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The Reserve Bank on Inequality in the Labour Market

Not much seems to be going on at the Reserve Bank of NZ in terms of research output these days, so when it does publish an article & features it on the website, it makes one curious. Their latest Research Note starts out with a strong statement, "Ethnic minorities experience consistently poor labour market outcomes across countries" (see page 2).

Hmmm. So lets take a look "across countries", starting with Malaysia, where there are three main ethnic groups: Malays at around 62%, Chinese at around 30% and Indians at around 8%. In other words, Malays are the majority whereas Chinese & Indians are minorities.

So who has the best labour market outcomes? Professor Snodgrass, at the Harvard Institute for International Development, says (below), "Malaysia's largest group (the Malays) is politically dominant but has far lower average income & wealth than the Chinese minority". Labor market outcomes are better amongst the minority Chinese.

How about crossing to Africa? The Tutsis in Rwanda formed a prosperous minority group, experiencing more favorable labor outcomes than the majority Hutus. Historians report that, "The Tutsis as cattle-herders were often in a position of economic dominance to the soil-tilling Hutus". As the Rwandan state developed, the Tutsis were apparently favored by the Belgian colonial administrators, fueling resentment. It is argued that these kinds of economic & political factors led to one of the world's worst ever genocides.

As for the Pacific Region, the Hawaiian State Government published a report on "Labor Market Impact During COVID-19". In terms of unemployment rates, it reports that, "Asians alone are most affected at first but have recovered relatively well. White alone are affected less at the beginning of the shut down, but their unemployment rate has plateaued. Native Hawaiians and Pacific Islanders are affected similar to other races".

Why make this point? Since most scholars would argue that it's a mistake to make sweeping generalizations about minority groups & labour market outcomes, as per the RBNZ Research Note. Better to look at each place as a Case Study and work out the particular historical & cultural features of that country that have led to disparities. In Malaysia's case, as in Rwanda's, as in a vast number of other countries in the world, without an appreciation of their own unique characteristics, one is unable to understand how different minorities have fared in different societies.



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