
29,00012,0006,300
24year olds: December
2012
Total productivity loss 1.39bn
485.9m160.6m106.3m(per capita) $(15,414)(16,755)(13,379)(16,875)
Unemployment
119.4m
47.6m
22.1m
10.2m
Inactivity
971.1m348.5m106.7m76.4m
Educational
296.7m
89.8m
31.8m
19.7m
Underachievement
Total public finance 1.03bn
354.5m108.4m105.6mcosts(11,433)(12,225)(9,033)(16,759)(per capita) $Unemployment
136.0m
47.7m
21.0m
11.0m
Inactivity
799.1m278.3m
77.3m
88.3m
Educational
93.8m
28.5m
10.1m
6.3m
Underachievement
Total per capita cost 21,969
23,661
18,17828,289$**15-19 year olds
10,084
11,347
10,853
18,62420-24 year olds
27,911
28,59921,112
32,162
Source:Author’s computations.

Auckland
Pacific
Peoples
8,400

116.4m(13,856)
9.8m
79.8m
26.7m
107.3m(12,773)
11.7m
87.1m
8.5m
22,242
14,411
25,378Notes: *The NZ and Auckland costs are estimated in an aggregate context without taking into accountthe ethnic composition of their respective cohorts.
**Total per capita figures are not an accumulation of productivity and public finance costs. To
avoid double counting we remove the value of tax (direct and indirect) income and ACC contributions
included in public finance costs as these are essentially transfer payments from the individual to thegovernment.
Clearly, devolving analysis down to ethnic sub-groups is crucial in capturing a more accurate
reflection of the economic cost of NEET youth. When we employ weighted averages of the per capita
costs for the three major ethnic sub-groups (NZ European, Maori, and Pacific Peoples) we arrive at an
56

New Zealand Journal of Employment Relations, 38(2): 47-63
average of $21,842, which is lower than the Auckland estimate of $23,661. It is important to note that
the Auckland figure also includes other ethnicities, such as Asian or Middle Eastern, Latin Americanor African (MELAA), and is based on Auckland averages from Statistics NZ for, for example, wages,
duration of unemployment, educational attainment. Consequently, both the NZ and Auckland
estimates of NEET costs presented here may have been lower if we were able to control for the ethnic
composition of the NEET cohort in these aggregate samples20. Nevertheless, our estimates can still beviewed as lower bound figures given the conservative nature of the assumptions made in computing
costs, and the omission of costs associated with the more subtle and indirect consequences of NEET,
such as crime and poor health outcomes.
As a final discussion point, we have not explicitly estimated the medium or long-term costs of NEET
youth. Coles et al. (2010) compute associated costs (for NEET youth aged 16-18 in the UK) for the
medium term of 40-45 years, and long-term in terms of pension differentials. They find the present
value of lifetime future costs to be approximately 9.6 times that of short-term costs. If we employ thesame multiplicative factor for the estimates of short-term costs of NZ NEET, we arrive at an
approximate present value of lifetime costs per capita of $210,902 whereas the analogous figure for
Auckland NEET would be $227,146. An interesting avenue for future research would be to investigate
what the relevant multiplicative factor is in the NZ context.

Conclusion
A vast literature shows that youth exclusion and disengagement from the labour market has costs bothto the individual, and the economy/society at large. Consequences range from reduced economic
productivity to increased criminal activity. Therefore, the rising number of youth in NZ that areclassified as NEET is of concern as it signals increasing difficulties for young people making thetransition from education into the labour market. Of particular concern is that there are sub-groups ofyouth in Auckland that appear particularly vulnerable to becoming lost in the transition between
education and the labour force; namely, youth of Maori and Pacifica descent for which NEET rates
currently exceed 20 percent.
This research estimated the expected economic cost of youth disengagement in terms of lost
productivity and the strain on public finances. When considering the current youth NEET cohort in
NZ, we estimated a per capita cost of $21,969 over the next one to three years. The analogous figure
for the Auckland cohort was found to be higher than that estimated for the average NEET NZ youth($23,661), which we attribute broadly to higher wages foregone of NEET in Auckland relative to therest of NZ.
Our analysis also suggests substantial differences in per capita costs of NEET youth across individualsof European, Maori, and Pacifica descent. NEET youth of Maori (Pacifica) descent were found to be
associated with the highest per capita cost at approximately $28,289 ($22,242), while the analogous
figure for their NZ European counterparts was found to be $18,178. This difference arises due to thegreater propensity of Maori and Pacific Peoples to disengage from the education system earlier, towithdraw from the workforce due to caregiving responsibilities at a younger age, and to experience
longer periods of unemployment.
We must note a couple of caveats in this conclusion. First, we have not been able to address the costs
associated with other expected outcomes for NEET youth that include poorer physical and mental
health outcomes, increased substance abuse, and increased prevalence of crime. Second, it is outside
the scope of this study to estimate the medium and long-term effects of youth disengagement. For
example, we do not estimate the ongoing labour market difficulties such as: underemployment post
57

New Zealand Journal of Employment Relations, 38(2): 47-63
the short-term window of one to three years; future unemployment; or future wage differentials arising
due to lower average educational attainment. Consequently, our estimated costs are likely anunderrepresentation of the true cost of increasing NEET levels and should be viewed as lower boundestimates.
Incorporating these additional costs and longer-term effects when data become available are possible
directions for future research in this area. Another possible future research exercise is to investigate
predictors of becoming NEET when aged 15-19 or 20-24. Such analysis would require appropriate
panel data from a cohort, and would be useful for designing policy aimed at early intervention, as wellas, where necessary, successfully re-engaging youth which become NEET.

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Notes
1

Explanations for the observed persistence in unemployment/inactivity and wage scarring vary. Some
popular explanations are that bouts of inactivity at a young age hinder human capital accumulation(Becker, 1964; Mroz & Savage, 2006), damage self-esteem, generate habituation effects (Clark et al.,2001), and/or signal low productivity to employers (Manning, 2000).
2

The equivalent private rate of return is determined to be just 8.9 percent in NZ, however, Zuccollo,
Maani, Kaye-Blake & Zeng (2013) argue ~50 percent of this gap can be explained by methodologicalissues.
3

Additional NZ evidence confirming high returns to education include Brosnan (1985), Maani (1999;
2000); and Scott (2009). Crichton and Dixon (2011) find limited returns to further education for adults
aged 25-64 years that undertook certificate or diploma qualifications; however, in ~60 percent ofcases, individuals were already qualified at a level at least as high as, if not greater than, thequalification undertaken.
61New Zealand Journal of Employment Relations, 38(2): 47-63

4

See Stiglitz (1975) for in-depth discussion of “screening” theory as it relates to the returns on
education.
5

Specifically, ~13 percent of Aucklanders in this age group who are classified as usually resident,
non-institutionalised, and civilian.
6

Birnie, Maloney, Canler & Davies (2012) also document these differences

7

Unfortunately, Statistics NZ does not collect information on individuals that are NEET for the 16-19
age bracket
8

The percentages for either age group of the NZ cohort do not add to 100 percent (specifically, 99.7
percent and 100.2 percent for 15-19 and 20-24, respectively) due to rounding by Statistics NZ.
Similarly, percentages for the 20-24 age group in the Auckland cohort do not add to 100 percent, butrather 99.5 percent
9This is similar to analysis by Sissons and Jones (2012) who focus on the 16-24 year bracket for theUK
10

Due to very small sample size in some instances, we are unable to conduct disaggregated analysis
for Auckland NEET of Asian ethnicity.
11

Statistics NZ, Household Labour Force Surveys. It is the time series average for the period
December 2007 to December 2012.
12

These are the applicable marginal tax rates for the 2012/13 tax year for the income brackets of ‘up
to $14,000’, and ‘$14,000 to $48,000’.
13

ACC levy charges are as at April 201214

Since 2005, the GST rate in NZ has increased from 12.5 percent to 15 percent meaning this figure
likely underestimates the actual incidence of indirect tax for low decile households
15

This is the average of the 2012 net benefit rates for single 18-19 year olds at home and not at homewith no children.
16

We focus on the unemployment benefit due to limited information on the number of NEET
receiving additional benefits.
17

Note – the focus of the forthcoming calculations are on the counterfactual for youth that areinactive, whether engaged in caregiving or not. It is outside the scope of this study to evaluate thedifferences in long term benefits for households when youth parents stay at home for caregiving
reasons versus enter back into the workforce.
18

Specifically, as at December 2012, ~17.6 percent (~34.5 percent), ~31.5 percent (~36.5 percent),
and ~52.4 percent (~20.1 percent) of European, Maori, and Pacific Peoples NEET youth in Auckland
aged 15-24 had no (school only) qualification. Due to a lack of disaggregated data, we assume theproportions hold across both age groups

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New Zealand Journal of Employment Relations, 38(2): 47-63
19

Average wage is based on an aggregate of all individuals across the educational qualification
spectrum
20

Individuals reporting multiple ethnicities (reflective of NZ’s culturally diverse population) willcomplicate any future research that wishes to venture down the path of controlling for ethnic
composition in the aggregate estimates for Auckland and NZ.

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New Zealand Journal of Employment Relations, 38(2): 33-46

Working in Residential Aged Care: A Trans-Tasman comparison
SARAH KAINE* and KATHERINE RAVENSWOOD**
Abstract
Residential aged care has become an issue of critical interest in developed countries, including Australia
and New Zealand, due to an ageing population and workforce. The ageing population has contributed toconcerns about ensuring a sustainable labour supply to the sector. A key barrier to a sustainable
workforce in residential aged care in Australia and New Zealand is the physically and emotionallydemanding work, which is undervalued and low paid. This article compares the regulatory frameworks
for residential aged care in New Zealand and Australia, and considers why, despite different
environments, the outcomes for residential aged care workers are very similar. There is scantcomparative research in residential aged care, particularly between New Zealand and Australia. This
article provides an important overview of the regulatory environment in a sector that is increasingly
important to the public, policy makers and researchers.

