3. Income security

Income Security is about having income that is both reliable and sufficient to provide a reasonable standard of living. Income can be derived from multiple sources including work, investments and government-funded financial support.

There is nothing new about income insecurity. Those with the least have traditionally also suffered the sharpest impacts of economic fluctuations through unemployment, under-employment and low wages. However, the breadth of the impact of income insecurity has widened, as legislative and economic demands for greater workplace flexibility – as well as tougher criteria to attain and retain state-funded benefits – mean even people with moderate incomes can no longer rely on getting the same amount in their bank account every payday. This makes it harder to plan, to save and to service a mortgage – factors that also lead to greater social instability.

Income support systems as well as taxation should recognise that people move in and out of work more frequently and often work across a ‘portfolio’ of jobs for different periods of time. They also need to acknowledge that people operate as families not merely as individuals. These family units need to be supported and recognised whether that work is paid or not.

The foundation of stable incomes is a decent day’s pay for a decent day’s work. The Productivity Commission report Who Benefits from Productivity and Growth? – The labour income share in New Zealand demonstrated that salaries and wages in New Zealand have not kept up with growth in productivity. The Labour Income Share, a measure of the proportion of income generated that goes to working people, has fallen from 65.9 per cent in 1981 to 56.1 per cent in 2010.1 Working people are simply not getting the benefits they should from the nation’s economic successes.

Issues to consider:

  • What policies most effectively deliver a fair rate of pay for people who do paid work?
  • How can we ensure the income derived from work is enough for people to support themselves and their family?

The taxation system needs to better reflect the ‘flexible’ work environment. It needs to be more adaptable and agile. But it still needs to ensure stable incomes for families and be progressive.

Issues to consider:

  • What changes should we make to the tax system to make it more fit-for-purpose in the 21st Century?

In a world where people are likely to move in and out of work more often – and where there may be a shortage of full-time work opportunities as we have traditionally known them – it is important to re-assess the way the state provides access to the income required not just to survive but to live.  This could include investigation of new approaches to ensure every citizen can have a reliable income that provides a reasonable standard of living, and is delivered in an equitable and efficient manner. An example of this is the growing interest internationally in a Universal Basic Income.2  This is a guaranteed basic payment made to all adult citizens no matter their employment status. It would eliminate the need for many of the criteria-based benefits currently available. It is a largely untested concept but brief trials have been undertaken including in Utrecht in the Netherlands.3

Regardless of other options for income, we must review the current criteria for accessing benefits and compliance requirements. In particular, we need to look at whether the cost of compliance outweighs the return, and identify any discrimination within the welfare system that needs to be addressed.

Issues to consider:

  • Do we need to re-assess the state provision of income support, including possible investigation of measures such as a Universal Basic Income?
  • Are the criteria and processes for accessing benefits negatively impacting the individual and their family’s ability to realise their potential?

Alongside the shift away from permanent employment there has also been a shift to greater numbers undertaking volunteer work and unpaid internships. People need to be recognised for the work they do for their community and those undertaking unpaid work need to be safeguarded from exploitation. Informal work is not only necessary to our economy and society; it is an opportunity for people to gain the skills and experience necessary to participate in the paid workforce. We must value volunteers by making sure that voluntary work creates opportunities and is not simply a source of free labour.

Issue to consider:

  • How do we better recognise and value voluntary work undertaken by those not in paid employment?

We have to support those who are unable to work to live quality lives with access to affordable and quality healthcare, education, housing and transport. We must also acknowledge that inadequate support results in higher longer-term costs for the individual and state, and has negative implications for communities.

We must also support parents who want or need to stay home and care for their children, recognising and valuing parenting as the most important job many people will undertake in their lifetime. Income support is only a start. Other forms of possible support include accessing quality and affordable schooling, healthcare, public transport, housing, parenting programmes and extra-curricular activities for children.

The benefit system needs to be structured in a way that supports people whose work is to take care of family members. It is important we recognise and value both formal and informal work in order to address the future demands and challenges faced by the country, our communities, families and individuals.

[1] New Zealand Productivity Commission, Who benefits from productivity growth? – The labour income share in New Zealand, http://www.productivity.govt.nz/sites/default/files/research-who-benefits-from-productivity-growth.pdf

[2] Fast Company, A Universal Basic Income Is The Bipartisan Solution To Poverty We've Been Waiting For, http://www.fastcoexist.com/3040832/world-changing-ideas/a-universal-basic-income-is-the-bipartisan-solution-to-poverty-weve-bee

[3] New York Times, 26 June 2015, This Dutch City Plans to Give Residents a Universal ‘Basic Income’, http://time.com/3938210/dutch-basic-income/