Income gap between the races gets wider

New Zealand's persistent income gap between Maori and Pacific people and the European majority has widened sharply during the recession. Photo / Thinkstock

New Zealand's persistent income gap between Maori and Pacific people and the European majority has widened sharply during the recession.

A quarterly update on vulnerable families by the NZ Council of Christian Social Services has found that European median incomes have risen slightly despite the recession of the past four years, but those of Maori and Pacific people have dropped.

Berl economist Ganesh Nana said the figures were a natural consequence of worsening unemployment for low-income earners.

"It follows from what we know about the impacts of the recession in terms of job losses impacting disproportionately on those on low incomes, and as we know Maori are unfortunately disproportionately represented in those on lower incomes," he said.

Maori unemployment rose from 10.2 per cent in March 2008 to 14.8 per cent in March this year, and Pacific unemployment rose even faster, from 8.7 per cent to 14.7 per cent. European unemployment rose from only 3 per cent to 4.9 per cent.

Council of Christian Social Services president Rod Watts said inequality was getting worse. "It begs the question: is the gap widening?" he said. "I think it at the very least requires society to ensure that strategies are put in place to reverse the trend that is apparent."

The income figures, which were highlighted in a recent Statistics NZ publication on Maori wellbeing, Te Ao Marama 2012, come from the agency's annual income survey and may be affected by demographic changes.

For example, they show a big jump in median incomes for Asians, from $344 a week in 2008 to $405 last year, which may reflect a maturing of the Asian population from a dominance of students in 2008 to an older, working profile.

But Dr Nana said age differences were unlikely to be driving the contrast between a slight increase in median European incomes, from $569 a week in 2008 to $580, and sharp drops in median incomes for both Maori, down $40 a week to $459, and Pacific people, down $65 a week to $390.

"The age differences would still have been there before the recession so that won't be an explanation for the growing gap," he said.

Solo parents have also suffered disproportionately. The median income for sole parents with children dropped by $2 a week in the three years to last year, while the median for couples with two children rose by 10.4 per cent.

Dr Nana said there was no sign that the gaps had closed again since last year and he expected unemployment to stay high for some time.

"I don't see a significant change on the horizon until the rest of the world gets its act in order and New Zealand gets beyond its fixation with Government debt and gets towards a bit more of a long-term perspective on building our export base and building jobs that go with that," he said.

Benefit statistics show Maori have continued to increase as a proportion of all beneficiaries, from 31.5 per cent in June 2008 to 32.4 per cent in June last year and 33.1 per cent last month.

Pacific beneficiaries have increased more slowly, from 7.6 per cent of the total four years ago to 8.1 per cent last year, and have stabilised at the same level this year.