Division over 'starter' wage

21:12, Oct 09 2012

The Government's support partners are divided over its plans to introduce a "starting out wage", with the Maori Party saying it will do nothing to address poverty and ACT hailing it as a win for youth and employers.

The new rate of 80 per cent of the $13.50 adult minimum wage, or $10.80 an hour, will kick in on April 1.

It will apply to 16 and 17-year-olds and some 18 and 19-year olds and will replace the current new entrants and training wage.

It will not be compulsory but will apply for six months and about 40,000 teens will be eligible.

A Department of Labour survey earlier this year found 63 per cent of employers did not support paying young workers less, but employers cautiously welcomed the move yesterday, particularly industries with many youth workers.

Maori Party MP Te Ururoa Flavell said the policy would do nothing to address poverty in New Zealand.

"If you do equal work, you should earn equal pay. That's what we should all be working towards."

The Maori Party wanted an increase in the minimum wage to ensure those in work could survive on their incomes, he said.

"We do not support the creation of a low wage economy. Our concern is that the proposed approach will incentivise employers to employ the cheapest form of labour; it will not address youth unemployment and it may have significant negative impacts on Maori."

An ACT blog said although the policy was not as bold as the party would have liked, it was a step in the right direction.

"When Labour abolished the youth minimum wage in 2008, youth unemployment soared." A Labour Department study had found it resulted in a loss of up to 9000 jobs.

"Removing the youth minimum wage priced young people out of the market," the party said.

Hiring young people was more of a risk for employers because most had little or no experience and did not have the life skills or maturity of older workers.

Critics would say youth workers were stealing jobs off older people but ACT said young people were more likely to spend their money, leading to the creation of new jobs.


For Fina Weight, 16, the "starting-out" wage of $10.80 an hour before tax makes dog-walking look good.

Fina, a Wellington High student, is unemployed, aside from odd baby-sitting jobs and walking a relative's collie - "And I get $20 for that".

She expects casual arrangements such as these to become more sought after after April 1, 2013, when the starting-out wage takes effect.

Fina will be looking for a job next year to save for a school trip to Nepal, which would be more difficult if her new employer decided to pay her the starting-out wage.


"I won't get paid as much, so I'll have to work more, and then I'll have less time for school and things like that."

The wage "doesn't really seem worth working if that's all you're going to get paid . . . If you're doing the same thing as an older person, it seems unfair that you get paid a lot less."

Sacred Heart College student Harriet Willis, who turns 17 this weekend, has a part-time job at Commonsense Organics in Lower Hutt.

She works up to 10 hours a week at $14 an hour - 50 cents more than the current minimum wage.

The possibility she would get the new starting-out wage would discourage her from changing jobs after April 1.

"Even if I was slightly unhappy in my job, or I wanted a change of scene, I definitely wouldn't change jobs now - though I guess that's not a very good argument because lots of people don't have jobs at all."

The starting-out wage could encourage employers to take on young people, "but maybe not for the best reasons", she said.

"They might be hiring them just because they're cheap, and I don't think that's a good thing for youth."

Companies used to a high turnover of staff would be tempted to hire employees they could pay less.

"There's always going to be a big supply of 16 and 17-year-olds that want part-time work."

She would be disappointed to be paid less for the same work as an older, more experienced person.

"I feel like I'm doing just as good a job as other people, so I wouldn't be happy about being paid less."


New 'starting-out' wage ($10.80 an hour):

Three groups will be eligible unless they are training or supervising others:

16 and 17-year-olds in first six months of work with a new employer

18 and 19-year-olds entering the workforce after more than six months on benefit

16 to 19-year-old workers in a recognised industry training course involving at least 40 credits a year.

Current new entrants' minimum wage ($10.80 an hour): Applies to employees aged 16 and 17, except for those who have completed 200 hours or three months of employment in the workforce, whichever is shorter, or who are supervising or training other workers.

Current training minimum wage ($10.80 an hour):Applies to employees aged 16 and over who are doing recognised industry training involving at least 60 credits a year.

Adult minimum wage ($13.50 an hour): Applies to all employees aged 16 and over who are not new entrants or trainees.

Those aged 15 and under (no minimum): There is no statutory minimum wage for employees who are under 16 years old.