New wage scheme aimed at youth unemployment
The adult minimum wage has risen 25 cents to $13.75, but it has been overshadowed by a controversial new youth wage geared towards lowering the country's highest youth unemployment rate in more than 30 years.
The Starting Out wage, which has been labelled by some as "discrimination", will allow people aged 16 to 19 to be paid 80 per cent of the adult minimum wage, or $11 an hour for the first six months of their employment. After that they must get the adult minimum wage. It begins on May 1, a month later than originally planned.
New Zealand youth unemployment reached 30.9 per cent last year, with 41,500 15 to 19-year-olds seeking work.
Ministry of Business, Innovation and Employment figures show workplace participation has fallen, and the usual rise in youth participation last December did not take place.
Eligible workers include 16 and 17-year-olds during their first six months of work with a new employer, 18 and 19-year-olds who were on a social welfare benefit for six months or more, or 16 to 19-year-olds training and gaining at least 40 credits in a recognised industry course.
Minister of Labour Simon Bridges said it would "incentivise" employers to give youth a chance.
Global evidence showed young people out of employment or education were likely to have a lifetime of poorer outcomes, Bridges said. "The advantages for young people are pretty clear; they get a job."
Labour's abolition of the youth wage from the 1990s contributed to the loss of 9000 jobs, he said.
"It's discrimination to complacently stay with the status quo, with more people languishing on the dole queue."
The wage will replace the New Entrant wage, used by 2 per cent of employers.
Bridges said the new wage was less complex than the New Entrant wage. MBIE expects about 2000 employers to take advantage of the Starting Out wage.
Labour's labour spokesperson Darien Fenton said the new youth wage was discriminatory and draconian and would not make jobs "magically appear".
"It's not going to achieve youth employment."
The youth wage scheme from the 1990s did not work, and the Starting Out wage would not work now, Fenton said.
But Employers and Manufacturers Association senior manager of advisory services David Lowe said the wage would give youth a job they would not otherwise get.
Politicians and commentators spent too much time disagreeing, rather than coming up with solutions, he said. "If it's going to help one person get a job then do it."
Many employers who participated in an EMA survey said a lower wage would encourage them employ youth, Lowe said.
McDonalds New Zealand national communications manager Simon Kenny said union discussions would dictate whether the fast food giant used the Starting Out wage. McDonalds currently employs youth on the adult minimum wage, but has not used the New Entrant wage.
Foodstuffs, the supermarket chain which owns Four Square, New World and Pak'n Save, was still waiting on the details of the scheme, but group communications manager Antoinette Shallue said it would welcome any new initiative that reduced barriers to employing young and inexperienced people.
Countdown national communications and public affairs manager Kate Porter said the supermarket chain had an existing wage structure, so the Starting Out wage would not apply to it. Additionally, Countdown employees were paid above minimum wage, and first-time employees made up a fairly small part of its staff, she said.
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