SUE BRADFORD (Green) Link to this
I move, That the Minimum Wage (Abolition of Age Discrimination) Amendment Bill be now read a first time. At the appropriate time I intend to move that this bill be referred to the Transport and Industrial Relations Committee. My goal in putting forward this legislation is simply to get rid of the current legal discrimination that sees young 16 and 17-year-old workers paid less than people doing exactly the same job, solely because of their age. There was a time in the history of this country, which lasted for generations, when Māori were paid a lot less than Pākehā for doing the same work, purely because they were Māori. Nor were tangata whenua entitled to unemployment benefits, but that is another story. There was also a time, which also endured for generations, when most women were paid a lot less than men who were doing identical work, simply because they were women.
These days I imagine that all of us in this House look back in disbelief that such primitive attitudes were so acceptable and accepted. Yet we still have a situation in which the legal minimum wage for young workers is set permanently at a lower rate than for workers 18 years and over. At the moment the minimum pay for 16 and 17-year-olds is $7.60 an hour. That will go up to a princely $8.20 at the end of March. The minimum pay for everyone 18 and over is $9.50 an hour, which is due to rise to $10.25. All those pay rates are far too low. The national average earnings in our country in December 2005 equalled $21.29 an hour. The Australian minimum wage is currently set at nearly NZ$14 an hour.
If we compare the $21.29 or even the A$14 with our minimum rates, it should be easy enough to see why workers on the youth minimum rate of $7.60, or not much more, might feel somewhat aggrieved. After all, those young workers are carrying out real jobs that need doing. The work is not make-believe, and it is not training. They have to meet a job description and all their employers’ expectations in just the same way as do their colleagues aged 18 and over. Jobs at the local petrol station, supermarket, fast-food outlet, shopping mall, cinema complex, farm, or a multitude of other places are not there for fun or for training. Those jobs are for real. If anyone doubts me, they should take a quiet closer look next time they are being served or helped by a young worker.
There seems to be a myth embedded in some older people’s consciousness that if one is young, one is not worth as much. Yet how real is that myth? We are actually at our physical and mental prime when we are in our mid-teens. I hate to say that, being the age I am now. For much of human history that was the age at which we started having and supporting our children and going to war for our tribe or nation. Most young people have minds that are sharp and bodies that are quick and strong at that age, and they are more than capable of performing to a very high standard, especially in the so-called entry-level jobs. I believe that many businesses take on workers in that age group because they bring greater mental alertness and/or a high physical capacity to the job—a higher capacity than would older workers in, say, their 40s, 50, or 60s—
Bob Clarkson—or even their 70s; I agree with Mr Clarkson. Employers are not hiring young workers out of the kindness of their hearts; they are taking them on because they are as valuable to them as any other employees.
The argument is often made that young workers deserve to be paid less because they are new to the workforce and need lots of training. I would like to refute that on several grounds. Firstly, in this day and age many young people have already been at work since they were 14 or 15, and they have considerable experience in the workplace, and even in the same job, by the time they reach 16. Secondly, even where that does not apply, any worker, no matter what their age, needs training and orientation when they start a new job. All employers know that, and in this day and age I am sure that most of them are more than adequately equipped to bring new employees up to speed in as timely and supportive a way as possible. Thirdly, during the last few months, as I have been working on bringing this bill to the House, I have been surprised to discover just how many 16 and 17-year-old workers are not just at entry-level positions but are in fact in roles like supervisors or shift managers. These are people who might have been working for 2 or 3 years at a job, and who have been promoted to positions where they are managing and training other staff—a number of whom may well be on substantially higher wages. Is that fair? Does that make sense? Not at all.
Another argument used by those who staunchly believe young workers are literally worth less is that getting rid of minimum wage discrimination will mean employers will be reluctant to take on people in that age group, thereby adding to youth unemployment. Now, if I thought that was a reasonable expectation, it is unlikely that I would be pushing this issue as hard as I am. There is no question that young people suffered disproportionately from unemployment in the 1980s and 1990s, and I would hate to see us go back to the kinds of unemployment levels we had then. In fact, I take note of research, like that carried out by Treasury, and published in a 2004 report, that shows quite clearly that raising minimum wages for young people does not create or cause unemployment for young people. That is a myth. Many other factors cause unemployment to rise, but that is not one of them.
