Making critical space for key workers in our increasingly unaffordable cities

Declining housing affordability is threatening the quality and viability of essential public services in Sydney and Melbourne. The low and moderate income workers who perform critical roles in health, education, emergency and community services (termed ‘key workers') are struggling to rent or purchase housing close to the communities they serve. This is impacting recruitment and longer-term staff retention and resulting in inequitable cities. We urgently need to improve how we plan for and address the housing needs of our essential workforce.

The situation of key workers in Sydney and Melbourne

There is no single definition of what a ‘key’ or ‘essential’ worker is. The term has traditionally applied to lower paid professionals in healthcare, education, policing, community welfare support and emergency services. But internationally, for policy and program purposes, it also extends to para-professional and support staff within traditional key worker industries and workers in locally significant industries such as tourism and tertiary education. In the context of the Covid-19 Pandemic, the popular usage has broadened to include commercial cleaners, delivery drivers and workers in essential retail services such as supermarkets [1].

Our AHURI-funded study examined evidence of housing affordability and the housing situations, commuting patterns and residential moves of workers in 21 essential occupations in Sydney and Melbourne. Incomes for these occupation groups examined sit within the second and third income quintiles for each metropolitan region (putting them in the low to moderate income range). We found that:

• 52,000 (20%) key workers in Sydney and 37,000 (17%) in Melbourne are in housing stress (spending more than 30 per cent of their gross household income on housing)
• 31,000 key workers in Sydney and 18,000 in Melbourne are living in overcrowded homes
• Around 40% of the Enrolled Nurses, commercial cleaners, aged and disability carers and child carers renting within 10kms of the CBD are paying rents that put them into rental stress

This demonstrates that key workers cannot afford to live in the locations where their services are most in demand.

Data from the Census shows that over a third of key worker jobs in Sydney and Melbourne are located within approximately 10kms of the CBDs. Key workers are required in those locations to support the large population base and daily influx of workers, and to service major hospitals and other community infrastructure. However, inner and middle ring suburbs of each of these metropolitan regions are not affordable to purchase and, in many cases, to rent on a key worker salary.

Consequently, key workers in Sydney and Melbourne are more likely than workers across the labour force generally to live in outer suburbs and cities outside the major metropolitan regions, including Wollongong and Geelong, and to commute more than 30kms to work. This may be more pronounced in the future - between 2011 and 2016, inner subregions of both metropolitan regions lost key worker residents, while outer suburbs and smaller cities and regions immediately outside each metropolitan region experience net gains

The effects of housing stress and long commutes on key workers and essential services

Housing affordability stress and long-distance commuting have negative effects on overall health and wellbeing [2-9]. Research has also linked long-distance commuting to poorer work performance as a result of fatigue, worsened mood and increased incidence of illness [4]. Our research found that these effects can be greater for key workers owing to the nature of the work they perform.

Key worker jobs are frequently performed over long shifts, during anti-social hours, and in high-stress situations. Housing stress and insecurity and long-distance commuting significantly add to the stress and fatigue key workers already accrue at work, exacerbating burn-out. That, in turn, has implications for the long-term retention of experienced workers and overall service quality.

In healthcare, emergency services and some community welfare support roles, workers who live too far from their jobs are unable to be on-call to cover shifts, deal with emergency situations and respond to spikes in service demand [1]. This means that where key workers can afford to live, relative to where they work, is critically important for the functioning of essential public services.

International policy responses to the key worker challenge

While the Covid-19 pandemic has raised public and policymaker awareness of key workers, the issues they face are not new. The term ‘key worker’ was popularised in the UK in the late 1990s and 2000s when public service providers began experiencing staff shortages in expensive housing market areas including London, Surrey and Cambridge [10-13].

With wages set at the national level, and opportunities to work in a wide range of locations, research found that access to housing, particularly to purchase, was a significant reason for teachers, nurses and law enforcement officers to seek jobs in less expensive housing market areas or to leave their profession [10] [13].

The Key Worker Living Program, introduced in England in 2004, was designed to assist key workers to access housing through a range of measures including equity loans to assist with purchasing; access to shared ownership (whereby a household purchases a proportion of a home they occupy); and access to subsidised rental housing (with rents set at less than 80 per cent of market rent) [14].

In England, government support for assisted home ownership and the provision of discounted rental housing for low and moderate income workers has continued, with eligibility now more broadly linked to income rather than occupation [16]. Planning requirements for developers to contribute affordable housing as part of most new developments (under S106 of the Town and Country Planning Act in England) is an important source of new affordable housing supply, some of which is allocated to local essential workers.

In the US too, there have been longstanding programs at the city, state and federal level to assist key workers to access housing. They have predominantly focused on assisting workers in specific occupation groups to purchase through down payment and purchasing cost assistance [15] [16]. But government programs have also supported the construction of new affordable rental housing for local workers and specific occupation groups through capital grants and low interest rate loans to developers [17].

These specific programs sit alongside other initiatives to support access to housing for low and moderate income groups more broadly, including inclusionary zoning policies which require developers of market rate housing to contribute to affordable housing as part of their developments, and programs to assist moderate income earners to purchase homes.

In Australia however, there has been little policy attention given to key workers and, to date, initiatives to create affordable housing for key workers, although significant, have generally been small in scale and sporadic.

What’s needed to ensure key workers can access housing close to jobs in Australia’s major cities?

Evidence of the housing challenges key workers are facing in Sydney and Melbourne means we need to better consider key workers in planning our cities. State governments, in particular, can play a leadership role in addressing the key worker challenge by:

• Defining what a 'key worker' is for planning, policy and program purposes
• Requiring local governments to explicitly consider key workers in identifying housing needs in their local area and providing guidance and support to do so
• Setting clear goals or targets for the provision of affordable housing for key workers.

It is also critical that planning policies and funded programs be introduced to support the scaling up of affordable housing for key workers across rental and ownership tenures. Government-led initiatives to support this scaling up should include:

1. Direct funding support for the construction or acquisition of affordable housing to be made available to eligible key workers at costs that are affordable relative to wages.
2. Leasing of public sector land to developers and non-profit housing providers on the condition that it is used to construct affordable housing for key workers.
3. Reform to zoning requirements to enable major key worker employers to use their own land to develop key worker housing e.g. by allow residential development with consent in non-residential zones (e.g. special use zones) but only for the purpose of affordable key worker housing.
4. Introducing a requirement that developers include a proportion of affordable housing for key workers in their developments (inclusionary zoning) when land is rezoned for higher densities within major health and education precincts or within a 1km radius of hospitals.
5. Developing new programs to provide capital grants, low cost development finance and or access to land for organisations committed to developing key worker housing and or housing models that can secure affordability over the long term, such as community land trusts.
6. Developing and or further expanding a government-led shared ownership program whereby eligible key worker households can purchase a share of a new property which they then occupy as an owner occupier. This can offer many of the benefits of ownership while reducing the cost. Eligible properties could include those delivered through the mechanisms outlined above.

While governments could also consider demand side support measures, or subsidising transport costs and worker wages in expensive housing market areas, those responses will not address the root problem of a lack of affordable housing supply within our metropolitan regions where key workers are critically needed. Public and policy support for the types of initiatives listed above is essential if our cities are to be safe, liveable and equitable into the future.

ACKNOWLEDGEMENTS

This article is based on research funded by the Australian Housing and Urban Research Institute (AHURI).