There’s been outrage (and rightly so) today at the TV3 piece last night saying that National was planning a youth rate for 15 – 24 year olds.
In just hours, a Facebook page dedicated to fighting the move has gained more than 1,000 supporters.
It’s not that we haven’t had youth rates before. National had youth rates for all workers under 20 at 60% of the adult minimum wage until Labour became government in 1999. Did they create jobs? No.
When Labour became Government in 1999, one of their first moves was to abolish youth rates for 18 and 19 year olds and increase the 16 and 17 year old rate to 80% of the adult minimum wage.
Later on, Sue Bradford’s youth minimum wage bill, which effectively abolished the youth minimum wage for 16 and 17 year olds was passed into law with Labour’s voting power behind it.
But we’ve never had “youth” rates (that I am aware of) for workers over 20. I suspect that the Minister made a blunder in the TV3 piece last night by saying that youth were “15 – 24 year olds”
15 – 24 is a measure used by the UN, the World Bank and several countries to describe “Youth” as a group eligible for special treatment under the law and in society. In New Zealand, the 15 – 24 year old age group is used to measure “youth” unemployment. It is also used in things like road accident statistics and a range of other measures. But this doesn’t mean this age group are eligible for discrimination in the way that youth rates discriminate.
Paying someone less because of their age, gender, race or sexuality is discrimination under NZ law. We wouldn’t tolerate older workers being paid less, so why is it different for younger workers?
I suspect that the government is really looking at the 16 – 19 year old group for a return to minimum youth wages. It’s a way to exploit the competitive advantage of a 30% wage differential with Australia that Bill English says is a good thing.
But this would not only be one step backwards to 16 and 17 year old youth rates, but a giant step backwards to last Century when the National Government had 18 and 19 year olds on 60% of the adult minimum wage.
Cutting wages never creates jobs. We’ve gone there before and now look what a mess we are in with low wages, an increasing skills gap and some of the longest working hours in the OECD.
I despair.
Imagine this. You’re a youth and an employer is willing to hire you for $10/hr. But you can’t and instead have to receive the equivalent of $4.5/hr on the benefit. That is the real serfdom. I don’t know how the Labour Party goes about its hiring decisions but I can’t recall hearing about an upward sloping demand curve for labour. But I suppose we can add the idea of derived demand reflecting marginal revenue product to the list of basic concepts Labour MPs don’t understand.
I despair also, low wages will never create jobs. Couple low wages with the 90 day “fire at will” rule, must have a lot of employers laughing all the way to the bank. Unless a young worker being paid $10.00 an hour can either walk or ride a bike to a job across town, there is very little chance of him or her making any progress financially.
Its about providing incentives to want to take them on because as an employer I can assure you if I have to pick between an unskilled youth and an unskilled adult with some work experience and are paying both the same i’ll pick the adult hands down.
We have had 16/17 year olds working for us and it is a nightmare they take twice as much supervision and effectively need to be shown how to work, in a busy operation I’d like my staff to give these kids a chance but they don’t have time and its not fair on me to expect them to.
So whether it is upping job ops or youth wages something does need to be done and its time labour took its head out of the sand.
Why doesn’t labour get someone (if there is anyone) with experience being an employer to front this issue, or better still Darien why don’t you spend a day supervising a business with 16-18 year old employees and see if your not ready to hit the bottle afterward!
@Edwin : so what is a youth? Or doesn’t it matter in your ACT party land?
@Ben : so what you are really saying is having a youth minimum wage will displace older workers from jobs they are currently doing under adult minimum wage. And please, I say again : I have been an employer. I’ve employed and managed a whole lot of staff. I paid them for the job requirements, not their age; trained them properly, and if they didn’t perform they were properly managed.
Edwin misses the point that if a job isn’t worth paying a living wage for, it is probably not a job worth doing.
An employer who cannot afford to pay a living wage should consider changing their business model or perhaps even shutting up shop. That would create space in the market for a business owner more competent and able to add value and generate the level of revenues required to pay workers fairly.