The Mayors Task Force for Jobs—which has done and will continue to do such wonderful work in the area of youth unemployment—said in a submission to Minister Ruth Dyson in late 2005 that minimum wage increases for 16 and 17-year-olds of 81 percent since 1999 “have not resulted in constraints on job creation or fewer opportunities for young people.” Instead, what higher pay rates actually do is increase worker productivity—a happy and reasonably well-paid worker will almost always be a more productive employee—and, at the same time, boost the amount of money going back into the low end of the New Zealand economy, thus helping to keep other workers in jobs, too.
Already, a good number of employers have policies not to pay less than the adult minimum wage to their 16 and 17-year-old staff. I take this opportunity to commend them for the respect they are paying to the worth and quality of their young employees, and I hope their fellow employers who have a less progressive attitude might take a closer look at the benefits those companies are achieving through a more enlightened approach. At a rough estimate, there are around 10,000 or more 16 and 17-year-olds in the workforce at present. The costs those young people face are no different from those confronting 18, 30, 50, or 70-year-olds. Food, clothing, and transport are just as expensive. There are no discounts for being young when young people go to the supermarket checkout or petrol station counter. Often young workers are still at school and helping to feed and clothe themselves and their families, because the income coming into the wider whānau is simply not enough.
Many young people are working long hours after school and on weekends just for reasons of survival. Teachers and principals express concern about the way in which that is affecting the ability of students to do their best at school. If those young workers were being paid more, they would not feel obliged to work such long hours at a time when getting the best possible education should be at the top of their career agendas. We live in a country where wages for many are far too low, and where the gap between rich and poor continues to widen. Those of us with a commitment to social and economic justice should be doing everything we can as MPs to boost minimum incomes and to close the aching gap between those who are paid a lot less than what they are worth and those who are paid plenty.
I understand that my bill tonight has the support of a number of parties in this House, and I would like to thank Labour, the Māori Party, New Zealand First, and United Future in advance for what I understand will be their support. It is great that we will be able to have the debate in the select committee and enjoy the opportunity to hear points of view from all sides of this issue in the months ahead. Should National and ACT choose to support the bill, I would be delighted. I realise that some members—even some in the supportive parties—may not be convinced by my arguments here tonight, but I believe that when they hear the voices of young people affected by the issue, and of those who work with them, they will become more certain about just how iniquitous it is to be paid less on the grounds of age alone.
I would like to finish by paying tribute to the unions and workers who have rallied, picketed, and marched over the last couple of months, and who are out there rallying and picketing tonight, in support of this bill and of a higher minimum wage for all workers in this country. They are the real heroes of this struggle, and I hope that before long we will be celebrating a small but vital victory in the long march towards genuine pay equity for all workers in this country, not just some.
Dr WAYNE MAPP (National—North Shore) Link to this
Sue Bradford certainly raised a series of what can only be described as emotional arguments. Her whole case—and it is in the bill—is built on the case that youth rates are a discrimination under the Human Rights Act 1993. I ask Ms Bradford this: can 16-year-olds vote? Can they enlist in the armed forces? Can they go to a hotel and drink? The answer to all those question is no. So in reality we do actually have proper and reasonable reasons why we have different rules for 16-year-olds, 17-year-olds, 18-year-olds, and so forth.
Sue Bradford’s second argument was that 16 and 17-year-olds have got the same life experience as older people, and that they actually bring more skills to the workplace than older people. Well, human experience tells us that that is not the case. Did not Ms Bradford watch television tonight? Did she not hear Mr Phil O’Reilly of Business New Zealand point out exactly the issue of additional training being needed for new workers? It is not just about skill; is it actually about life experience. The third argument she raised was that this bill will help schoolkids. I actually think that schoolkids should be studying.
