‘Why should poorest lose jobs to get inflation down?’

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By By Susan Edmunds of

Photo: 123RF

New Zealand’s poorest people are likely to bear the cost of the country’s battle against inflation, the Salvation Army says.

It has released its latest State of the Nation report, which highlights growing problems for some of the country’s lowest-income households.

It said the number of children in households receiving a benefit increased during 2023 and had reached 222,500 by December, the highest number since 2012.

Nearly one in five children were in households relying on welfare support.

It said the number of people receiving Jobseeker support also began to rise through the year and cost pressures remained high due to continued high food and grocery prices.

The number of households with children that reported some level of food insecurity rose sharply, including 40 percent of Pacific households with children.

The Salvation Army said the volume of food assistance it provided increased more than 40 percent compared to a year earlier.

Salvation Army senior policy analyst Paul Barber, one of the report’s authors, said it was important as a country to talk about who was feeling the impact from the efforts to reduce the rate of inflation.

Pressure on the poorest

The Reserve Bank has said that the rate of unemployment will need to increase for it to reach its goal, of bringing inflation back to the one percent to three percent range. ANZ economists estimated it would need to get to about 4.5 percent, from the current four percent.

“If part of the policies around controlling inflation involve putting pressure on the economy so that unemployment rises, which is what’s happening at the moment – unemployment has risen by 22,000 – lower-income households, households on the margins that we are working with … they are the groups of people most impacted.”

He said people were also facing rapidly rising rents, of up to 15 percent a year in some places.

“We hear from people working in financial mentoring, welfare support, that once they pay the rent there’s even less or nothing left over for people.

“One of the other dynamics going on is the enormous growth in population in the past year as inward migration has returned is putting huge pressure on the rental market. Most people who are lower-income are renting and the trend is they will be displaced if there is a choice between someone with insecure work and someone coming into the country to take up a role, which is what’s been happening.

“We should be questioning the logic behind making the poorest pay to bring down inflation. It’s no comfort to the thousands of people losing their jobs now that inflation is coming down, when their income is falling further.”

He said even when unemployment was at its lowest, there were thousands of people not working as many hours as they wanted to.

“There’s something wrong with the employment market when so many people who want to work are not able to work. I would really like to see employers and our education and training sector, government, local communities, working together to create much better connection between the opportunities to train and employ people and the work that’s available.”

– This article was first published on Stuff