Starting out wage a boost for SMEs

Last updated 05:00 28/03/2013

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In the December 2012 quarter, youth unemployment rose to historic levels in New Zealand, reaching 30.9% for people aged between 15 and 19, according to Statistics New Zealand.

OPINION: This reflects the youth unemployment crisis in Europe and the rest of the developed world.

Getting that first step onto the job ladder has always been a challenge. It requires someone willing to invest in training and mentor people to establish foundational work skills - and adapt the style of their workplace to accommodate the needs of a young trainee.

For many young Kiwis, that first job opportunity comes from a local small business. This is in spite of the fact that, for a small business, an inexperienced employee is a proportionally greater burden than a more mature employee.

That’s likely to be a big reason why most New Zealand SMEs support the reintroduction of the starting-out wage, due to come into force on 1 May.

According to the March 2013 MYOB Business Monitor, a national survey of over 1000 SMEs, run by Colmar Brunton, 50% of SMEs support the re-introduction of the youth wage rates. Only 14% are opposed.

The Minimum Wage (Starting-out Wage) Amendment Bill found particular favour in areas where youth employment opportunities are strong. This included the retail and hospitality sector, where 65% of business owners and managers were in support, and the manufacturing and wholesale industry, where 58% were in support.

For SME employers, the reintroduction of youth rates doesn’t mean an opportunity to exploit young people, as opposition parties have contended. That suggestion is insulting to New Zealanders who work incredibly hard to provide employment opportunities for local people.

Instead, the starting-out wage provides assistance for a business that is prepared to take on a young person, invest in their training and skills development, and give them an opportunity to gain entry into the wider workforce. 

With youth unemployment reaching crisis levels in New Zealand, something had to change to make employing a young person more sustainable for employers.

For the SME community - which provides almost a third of all jobs in New Zealand - the starting-out wage will go some way to offsetting the investment they make in giving young Kiwis a chance to take their first step in employment.

Scott Gardiner is an executive director of MYOB New Zealand Limited. MYOB has recently launched a free online guide for employers featuring information, tools and tips at

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