The problem with the bill is that it is potentially and actually going to be a perverse incentive. The 16 and 17-year-olds, particularly those who would be taking on full-time work, will get a perverse incentive not to continue at school. Instead, they will try to get a job because of the increased wages. That is the wrong way to go. What we need to do is boost the skills and training of the youth of New Zealand. Frankly, that means going to a polytechnic, doing apprenticeships, going to university, or staying at school. We are talking, after all, about 16 and 17-year-olds—which is years 12 and 13. [Interruption] Mr Cosgrove probably remembers that as forms 6 and 7. So perverse incentives will lead to bad outcomes.
I wish to point out a crucial fact. Has the member considered, in an analytical kind of way, that the unemployment rate for youth in New Zealand, even today, is in fact 12 percent, compared with 3.4 percent overall. Does that not tell one something? Even in times of—and I admit it—high employment, people are still choosing older workers. Why? Because they are more experienced, not just in skills but in life skills. That is hugely crucial in the way we grow up. When I heard the Green member speak it was as if 16 and 17-year-olds have all the maturity of someone aged 21 or 22. Common sense tells us that that is simply not true. Indeed, that is precisely the reason we do not allow people of that age to drink—it is too risky, and they do not have enough experience. So those are the kinds of arguments.
Hon Clayton CosgroveI want to point out to the House, and indeed to that carping member, that this country has an incredibly difficult problem around productivity. Productivity in this country is low. We have heard members on the other side of the House go on about productivity. They talk about it all the time, but they simply do not know what it means to actually boost productivity. I just want to share some statistics with colleagues in the House. The truth of it is that the minimum wage in New Zealand is the highest as a percentage of average incomes than any other country we would like to compare ourselves to. In New Zealand it is basically 50 percent. It certainly will be once the $10.50 rate comes into effect. What is the case in Australia? It is 46 percent. That is as close as it gets. In the United States—it is quite low, admittedly—it is 32 percent. In Canada, a country that we regularly compare ourselves to, the average—because it is done on a provincial basis there—is 40 percent. In the United Kingdom, which has had nearly 10 years of a Blair Government—a Government admired by the Labour Party—it is 38 percent.
Members might say: “Obviously all those countries have got it wrong.”, but they have not. Every one of those countries is wealthier than New Zealand. Every one of those countries has higher productivity than New Zealand. So this bill is essentially a naive attempt to try to close the wage, wealth, and productivity gaps by artificially boosting minimum wages, and New Zealand First is guilty of succumbing to these emotional arguments, as well. New Zealand First has bought into the $12 argument.
Yes, they have. Do members want me to recite to the House the numerous items of guilt that New Zealand First has? No, that would take too long, so I will not bother.
The point is this. The reason each one of those countries is more wealthy and more productive is that they put the stress on boosting skills. Australia, for instance, spends more as a percentage of GDP on tertiary education—and by that I mean apprenticeships, polytechnics, and universities—than New Zealand does. That is why Australia’s economy runs faster. It has, in short, made a different choice. It has decided not to encumber its businesses with increased minimum wages. Australia says: “Let’s give the taxpayer the opportunity to spend that money on boosting skills, because that is the crucial thing that we have to do to boost productivity.” It is a lesson that members on the other side of the House simply do not get. So Labour, in a craven kind of way, caving in to its Green mates, has said: “Well, let’s send this bill to the select committee.” The truth is that sending the bill to the select committee ends up being the same as voting for it, finally. I will be very interested to hear how Labour deals with this.
The problem is if one artificially boosts minimum wages to levels that are, frankly, too high, one ends up reducing profitability, reducing opportunity, and reducing the ability to put more money into improving skills. Now, if the Government had a credible plan to spend some of its surpluses on boosting skills, which is the crucial thing to boost productivity, I would say: “Good on them!”, because I know that works. It works in Australia, it works in Britain, it works in Canada, and it works in the United States. Every one of those countries has a higher level of skills in its workforce than New Zealand does. That is why they are wealthier than New Zealand, and that is why they have higher productivity. They have not gone down the path of having an unsustainably high level of minimum wages as the means to close the income gap. It is simply a false way of doing it.
