Saturday, 17 Apr 2021

Kevin Jenkins: The story of Pasifika business is bigger than the minimum wage

Disciple Pati is a stunningly creative young Samoan New Zealander. Her song The Boy Who Cried Woman won best music video at the 2020 Pacific Music Awards and late last year she released an equally impressive follow-up called ATMA. She is set to become the latest musical star from Aotearoa.

But she is also an emerging player in the wider entertainment industry.

As well as a great singer with distinctive phrasing, she is a songwriter, a music producer, a video producer, and (have a look at her videos online) an innovative stylist who’s up for taking the risks necessary to stand out from the crowd.

https://www.youtube.com/embed//66UD_8RSfGc

Pasifika long ago broke through in sport and entertainment, adding immensely to our quality of life. Luteru Ross Taylor is a joy to watch, Beatrice Faumuina and Dame Valerie Adams are inspirational and, well, the list of high-achieving Kiwi-Pasifika sports stars is endless.

As is the list of Kiwi-Pasifika bands and musicians, starting way back with groups like Golden Harvest, Ardijah, Sisters Underground, Te Vaka, and OMC.

Award winners, entrepreneurs, minimum wage

There are also plenty of high-profile Pasifika CEOs, professionals and managers.

The recent Pacific Business Trust (PBT) Awards recognised the success of businesses owned and run by Pacific people, like GirlBoss, SunPix, Bethel Hair and Beauty, MYRIVR Technologies, and TROW Group.

But are these high achievers obscuring a grimmer story for Pasifika New Zealanders?

Economic development expert Jason Leung-Wai told me Pasifika are almost twice as likely as the general population to be employed in administrative and support services, transport, postal, warehousing, and manufacturing, and about half as likely to be employed in primary industries, in professional, scientific and technical services, and in equipment rental services, and real estate.

Pasifika are disproportionately employed in industries that require low-skilled workers like labourers, machinery operators and drivers, sales workers, and clerical and administrative workers. This is not good, because it means lower incomes and less job security, including a greater risk of their jobs being disrupted by technology.

Leung-Wai also told me Pasifika are five times less likely to be employers or self-employed than the general population. The 2018 census showed only 3 per cent of Pacific people are employers or self-employed, compared to 16 per cent for all ethnicities.

That means they miss out on the general benefits of being employers – things like higher incomes, greater wealth and asset accumulation, autonomy and security.

Further, Pacific people and communities miss out on benefits that would come to them from New Zealand having more Pasifika employers. Pasifika businesses are more likely to employ Pacific people and so provide economic opportunities for the extended family and the Pacific community. Pasifika businesses bring positive community benefits as they are more likely to be aware of and consider the cultural differences of their employees, to reinforce knowledge and pride in Pacific cultures, and to present a positive image to the wider community.

While Pacific people are more likely to be working in low-paying jobs across all industries, there are areas of comparative advantage that we can focus on. For example, nationally, Pasifika are proportionately represented in construction, and that is the industry where they are most likely to be employers. A Treasury-commissioned report on the Pacific economy in New Zealand showed that employers/self-employed make up about 12 per cent of Pacific people working in construction, which is well below the rate for the general population (28 per cent). However, the construction sector has the highest number of Pacific employers/self-employed, making up almost a quarter of Pacific employers/self employed.

It’s a good starting point where we can look to make a positive difference, and there are also other pockets of opportunity. But first, let’s look at the effect Covid-19 has had.

Pandemic risk and opportunity

Bevan Graham, an economist at Salt Funds Management, pointed to the recent recession to show how the impact of an economic downturn can be unique to Pasifika communities.

“It was on us very quickly and it was very deep,” he says.

“Importantly, it was not borne of the usual build-up in economic imbalances that need to be corrected. That has seen a swift and sharp recovery as economic and social restrictions have been lifted, but it will take time for a full recovery.’

It is still true, however, that, as in all recessions and despite the best efforts of the Government, many firms haven’t and still won’t make it through. Those that do will emerge in a different shape as business owners look to lock in productivity gains achieved through the lockdown:

“Productivity gains have been missing in action in the 12 years since the Global Financial Crisis. There have been many reasons posited for this, from the obvious ‘Firms have used labour rather than capital to resource the growth of their businesses,’ to the ‘measurement problems’ we economists typically fall back on if we can’t explain something,” Graham says.

Graham thinks it’s different this time. Firms were thrust into having to work in a new way, embracing the use of technology and making critical assessments, often required in challenging times, of what tasks are important and what doesn’t need to be done. This aligns with the article I wrote in May about how businesses are changing their game plans post-Covid.

So businesses will come back more match-fit. The downside is in the labour market. While the unemployment rate didn’t reach the dizzying heights predicted during the worst of the pandemic, it is now 4.9 per cent, well above the pre-crisis level of 4.1 per cent.

The Government’s wage subsidy has been critical in avoiding the worst, but for some firms it just delayed the inevitable as temporary job losses became permanent. There may still be more of that to come as firms continue to adjust to the new reality and make the hard calls, so we are not completely out of the woods yet.

Many jobs have been and will continue to be regained, but the combination of firms not surviving and others locking in the productivity gains means getting back to full employment will be hard work and will take time.

Unfortunately, Graham says this is impacting our most vulnerable workers disproportionately: the low- and unskilled, particularly those in sectors that will take the longest to recover, like hospitality and other tourism-related businesses. This is scary for Pasifika, whose latest unemployment rate is 9.6 per cent and rising, compared to the Palagi rate of 3.7 per cent, which is down from the previous quarter.