Introduction
Across the developed world, governments are contending with the policy challenges associated with anageing population. The extent of the problem is starkly illustrated in OECD figures, and its impact ofworkforce and retirement policy in general (OECD, 2006). These demographic trends are reflected inAustralia and New Zealand where government-sponsored reports have delineated the extent ofdemographic change and the implications of this change for the provision of social services, specificallyaged care services (Badkar, 2009; Commonwealth of Australia, 2004; 2010; Grant Thornton, 2010;
Productivity Commission 2008; 2011).
In Australia and New Zealand, particular attention is being paid to the issue of attracting andmaintaining a suitable workforce to deliver services to the aged, either in their own home or in
residential care facilities (Grant Thornton, 2010; Productivity Commission, 2008; 2011). The demand
for aged care is, of course, underscored by the same ageing population that is predicted to leave bothcountries with critical labour and skills shortages, particularly in aged care (Badkar, 2009; Carryer,
Hansen & Blakey, 2010; Kiata, Kerse & Dixon, 2005; Lazonby 2007; Productivity Commission, 2011).
Aged care services are publicly funded on both sides of the Tasman; consequently, the growth indemand for services raises two important public policy questions. The first about the sustainability of
the aged care sector, and the second about the responsibility of national governments to guarantee thequality of care provided to the aged. Although key concerns are to prevent escalating cost to
governments and public, poor work conditions of employees have been associated with lower qualitycare. Research has established some connections between poor work conditions, such as stress amongst
employees (Bonias, Bartram, Leggat & Stanton, 2010; Schmidt & Diestel, 2010), workload and ensuinglack of time to provide non-physical care (Carryer et al., 2010; Duffield et al., 2011; King & Meagher,
2009; Palmer & Eveline, 2012) and job dissatisfaction created through lack of recognition of the skill*

Senior Lecturer, Management Discipline Group, University of Technology, Sydney
Senior Lecturer, Management, AUT University**

33

New Zealand Journal of Employment Relations, 38(2): 33-46

required and low pay (Bach, Kessler & Heron, 2012; (Badkar, Callister & Didham, 2009; Kaine 2009;
Kiata & Kerse, 2004; King & Meagher, 2009; Lazonby, 2007; Martin, 2007; Mears, 2009; Nishikawa,
2011; Palmer & Eveline, 2012; Provis & Stack, 2003; Ryosho, 2011) and lower care outcomes. A
critical component in the provision of quality care relates to the supply of appropriately trained workers(Productivity Commission, 2011).
In order to understand how to ensure an appropriate labour supply to the sector, it is necessary to
identify and comprehend the characteristics of the aged care sector, in particular, how aged care funding
and regulation impacts on the existing, and potentially future, workforce. Funding of the sector isinextricably linked to the wage rates of the workers. As low waged workers in a feminised sector andoften on part-time contracts, this group of workers is one that would immediately benefit from a living
wage. This article compares the workforce characteristics and regulatory framework for residential agedcare in Australia and New Zealand. In doing so, it enables some explanation of how different regulatory
systems result in similar working conditions.

Trans-Tasman ComparisonsResearchers have pointed out the benefits of a comparative approach to industrial relations (IR) because
it facilitates both a greater understanding of our own IR context, and highlights both positive andnegative aspects of the IR system in relation to the comparative country (Bamber & Lansbury, 1998).
There have also been calls for increased comparative research between Australia and New Zealand(Markey, 2011), in part because of similar shared union and regulatory environments between the
countries during the twentieth century (Ellem & Franks, 2008; Markey, 2011). Although New Zealandand Australia have followed similar IR patterns, for a period of the 1980s and 1990s, there wasconsiderable divergence in formal IR policy (Barry & Wailes, 2005). Despite this divergence, the 2000s
saw the two countries align much more in IR policy than the previous two decades (ibid).
This current Trans-Tasman comparative study is particularly fruitful because, despite differences in IR
policy in the residential aged care sectors, there are considerable similarities in the increasing demand
for labour, and the continuing low wages paid to non-nurses in residential aged care. The poor work
conditions in both countries have been the subject of separate research by both authors and by otherresearchers in Australasia (Kaine, 2012; Ravenswood, 2011; McGregor, 2012; King & Meagher, 2009).
Indeed, while this article focusses on residential aged care, Barry and Wailes (2005) also noted similar
labour market outcomes from different institutional frameworks.
Through examining the two regulatory systems and where they differ or are similar, it is proposed thatsystems perpetuating the current poor work conditions will be revealed and potential remedies
discovered. This is an important tenet of comparative IR research that is noted by several scholars in thefield (Bamber & Lansbury, 1998; Barry & Wailes, 2005). Furthermore, comparing two countries withsimilar historical IR trajectories enables a focus on the functions of institutions more than comparative
national cultures, and strengthens the results where they are similar in both countries, suggesting thatthey may be more generalisable to other IR contexts than a single nation study.
The similar historical frameworks for IR between these two countries mean that any differences canprovide a substantial background for examining, and learning from, the differences and similarities in an
increasingly significant sector. Our approach, looking as much at the functions of institutions as the34

New Zealand Journal of Employment Relations, 38(2): 33-46

institutions themselves, answers the critique of an overly institutional approach to comparative industrial
relations (Barry &Wailes, 2005; Bamber & Lansbury, 1998; Markey, 2011).
This current article arose through comparison of the results of two earlier studies that were undertaken
separately in Australia and New Zealand by the authors. Each study comprised of analyses of threeresidential aged care organisations in each country. The original projects were conducted with slightly
different purposes, one focussing more on regulation in Australia, the other on employee participation
and wellbeing in New Zealand. Comparison of results confirmed that, despite differences in regulatory
frameworks, the outcomes for workers in residential aged care were very similar in both countries. This
current article proposes to outline the workforce characteristics and regulatory frameworks in bothcountries, offer some explanation for the similar outcomes for workers, and suggest alternative means ofregulating residential aged care for employees.
Section one contains an overview of workforce characteristics and issues in residential aged care inAustralia and New Zealand. Section two outlines the regulatory context within which residential agedcare in both countries is delivered. The penultimate section then considers these regulatory contexts andcomparative workforce issues, and suggests potential remedies to address these in both countries. The
final section provides some concluding observations about the nature of work in aged care and theimpact of regulation on workplace outcomes. It also suggests directions for future research.

Residential Aged Care in Australia and New Zealand
Residential aged care is a growing sector in terms of employment in Australia and New Zealand.
Australia had 2773 facilities providing care to 163,000 people in residential aged care facilities in 2010,
and New Zealand providers had approximately 34,000 beds in residential aged care facilities in 2011
(NZACA, 2012; Productivity Commission, 2011). Table 1 illustrates how many of the workforce
characteristics are similar between New Zealand and Australia: the majority of residential aged care
workers are in direct care positions, women, employed on a part-time basis, and increasingly in the agegroup of 45 years and older.
Table 1: Workforce characteristics
Australia

New Zealand

202,344 RAC workers

Approx. 33,000 RAC workers

73% in direct care roles

77% in direct care roles

89% women

92% women

72% working part-time

64% working part-time

55% aged 35-55

Majority 45 years or older

Increasing use of agency staff

Increasing use of migrant labour

Turnover of approx. 25%

Turnover of approx. 25%

Source: Badkar, 2009; Grant Thornton, 2010; Kiata et al., 2005; Martin & King, 2008; Miller, Booth &Mor, 2008; King et al., 2013; NZACA, 2010.
35

New Zealand Journal of Employment Relations, 38(2): 33-46

The workforce issues are similar in both Australia and New Zealand, characterised by a growing sector
with constraints on funding. How future workforce demand will be met is a key concern in bothcountries. It is predicted that workforce demand may increase by 50 to 75 percent by 2026 in New
Zealand (Grant Thornton, 2010). In Australia, it is anticipated that the workforce will need to grow tofour times its current size to meet demand in 2050 (Commonwealth of Australia, 2012).
One means of reducing demand for workforce is, of course, increasing the workload and intensificationof existing employees. There is evidence of this in both countries where research documents a
decreasing ratio of employees to residents (Productivity Commission, 2011; Carryer et al., 2010;
Haultain, 2011; Kiata et al., 2005). Furthermore, complex tasks are often delegated to lower skilledemployees (such as from nurses to caregivers) as a cost cutting measure (Networkers, 2005; Productivity
Commission, 2011). These types of efficiency measures may impact on both quality of care as workers
have less time to carry out care tasks, but also pose issues for employee health and safety, and, therefore,
may increase costs to organisations through injury, accidents, and lost time (Ravenswood, 2011). In
Australia, research has shown that increased workload/low staffing levels have contributed to increased
staff turnover, and poorer care outcomes (Productivity Commission, 2011). Another factor relevant toworkload is the relatively high use of agency staff in Australia to cover absences and shortfalls in
staffing levels (King et al., 2013). This, too, impacts on quality of care because, generally, agency staff
are not as familiar with residents’ needs, but also has on-flow effects on the workload for other staff who
may have to compensate for an agency staff member’s lack of familiarity with the facility. New Zealand,in contrast, relies on agency staff less, with managers employing existing staff on extra shifts, or
allocating more work to individuals on a shift (NZACA, 2010; Ravenswood, 2011).
Wages are relatively low in both countries with residential aged care workers not only on low wages, but
low compared to those in similar positions in public sector hospitals (ANF, 2012; McGregor, 2012;
Ravenswood 2011). In New Zealand, wages for residential aged care have tracked at the minimum wage
or slightly above, with the only increases really being in adjustment with increases to the national wage
(McGregor, 2012; Ravenswood 2011). It must be noted that wages are higher in general in Australia
than New Zealand, but residential aged care wages in Australia still are low compared to other industries(Productivity Commission, 2011).

