Govt's 'starting out' wage rubbished

04:55, Oct 09 2012

Shop, restaurant and bar owners have welcomed lower wages for teenagers.

However, unions and opposition parties say the Government's plans for a teenage wage will undercut all workers and drive young people overseas.

The Government said today it would introduce a pay rate for 16 to 19-year-olds - a minimum $10.80 an hour - for  the first six months of a job.

New Zealand Retailers Association spokeswoman Louise Evans McDonald said 71 per cent of its members had wanted to see the reintroduction of youth rates when surveyed last year.

"The starting out wage is nothing to do with the work of 16 to 17-year-olds being considered of lesser value but everything to do with recognition that where limited skills, particularly in a first-time worker, are brought to the table, they by and large require a substantial investment of training and support from the employer," she said.

"The starting-out rates fairly reflect that investment."


Today's announcement was a "step in the right direction" to encourage employers to hire more young workers as wages were one of the biggest overheads for a retail business after rent, she said.

"If you consider that many small retailers are taking a very low wage for themselves out of their business and cannot afford to take on another employee at $13.50, they may be tempted to take on a 16 or 17-year-old after school or at weekends at $10.80."

She did not believe youth workers would be exploited or hired only for six months, and she disagreed that an increase in youth employment would come at the expense of older workers.

"Most employers are responsible and wouldn't even think of this," she said.

"While there will be some adjustment, we believe that, in retail at least, this will create opportunities for more jobs for young people - mostly part-time roles."

New Zealand Hospitality Association chief executive Bruce Robertson said he thought the changes were a good idea.

"It gives young people a chance at a first job at a rate that is affordable for the employer," he said.

"A lot of young people when they start out have no experience. They're not used to going to work every day, so their productivity is low."

Employers and Manufacturers Association employment services manager David Lowe said everyone concerned about New Zealand's youth unemployment rate should be celebrating the changes. 

"Without an incentive, an employer with a choice between an experienced worker and an inexperienced worker will choose experience every time."

Abolishing the youth rate had "hurt the very people its supporters were trying to help", he said. 

EMA spokesman Gilbert Peterson acknowledged that 80 per cent of the adult minimum wage was "not a very high rate of pay", but most young people were not supporting children or spouses. 

"It is only for six months until they get into the way of work. I think it's got far more positives than it's got negatives," he said.

A spokeswoman for Foodstuffs - which owns the Pak'n Save, New World and Four Square brands - said the new scheme appeared easier to administer than the current new-entrants minimum wage.

Michael Kupiers 17, began fulltime work a month ago and said the changes would not affect him as he earned more than the minimum wage already.

"I'm not really fussed because I don't have much expenses anyway."

However, some of his friends were not impressed with the changes, with one describing them as "pretty stink", he said.


The new pay rate, to be called the 'starting-out wage', will not be compulsory but 40,000 teenagers will be eligible.

It will kick in on April 1 next year, and the Government estimates it will create up to 2000 youth jobs in the first two years.

The starting-out wage will be set at 80 per cent of the adult minimum wage, which is $13.50 an hour.

It will apply for six months after starting with a new employer. The move was National Party policy before the election last November.

Waimakariri MP and Labour Minister Kate Wilkinson said the new wage was one of a series of steps to help get people into jobs after the global financial crisis.

"The new starting-out wage will create demand for young people by giving employers a real incentive to take them on."

She said it would help young and inexperienced workers to get a foot in the door.

The wage will be available to 16 to 17-year-olds in their first six months of work with a new employer, 18 to 19-year-olds entering the work force after six months on a benefit and 16 to 19-year-olds in recognised industry training courses involving at least 40 credits.

Those training or supervising others will not be eligible and must be paid at least the adult minimum wage. The previous Labour government abolished the youth minimum wage in 2008.

The new wage will replace the new-entrants minimum wage that applies to 16 and 17-year-olds for up to three months and the training minimum wage, which applies to employees aged 16 and over who are doing a recognised industry training involving at least 60 credits a year.

The Service and Food Workers Union has rubbished the move, saying a lower pay rate will not create jobs or give young people skills.

National secretary John Ryall said the adult minimum wage was already too low.

"There is no evidence that reducing the pay rates for some workers to do the same job creates jobs or gives young workers skills," he said.

"This is simply about providing cheap labour in a country where wages are already too low and low-paid workers of all ages are struggling to survive."

Labour leader David Shearer said the new wage would drive more young New Zealanders to Australia.

"Under National's watch, 65,158 young Kiwis aged between 18 and30 have headed to Australia looking for better jobs and opportunities - 21,733 this year alone. Paying lower wages will just drive more of them offshore."

Prime Minister John Key was content with New Zealand being second best and a low-wage economy, Shearer said.

Labour would pay employers to take on apprentices, raise the minimum wage and foster innovation through research and development tax breaks, he said.

"We will create wealth through innovation and by supporting our businesses. We can't sit back and continue to see manufacturing jobs being shed - 40,000 have already been lost over the last four years," he said.

Green Party co-leader Metiria Turei said the new wage would undercut all workers and rip off young workers.

"This policy is an incentive for bad employers to hire and fire young workers and is likely to see real wages for young workers drop significantly," she said. 

The starting-out wage was part of the Government's Skilled and Safe workplaces announcement today.

The Government also announced details today of an annual occupational outlook report that will show expected future demand for key occupations.

That will help young people decide what to study, Tertiary Education, Skills and Employment Minister Steven Joyce said.

"The occupational outlook will provide information on job prospects for around 40 occupations, as well as setting out likely income ranges, and qualifications needed."

Joyce said the progress report showed government actions had helped "lift labour productivity, drive sustained economic growth and deliver higher wages and living standards".

It is the third of six reports on progress towards the Government's Business Growth Agenda.

The report looked at government targets in the area, including:
* 85 per cent of 18-year-olds will have NCEA level 2 by 2017.
* 55 per cent of 25 to 34-year-olds with a level 4 qualification or above in 2017.
* Reduce the number of long-term beneficiaries on jobseeker support by 30 per cent to 55,000 by 2017.
* Reduce workplace fatalities and serious injuries by at least 25 per cent by 2020.
* By 2016, 85 per cent of skilled migrants will be employed in a job that matches their skills and qualification.
* Maintaining New Zealand's top-four ranking in OECD countries with lowest share of people who are unemployed for six months or more.