Disparity in wages for young workers is under the spotlight for dozens of Youth MPs who have descended on Wellington to take part in the 10th Youth Parliament this week.
The issues raised during the three-day event often reflect the key issues that youth consider relevant, with motions expected on the climate crisis, mental health and reducing the voting age among other things. Yet it is a mock Member’s Bill which zeroes in on the glaring gap in wages for young people compared to adults that will be a prime focus of debate for the 120 Youth MPs, each assigned a spot for a corresponding MP in the Parliament.
Selected through the traditional biscuit tin ballot, the Minimum Wage (Starting-out wage abolition) Amendment Bill will go through the mock legislative process. Why is this legislation important to young people and what are the stakes?
The legislation seeks to address what is considered to be age-based discrimination in the Minimum Wage Act 1983, which currently allows for a starting out wage of 80% of the current adult minimum wage for youth aged 16 - 19.
“Amending the Minimum Wage Act to remove the starting-out wage will mean that all young workers are paid fairly,” explained Youth MP William Bell-Purchas.
“The starting-out wage is both unfair and ineffective. What has happened is that young workers who are employed on a starting-out wage are paid unfairly, at a rate much lower than what is acceptable in Aotearoa today.”
As it stands, the starting-out wage raises an issue of discrimination under section 19(1) of the New Zealand Bill of Rights Act 1990, as the wage makes a distinction on the basis of age and/or employment status.
With inflation in New Zealand recently hitting a three-decade high, the cost of living weighs heavily on the minds of many, and wages are a hot topic. In April, the Government announced a minimum wage increase from $20 to $21.20 per hour, and an increase in the starting-out and training minimum wage from $16 to $16.96 per hour.
Despite the increase, $16.96 is still well below the current living wage of $22.75 per hour, which itself is set to increase to $23.65 in September.
While the mock Bill would repeal the starting-out wage for those between the ages of 16-19, it does not go as far to repeal training wages, which are set at 80% of the current minimum wage. The Bill reduces the age of workers eligible for the training minimum wage from 20 years to 16 years.
Critics of the Bill say it doesn’t go far enough, with training wages still only 80% of the minimum wage. A Youth MP for Christchurch East, Alex Hewison, said he intended to push for the training wage to be repealed as well.
“If we want to enact change in our workforce, then we need to act. Not half-heartedly, not with unambition, but with the intention of creating an equal workplace, with equal opportunity starting out. Incentivising our young adults into employment.
“The Bill is a start, but 80% of minimum wage is by no means an acceptable rate to be paying those entering employment,” he explained.
The Youth MP shadowing National’s Chris Bishop, Hamish Ross, is less concerned on this front. However, he said he looked forward to hearing further debate on the finer details of the Bill.
“I think the key difference is the starting-out wage clearly discriminates due to age and only age, whereas the training-wage is in place for untrained labour and also takes into account the employer's cost for the training.”
Where did the starting-out wage come from?
In 1994, the first use of what was known as the ‘youth rate’, a minimum wage of $3.68, was introduced for workers aged 16 or 17. Older workers at the time were paid $6.125.
Prior to this, there was no requirement for a minimum amount to be paid to employees younger than 20.
Training wages were introduced in 2004 to encourage industry training. To be eligible, trainees must gain 60 recognised credits per year, and be aged at least 20.
In 2013 the youth rate was rebranded as the 'starting-out' rate in an attempt to encourage employers to hire young people at a rate below the minimum wage.
Employers can pay this rate for 6 months before being required to pay the minimum wage.
Why is change needed?
Since its introduction, there has been relatively low uptake of the rate. Most employers offer the adult minimum wage for all workers despite their age.
In the 2021 review of the minimum wage, the Ministry of Business, Innovation and Employment (MBIE) found that only four and half thousand people aged 16 to 17 were being paid the starting-out wage. Youth MP Alex Hewison contends that this is proof the wage is not working as intended.
“Despite a rise in the minimum wage, unemployment has continued to fall, now at the lowest in recorded New Zealand history,” he said.
“The starting-out wage is not justified, well-intentioned, or supportive of getting our youth into employment. Everyone who is doing the same work, should receive the same pay.”
With the majority of employers opting to pay the minimum wage, workers aged 16 - 19 who are being paid the starting-out wage face being paid less than their peers on the basis of age, despite having similar roles or experience.
Young people remain one of the most exploited demographics in New Zealand’s workforce. Many are students, and it's especially difficult while studying to work enough hours to earn a decent wage. With the rising cost of living, the cards are already stacked against youth, before they even fully enter the workforce.