Regulatory context – Funding and Quality of Care
Funding of the sector is via public funding, and to a mixture of private (and in Australia some public)
providers of residential aged care. Although there are different mechanisms, to be detailed below, bothcountries regulate the amount individuals pay for residential aged care and by how much they are
subsidised. Both countries also regulate the licensing of residential aged care providers, and provide
some minimum standard of care guidelines. The patterns of ownership of residential aged care providers
differ significantly, with the majority in Australia owned by not-for-profit organisations, and theconverse in New Zealand (see Table 2).

36

New Zealand Journal of Employment Relations, 38(2): 33-46

Table 2: Ownership of Residential Aged care facilities
Australia

New ZealandProfit35%

68%

Not-For-Profit

59%

32%

Public6%0%Source: DoHA, 2010 as cited in Productivity Commission, 2011; NZACA, 2010.
The aged care sector in Australia is highly regulated by the state in recognition of the vulnerability ofresidents and clients (Hogan, 2004), and due to the large amount of public money it attracts. Formal
state regulation of residential aged care is complex. It extends to quality of care, location and quantity ofservices provided, and price controls stipulating the maximum a provider may charge its clients(Productivity Commission, 2011). These regulations are largely enforced as a consequence of the needfor a ‘managed market’. A key characteristic of this managed market for aged care services in Australia
is that the federal government provides the majority of funding for the provision of services within the
sector, allowing it to constrain or regulate the actions of non-government (both for-profit and not-forprofit) providers by placing conditions on the granting of subsidies (Howe, 2006). In the case of agedcare, those conditions are expressed through the Aged Care Act 1997 (Cth).
The Aged Care Act 1997 (the Act) is the over-arching legislation articulating the goals of the sector,
establishing the funding framework and detailing the responsibilities associated with the acceptance ofsuch funding by service providers (Nicoll, Jackson & O’Hanlon, 2003). Specifically, the Act outlines
the regulatory mechanisms with which the government controls the allocation of beds, limits service
prices and accommodation bond charges, allocates funding and assesses the eligibility of clients to
attract subsidies (Productivity Commission, 2008). These mechanisms and their inter-relationships will
be explored in more detail below.
Figure 1 illustrates the relationship between the regulations and funding. It shows the regulatory processfrom the initial approval of a provider by the Department of Health and Ageing to the annual allocationof beds for which the provider applies, through to building certification and accreditation, all of which
contribute to the eligibility for funding. The funding of aged care facilities is distributed throughsubsidies for each resident, which is based on care needs. Given the direct link between the level of carerequired for a resident and the amount of government funding a facility attracts to care for that resident,
government validation through Aged Care Assessment Teams (ACAT) occurs to ensure appropriate carelevels are being declared and claimed by providers. The federal government also determines the pricepaid by residents for subsidised services and the cost of accommodation bonds (Productivity
Commission, 2008).

37

New Zealand Journal of Employment Relations, 38(2): 33-46

Figure 1: Regulatory Process

Source: Nicoll et al., 2003 as cited in Braithwaite, Makkai & Braithwaite, 2007: 192)
Similarly to Australia, the New Zealand government, via District Health Boards, is the major funder ofresidential aged care. All aged care residential providers, who provide care to subsidised people, arefunded through contracts of service with their District Health Board. The Social Security Act 1964
governs the maximum contributions made by individuals towards their care in residential aged care
(Ministry of Health, 2012). Subsidies are granted dependent on the elderly person’s dependency levels
and means testing of income and some assets (Lazonby, 2010; NZACA, 2010). While the contract ofservice with aged care providers and District Health Boards is negotiated nationally, compliance withthe agreements is monitored by the local District Health Board with which the agreement is made(Office of the Auditor General, 2009).
New Zealand is starkly different from Australia in its lack of current specific legislation governing agedcare. Historically, residential aged care was governed by specific regulations: the Old People’s Homes
Regulations covered minimum standards of accommodation, licences, and the duties of licensees. The
latter section outlined the minimum number of hours to be worked by staff (including the manager) per
facility according to the number of residents. This regulation was revoked in 1993 and replaced with the
Hospital Regulations which also has been superseded. The Health and Disability (Services) Act 2001
currently guides minimum standards for quality of care, and the accreditation of providers. Quality ofcare is regulated to some extent through this Act (Lazonby, 2007).
The Act provides the basis for standards that must be met to gain certification. These include general andcore standards, restraint minimisation standards, infection prevention, and control standards (see Table3). Within each standard, several specific criteria are included. Table 3 shows some of the standards andhow they are audited. According to the Health and Disability (Services) Act 2001, providers must be
audited by independent assessors every five years. This process has been called into question because
the provider appoints and remunerates the auditor themselves. Furthermore, the standards are for thehealth and disability sector overall, and it is up to auditors to assess how the standards apply in theresidential aged care sector (Office of the Auditor General, 2009).
38

New Zealand Journal of Employment Relations, 38(2): 33-46

Table 3: Standards and auditors’ requirements
Standard
Example of what the auditors check
Organisation management
Enough staff with the necessary qualification on duty at therest home. Checked by staff rosters and interviews withmanager and staff.
Auditors will check records to ascertain that staff receive
adequate orientation and training.
Check that risk management systems are in place and that rest
home service is monitored.
Continuumofservice Residents receive care that is safe and appropriate to theirdeliveryneeds.
Residents receive medication in a safe way.
Source: Adapted from Office of the Auditor, 2009: 19

Regulatory context – employment conditions
Two recurring key issues for employment conditions are low pay and also workload, with increasing
intensification of work in both countries. In New Zealand, there is little regulation governing workloador, indeed, required training for caregivers, with neither the Aged-Related Residential Care agreementsor the Health and Disability (Services) Act 2001 providing detailed guidelines for minimum numbers of
non-nursing staff nor minimum numbers of hours worked per week.
In Australia and New Zealand, the traditional mechanism for increasing wages in residential aged carehas been through centralised instruments, either Awards (in Australia) or through movements in the
Minimum Wages Act 1983(New Zealand). The reliance on both of these instruments to alter wages
highlights the difficulty faced by caregivers in the sector to collectively bargain. This difficulty isthreefold: first the casual/part-time nature of care work in dispersed workplaces has made the sector
difficult for unions to organise and, consequently, bargain for (Cooper, 2010). Second, centralised wage
determination has been subject to the historical undervaluing of women’s work, such as caregiving(Baird, 2003; Kaine, 2012; Palmer & Eveline, 2012). Third, the public funding of aged care in bothcountries has imposed budgetary constraints, with aged care providers frequently citing inadequate
funding as a barrier to improving the wages and conditions of caregivers (Catholic Health Australia,
2013; NZACA, 2011). The cumulative effect of these barriers to bargaining is the continuing reliance ofaged care workers on centralised instruments, which only ensure minimal wages and conditions arereceived.
In Australia, recent changes to labour laws have resulted in a mechanism embedded in the Fair WorkAct 2009, which is designed to facilitate collective bargaining amongst low paid workers known as the
Low Paid Bargaining Stream (LPBS) (see Naughton, 2012). While the LPBS contains the capacity toinclude third parties, such as funding bodies in the bargaining process, it cannot compel third parties(such as governments) to increase funding. Unions representing aged care workers applied to access the
LPBS in 2010, but the case faced a significant hurdle early on. Fair Work Australia determined that,while aged care workers were indeed ‘low paid’, it also deemed ineligible to access the LPBS any
workers in organisations that had previously only been involved in what might be described as‘defensive’1 bargaining, effectively splitting the sector in half.
39New Zealand Journal of Employment Relations, 38(2): 33-46

As a consequence of the LPBS excluding significant numbers, aged care unions diverted efforts
attempting to influence a review of the sector being undertaken by the federal government. The resulting
policy document, Living Longer, Living Better: Aged Care Reform Package, was released in 2012. Aspart of this package of reforms, the then federal government quarantined $1.2 billion of the $3.7 billion
new funding to the sector, overall, to be used for the improvement of wages and conditions. The receiptof these funds by aged care providers was conditional to particular labour outcomes being agreed uponand met. Specifically, this funding process involved the development of a workforce ‘Compact’ (thetripartite commitment between government, unions and aged care providers), which set out the broad
parameters for the disbursement of the additional funding in accordance with goals concerning theimprovement of labour standards. Outcomes, thus far, are mixed. While some aged care providers
agreed to participate in bargaining under the conditions of the Compact, employer peak bodies haveargued that the Compact is “poor public policy” and a break with “established and respected industrial
relations practices” (Maher, 2013). Furthermore, the election of a conservative federal government has
put in doubt the future of the ‘Compact’ in any form.
There is no obvious parallel in New Zealand, however, the EEO Commissioner of the Human Rights
Commission has formal responsibilities, including the evaluation of the role that legislation, guidelines,
and voluntary codes of practice play in facilitating and promoting best practice in equal employment
opportunities; leading the development of guidelines and voluntary codes of practice to facilitate andpromote best practice in equal employment opportunities, and monitoring and analysing progress in
improving equal employment opportunities in New Zealand (Human Rights Amendment Act, 2001).
The EEO Commissioner has reported on inequalities in aged care for both the older people being cared
for and for employees in aged care. This has not led to changed regulations, but has, in October 2012,
been the impetus for a summit between some providers, unions, government and other interested parties
in aged care with a view to increasing wages and conditions across all types of aged care in New
Zealand (McGregor, 2012). Furthermore, a case has been taken by a female aged care worker under the
Pay Equity Act 1972, arguing that it is discrimination that aged care workers are paid less because thework is in a female-dominated occupation. This argument tests the interpretation of the Act and iscurrently awaiting the Judges’ decision (Slade, 2013).

