9 Oct 2012

New teenage workers' pay rate set

9:14 pm on 9 October 2012

The Government is going ahead with its plans for a starting-out wage for young workers.

Legislation will be introduced that will result in eligible 16- to 19-year-olds being paid 80% of the minimum wage, or $10.80 an hour, for the first six months of a new job.

The wage is an extension of the new entrants' wage that at present applies for three months.

Those eligible for the starting-out wage include 16- and 17-year-olds in their first six months of work with a new employer, and those aged 18 and 19 entering the workforce after more than six months on a benefit. It will also apply to all those aged 16 to 19 who are in industry training courses.

Liam, who is 17, works off-and-on as a contractor in the school holidays, earning the minimum wage of $13.50 per hour. He says he works just as hard as an adult - and deserves to be paid the same.

But Labour Minister Kate Wilkinson says the scheme will provide a real incentive for employers to take on young people and help inexperienced workers get a much-needed foot in the door.

"It will give these young people opportunities to earn some money, to gain some skills and to get work experience."

Business New Zealand chief executive Phil O'Reilly told Radio New Zealand's Checkpoint programme on Tuesday the scheme will benefit young people who are being excluded from the labour market due to a lack of skills.

"We have a lot of young people unemployed and a lot of them are Maori and Pasifika, and we just need to get them activated into the workforce.

"Because when we do, it's much more likely that they'll get the next job, they'll pick up those skills and they'll pick up a better pay. That'll be good for them and their families later on."

The Employers and Manufacturers Association expects the new wage will be a huge incentive for businesses. Its employment services manager, David Lowe, says firms will be encouraged to hire teenagers and give them their first steps on the employment ladder.

Big step backwards - union

Unions are not so sure that the Government's scheme will benefit young workers.

The United Union, which represents low-paid young people, says a return to a youth rate is a massive step backwards. National director Mike Treen says the changes will not fix youth unemployment.

"What it may do is displace 2000 adult workers and put them on the dole queue to create a couple of thousand jobs for young people - it's not going to create a single job."

Mr Treen says making labour cheaper does not create work - "all it does is cheapen labour for the employer so they make more profit out of it".

The union plans to fight the change.

The Council of Trade Unions believes some employers will use the Government's plans for a starting-out wage as a means to secure cheap labour.

CTU secretary Peter Conway told Checkpoint some young people will be taken advantage of and it will be the same employers that are always pushing to get migrant workers in for cheap labour.

"This is really a policy approach from the Government that is admitting defeat that it cannot actually stimulate the economy."

Unfair on young, say Opposition

Opposition parties say the Government's scheme is unfair to young people.

The Labour Party describes it as the reintroduction of youth rates, saying it confirms National's focus is on cutting wages, rather than job creation.

The party's spokesperson on Labour issues, Darien Fenton, says young people are going to find themselves on a lower pay rate for longer.

"Under the existing policy, they only have a starting wage once and then every job after that they get the adult minimum wage. Under this announcement, every new job they start they will have a six-month period on a youth minimum wage."

The Green Party says it is also discriminatory to expect 18- and 19-year-olds to take a lower wage because they have been on a benefit.