@Ben : and if you’re offering to have me spend a day supervising young workers – happy to take you up on that.
Ben typifies the low level of management ability and lack of people management skills present in too many NZ businesses today.
True story: hundreds of NZ students flying to Australia in the holidays annually, to do hospitality jobs over there.
- Can get real jobs.
- Have a holiday in the sun.
- Make enough money to have fun on holiday plus come back to NZ with savings after a few months.
- Each A$ saved is worth over NZ$1.30.
- Casual hospitality jobs frequently pay over A$20/hr in unionised workplaces (= NZ$27/hr)
What can one say. NZ youth are pretty smart.
And once they get a taste of living, working and earning in Australia, when they finish their qualifications or trade training over here…
@Colonial Viper : Yep : $20NZ hour minimum wage in Oz. And I mean minimum. So many industries have a higher minimum wage.
Ben, you show a complete lack of understanding of the issue mate.
You seriously need to go here http://www.rwjf.org/files/research/thepoorpaymore2009.pdf download the document and turn to page 19!
This government has cut ECE funding, the result is they are already setting kids up to fail in 12 – 15 years time.
From the same document
Establish a Realistic Minimum Wage (it is a US document, but the same applies here)
Increasing the federal minimum wage beyond the current level of $7.25 per hour would serve to raise the economic status of the poor. Even with the recent increase, the minimum wage today is about 40 percent of the average wage for non-supervisory employees, compared to the 1950’s and 1960’s when it was roughly 50 percent.
To return to that 50 percent level would mean an hourly wage of around $9.25 per hour. Current analyses suggest that modest increases in the minimum wage do in fact increase the wages of low-income workers earning more than the minimum wage, without significant job losses. Even a wage of $9.25 an hour is inadequate to meet basic needs.
Reducing the wages of young people would be, quite simply, a criminal act!
Great comments Viper.
Chur, mate.
@Darien Fenton I’m not sure how I’d define a youth. Certainly those under 18 and possibly 20. I agree the Ministers comments are likely a slip-up that has been taken out of context.
Sure, Australia has a higher minimum wage. But at last count NZ’s minimum wage is higher as a proportion of the median income at 57% compared with Australia’s 54%.
@Colonial Viper Whilst I agree on the need for a living wage I think it is far better to have it achieved through something like a negative income tax, rather than the crude mechanism that exists in the minimum wage.
18 and 19 year olds are considered adults under the law in every other respect – giving them youth wages is insulting!
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GRRRRRR
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Edwin you’re reaching mate, especially since Australia’s median income is way higher than NZ.
Who is feeding you these stats anyway?
@Colonial Viper I got them from this Herald article:
http://www.nzherald.co.nz/employment/news/article.cfm?c_id=11&objectid=10633120
What do you mean feeding me these stats? Do you think I’m an ACT staffer or something?
@Colonial Viper It is entirely appropriate to have a higher minimum wage if a nation has a higher median income. When growth is strong it indicates the economy could probably support an increased minimum wage with little effect on involuntary unemployment. However it is wrong to suggest NZ could support such a high minimum wage as Australia has, given our lack-lustre economic performance.
Colonial Viper
I know people that do this then come back to study. They plan to finish and then go back. So much more money over there.
They are trying to convince me to go over once I finish. I cannot of course. I have to stay here and work once finished. I don’t have that choice, but it is hard to get many people to see that. I am actually jealous of people that have that freedom. NZ is expensive and wages are way too low.
Well, I agree with you on a Universal Income/Negative Tax but are you willing to pay the taxes needed to support it?
But why does our economic performance Suck? Oh, that’s right, it’s because our managers (PDF) suck.
Interesting debate, heres a curveball though the industry is agriculture and these 16 and 17 year old are making more than I do with two degrees? so why aren’t they more motivated if its about the money?
Gosh Darien…you were the ultimate employer and anyone challenging your point of view must be ACT?
If you could consider that the majority of NZ employers are small to medium businesses where those that are employed need to be fully productive, willing and engaged…and that Ben is right…no employer will take the 16-20 year old with no experience over an older person with some experience.