Comparing ‘remedies’
A common outcome of enduring low pay for caregivers in New Zealand and Australia is the likely
impact on the quality of care for recipients of aged care. While outcomes are hard to measure in terms of
non-physical care, research does indicate that quality of care is impacted on by the workload andwellbeing of caregivers (Bonias et al., 2010; Carryer et al., 2010; Clarke & Hill, 2012; Ravenswood,
2011; Schmidt & Diestel, 2010). As competition among providers increases, reputation for care will
become increasingly important. It would, therefore, seem crucial for work conditions to be integral to theregulation and funding of this significant industry. Long term, perhaps radical, ‘blue skies’ ideas arenecessary to ensure a skilled, sustainable workforce that provides quality care. What we propose here,
however, is more practical medium term solutions that could work with current regulation as future
innovations are developed. We propose these as a result of the comparative strengths and weaknesses ofboth the Australian and New Zealand frameworks.
One weakness of both regulatory frameworks is the lack of assurance for work conditions in theaccreditation standards for aged care providers. The national accreditation of aged care providers iscentral to the funding and regulatory frameworks. The accreditation standards focus on outcomes of care40

New Zealand Journal of Employment Relations, 38(2): 33-46

and overlook the role that employment has in providing quality care. While, currently, these systems are
not providing the necessary stimulus for improved working conditions, enhancing the accreditation
standards would necessitate greater focus on employment conditions, and the ensuing effect on qualityof care. Given the increase in workload, skill and demand for aged care workers, a ‘sensible’ remedy
could be to address these factors more precisely in accreditation standards. Including components ofwork conditions, such as staffing levels, maximum hours, training and other work conditions in theaccreditation standards would indicate their importance for, and connection with, quality of care and,
therefore, organisational outcomes for providers. While Australia has specific aged care accreditation
standards, New Zealand has very few, and this is one remedy that could be taken from a Trans-Tasmancomparison. New Zealand could benefit from standards and audits that refer to the specific conditions ofaged care, as opposed to generic health provision guidelines, which existed under the previous
legislation in New Zealand briefly outlined earlier.
Furthermore, in comparison to Australia, New Zealand has limited industry and national instruments foraged care workers to collectively take action on wages. In Australia, the LPBS and the Aged Care
Compact both represent recent attempts to address wages nationwide. Changes may eventually occur in
New Zealand depending on the current case under the Pay Equity Act 1972. One possible solution for
New Zealand in the shorter term is the inclusion of employee representation in the negotiations for thenational aged care service agreements, strengthening employee voice at an industry level (Ravenswood,2012). Indeed, a combination of more aged care specific standards for work conditions in accreditation
with increased employee voice at a national level could provide substantial improvements for aged care
workers. While not exactly the same, this process would mirror the Australian example of linking
funding to the development and implementation of a Workforce Compact. We acknowledge, however,that changes to the process of the national service agreements would require considerable change in
employers’ acceptance of the inclusion of work conditions in their service contract, which has been
contested in the past (Healthcare Providers New Zealand Incorporated and New Zealand Association of
Residential Care Homes Incorporated vs District Health Boards of New Zealand, 2007), and is, indeed,
proving controversial in the Australian equivalent.

Future Research
Palmer and Eveline (2012) highlight the role that a rhetoric of vocation and low-skill has in enduring
low wages for aged care work. This is, undoubtedly, a strong underlying factor in the similar outcomesfor workers from different regulatory frameworks in New Zealand and Australia. Indeed, as has beenargued, both countries have similar IR histories (Bray & Walsh, 1998; Wailes, 2011), which will havebeen influenced by gendered notions of care work and its value (Frances & Nolan, 2008). However, anychange to that rhetoric will be through social change, which is not likely to provide quick solutions to a
growing problem. It could be that we may, in both countries, reach a ‘tipping point’ where the sheer
number of baby boomers approaching residential aged care will prompt a rethinking of society’s valueof care work. This is a complex issue which could provide endless avenues for the exploration of what
the societal influences on the value of care work are.
One stimulus to social change could be through changed regulation of the work conditions in theindustry in both countries. The question of the role of regulation versus managerial prerogative is an
enduring debate, but in the context of aged care, in particular, the role of government not as formal
regulator but as the procurer of a service is an area of research that deserves further consideration.
41

New Zealand Journal of Employment Relations, 38(2): 33-46

Should our ‘remedies’ of more closely linked work conditions with clinical outcomes be included inaccreditation standards, where does this leave the role of unions as representatives of aged care workers?
Unions in both countries have been instrumental in the use of current regulation in trying to secure
increased wages. In environments of at best stagnating unionisation (OECD, 2013), could our proposed
remedy push unions in aged care further to the edges? What would the effects of this be, and could it, inthe long term, erase some of the benefits of increased regulation?
While we have focussed on formal regulation, social change could well provide faster moving progresswith relation to wages if, for example, the living wage campaign in New Zealand continues to gainsocial acceptance and employer uptake. While the living wage campaign does not address the generalwork conditions of residential aged care (such as staffing levels and work load), low pay is a primaryconcern for workers in the sector. Furthermore, the philosophy underlying the living wage campaign thatencourages the respect for and valuing of workers as people could well lead to other improved
conditions and recognition of the work that residential aged care workers undertake. The role of unions,managerial prerogative and the living wage campaign will be of future interest in this sector.
Our comparison of aged care regulation in Australia and New Zealand has highlighted some key
differences, mainly in the lack of specific attention to aged care in New Zealand. However, thecomparison also indicates common weaknesses in accreditation of aged care providers that could
provide an avenue for improvement in an industry that is in a state of ‘urgency’. These ‘simpler’
remedies, however, do not preclude the need for long-term planning and thought which looks beyond the‘simple’ to innovative, perhaps challenging change that may be required.

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Notes
1

In Australia, the change from state-based industrial relations systems and legislation required workers
in aged care to transition from state-based industrial instruments to federally-based instruments. In an
attempt to save more favourable provisions contained in the state-based instruments, unions opted toquarantine these conditions in collective agreements.

46

New Zealand Journal of Employment Relations, 38(2): 64-69

Precarious work and a Living Wage in our communities
ANNABEL NEWMAN*
Introduction
Food parcels are the soup kitchens of the modern age. Workers are not hovering “seagulls” at thewaterfront waiting for work, a visible reminder of a society in crisis; they are battling foraccommodation allowances at the local WINZ (Work and Income New Zealand) office, taking
loans from sharks or picking up texts notifying them of available working hours for the next day.
Many are poor but they are less visible in their cyber-queues than they once were on the street.
John Maynard Keynes (1963: 10) said “The outstanding faults of the economic society in which
we live are its failure to provide for full employment and its arbitrary and inequitable distributionof wealth and income”. We know New Zealand has 500,000-750,000 people living in households
below the internationally recognised poverty line, that up to 270,000 children are estimated to beliving in poverty, of which one in five are Pacific or Maori. We also know that two in fivechildren living in poverty are in households where there is at least one adult in full time
employment or self-employed (Perry, 2013).
Living Wage Aotearoa New Zealand (Living Wage Aotearoa) is a response to the challenge weface as a society of a growing working poor. This is a social justice movement that aims totransform the lives of workers and their families and, at the same time, to rethink how we organise
our civil society so we have a united voice around the concerns we share.
I approach this article from a union perspective and, in this context, I will address the drivers forchange and the nature of the movement emerging. I will argue that while a living wage may welllift many thousands out of poverty in New Zealand workplaces, the real value of the movement isin the bold new relationships being formed across civil society that could provide a vehicle forsocial justice campaigns for many years to come.

The problem
Members of the Service and Food Workers Union Nga Ringa Tota (SFWU) and the New ZealandNurses Organisation took industrial action against the largest rest home provider in the country,
Oceania: an overseas controlled private equity firm, which runs wind farms in France and theGdansk shipyards in Poland. More than 600 Oceania union members were paid barely above theminimum wage, at the time $13.50 per hour, but the company refused to offer the funding increase
passed on by government – just over 1 percent.
Union members took repeated strike action over many months, joined by residents, their families,
politicians and the media. Newspapers ran photos of residents with Zimmer frames and 103 year
old Leoni Teesdale told the local paper: “I believe in fair pay. In the Bible it says: “A labourer
must be worth his hire’ and that’s what this is all about” (Our Voice, 2012: 10).