The President of the University of Canterbury Student Association, Pierce Crowley, said the UCSA supported the proposed changes.
“The starting-out wage, where it has been implemented, has been used as justification by employers to underpay young people with similar skills to, or carrying out the same role as their older counterparts,” Crowley explained.
“Many students, both at High School, and University, are put in situations where they are underpaid solely on the basis of age. This amounts to clear discrimination, and is in contravention of section 19 of the New Zealand Bill of Rights Act 1990, and also section 21(1)(i)(ii) of the Human Rights Act 1993.”
While Crowley backs the Bill, seeing it as a step in the right direction, he feels that the proposed changes do not go far enough.
“While we support the changes to the starting wage, we note that the training wage still puts workers at a disadvantage and remains unchanged in this Bill. Trainee workers still face the same cost pressures that other employees face, and it is wholly inequitable for them to be paid less.”
One University of Canterbury student shared her experience with the starting-out wage. Her first job in 2020 paid her the starting-out wage of $15.12.
“It was my first job, cleaning, and they said they would pay me the starting-out wage due to the fact that they would have to put time into teaching me how to do my job. It seemed reasonable as I was 16 and new to working.”
Despite the employer's justification for the use of the wage, the student received very little training for her work.
“I was told what to do on the first day, then left to my own devices from there. People were around if I needed help, however I found I was doing just as much work as my so-called “managers”.
“While I was working there, they hired an 18-year-old into the same role as me. She was started on the minimum wage of $18.90, despite this being her first job too.
“I feel as though the starting-out wage allows for employers to underpay young workers who are doing just as much work as those above them, a lot of the time. I ended up leaving that job soon after as I felt like I was being discriminated against just for being younger.”
According to the Youth MP shadowing Labour’s Guarav Sharma, Aidan Donoghue, it should be simple.
“If two workers produce the same output in the same amount of time, they deserve to be paid the same rate.”
There's little doubt the experiences of a young person early in their career will reverberate throughout their whole working life. Donoghue said that scrapping the starting-out wage would provide the best foundations for future employment.
In an economy facing tough times, and with economists warning that inflation will only get worse, fair pay is fundamental. Combined with housing and rent prices, as well as the rising cost of living, young people are facing a catalogue of financial hardship, particularly those making the difficult transition into financial independence from being supported by parents or caregivers.
Given this bleak outlook, supporters of the Bill consider it long overdue to address the disparity between the starting-out wage and the adult minimum wage.
“The current living wage for a worker in Aotearoa to afford the necessities is $22.75. The minimum wage falls below this at $21.20, and the starting-out wage is just over two thirds of the living wage at $16.96,” noted Youth MP William Bell-Purchas.
“Young people are struggling on the minimum wage in the current conditions, and employers shouldn’t be authorised to pay even less.”
Youth entering the workforce for the first time are often faced with navigating a confusing new system. Employers can take advantage of the inexperience of new workers to push unfair contracts, punishing hours, and poor pay, because of a system which leaves room for businesses to interpret the rules to their benefit.
Donoghue thinks the wage disparity is part of a bigger problem of youth exploitation in Aotearoa’s workforce.
“Young people due to no fault of their own are usually the least informed when it comes to employment law and have the least experience for how a workplace should run or complaint procedure.”
Bell-Purchas echoes Donoghues sentiment.
“Legislation in Aotearoa is often lacking youth voice and representation, meaning laws passed often negatively affect or fail to address issues facing young people.”
What happens if the Bill is passed?
The Bill is expected to be hotly debated during this week’s sitting of Youth parliament when Youth MPs from a wide range of diverse backgrounds will get the chance to share their perspective on the starting-out wage.
On the final day of the Youth Parliament (Wednesday), the Bill will be put to a vote. Bell-Purchas is optimistic that the focus on the starting-out wage can be carried over from Youth Parliament to the agenda for members of the real Parliament, in order to set youth employment law on a trajectory for fairness. Certainly, many Youth MPs are expecting some movement on this issue, as the political race heats up ahead of next year’s general election.
The 2022 edition of Youth Parliament has been running from the 1st of March and concludes on the 31st of August with the two-day Youth Parliament sitting of the house held on 19-20th of July.
*Matteo Zhang and Louis Collins are members of the Youth Press Gallery which takes the role of independent media reporting on Youth MPs and Youth Parliament 2022. This article can be republished freely on your platform subject to the following conditions:
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