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OECD report shows NZ on right track but more to do


21 October 2008

Embargoed until 8 pm New Zealand time, Tues 21st Oct.

OECD report shows NZ on right track but more to do

A major report from the OECD called Growing Unequal shows the importance of Governments taking a range of measures head-on to reduce inequality and poverty, says the Council of Trade Unions.

Peter Conway, CTU Economist, says that the OECD Secretary-General Angel Gurría has emphasised that education, boosting family income of those in work, and direct measures to tackle poverty are the best policies.

“Gurría also said that increasing employment is the best way to reduce poverty. But there is no guarantee that more jobs and higher employment do reduce poverty. The rising incidence of non-standard employment has widened the earnings distribution and contributed to the increase in poverty.”

“The Report also highlights how sensible investments in child care, parenting support and in promoting flexible employment can provide vital support for mothers who choose remain in paid work.”

Peter Conway said this shows that the Government is on the right track but must keep going with policies that can lift incomes, promote employment, and direct resources to those in most need.

“This is yet another Report which shows that the Nordic countries have a good policy mix. Overall, the gap between the rich and poor has widened. On average the income of the richest 10 % of citizens is almost nine times higher than that of the poorest. However, in the Nordic countries, in Denmark, Sweden and Finland the gap is much smaller (5-6 times) compared with USA at 16 times.”

The Report also says that it is a “myth” that inequality encourages people to try to do better.

“At a time of financial crisis due in large part to the excesses of those on very high incomes at the expense of the poor, this report is a timely reminder of a sensible policy mix to promote economic growth and fair distribution of income at the same time, as well as the huge importance of tackling poverty”.

“New Zealand has made a good start in recent years with a higher minimum wage, paid parental leave, more flexibility in working hours, support for early childhood education and family tax credits. But the momentum must continue in these difficult economic times – particularly through support for decent jobs.”

“The Report shows that there was a significant increase in income inequality in NZ from mid-1980s to mid-1990s and that from the mid-1980s to mid-2000s there has been a significant increase in income poverty – measured as below the threshold of half of median income.”

“This shows that the policies of the late 1980s and 1990s were a disaster for low income families. We do not want a repeat of policies such as reducing workers employment law rights, freezing the minimum wage, cutting benefits, and user pays for public services”.


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