*Campaign Coordinator, Service and Food Workers Union Nga Ringa Tota, Master of Public Policy (Hons), Massey64

New Zealand Journal of Employment Relations, 38(2):Union Secretary, John Ryall, said Oceania was planning a massive expansion and the residents’and families’ message that Oceania undervalued their staff was critical in turning the company
around. Oceania agreed to pass on the government funding increase and the dispute was resolved.
In this campaign, the workers came together as union members, they bargained, they accessed
mediation, they took strike action, they won extensive news coverage and public sympathy, inother words they did everything the law allows to influence their employer and more, and yet thevast majority of these workers remain on poverty wages of between $14 and $16 per hour.
This story captures the problem faced by many unions, and provides a glimpse into the sort ofsolution that is inspiring the living wage movement. The primary role of unions is to represent
workers so they can advance their collective interests. Unions balance the unequal power
relationship between employers and workers in bargaining for employment conditions, and in the
management of disputes at work. While many workers, such as cleaners, gain a financial benefit
from being on a collective agreement (currently 25 cents above the minimum wage), the task ofrepresentation is all-consuming for what are generally very financially-stretched organisations,particularly in the private sector. The role of unions is central to social justice for workers in a
democracy but, at the same time, unions are struggling to fulfill a role as social justiceorganisations, if indeed they aspire to such.
Decentralised wage setting and weakened unionisation are critical factors in the growing
inequality in New Zealand (Rosenberg, 2011). The market determines wage outcomes and has
failed to deliver large numbers of working people in this country out of poverty (Perry, 2013). It is
the statutory minimum wage that determines ground zero for many workers (currently $13.75 perhour) and, at 53 percent of the average wage, it is a far cry from its genesis in 1946 when thestatutory minimum was 83 percent of the average wage. With 91,500 workers living on theminimum wage and 573,100 earning less than the living wage rate of $18.40 per hour (Ministry ofBusiness, Innovation and Employment, 2013), the call for a shift in thinking about wage-setting isunderstandable. Neither the market nor the statutory minimum wage is grounded in what workers
need to live a decent life – the living wage is. Reflecting international models, the living wage
movement has defined the living wage as what workers need to survive and participate in society.
Setting a living wage through independent research is a milestone for this movement, but winninga living wage for workers when this can mean a 30 percent pay increase is a massive challenge
because our law and our levels of activism are currently so compromised in New Zealand. The
legal structures, of course, influence our history of activism – in quality and quantity – but equally,
our levels of activism influence the quality of the law. The living wage movement seeks to play apart in shaping the future outcomes for workers through deepening social activism and, ultimately,
influencing the decision-makers who mold the economy of the future and the legal framework that
constrains or liberates us. In this sense, it is not the call for a living wage, or the evidence thatjustifies a living wage that is transformative but the activation of civil society around a common
purpose that will contribute to shaping a new future for New Zealanders.

The organising challenge
The modern precarious workforce cannot depend on traditional union organising and bargaining as
the sole means by which workers can realise a better life for themselves and their families. While
the Employment Relations Act 2000 places employees and employers at the centre of all theaction, the reality is that there is no longer a single field of battle for addressing the interests ofthese parties. The real power (where the money is) is often elsewhere, and those who hold the65New Zealand Journal of Employment Relations, 38(2): 64-69
purse strings are invariably – and comfortably – beyond reach of the law and the rough and tumbleof bargaining. This is not to say all workers are caught in complex webs of control, but it is a
growing reality and some unions have been forced to grapple with this more than others.
An example of this precarious worker is the contracted cleaner whose employer is winning tenders
to deliver services to a business, such as a company or government agency. The contractor islimited by the parameters of the contract for service and the behavior of the competitors in theindustry. On the one hand, setting the price of the labour through a collective agreement is
attractive to the employer because it takes labour out of competition for the tendering process; onthe other hand, it limits any movement above the industry standard because this is likely to resultin the contractor being undercut by competitors. Any fair shift in the price of labour has to benegotiated with those not part of the legal employment relationship, those who hold the funds,
whether that is a private business, a council or a university. Unfortunately, funders usuallycontracted out services in the first place to absolve themselves of responsibility and/or to cut thecost of their “non-core” activities – the last thing they expect is to be shackled (as they may wellview it) once more to this large low paid workforce. Wellington City Council’s decision in May
2013 to endorse the principle of the living wage, and put in place a framework for delivering thisacross directly employed and contracted workers is a beacon of hope for the movement.
Moliati Fataua is a cleaner at Christchurch airport on $13.85 per hour where she works from12.30am until 9.00am, 40 hours a week, so she can be at home with her children during the day.
She is the sole income earner, with four children, and at the end of the week, they live on rice or
noodles “because the money has run out.” Moliati cannot remember the last time she bought new
clothes for her children.
This story illustrates part of the organising challenge for unions. Real power to deliver a decent
wage for contracted cleaners lies with the agency, the institution, or the multi-national company
and not the employer (as defined by law). Employment agreement negotiations with employers
will be limited at best and futile at worst unless leverage is applied where the real decisions are
made about money. The other aspect of the organising challenge is the workforce itself, recently
articulated as the “precariat” (Standing, 2011). The “precariat” include contract workers, agency
staff, part-time and casual workers, who are employed for irregular hours, for multiple employers,
behind security walls, and on multiple locations.
Legislation does not support organising or collectivising this modern precarious workforce: union
membership is voluntary, relationships are individualised, and union access is restricted. The
collapse of private sector unionism since the deregulation of the labour market in 1991 is
testimony to this lack of support.
To organise people around the values and the issues that matter most to them, we must lookbeyond the confines of the workplace. Workers and their families come together and form bonds
in communities, schools, churches and sports fields. It is here that workers and their families havethe opportunity, the confidence, and the support to talk about what matters and what should bedone about it. Living Wage Aotearoa is a social justice movement that steps outside the traditional
domain of organising – the workplace – to build strength and power around the shared values
expressed by workers through their communities, faith networks and unions. This is a project toempower workers, as Jane Wills says: “Justice...requires that people are able to organise
themselves to represent their own interests, to find what is in common, and to secure the power toact” (Wills, 2011).
66

New Zealand Journal of Employment Relations, 38(2):The US father of community organising, Saul Alinski, talks about building organisation upon thediverse loyalties to church, unions, and other institutions that make up our daily lives. It is theseloyalties, Alinski says, that “combine to effect an abiding faith in, and profound loyalty to, thedemocratic way of life” (1969: 88). In its commitment to establishing new relationships acrosscivil society, Living Wage Aotearoa is seeking a revitalisation of democracy by generating hope,injecting energy, and organising networks of people to win some dignity and respect for working
people in this country.

A new movement gains momentum
One of the most active participants in our new movement from a mainstream faith group told me
he was a management consultant before he retired, and would never have had anything to do with
unions in the past. He said Living Wage Aotearoa was different from anything that had happened
before: diverse groups of unions, faith-based religious groups and other non-governmentorganisations were working together around their shared commitment to reduce poverty.
This partnership between community, union and faith groups was signalled very early in thedevelopment of Living Wage Aotearoa. In early 2012, SFWU representatives met with faith andcommunity groups in Auckland and Wellington to talk about the concept of the living wage. The
union had a direct interest in addressing the pay of its members, 80 percent of whom were on lessthan $18.00 per hour. However, it resonated with many others – with those who were seeing
waged workers collect food parcels because they could not make ends meet; with those supporting
beneficiaries to navigate the complex maze of government support; and, among many others, withthose health and community workers addressing the growing number of third world diseases
among the poor. The living wage was seen as an achievable goal in a sea of demands,
expectations and seemingly unending need. The early conversations were also laced with words
of caution – that politicians should not be part of defining this landscape; unions should not be thesole drivers of it, and campaigns should not be national but rather able to emerge locally, built
around local relationships and local issues.
While communities articulated their terms, international influences helped to strengthen theapproach to the campaign to create a new and genuine community/union partnership thatrecognised important principles of community organising. Firstly, this means ensuring thatpolitical parties were not part of the community campaign. The role of the movement is to give
politicians a mandate to deliver a living wage and to hold them to account for their commitments;
politicians are targets rather than partners of the movement. This separation from party politics ischallenging for many unions, but the wisdom of maintaining neutrality was born out early in the
campaign when a city mayor would not continue a conversation with us if we were politicallyaligned. Secondly, organisation is built on the basis of group and not individual membershipbecause, ultimately, groups mobilise numbers for power and not individuals. This was initiallychallenging for the many enthusiastic activists that were independent of organisations because it
appeared to be excluding valuable support. Thirdly, local organisation takes precedence over any
national structure. Community organisations said, at the start, that successful campaigns in afinancially-stretched sector were built around local relationships and less vulnerable to collapse.
Finally, organisation is underpinned by a genuine partnership of community, faith and union
representatives around shared values (a structure now established in the rules of Living Wage
Aotearoa).

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New Zealand Journal of Employment Relations, 38(2): 64-69

Converging identities
Jane Wills talks about the effectiveness of the community alliance, London Citizens, in terms of its
ability to create identity connections between individuals and “identity linking” between
institutions that share common ground, so that ultimately the alliance is involved in the making ofa new identity that enhances civic engagement (Wills, 2013). London Citizens facilitates
connections between different aspects of people’s lives – as cleaners, migrants, Christians, parents
and trade unionists. Connections are also formed at an institutional level, whereby different
groups find common ground with each other, and each is strengthened as a result. It is what builds
power to act. Rt Rev. Justin Duckworth, Anglican Bishop of Wellington, captures thisconvergence when he says:
on a simple level the living wage campaign is a no-brainer. If you’ve got two coats andsomebody else hasn’t got one, you give them one of your coats. That’s what it says in
scripture (McDonald, 2013).
There is a mutual self-interest for both unions and community organisations, for faith groups andinstitutions in this country to join together and use their collective power to build a decent society.
The faith and community groups quickly identified the benefits of building unity beyond their own
networks, such as the former-refugee and migrant groups that identified they need jobs but theyalso need well-paid jobs. Yet, trade unions also need these communities because this is where thenon-union workforce (both current and future) come together and form bonds and create
communities. The young educated Somali children of refugees have not come across traditional
unions before; they do not know what they exist for; they do not see what the benefits of belonging
will be. We do not yet understand each other, let alone know how to work together to strengthen
our respective communities and unite to win improvements in our lives.