The good news is as the recovery continues, opportunities will emerge, and these will require a skilled workforce to ensure their success. The Government’s commitment to a significant investment in trades and apprenticeships in Budget 2020 is targeted at this.

The Government also allocated $22 million in Budget 2020 to Auckland Pacific Skills Shift to provide micro-credentials to Pasifika people working in the building and construction industry, upskilling them and increasing their value.

It’s not going to be easy or straightforward, but there is a real opportunity here as we come out of this crisis to build our resilience for the next one.

Plans for growth

By 2026, Pacific people will potentially be 30 per cent of the Auckland working population. The best current data suggests there are about 4000 Pasifika sole traders, making up just over half of all Pasifika businesses, while 38 per cent of Pasifika businesses have two to five staff, 10 per cent have six to 19, and 1 per cent have 20 or more.

The PBT recently shifted to become an economic development agency that provides support and resources to Pasifika businesses and sole traders to “improve capability and prosperity, and fuel growth”.

Chair Tevita Funaki (also CEO of thefono.org, a major Pasifika healthcare provider) told me: “It’s all about growing and developing businesses and entrepreneurs.”

Nearly half their client base is in the service industry, about 15 per cent in tourism, and 8 per cent in construction (construction accounts for 25 per cent of Pasifika employers/self-employed).

Minister for Pacific Peoples Hon Aupito William Sio said at the PBT Awards: “Those that we honour with awards tonight are exceptional, they’re risk takers and put everything on the line for a belief and a vision for a better future. Our aim … is to help support the growing population of Pacific people in New Zealand by supporting the development of businesses which drive meaningful impact for the growing Pacific community and New Zealand.”

Over 2019 the Pacific Business Trust developed its new strategy. Strategy is all about choices, including how to use limited resources, and Tevita told me they decided to focus on three industries where they could make the biggest difference: construction, digital and creative.

Jason Leung-Wai, the economic development expert, warned me that while there are satisfying, well-paid jobs in all industries, there are dangers in being employed in low-skilled jobs in industries where there are limited or no prospects of moving up the occupation ladder.

The PBT is targeting this very problem in construction, digital and creative.
A good illustration is how they secured funding from MSD to contract more than 300 unemployed Pasifika into jobs on the City Rail Link project. They are also focusing on moving Pasifika from unskilled to skilled jobs, from skilled jobs to being supervisors and managers, from managers to self-employed, and from self-employed to employers. Success will be when Pasifika are proportionately represented in the construction sector as employers/self-employed and managers.

Disciple Pati is an example of a star inhabiting a Pasifika business ecosystem, and construction is looking very promising. What about digital?

Award-winner MYRIVR is one example, and another is MakaNet, the only Pasifika-owned and -operated ISP in Aotearoa. Their unique offering is a great price for unlimited fibre, but being Pasifika-owned and -led also makes a difference.

Demonstrating cultural understanding with Pasifika clients has boosted trust when pitching to Pasifika homes and businesses. Their countrywide broadband service covers urban and rural areas, from fibre to satellite, for all Kiwis.

It must be tough taking on the behemoths in the ISP world, but MakaNet’s Niuean-born and raised founder/CEO Emani Lui has had a vision of providing high-quality, affordable broadband to communities since 1999. Most of their clients are from south Auckland where the firm is based, but their client base is growing and broadening out, including into the US.

Lui told me that: “Being agile with refined processes helped us during the lockdown to connect people with fibre in less than two days.” Lots of homes had never had broadband services, or used mobile data only, and relied on WiFi hotspots in libraries, schools, cafes or workplaces. The lockdown prompted working from home and online learning, which forced families to get connected in a hurry.

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Lui tells an exciting story: MakaNet is showing signs of being the frictionless and borderless digital company we hear so much about. Their company was originally established here in 2015 to acquire satellite bandwidth for wholesale to the islands. That journey evolved into a partnership with some local Kiwis that created a homegrown satellite ISP for rural and remote New Zealand.

Lui’s own ISP on Niue is experiencing good growth on the back of a recently launched high-throughput satellite delivering reliable service and high-quality performance that covers most of the Pacific and East Asia. MakaNet continues to explore opportunities in the Pacific region while helping communities get connected in Aotearoa.

MakaNet staff are predominantly Niuean, and their aim is to promote more Pasifika youth into the telco industry, but to also build a base of stay-at-home subcontractors, especially for their support calls and sales. They also take tertiary students studying technology as interns during their holidays.

Key to the future

So what are the three reasons why Pasifika businesses are fundamental to New Zealand prosperity post-Covid?

1. The Pasifika population is growing fast and is heavily skewed to young people, with many of them being digital natives.
2. Pasifika youth are also creative – they are drawing on their experiences and culture and, combining this with their talents, are building global products and brands.
3. Considering the current position of Pasifika in the labour market, there is a lot of potential for better outcomes, with the construction sector a good place to start.

Success breeds success, and it’s plain that young Pasifika people share the same aspirations as everyone else to create and build businesses, and this is being actively supported by the Pacific Business Trust and others.

Disciple Pati, Emani Lui and many others are part of a shift: Pasifika are claiming their place in the New Zealand business community.

Kevin Jenkins is a founder of www.martinjenkins.co.nz and writes about the intersection of business, innovation and regulation. He is an advisor to the Pacific Business Trust.

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