Valuing Access To Work - NZIER
Valuing access to workAn NZIER report commissioned by the Blind Foundation for the Access AllianceFebruary 2017What we do is accommodate any employee, whether they are disabled or not. Every employee gets what they need. Whenit comes to people with disabilities, it may be assistive technology or services. Even if you’re not disabled – if there issomething you need in order to make your job more productive, you would get it.Unnamed IBM Executive, 2007
About NZIERNZIER is a specialist consulting firm that uses applied economic research and analysisto provide a wide range of strategic advice to clients in the public and private sectors,throughout New Zealand and Australia, and further afield.NZIER is also known for its long-established Quarterly Survey of Business Opinion andQuarterly Predictions.Our aim is to be the premier centre of applied economic research in New Zealand. Wepride ourselves on our reputation for independence and delivering quality analysis inthe right form, and at the right time, for our clients. We ensure quality throughteamwork on individual projects, critical review at internal seminars, and by peerreview at various stages through a project by a senior staff member otherwise notinvolved in the project.Each year NZIER devotes resources to undertake and make freely available economicresearch and thinking aimed at promoting a better understanding of New Zealand’simportant economic challenges.NZIER was established in 1958.AuthorshipThis paper was prepared at NZIER by Michael Bealing, Todd Krieble and DanielPambudi.It was quality approved by John Ballingall at NZIER.L13 Grant Thornton House, 215 Lambton Quay PO Box 3479, Wellington 6140Tel 64 4 472 1880 econ@nzier.org.nz NZ Institute of Economic Research (Inc) 2012. Cover image Dreamstime.comNZIER’s standard terms of engagement for contract research can be found at www.nzier.org.nz.While NZIER will use all reasonable endeavours in undertaking contract research and producing reports to ensure theinformation is as accurate as practicable, the Institute, its contributors, employees, and Board shall not be liable (whether incontract, tort (including negligence), equity or on any other basis) for any loss or damage sustained by any person relying onsuch work whatever the cause of such loss or damage.
Key pointsPurpose and scopeThe Blind Foundation commissioned NZIER to analyse the economic impact ofimproved access for people with disabilities (PWD). Two scenarios were considered: Scenario 1 models the impact of increasing employment among PWD toshow what might happen if the unemployment rate of PWD was equal tothe national unemployment rate. Scenario 2 models the impact of an increase in productivity throughimproved educational outcomes for people with disabilities, which willenable them to increase their income levels.We did not consider the impact of increasing labour force participation for PWD thatare not participating in the labour force. Improvements in accessibility may encouragegreater labour force participation by PWD. The potential benefits of increasing thelabour force participation rate are not included in our estimates.We also discuss improvements to accessibility in the context of tourism. The tourismindustry has a large and growing market for accessible tourism. Accessibilityimprovements to the built-environment reduce the barriers to participation in work,leisure and tourism.Finally, this report discusses the issues and approaches to determining the costs ofincreasing accessibility.This is a hypothetical examination of ‘what could be’ if PWD, in time, participated inwork to the same degree as the total workforce. The displacement effect of a largegroup of new workers is not considered. PWD realistically would only graduallyincrease the labour supply as educational outcomes, new technologies and anincreased level of accommodations took effect and the number of jobs increased overtime. We also expect that any changes to accessibility requirements for employerswould be introduced with an adjustment period to phase-in the changes.Findings 925,000 working age New Zealanders have a disability(ies). 40,000 PWD are unemployed. 184,000 PWD are not active labour market participants. The rate of unemployment for people with a disability is 50% higher than theunemployment rate of the total workforce. Decreasing the unemployment rate for PWD from (9.2%) to the national rate(6.1%) would reduce the number of people on benefits by 14,000. The absorption of 14,000 workers into the labour market over several yearswould not be a major adjustment given that the number of people employedincreased by 51,700 from 2014 to 2015.NZIER report – Valuing access to worki
If jobs were readily available, and no one was displaced from work, equalisingthe unemployment rate for PWD to the national rate would add 1.45 billionto real gross domestic product. If jobs were readily available, and no one was displaced from work, the fiscalsavings from reducing the unemployment for PWD to the national averagewould be 270 million per annum from social support payment. The cumulative 10-year fiscal saving in this scenario to the social supportranges between 2.9 billion and 3.0 billion. The costs of equalising the unemployment rate for PWD depend on theinterventions required for PWD to achieve an ‘accessible journey’ to work andaccessibility at work. Improved education outcomes, new technologies and an increased level ofaccommodation provide the potential for getting more PWD into active labourmarket participation, both for those already looking for work and the largergroup of PWD not currently looking for work. Overseas experience suggests that more attention needs to be given to thecosts of improved access for PWD so that the most practical and beneficialactions are taken first. The summarised set of maximum potential benefits is:Maximum potential benefits from employment and education scenariosScenarioIncrease inemployment(people)Increase inreal GDP( million)Increase in realhouseholdconsumptionFiscal savings fromreduced benefitpayments( million)( million)Scenario 1:equalisingemploymentrates for PWDwith the nationalrate14,000 1,454 1,139Scenario 2:increased labourproductivity ofPWD by 2%through bettereducationaloutcomesN/A 862 608 270 in the first year 2,900 over 10 years*N/A*Allowing for annual CPI adjustments to core benefit payments.The results of the two scenarios are not additive. They were modelled as separate economic shocks.Next steps The ‘size of the prize’, in terms of gains to GDP and reduced fiscal costs, meanthat improved accessibility for PWD is worth further consideration by policymakers.NZIER report – Valuing access to workii