Conclusion
In 18 months, more than 160 organisations endorsed the call for a living wage and Living Wage
Aotearoa New Zealand had a rapidly growing membership, comprised of unions, faith-basereligious groups and community/secular organisations. These organisations joined together in key
cities to call for local councils to pay a living wage to directly employed workers and to those
employed by contractors. In Auckland, living wage communities campaigned in the local
government elections by supporting each other’s issues, such as the need for social housing,
employment opportunities for students of refugee background and the living wage. In this way,
relationships across the movement are deepening, trust is being built and people, whose lives havepreviously not converged, are experiencing working together to mold a better future for New
Zealand.
If we want to salvage our union movement for the future of a healthy democracy, we have to shift
our focus to the communities in which workers live and shift our strategies and tactics accordingly.
A community approach means creating common ground and a shared agenda with our diverse
communities, not just calling on these communities to support the agenda of one advocacy group,
such as unions. Living Wage Aotearoa aspires to have a society with decent living standards that
our current labour market mechanisms cannot deliver for the most vulnerable and precarious
workers. It aspires to building a collective voice comprising our diverse citizenry that strengthens
68New Zealand Journal of Employment Relations, 38(2):each of our organisations and our whole community, and that has the power to shape our lives forthe better. For unions, the campaign for a living wage is a social justice project and one that
requires focussed consideration and distinct resourcing because it is different from industrial
advocacy in orientation and outcome. This is about building power through the collaboration ofcommunity, faith and union groups, giving vitality to our democracy, and delivering a decent
society where workers can survive on the fruits of their labour.

References
Alinsky, S.D. (1969). Reveille for radicals. New York: Vintage Books.
Keynes, J.M. (1936). The general theory of employment, interest and money. New York: Harcourt,
Brace.
McDonald, N. (2013, 22 June). Bishop Duckworth leading the charge. The Dominion Post.
Retrieved from http://www.stuff.co.nz/dominion-post/capital-life/8826469/Bishop-Duckworthleading-the-charge
Ministry of Business and Innovation. (2013). Summary of the impacts of the minimum wage
options for 2013. Wellington: Author. Retrieved from: Official Information Act request, March 11,
2013
Our Voice. (2012). It’s all about care. Our Voice. April(1): 1-31
Perry, B. (2013). Household Incomes in New Zealand: trends in indicators of inequality andhardship 1982 to 2012. Retrieved from http://www.msd.govt.nz/about-msd-and-ourwork/publications-resources/monitoring/household-incomes/
Rosenberg, B. (2011, August). Getting wages right: wages must rise faster than inflation – and besustainable – if the well-being of New Zealand families is to be protected. Kai Tiaki Nursing New
Zealand.
Standing, G. (2011). The precariat: The new dangerous class. New York: Bloomsbury Academic.
Wills, J. (2011). The geography of community and political organisation in London today.
Political Geography. 31(2): 114-126
Wills, J. (2013). Work, identity and new forms of political mobilisation: An assessment of broadbased organising and London’s living wage campaign. Identities. Retrieved fromhttp://www.geog.qmul.ac.uk/livingwage/pdf/Wills.pdf

69New Zealand Journal of Employment Relations, 38(2): 70-77

The living wage: an idea whose time has comeDEBORAH LITTMAN*
Introduction
Every weeknight, a steady stream of young people gather on a quiet side street in Vancouver, British
Columbia, waiting for the local Sikh temple to open its doors. The free, nutritious food provided by thistemple and others across the city has become a lifeline for a growing number of young people trying toearn enough to get by. One young man explained:
If you’re on low income, it’s a struggle to eat well, or sometimes to eat at all. Even when we areworking full-time, our pay barely covers rent and bills, leaving food far down our list (Interview,
July 9, 2013).
The young crowd that fills the dining room at Akali Singh Temple is just a symptom of a growing
problem that plagues many supposedly prosperous countries. Over the past 30 years, the link between
work and the ability to afford a decent life has been broken around the world.
The recently released New Zealand General Social Survey 2012 found that only 52 percent of New
Zealanders felt that they had “more than enough” or “enough” money to meet their everyday need foraccommodation, food, clothing, and other necessities (Statistics NZ, 2012: 5). Most telling, 43 percent
of employed people felt they lacked the money to provide the basics (Statistics New Zealand, 2012). The
growth in working poverty, however, is not confined to New Zealand or to Canada. In its most recent
report on income inequality, the Organisation for Economic Co-operation and Development (OECD)warned that income inequality and the number of people below the poverty line have both grown overthe past two decades. The increase is widespread, affecting three-quarters of the 34 countries in theOECD (OECD, 2013). According to the OECD (2011:6), “increases in household income inequality
have been largely driven by changes in the distribution of wages and salaries, which account for 75% ofhousehold incomes among working-age adults”. With very few exceptions, the wages of the 10 percent
best-paid workers have risen while those of the bottom 10 percent have declined in real terms (OECD,2013).
The human cost of the loss of real wages for those at the bottom was starkly illustrated by a recent
Public Broadcasting Service (PBS) documentary which followed two ordinary working class American
families over 20 years (PBS, 2013). When filming began, the Neumanns and Stanleys were working at
well-paying industrial jobs in Milwaukee, Wisconsin. Their pay allowed them to support their children,
buy homes and save for the future, but in the early 1990s, plants in older industrial cities like Milwaukee
began closing and moving production overseas in search of cheaper labour, forcing families to startover. For the next 20 years, the Neumanns and Stanleys, and millions like them struggled to stay afloat,
piecing together poorly paid jobs with longer hours and no benefits. Despite their hard work, they fell
further into poverty. This took a toll on their families and local communities. Children with potential did*

Lead Organiser, Metro Vancouver Alliance70New Zealand Journal of Employment Relations, 38(2): 70-77
not go to college, homes were lost and marriages broke down. Their previously solid neighbourhoods
crumbled under the threat of debt, homelessness and crime.
Along with living wage jobs, what these working families lost were the levers put in place by the postwar social contract that had once given them influence over conditions in their workplace and thedecisions affecting their communities – strong unions, a local industrial base and a widely shared socialand political commitment to the common good (Bruce, 2013). It is the need to rebuild this bargaining
power, as part of a wider struggle for a decent society, that has made the living wage “an idea whosetime has come” (Cameron as cited in Steward & Loweth, 2010). As Anglican Archbishop of York(UK), John Sentamu (2013) said in a recent debate on welfare reform and the church:
Paying the living wage is not about generosity or charity: it is about fairness and justice. [Theroad to recovery] is rooted in… the rediscovery of a vision to rebuild community in recognitionof our duties to one another. Rediscovering the wellsprings of solidarity

Key elements in a living wage campaign
The idea of a living wage traces its roots to industrial heartlands of Britain, Australia and New Zealandduring the 1870s. As trade unions built the capacity to bargain over pay, they began to demand a wagethat would allow workers to adequately support themselves and their families. As early as 1899,
industrialist Benjamin Seebohm Rowntree developed a method for calculating the living wage based on
the cost of essentials in his city of York (Wills, 2009).
The modern incarnation of the living wage campaign was launched in Baltimore in 1992, when
Baltimoreans United in Leadership Development (BUILD), a local affiliate of Saul Alinsky’s Industrial
Areas Foundation teamed up with public service union AFSCME (American Federation of State, County
and Municipal Employees) to persuade the city council to legislate a requirement that that all work doneby agencies of the municipality pay a living wage to their workers. This campaign spread to 140 cities
across the US and then to the UK in 2001, where it was led by another IAF affiliate, London Citizens.
Living wage coalitions launched campaigns in Canada in 2008 (Ivanova & Klein, 2013) and New
Zealand in 2012 (Newman, 2014).
While each local campaign has followed its own trajectory, there are certain principles that have become
central to the movement’s success. Each campaign has made an effort to build a broad consensus aroundthe need for a living wage by appealing to mutual self-interest of a diverse set of actors while holding
politicians and employers accountable to the wider community. Most important, living wage campaigns
have sought to reframe the debate around pay, moving from a strictly market-based analysis to one
based on social justice and the common good.

Recognising that low pay hurts the whole community
Living wage campaigners have argued that pay which falls below a living wage level not only detracts
from the quality of life of individual workers, but has a detrimental effect on the whole community andthe public purse. Though the percentages vary by country, approximately 40-60 percent of poor children
71New Zealand Journal of Employment Relations, 38(2): 70-77
across the UK, US, Canada and New Zealand live in households where at least one person is in paid
employment (Perry, 2013; Aldridge, Kenway, MacInnes & Parekh, 2012). Poor children do less well inschool, have reduced life chances and are more likely to be physically or mentally ill (UNISON, 2010).
When the adults in the family have to work long hours or work two or three jobs to pay the bills, they
are unlikely to have time to spend with their family, much less to help out at their children’s school, joina tenants’ association or participate in community activities. Numerous studies have highlighted theconnection between low pay and greater problems of crime and disorder, ill health, wasted skills, lowlevels of democracy, skyrocketing debt and an impoverished civil society. (The Marmot Review, 2010;
Mishel & Shierholz, 2013). As Wilkinson and Pickett (2009) powerfully argue in their book The Spirit
Level, all strata of society suffer the negative consequences of income inequality, not just those at thebottom.

