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50,000 New Zealand households living in ‘in-work poverty’.
The New Zealand Work Research Institute has found in research commissioned by the Human Rights Commission has found that across New Zealand over 50,000 working households are living in poverty.
What is in-work poverty?
In-work poverty refers to situations where a household is in gainful employment but the net income is not sufficient to meet their needs. There are a range of reasons someone can find themselves in in-work poverty including low wages, rising cost of living, or unavoidable costs.
The research undertaken shows that - before housing costs - the overall in-work poverty rate was 7% however can be as high as 19.9% in two family households where only one adult was working.
The pattern of in-work poverty is as follows, the lowest rate was found in households of one couple with no children at 4.8%, add at least one child to that household and it raises to 6.3%, with adults living on their own rising to 6.4%. The rates rise to 9.6% and 12.3% in multi-family households and single-parent households respectively.
Even in households where the income is high, there is a significant prevalence of financial stress. Where housing costs are higher the impact of losing a job – or a job being side lined by a global pandemic – can be financially stressful for households who may not typically be considered vulnerable.
What does vulnerability mean?
Vulnerability in this sense refers to the aspects of someone’s life that puts them at risk or increases their susceptibility to threats to their wellbeing or health. Aspects such as chronic illness, mental health concerns, and disabilities all play a role in a person’s vulnerability but so do factors like financial stress. Financial stress can contribute to vulnerability by causing fear, general stress, and putting additional stress on relationships and health.
What is the connection between financial stress, vulnerability, and services?
While people under financial stress could mean that a person is less likely to hold an insurance policy, they may be on a claim. For example, a leading cause of financial stress is loss of a job or overall reduced work.
In these times of Covid-19 layoffs, lockdowns, and an overall slowdown in our current economic situation there are more people who are experiencing unexpected financial stress than we have known in recent times.
When this financial stress is the backdrop for a claimable diagnosis then an insurer has a responsibility to a vulnerable client who needs extra care.
By being aware of the extra challenges that your vulnerable clients may be facing, as well as providing options and support where needed, you can help them manage their stress. By undertaking simple steps like including resources and links in general materials or newsletters you can not only potentially help someone but also make them less likely to cancel their policy.