So I say to the Government that when one is talking about productivity, one has to do the things that will actually boost skills. That is most crucial for young people. I ask members to go back to that figure I mentioned earlier—12 percent youth unemployment. Why does that exist primarily? It exists because that 12 percent is unskilled. That 12 percent does not have the life skills, the technical skills, or the employment skills to get into a job. If we change that, we change their life skills.
Finally, I put it to members opposite that young New Zealanders make choices. People who take skills—an apprenticeship, university, polytechnic, and the like—know they are making a life investment. They know they are deferring the immediate gratification of higher wages. Why do they do that—something, I suggest, that everyone in this room probably did? They do it because they know there are higher incomes down the track. That is the way to boost productivity and to boost life skills for youth workers.
Hon RUTH DYSON (Minister of Labour) Link to this
Two words sprang to mind as I listened to that speech. One word is not allowed to be used in the House, so I will not even tempt fate; the second word is “irony”. There is huge irony in listening to a speech from a National member of Parliament who presided over a regime for nearly a decade when National’s skills strategy was to look to the stars and hope that the stars lined up with apprenticeships, which National scrapped, hope that the stars lined up with industry training, which National scrapped, hope that the stars lined up with tertiary education, which National stifled through reducing the funds provided to tertiary institutions and increasing the fees for students, and hope that the stars lined up with collaboration between business and unions, and that then the market would deliver skills. It is no wonder we inherited such a skills deficit from the member who now stands up and says that productivity is what we need. There is another huge irony in that member talking about productivity, but I do not think that I need to go there, because not only do we on the Government side of the House recognise that but so does every other member of the House.
It gives me great pleasure to support this bill going to a select committee, and I congratulate Sue Bradford from the Green Party on taking the initiative, stimulating the debate around the country, and introducing the bill to the House. Since Labour was first elected at the end of 1999, our Governments have reviewed, and then raised, the minimum youth and adult wage annually. I am very proud of that. In 2001 we lowered the age of eligibility for the adult minimum wage from 20 years of age, as it was then, to 18 years of age. Prior to that, one had to work on the youth rate, if one was on the minimum rate, right up to age 20 years; now it is 18 years. Labour increased the relativity between the youth rate and the adult rate, in two steps, from 60 percent to 80 percent, and it has maintained that relativity. It is my view that those steps have been very positive.
But it is still obvious that there is a debate to be had about the suitability of paying workers at a different rate for the same job, just because of their age. I think that that debate should properly be held at a select committee. There are many issues to be debated. Is the enticement of young people from the education system—from high school, polytechs, apprenticeships, or university—with the possibility of higher-paid jobs an issue? I think that should be debated. As Sue Bradford quite rightly pointed out, we do not want young people to work long hours while they are studying. Will a higher wage reduce that, or will young people continue to work for the same number of hours and just earn more pay for doing so? That issue should be debated. The financial pressures on employers, and the potential for the constraint of job growth, are issues that should be debated. A primary issue is that all workers in New Zealand should receive fair pay. The debate that Wayne Mapp mentioned briefly in his contribution tonight is that concerning the value of experience and ability in terms of being able to do the job, and the debate between what is genuine training and what is life-work experience and what the financial consideration for that life-work experience should be.
This matter is not a simple or a straightforward issue, but, in my view, it is one that should not divide our employers and our unions, despite the differences of opinion that those two parties may hold. From Labour’s perspective, employers’ and unions’ voices, and the voices of young New Zealand workers, should be heard. A select committee is an appropriate forum to host the debate. I know that the members of the Transport and Industrial Relations Committee will give fair consideration to both the perceptions and the facts around this debate. I, personally, very much look forward to the debate and to hearing the deliberation of the select committee. It is a debate that the time has come for. Labour will give further consideration to its position in the House on the bill following that consideration and deliberation.