Building coalition
If the whole community is damaged by low pay, it stands to reason that the whole community has a
stake in securing a living wage for the lowest paid workers. By understanding the impact of low pay on
different sectors of the community, living wage campaigns have built wide coalitions of union, faith andcommunity groups. They have found allies amongst politicians, professionals and business leadersconvinced by the benefits that a living wage can bring. Coalitions play an important role in overcoming
the fragmentation that has separated different groups of workers – contract workers from in-house staff,
migrants from indigenous workers, better paid workers from their lower paid colleagues. Working incoalition also helps to build links between unionised workers and those who benefit from their services.
Too often union gains have been portrayed as being at the expense of the public good. Where tradeunions can work alongside civil society organisations, they wield much stronger influence.
Coalitions can also bring a different kind of pressure to bear on recalcitrant employers, helping torebuild the lost bargaining power discussed above. At the outset of the UK living wage campaign in
2003, the Trust Board at Homerton Hospital in East London refused to meet the union branch to discuss
the pay of staff working for a private contractor because the Trust did not directly employ those workers.
However, when more than 60 people from local churches, schools and mosques, organised under thebanner of the East London Communities Organisation, asked for a meeting, the Board was compelled toagree. Instead of the ‘usual suspects’ addressing the Board, the workers’ case was put forward by Sister
Marie Mooney, a nun from a local Catholic church and hospital chaplain. Her powerful condemnation of
the Trust for its shabby treatment of the cleaners carried weight because she represented both the moral
authority of the church and local community the hospital was meant to serve. The meeting turned thetide and over the next two years the union was able to bring cleaners at Homerton and three otherhospital trusts onto full National Health Service terms and conditions, with salaries above the living
wage, as well as access to sick pay and pensions (Donne, Littman & Wakefield, 2010).

Making the primary employer responsible
Employment policies of privatisation and subcontracting have been major contributors to the low wage
economy. The contracting out of a growing range of services, from cleaning to payroll has allowed the72

New Zealand Journal of Employment Relations, 38(2): 70-77
primary employer – the school, hospital, local authority or private business – to avoid responsibility for
the welfare of the people doing their work. This increasingly distant relationship between worker andemployer has also weakened traditional forms of union organising and collective bargaining. As Prof.
Jane Wills (2009: 41) put it:
The workers might be down the corridor cleaning the loo or they might be thousands of miles
away at the end of a complex supply chain sewing jeans in a factory in a free trade zone, but theyno longer feature in the consciousness of the people that benefit from their work.
Living wage campaigners have demanded that the ‘real employers’ take responsibility for all of those
who work for them, whether directly or indirectly. Where employers have proved reluctant, campaigns
have used creative actions – rallies, concerts, flash mobs, shareholder interventions and community
hearings – to bring pressure to bear, often with great success.

Not just for the good times
Far from the post-2008 economic downturn being a time to retreat on low pay, campaigners argue thatthe living wage campaign is needed now more than ever. As lawyer Helena Kennedy (2009: 4) wrote:
The current recession could easily be appropriated to provide a smokescreen for legislators andemployers to freeze the lowest wages of those in most need who have played no part inengendering the economic crisis that is hitting them and their families so badly. This would bebeyond folly; it would be commercially dangerous and socially short-sighted.
Encouragingly, a growing number of public and private sector employers are heeding this warning,
recognising that job cuts and low pay will further deepen the recession by taking demand out of theeconomy. A powerful business case has emerged from the experience of employers who have found thatpaying a living wage provides real, tangible benefits to their organisations. According to Guy Stallart,
Facilities Manager for KPMG Europe, the decision to ensure that all of the company’s contract staff
were paid a living wage led to a sharp reduction in turnover, raised staff morale and productivity andimproved service (Stallart, 2009). Matt Sparkes, Global Head of Corporate Responsibility at Linklaters,
a leading UK corporate law firm, asserts that paying the living wage is “not just the right thing to do, itmakes absolute business sense. It ensures that we attract and retain the best and most motivated people,
whether directly employed by us or by others” (Sparkes, 2013).
Figures compiled by Queen Mary University London estimate that, in the UK alone, over £100m has
been added to the pay of almost 15,000 low paid workers between 2005 and 2012 as a direct result ofliving wage campaigns in local authorities, museums, universities, hospitals and voluntary organisations,as well as a growing and impressive number of high profile private companies. An additional 100,000
workers benefited from living wage jobs over the six weeks of the London Olympics in 2012 (Wills,2013). One in five UK local authorities have now adopted living wage policies, even without thepressure of a campaign and in the face of reduced public funding. Much more will have been gained
through upward pressure of the living wage on the ‘going rate’ in low paid sectors.

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New Zealand Journal of Employment Relations, 38(2): 70-77

Focus on the social wage
The living wage calculation is based on the cost of all the items needed by a worker and their family tomeet their basic needs. The figure includes both the money going into a worker’s pocket and the ‘social
wage’, the goods and services accessed as a public right, such as schools, healthcare, libraries andrecreational facilities, and state transfer payments of various kinds. The more that is available throughthe social wage, the less is needed in cash terms to support a family. Thus, campaigns for thepreservation or expansion of the social wage can be seen as part of a living wage campaign. For
example, in British Columbia, childcare is the second most costly item in the living wage budget,making the campaign for a $10 a day daycare programme a natural extension of the living wage
movement (Ivanova & Klein, 2013). Focus on the social wage has the potential to expand the living
wage coalition and provide smaller, interim victories to be achieved when a global living wage policy
still seems a distant prospect.

Gaining public support
The idea of a living wage has overcome initial opposition to gain increasing traction from businessleaders and politicians across the political spectrum (see, for example, Vancity Credit Union, 2011;
Mullholland & Wintour, 2012). In 2010, UK Prime Minister David Cameron declared the living wage
an idea “whose time has come.” Both of London’s elected Mayors, Ken Livingstone (Labour) and Boris
Johnson (Conservative), have been vocal advocates, as has current UK Labour Party leader, Ed
Miliband (Pennycott & Lawton, 2013). In 2012, Mayor of Wellington, New Zealand, Cecilia WadeBrown (2013) explained her council’s decision to adopt a living wage, saying, “we want a successful
high-growth, high-value economy in Wellington. The Living Wage is the income necessary to enable
more workers and their families to participate in society” (Wellington City Council, 2013).
What has shifted the political landscape has been the slow, painstaking work done in organising lowpaid workers seeking a decent living standard. It meant building community support for the campaign
and hammering on the doors of employers and politicians over and again, using powerful stories andimaginative actions. Not only does this get across the message that this is the right thing to do, but itshows that there is power – diverse, vocal and well organised – behind the demand for a living wage.

Conclusion
The living wage campaign has made enormous strides since its inception in Baltimore in 1992. Millionsof dollars and pounds of additional income are now flowing into the pockets of workers in cities andbusinesses that have adopted living wage policies, and this money is taking thousands of families out ofpoverty and helping to boost fragile local economies. The campaign has gained strong backers ingovernment, public authorities, and business who have seen the moral and practical benefits of paying aliving wage.
The living wage campaign has also helped to forge powerful, sustainable coalitions of community
organisations and unions who are willing to put themselves on the line in defence of low paid workers.
Most important, it has begun rebuilding the bargaining power lost over the last three decades and74

New Zealand Journal of Employment Relations, 38(2): 70-77
reframed the argument about pay. Instead of focusing on ‘what the market will bear?’, we are asking‘what kind of communities do we want to live in?’
Philosopher Michael Sandell (2012: 203) sums it up when he says:
In the end, the question of markets is really a question about how we want to live together. Do
we want a society where everything is up for sale? Or are there certain moral and civic goods
that markets do not honor and money cannot buy?

References
Aldridge, H., Kenway, P., MacInnes, T. & Parekh, A. (2012). Monitoring Poverty and Social Exclusion.
York: Joseph Rowntree Foundation.
Bruce,B.
(Director).
(2013).
Mind
the
Gap
http://www.tv3.co.nz/INSIDE-NEW-ZEALAND-Mind-TheGap/tabid/3692/articleID/94816/MCat/3061/Default.aspx[Documentary].

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Donne, M., Littman, D. & Wakefield, B. (2010). Unfinished Business: the quest for the living wage. Fair
Pay Network, London. Retrieved from http://slw.povertyalliance.org/userfiles/files/living-wage-rep-sep2010.pdf
Ivanova, I. & Klein, S. (2013). Working for a Living Wage: marking paid work meet basic family needs
in metro Vancouver. Canadian Centre for Policy Alternatives (CCPA),Vancouver. Retrieved fromhttp://www.policyalternatives.ca/sites/default/files/uploads/publications/BC%20Office/2013/05/CCPABC_Living_Wage_Update_2013.pdf
Kennedy, H. (2009). Not just for the good times. London: Fair Pay Network. Retrieved fromhttp://issuu.com/equanomics/docs/not_just_for_good_times
Marmot. (2010). Fair Society, Healthy Lives: Strategic Review of health inequalities in England post
2010. Retrieved from www.ucl.ac.uk/marmotreview
Mishel, L., & Shierholz, H. (2013). A Decade of Flat WagesThe Key Barrier to Shared Prosperity and a
Rising Middle Class. Economic Policy Institute. Retrieved from http://www.epi.org/publication/adecade-of-flat-wages-the-key-barrier-to-shared-prosperity-and-a-rising-middle-class/Mulholland, H. & Wintour, P. (2012, November 6). Living wage should be adopted by central
government,
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Review Essay: Inequality and the Living Wage
PETER SKILLING*
Rashbrooke, Max. (2013). Inequality: a New Zealand crisis. (ed.). Wellington: Bridget WilliamBooks.
296 pages, $39.99 per bookISBN 9781927131718

Introduction
Living wage campaigns are situated within a broader context of increasing inequalities of wealth andincome. Arguments for a living wage and for reducing inequality both point to the negative social
consequences of high levels of inequality, and both appeal to fundamental principles of fairness,
power and participation. Economic inequality is a broad and complex social issue, and it hasdeveloped into a similarly broad and complex field of academic inquiry.
Inequality: A New Zealand Crisis (Rashbrooke, 2013), hereafter, simply ‘the book’ is not designed tooffer conceptual or empirical innovations in the field. Rather, it sets out to bring together many of thevarious aspects of inequality in New Zealand. The book succeeds admirably in this synthesising role.
In its wide-ranging coverage (including two chapters dealing explicitly with the relationship between
inequality and work), the book is designed to appeal to a wide readership. Chapters are short andengaging, and interspersed with short (two-three page) viewpoints from a range of non-academic
voices, including workers, business-owners, and students.
The book, then, represents an important distillation of knowledge about inequality in New Zealand.
It also serves as a more or less direct political intervention. From its polemical title to its concluding
sections, the book presents current levels of inequality as a pressing social problem. “Thecontributors”, write Rashbrooke and Jonathon Boston, “share a common concern” about theconsequences of inequality, and a “desire for the issue and policy options to be properly debated”(2013: xi). This desire has been supported by a series of debates at Te Papa in 2012, well-attended
book launches this year in Auckland and Wellington, a speaking tour and media appearances bycontributing author Robert Wade, a day-long symposium in Wellington and the website ‘Inequality:
A New Zealand Conversation’ (www.inequality.org.nz).

