John Key’s track record on raising wages – 6. Youth Rates

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Continued from: John Key’s track record on raising wages – 5. The Minimum Wage

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6. Youth Rates

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When Labour was elected into government in 1999, replacing the highly unpopular Shipley-led National administration, one of their first actions was to radically reform the  Youth Rate,

1. From 2001 to 2008 the adult minimum wage applied to employees aged 18 years and over. Prior to that, the adult minimum wage only applied to those aged 20 years and over.
2. From 1 April 2008, the adult minimum wage applies to employees aged 16 years and over, who are not new entrants or trainees.
3. The youth minimum wage applied to employees aged 16 and 17 years. From 1 April 2008, the youth minimum wage was replaced with a minimum wage for new entrants, which applies to some employees aged 16 or 17 years.
4. The training minimum wage was introduced in June 2003.

See: Dept of Labour – Previous minimum wage rates

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Source

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It did not appear to unduly impact on unemployment, which consistantly tracked downward in the 2000s, until the down-turn caused by the Global Financial Crisis began to impact on our economy, in 2007/08.

On 9 October, Labour Minister Kate Wilkinson announced that National intended to introduce a new Youth Rate, to take effect in April, next year. The rate would be set at $10.80 an hour – compared to the minimum rate of $13.50 an hour currently, and would include 16 to 19 year olds.

As Scoop.co.nz reported,

“That equates to $10.80 an hour, or $432 before tax for a 40-hour week. From April next year, the ‘Starting Out Wage’ will apply to 16- and 17-year-olds in the first six months of a job, to 18- and 19-year-olds entering the workforce after spending more than six months on a benefit, or 16 to 19-year-olds in a recognised industry training course.”

See: NZ teens face $10.80 an hour youth wage rate

It is doubtful if National’s Youth Rate will actually create new jobs. More likely, a drop in youth wages will simply create more ‘churn’ in employment/unemployment numbers.

As David Lowe, Employment Services Manager for the Employers and Manufacturers Association, inadvertently revealed,

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

See: Starting-out wage will help young people onto job ladder

So there’s no new job for the  younger worker – s/he is merely displacing an older worker. Which probably results in  older workers joining the migration to Australia.

End result; a loss of skill and experience for New Zealand, and a gain for our Aussie cuzzies.

Nice one, Mr Key. Remind us when you took on the role of staff recruiter for Australia?

On top of this, we have this bizarre rationale from Kim Campbell, CEO of the Employers and Manufacturers Association, who is arguing that young people should be paid less because they have less to pay for. I kid you not.

She said,

“Remember these people are not raising a family or running a household on this money –nobody expects them to – but it does give them some money to get started on.”

Campbell’s remark are offensive on several levels.

Firstly, National’s intention to return to  Youth Rates for 18 and 19 year olds, as well as 16 and 17 year olds, is simply unreasonable. These people are  young adults, and those studying  at  polytech and  University Students will soon be earning less,  even while having to pay Student fees; course-costs; and living expenses like rent, food, power, and other financial committments.

Secondly, 18 and 19 year old are as able to have families as their older counterparts.

Thirdly, by what logic is it of  Ms Campbell’s business  that “these people are not raising a family or running a household on this money“?! It’s none of her damned business what 18 and 19 year olds spend their wages on.

Conversely, does that mean Ms Campbell will encourage companies to pay a higher,  living wage,to those workers who do happen to have families?!

Yeah, right.

If  National has a secret agenda to motivate more young people to head overseas, such a plan will succeed beyond their wildest dreams.

18 and 19 years olds – old enough to get married; old enough to get drunk; old enough to get killed in a warzone – but not old enough to be paid the same adult rate as a 20 year old?

National should take note;  it’s true that 16 and 17 year olds can’t vote.

But 18 and 19 year olds can – and do. I bet they just can’t wait to vote at the next election.

And precisely how does this raise wages, as per Dear Leader’s promises?

Next chapter: 7. Part 6A – stripped away

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Addendum

In June last year  Prime Minister John Key said the prospect of a new youth rate was unlikely,

“I don’t think there’s a high probability. Whether we’d actually bother embarking on that it’s far too early to say.”

Source: Govt reintroduces youth wage

Ten months and one election later, preparations are under way to legislate.

Is ten months “to early to say“?

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