I wish the next stage of the bill very speedy progress.
PETER BROWN (Deputy Leader—NZ First) Link to this
New Zealand First is quite delighted to support this bill. We have long said—even before the Greens came into the House in any meaningful way—that the minimum wage should go up. We put it in our policy, and when we had confidence and supply discussions—[ Interruption] That is a bit of policy that National did not pinch, according to Wayne Mapp, so I say to the new member that he should sit there quietly, or maybe he should take note and go and pinch it tomorrow. It was in our policy that we wanted to raise the minimum wage to $12 an hour. When we sat down with Labour to negotiate the confidence and supply agreement, Labour members were willing to look at the policy. But they came back and said “if economic conditions permit”, and they made us tag that on to our policy. Finally, they agreed that the wage would reach $12 an hour by the year 2008, which is before the next election.
I have to say to the honourable member there, who cannot stop grinning, that had we got into meaningful discussions with Dr Brash and Gerry Brownlee when they came knocking on our door, it would have been in an agreement with them, as well. I bet they would have nodded their heads faster than we can say that member’s name—which I cannot even remember. It would have been in any confidence and supply agreement that we proposed to National. [Interruption] Yes, it would; I can assure the member of that. That member would have crawled over broken glass to get a confidence and supply agreement with this provision in it. It disappoints me, to some degree, that the National Party is obviously not prepared to send this bill to a select committee in order to hear what the public really have to say about it. Frankly, we live in a low-wage economy and we need a minimum wage with a reasonable ceiling to ensure that people can live at least reasonably well.
I will move on to the youth rate. We support this bill going to a select committee, but we have some reservations. I want to be absolutely honest here. I have spoken to a number of employers and they have told me that if they have to employ a young person aged 16 or 17 years at full wages, then they will get older people instead because of their life skills. Wayne Mapp made some very good points on that. I note the point that he raised about the unemployment level. According to Statistics New Zealand, the unemployment rate for youth aged from 15 to 19 years is 11.7 percent. That is a very high figure. It is actually close to double the next-highest sector group, and after that the rates are all very much lower.
So I want to put forward a reservation. If Parliament, in its wisdom, chooses to abolish the youth rate totally, then we might be doing young people a huge disservice. New Zealand First is aware of that, but it still wants the bill to go to the select committee, as the Minister said, so that we can hear the voices and the views of New Zealanders, in total. They are entitled to have a say on the issue. That is why New Zealand First supports the bill going to a select committee.
I have to say, I was encouraged by the Hon Ruth Dyson. I know she is a lady who keeps her word. She sort of implied that after the bill comes back from the select committee Labour will want the adult rate to be $12 an hour. If that is the case, we will be totally behind it. We had reservations about including in our policy the tag “if economic conditions permit”, but we are prepared to listen to New Zealanders—to working New Zealanders, trade unions, fellow politicians, and New Zealand business people. We want to hear their views. We want to send this bill to a select committee so they can have their say.
I shall talk briefly about what happened under the National Party. We tried to give the National Party good advice in terms of the Employment Contracts Act when we came here. We said to modify it and make it fairer. I come from an industry of shipping and of loading ships. I can tell Dr Mapp honestly, and I can see that he is taking an interest in this, that there is no port in the world that can load any type of ship, or discharge it, faster than can the Port of Tauranga. Yet what did port workers get for their troubles? They got massive casualisation and redundancy. [Interruption]
I tell the honourable member over there that I do not think terribly many voted for “Uncle” Bob Clarkson. I do not think that they did. If members listen to that honourable member’s speeches, they will hear that he cannot speak without saying something derogatory about Winston Peters. I will get phone calls like the one I got the other night when someone said: “Peter, we only wanted to scare Winston. What the hell have we done? We’ll be back with him next time, with a huge majority.”