Overview
The book is structured in four sections. The first (‘Introduction’) contains two chapters by
Rashbrooke. In the first, he defends the book’s contention that inequality is, indeed, a national crisis.
There is an emphasis here on the range of negative social consequences said to be associated withhigh levels of inequality, and an engagement with some prominent ways in which it might be denied
that inequality is actually a problem. Then, in the following chapter, Rashbrooke summarises a vast
amount of data on the increasing extent of wealth and income concentration in New Zealand.
*

Senior Lecturer, Department of Management, AUT University

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Part Two (‘Issues and Debates’) contains strikingly different chapters by Robert Wade, Ganesh Nanaand Jonathon Boston. Wade’s focus is on the share of income gains going to those at the top. His
account focusses on the disproportionate ability of wealthy individuals and groups to influence thepolicy-making process to their own advantage (see also Hacker & Pierson, 2010). Nana’scontribution frames inequality, in its erosion of the ability of all to contribute to economic growth, as
an instance of market failure. He offers good reasons for an economics profession that, he complains,has “given way to narrow financial analysis” to take inequality as a central concern (Nana, 2013: 56).
Boston’s chapter is different again: a sober philosophical analysis of exactly what ought to beequalised, why, to what extent, and by whom, noting the particular appeal and the specific dangers of
pursuing various kinds of equality.
The three middle chapters in Part Three (‘Consequences’) – on inequality and housing (by Philippa
Howden-Chapman, Sarah Bierre and Chris Cunningham); inequality and imprisonment (Kim
Workman and Tracey McIntosh), and inequality and education (Cathy Wylie) – work as a sort of
triptych: they illustrate the ways in which inequality is simultaneously cause and effect of a variety
of social outcomes, and also how these various social outcomes act as cause and effect on eachother. Poor housing outcomes (including poor insulation and high levels of housing transience) areassociated, for example, with educational disadvantage. In turn, poor housing and educational
outcomes are associated with crime and imprisonment figures. Taken together, these chapters
explicate some of the mechanisms by which inequalities become entrenched and self-reinforcing.
These three chapters are bookended by important contributions on inequality and Pasifika peoples(Karlo Mila), and on inequality and Maori (Evan Poata-Smith).
Having established the extent and the complexity of the problem, the fourth and final section(‘Looking Ahead’) canvasses some responses (although the demarcation is somewhat arbitrary, withmany of the previous contributors having already posited possible responses. These earlier
prescriptions include investing properly and regulating smartly in areas, such as housing andeducation, and controlling the funding of political parties). In this last section, Paul Barber and Mike
O’Brien make sound and sensible suggestions (around remaking social bonds of empathy andcompassion and around designing a fairer welfare system, respectively) which might, perhaps, havewrestled more deeply with the difficulties likely to beset these proposals. Issues related to
employment relations are addressed by Paul Dalziel (on the theme of ensuring that training and work
systems reduce inequality, and in which some readers may well be left wanting more discussion of
how official figures on skills shortages can be reconciled with current levels of unemployment); andNigel Haworth (on making workplaces more democratic, utilising principles of empowerment,
ownership and voice). These two chapters make a common call for institutional arrangements thatgive labour organisations a seat at decision-making tables. The book finishes with a chapter by Linda
Tuhiwai Smith that takes a more radical view on the way forward, invoking Audre Lorde’s dictumthat “the master’ s tools will never dismantle the master’ s house” (p.231).

Review
The book is lucid, thorough, and strong, and it will stand as an important contribution to local
debates. Some readers may find grounds for quibbles here and there in the details. For instance, theGini coefficient is offered as ranging between 0 and 100 rather than between 0 and 1, and page 98
sees some confusion as to which deciles represent which end of the wealth distribution. Moresubstantively, it is never quite clear why the book focusses (see page 3) on inequalities of income
rather than of wealth, given the role of wealth in allowing individuals and families to plan for the79

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future and ride out tough times (Orton & Rowlingson, 2007), and given that wealth is “yet more
unevenly distributed than income” (p. 154). On page 13, a much-debated aspect of The Spirit Levelthesis (the claim that inequality makes everyone – including the wealthy – worse off) is accepted andrepeated where a certain amount of qualification might have been in order. Given its scope andrange, however, the book is relatively free of such question marks.
A great strength of the book lies precisely in this wide scope and range. Incorporating 15 chaptersand 17 different authors (plus those who contribute the shorter viewpoints), it brings together manyof the important aspects of inequality that are often viewed in isolation. Doing so allows salient
themes to emerge organically. New Zealand’s political predilection for light-handed regulation is a
key theme in the chapters on, for instance, housing policy, education policy, skills development andworkplace organisation. All of these chapters (and many others besides) can be heard together as achorus calling for a rethinking of how policy is made: a rejection of laissez-faire approaches and anembrace of a coordinated approach aimed at sustainable, widespread benefit.
There were times, however, where the book might itself have benefited from a touch morecoordination. Given its range of authors and issues, a certain degree of divergence between thevarious contributions is inevitable (and healthy). It is useful, for instance, to read a nuanced but
broadly positive account of the work of Maori tribal organisations by Anake Goodall (formerly the
CEO of Te Runanga o Ngai Tahu) directly after Poata-Smith’s discussion of the growing inequality
between tribal elites and Maori communities. It is also interesting to note Smith’s scepticism ofevidence-based policy-making after the housing and education chapters’ call for policy to reflectevidence and best practice. To restate: these – and a few other – areas of tension are inevitable andhealthy. I did wonder, however, whether future editions of this book might employ some editorialdevice (a brief introduction to each of the book’s four parts perhaps, or a separate conclusion
chapter) that might engage them directly to turn the diversity of perspectives into a more consciousand productive dialogue.
Something similar might also be said where insights offered in one chapter might have shed
important light on issues raised elsewhere, had they been linked more explicitly. For example,
Michael Walzer’s notion of complex equality (raised in Boston’s chapter, pages 82-3) might havebeen deployed elsewhere as a standard against which to judge the realities of housing andeducational outcomes, or the inequalities in political influence discussed by Wade.
In seeking to establish that inequality truly is “a crisis that affects us all” (back cover), the bookfocusses heavily on the range of negative social consequences associated with high levels of
inequality. This is a sound move, aligning the book with a burgeoning international literature (seeWilkinson & Pickett, 2009; Stiglitz, 2012; and Lansley; 2011) and with the wide range of groups(including institutions not normally associated with the political left, such as the World Economic
Forum, the IMF, the OECD, Financial Times, and the Economist), who have acknowledged
inequality as a pressing social problem. While consequentialism is an important moral approach, I
did wonder, at times, whether this focus sometimes left little room for other normative approaches tobe developed.
More specifically (and at the risk of producing a slightly denser book), I wondered whether here
might have been room for a fuller development of Michael Sandel’s communitarianism (discussed
on page 15 and reflected in Barber’s chapter), or for a thorough-going neo-pluralist analysis(implicitly present in Wade’s argument) of the disproportionate political influence of wealthy andpowerful groups. Or – especially – for a fuller examination of the constitutive power of elite
discourse, which is not really covered until Smith’s closing chapter. These questions of power,
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hegemony and public opinion seem – to me, at least – important, in light of the recent accounts ofinequality (see especially Hacker & Pierson, 2010, and Stiglitz, 2012) that stress the extent to whichthose comfortable with the status quo have been able to influence the policy process.
In sum, the book is highly readable, and it succeeds admirably in bringing together a wide range ofimportant aspects of contemporary inequality. It offers a clear defence of its central thesis and arange of proposals to reduce current levels of inequality. If, as an edited collection, it does not leave
the reader with a clear and compelling conclusion, it remains an important marker in a crucial andon-going New Zealand conversation about inequality.

References
Hacker, J. & Pierson, P. (2010). Winner-take-all politics: how Washington made the rich richer-and
turned its back on the middle class. New York: Simon & Schuster.
Lansley, S. (2011). The cost of inequality: three decades of the super-rich and the economy. London:
Gibson House.
Orton, M. & Rowlingson, K. (2007). A problem of riches: towards a new social policy research
agenda on the distribution of economic resources. Journal of Social Policy, 36(1): 59-78
Stiglitz, J. (2012). The price of inequality: how today's divided society endangers our future. New
York: W.W. Norton & Co.
Wilkinson, R. & Pickett, K. (2009). The Spirit Level: Why More Equal Societies Almost Always do
Better. London: New York: Allen Lane.

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