Thanks to your introduction of the Employment Contracts Union dictated Hate the Employer doctrine…you’ve created a generation of employees who feel they’re owed something as soon as their contract is signed.
I note another poster calls the 90 day trial “fire at will” (not the case at all – all fair employment processes still need to be followed by the employer) rather that than the “I know I’ve got you by the short and curlies” option introduced by Labour, where every employer I know was too terrified even to have a performance discussion with their borderline employees.
It’s incredible how good an employee can present at interview, including their well faked references with phone contacts (DDIs to mates or family members) manage to be indispensable for 3-8 weeks and then suddenly turn into the spawn of satan…bragging to their co-workers and on their Facebook pages how they’re going to ‘do’ their employer as soon as they’ve behaved badly enough to be managed out of the business.
We have few large employers here and one who used to employee 150, cut to 130… then to 100 and has moved production to China…despite the fact that he pays more than minimum wage…he’s fed up with constant flow of mediation and employment claims.
Colonel Viper how can all successful business operators be poor managers of people? This chap was able to sell NZ manufactured product NZ and world wide, win exporter awards and business awards, negotiate with multiple countries and their reps, set up in Australia and China…but doesn’t know how to ‘manage people’ and should ‘move aside for someone more competent’? His stated reason for growing Chinese operation is 100% NZ employment demands and the attitudes of GenY…he won’t employee them at all…no matter how little he could get away with paying them.
When talking about how high min wages are in Australia…it’s slightly disingenuous not to mention the very high rents (potential tenants bidding against one another for right to rent at open auctions on the lawn) and the higher cost of living.
I was a youth once, was paid minimum wage, worked my butt off, learned heaps…am grateful for the multiple experiences I had and now employ 5 (at more than min wage!) and live very comfortably…why don’t some of you posters try and create a job for someone else as well! That’s what NZ needs…not the grass is greener whingers and gimme, gimme, gimmes.
Although I guess in this forum, you’re appealing to a certain type…and not those who consider that taking on a job places expectations on them as well.
“(not the case at all – all fair employment processes still need to be followed by the employer) ” If you are correct, why did it require a law change???
“why don’t some of you posters try and create a job for someone else as well!”
Wow, big generalization to assume all people who post here don’t create jobs, either by working hard for someone else or running a business.
“Although I guess in this forum, you’re appealing to a certain type…and not those who consider that taking on a job places expectations on them as well.”
You are including yourself in this as you were attracted to the forum?
@ debsnz If you employ 5 people good, but at least take the time to find out that the law isnt the Employment Contracts Act – that was Nationals law last century. Also it’s not true that fair processes have to be followed under the 90 day fire at will law. Thats why its called that. But perhaps i shouldnt be telling you that. Also the personal grievance law was changed by the Nats in 1990.
There’s something about the youth rates idea that doesn’t make sense to me. I was looking at what the Act party say about them and they argue that when young people have the same minimum wage as older people they get passed up for jobs because an employer can get a more experienced worker for the same price as someone with no experience at all.
But then the Act party goes on to insist that the minimum wage is just that a bare minimum. Anyone with any skills or experience can negotiate for more money so even young people getting a youth wage initially can command more if they work hard.
These statements are contradictory to me. If the minimum wage is only a bare minimum and people with experience can get more then why do they seem to think there’s so many older experienced people getting the same amount of pay as teenagers or people in their twenties. Surely a younger less experienced person is cheaper to hire even without a youth wage?
I was interested to hear Phil Reilly this morning slamming the decision to overturn the broadband contracts on the grounds of how can businesses have planning certainty etc etc. He has a valid point (provided the awarding of the said contracts was always kosher).
However he failed to apply consistency by having no problem with employment laws being rushed under urgency which took away a lot of certainty for those who are employees in NZ.
“as older people they get passed up for jobs because an employer can get a more experienced worker for the same price as someone with no experience at all.”
So much for extending the retirement age
@kimberley : that’s a very insightful comment. And Tracey – point well made.