TARIANA TURIA (Co-Leader—Māori Party) Link to this
The Māori Party will be supporting the Minimum Wage (Abolition of Age Discrimination) Amendment Bill before this House, in its direction to abolish age discrimination. In our world view, to arbitrarily single out any one age group and discriminate against it is entirely contrary to the recognition that it is the breadth and collective strength of the people that is our wealth. I thank Sue Bradford and the Green Party for introducing this legislation. Others now want to take the credit for it, but no one has stood up for 16 and 17-year-olds. I have not heard anybody talk about that before, so I thank the Greens for doing that.
We can appreciate what employers are saying and understand their concerns that their ability to select their preferred workforce is being constrained by another intervention by the Government—even when it is a Government with good intentions, such as this one. Having been an employer myself, however, I know that I would not expect young trainee employees to carry out complex duties that I would expect more experienced employees to carry out. I would expect that those I employed on the minimum wage would be performing at the level of the basic skills that we would expect to see at the lower end of the salary range. No matter how old a person in a new job is, that person needs training. I cannot see the difference between training a 16 or 17-year-old and training a 20 to 60-year-old. Frankly, when I see young people pushing trolleys around car-parks, I think not very many 60-year-olds would want to perform that job, and certainly not for a minimal wage.
The central concept in this bill is the word “discrimination”. The Minimum Wage Act 1983 discriminates against those rangatahi who are aged 16 to 17, by dropping the minimum rates to $7.60 an hour. Those rangatahi are tomorrow’s parents, workers, leaders, helpers, spokespeople, and mentors. In order to ensure that rangatahi have the ability, confidence, and support to fulfil those roles to the very best of their ability, we need to ensure that nothing we are doing as part of the Government, as whānau, and as a community limits or impedes their development. They are tomorrow’s managers. It is a question of justice. We must remove the discriminatory aspects of the current Act, in the interests of our young people. In the end, those are the interests of our nation. We have heard some shocking stories, from right around the country, about youth rates. We have heard about 15-year-olds working long hours, and being paid $5 an hour to stack supermarket shelves. That is legal.
The Māori Party has a particular concern about the injustice currently permitted by the legislation, given the demographics of our population. Almost half of the Māori population is under 18 years of age—43 percent, compared with 24 percent of the non-Māori population. In real numbers, when we look at the age range of 10 to 18 years, the figure is 103,158. That is a lot of young people on youth rates. We know that for far too many of our young people, the crisis of poverty that racks this nation has pushed them literally out of the door—out of their homes—and into the workplace. The House needs no reminding of the reality that the Māori poverty rate is over 50 percent higher than the non-Māori rate. We must also consider the reality that one in five children live in low-income families, which is nearly twice the level of the late 1980s. Alongside that, the employment security that previous generations enjoyed has mostly disappeared, with many training and education options being too costly to pursue to the level of obtaining employment and income security.
I heard a member from National say that youth rates are how one gets ahead and moves on to higher wages, at a later stage in life. Well, that is fine talk if one has money. Some people do not know what it is like to have no money and just to focus on living from day to day.
Finally, I return to the issue of discrimination, and I raise the obvious anomaly of this bill. It is to do with disabled workers. During our discussions with our constituents about this bill, we have heard about intellectually disabled employees who know that they are being exploited, and know that they are being abused and that it is legal. Yet this bill does nothing to change the current law.
We will support this bill going to the select committee, to remove the current discrimination against 16 and 17-year-olds. Members of this House will be familiar with the whakataukī “ma pango ma whero ka oti te mahi”, interpreted in this context to mean that old and young—in fact, all peoples—can work together and be rewarded equally for that work. It is a worthy goal to work towards.
JUDY TURNER (Deputy Leader—United Future) Link to this
I rise on behalf of United Future to speak to the first reading of the Minimum Wage (Abolition of Age Discrimination) Amendment Bill. I have to be honest that when I first heard about this bill my gut reaction was: “Oh my goodness me, the employers are not going to like this. As a consequence of them not liking this, there will be fewer jobs available for 16 and 17-year-olds, and therefore this is going to be very counter-productive.” I suspect, from hearing some of the speeches tonight, that other members reacted like that and have camped at that place.