There is a broad understanding of the types of barriers to employmentexperienced by PWD, but only a limited amount of detailed research into whatmight be the effective policy interventions. More research and policy development is needed before the cost ofinterventions can be estimated and compared to the benefits. The New Zealand Government has encouraged the use of the socialinvestment approach for developing policy interventions. There is benefitfrom using the social investment approach because of the recent integrationof data sets relevant to PWD and their outcomes. The range of interventions to support PWD into work will require businesspartnerships with education, transport, health and disability supportproviders, to achieve an ‘end to end’ result for PWD.NZIER report – Valuing access to workiii
Contents1.Objectives and scope . 12.Organising framework. 33.Employment statistics . 44.Employment and education scenarios . 64.1.The impact of increasing the employment rate of PWD . 64.2.The impact of education . 95.Tourism and accessibility . 116.Barriers to work. 137.Aggregate cost estimates of equalising access for PWD. 177.1.Conceptual challenges . 177.2.Budgeted disability support examples. 187.3.Who is best placed to make decisions? . 188.Next steps. 209.References. 21AppendicesAppendix A . 23FiguresFigure 1 An intervention logic for improved incomes for PWD . 3Figure 2 Unemployment rate . 5Figure 3 Not in the labour force . 5Figure 4 The value of the employment effects . 7Figure 5 Disability spending compared to unemployment spending . 8Figure 6 Highest qualification with and without a disability . 9Figure 7 The impact of increasing the labour productivity of PWD. 10Figure 8 Disability and age . 11Figure 9 Tourism forecasts . 12Figure 10 Proportion of PWD with single or multiple impairments . 13Figure 11 Self-reported impact of a disability on looking for work . 15Figure 12 CGE models cover the whole economy . 23TablesTable 1 Definitions of key terms used in labour statistics . 4Table 2 Scenario for increased employment . 7Table 3 Additional costs of a disability . 14Table 4 Barriers to employment . 15Table 5 Costs for selected disability related programmes . 18NZIER report – Valuing access to workiv
1. Objectives and scopeNZIER was commissioned by the Blind Foundation to analyse the economic impact ofthe potential outcomes from improving access to employment for people withdisabilities (PWD).PWD are more likely to be not employed or in part-time employment than peoplewithout disability (PWoD). This impacts on the living standards experienced byindividuals with a disability and government spending due to the fiscal liability of longterm welfare dependence.The Government has set a goal of reducing the burden of long-term welfaredependency by reducing the number of people requiring income support.1 Improvingaccess to employment for PWD is one way to reduce their dependency on welfare andimprove their living standards.This report explores three key themes:1.2.3.The economic impacts of increasing employment rates among PWDThe impact of adopting new accessibility standards on markets like tourismThe cost of changes to accessibility standards.ScopeThis report provides a high-level assessment of the potential benefits and costs ofimproving access to employment for PWD. In-depth policy analysis of anyimprovement in accessibility and lowering barriers to labour force participation is outof scope.The Blind Foundation has commissioned the analysis of two scenarios: Scenario 1 models the impact of increasing employment among PWD toshow what might happen to the economy if the unemployment rate ofPWD was the same as the national unemployment rate. Scenario 2 models the impact of an increase in productivity throughimproved educational outcomes for people with disabilities, which willenable them to increase their income levels.The results of these scenarios capture the market effects of increased consumerspending by PWD due to increased employment and incomes. We also discuss thepotential role of accessibility improvements in attracting tourists, such as the elderly,who put a high value on accessibility.Finally, we discuss the challenges in, and approaches to, determining the costs ofchange.This is a hypothetical ‘what-if’ examination of the benefits of PWD being able toparticipate in work at the same rate as the total population. Jobs do not magicallyappear. The displacement effect of increasing the labour supply (i.e. the possibility thatnew PWD entrants into the labour force ‘take’ jobs from existing labour marketparticipants) is not considered here. PWD, as a cohort, would only gradually denceNZIER report – Valuing access to work1
their participation in the labour market as educational outcomes, new technologiesand job growth permit.A detailed assessment of the cost of any change to a given accessibility standardrequires specific information about the degree of change from the status quo that anew policy or standard would require. Examples are provided to indicate the level ofcosts and benefits associated with changes to accessibility standards.NZIER report – Valuing access to work2
2. Organising frameworkImproving the social and economic well-being of PWD depends on having anintervention logic that is supported by a causal chain of effective interventions. TheMartin Prosperity Institute (2010) has examined the case for intervention in Ontarioand Deloitte Access (2011) considered the case for intervention in Australia. Bothexaminations show the magnitude of the opportunity and the key points forintervention. Neither of these reports considered the costs of the interventions. Aframework for understanding the intervention logic is set out below.Figure 1 An intervention logic for improved incomes for PWDDisability supportNew technologiesTransport &built environmentIncreased level ofaccommodationsEducationEmploymentAccess & completionof a higher levelof educationAccess tolabour forceparticipationHigher incomes for PWDSource: NZIER, Martin Prosperity InstituteThe Martin Prosperity Institute (2010) found that removing barriers to labour forceparticipation for PWD would increase the GDP per capita of the province of Ontario by 600 per annum. Deloitte Access (2011) found that closing the gaps by increasing thelabour force participation rate and decreasing the unemployment rate of PWD wouldincrease Australia’s GDP by A 12 billion in 2011.NZIER report – Valuing access to work3
3. Employment statisticsUnderstanding the jargonLabour market statistics use some specific jargon. Understanding the jargon isessential for comprehending the scenarios and results discussed in this report. The keyterms are defined in Table 1.Table 1 Definitions of key terms used in labour statisticsKey termsDefinitionWorking agepopulationAll people aged 15 years and over.Labour forceThe employed plus the unemployed.Not in the labourforcePeople are defined as not participating in the labour force when they:-are retired-have personal or family responsibilities such as unpaid houseworkand childcare-are attending educational institutions-are permanently unable to work due to physical or mental disabilities-are not actively seeking work.UnemployedPeople who are participating in the labour force but are not employed duringthe period of the Household Labour Force Survey.UnemploymentrateThe percentage of people in the labour force that are not employed at the timeof the Household Labour Force Survey.Labour forceparticipation rateThe percentage of the working age population that are in the labour force.DisabilityIn the Disability Survey, disability is defined as “an impairment that has a longterm, limiting effect on a person’s ability to carry out day-to-day activities.“Long-term” is defined as six months or longer. “Limiting effect” means arestriction or lack of ability to perform.People were not considered to have a disability if an assistive device (such asglasses or crutches) eliminated their impairment.Source: NZIER summary of definitions used by Statistics New ZealandUnemployment rate among people with disabilitiesThe latest available official data from 2013 shows that there are around 925,000working age PWD in New Zealand2. Responses to the Statistics New Zealand DisabilitySurvey 2013, show that 42,000 PWD aged from 15 years old were participating in thelabour force, but unemployed. In comparison, 416,000 were in part-time or full-timeemployment.PWD are more likely to be unemployed or not participating in the labour force thanPWoD. The rate of unemployment of people in the labour force with disabilities is closeto twice the rate among those without disabilities (see Figure 2).2Statistics New Zealand Disability Survey 2013 labour force statisticsNZIER report – Valuing access to work4
Figure 2 Unemployment rate% of labour force10%9.2%8%5.3%6%4%2%0%PWDPWoDSource: NZIER analysis of the Disability Survey 2013Figure 3 shows that 31.8% of PWD aged from 15 to 64 years3 were defined as not inthe labour force. Unsurprisingly, PWD are more likely to be defined as not participatingin the labour force because one of the criteria for not being in the labour force includespermanent disability. But disability may not be the reason that they are notparticipating in the labour force. PWD may also be attending education courses, takingon personal or family responsibilities, not actively looking for work or in earlyretirement.Figure 3 Not in the labour force% of people aged 15 to 64 years’ old35%31.8%30%25%19.3%20%15%10%5%0%PWDPWoDSource: NZIER analysis of the Disability Survey 20133People aged 65 years and over are excluded because retirement is a reason to be not participating in the labour force.NZIER report – Valuing access to work5
4. Employment and educationscenariosWe used a computable general equilibrium (CGE) model to quantify the impact of ourtwo scenarios4. The scenarios are intended to establish the potential ‘size of the prize’.They indicate the upper limit of the potential benefits before considering the practicalchallenges and the cost of mitigating the challenges.CGE models are our preferred method for assessing economic impacts and are usedextensively in New Zealand and internationally. As a recent commentary notedregarding CGE modelling, “a well-designed model that is used by skilled practitionersto shed light on issues the model was designed to illuminate can make a significantcontribution to policy debates and decision making”.5In the two scenarios run, there is an assumption that jobs are readily available – whichis not the case. The scenarios provide a counterfactual ‘what if?’ By quantifying the‘what if’ scenarios, insights are gained into whether improving labour market andeducational outcomes for PWD is worthy of more detailed investigation by
NZIER report – Valuing access to work iii There is a broad understanding of the types of barriers to employment experienced by PWD, but only a limited amount of detailed research into what might be the effective policy interventions. More research
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