I took the time to read very carefully the bill put forward by Sue Bradford, and I also did some research of my own and discovered that this is actually quite a sensible proposal. It is time we had this debate. United Future will support this bill going to the Transport and Industrial Relations Committee so that we can have the discussions that need to be had. We will be able to hear from both employers and young people about their concerns in this regard. I do not think there is anything to be scared of by letting this bill go through.
The first thing that impressed me was that this bill is not extreme. We are talking here about 16 and 17-year-olds. The current provisions that relate to 15-year-olds and under would still remain in place, and maybe that is a discussion to be had on another day. I am kind of glad that we are focusing on a very specific age group of young people who have often been employed at least part-time for several years, are quite competent at what they do, and, quite often, are supervising older workers. Certainly, my own children worked during their high school years. They learnt an amazing work ethic, gained skills, and were given responsibilities. It would have been offensive to them to work for less pay alongside adults doing exactly the same job. The employer they worked for did not make that discrimination and they were paid the same minimum rate as the adults working alongside them. They appreciated that consideration.
My concern was how employers would react to this bill, and when I did some research, one of the things that interested me was that, currently, 44.7 percent of 16 and 17-year-olds who are employed are already on more than $9.50 an hour. Employers are already making some very good calls in that regard. This bill is not the major shock to employers that I had anticipated it would be. So the first fact that I found really interesting was what is actually happening in common practice out there right now.
We are talking about quite a large number of young people. Something like 26,400 16 and 17-year-olds who are employed either full-time or part-time are affected by this; we are not talking about small numbers. We have to think about what those young people are working towards at this point. First of all, they want to get a track record of employment that looks very good on their CV as they apply for all sorts of jobs and tertiary training opportunities. They want a consistent work record that looks very good on paper. The second thing is that many of them are saving toward their tertiary education. They are responsible young people who are developing an early work ethic that should be applauded. When we start to undermine that development by saying that they do the same work but are not worth the same as anybody else, we are sending some really strange messages. United Future believes that because of those kinds of considerations, this debate is probably long overdue. We are very happy to support this bill’s passage to the select committee, and we will watch with interest.
We do have some concerns, and we would like to see those addressed. I am sure that submitters will bring those up very loudly and clearly. We want to see what kind of responses come out of that. One of the concerns I have is about the training period that might happen. I guess we need to find out whether it takes longer to train 16 and 17-year-olds than to train more mature workers. Maybe there is a case to be made, and maybe provisions need to be made for those kinds of considerations; I am very open to that kind of thinking. But I also take the point that possibly there is no difference. It will be interesting to see as the evidence comes out.
We are very keen to see the bill progress. That was not our initial reaction, but we did a bit of soul-searching on the issue. We looked at what was genuinely proposed here, and we discovered that it was not as extreme as we first had anticipated. We commend the member for bringing the bill to the House’s attention.
RODNEY HIDE (Leader—ACT) Link to this
I rise on behalf of the ACT party to oppose the Minimum Wage (Abolition of Age Discrimination) Amendment Bill. I think people would be surprised if I did anything else. Let me make this point. It is all very well for people in the House to stand up and piously say that they would like 16 to 17-year-olds to be paid more, and that they feel good about voting in favour of the bill. But, of course, members will not pay the price of the bill. Businesses that are struggling to pay, or that cannot afford to pay, workers their wages will pay the price of the bill. The second group that will pay the price of the bill will be young people themselves, because there is no doubt that people will be priced off the labour market as a consequence of the bill, and that they will struggle, as a consequence of that, to find work. One might say that that will not happen. But if it will not happen, then why pass the bill? The only way that a minimum wage can work is by actually increasing the wage rate above the level that the market currently pays. If the minimum wage is below the rate that the market currently pays, then it does not have any impact. If the minimum wage is above the market rate, then it will have an impact on the numbers who are employed and the ability of people to get a job.
I ask the people who are voting for the bill to contemplate the following. Of course, everyone in the House wants higher wages for New Zealanders. But if it were as easy as passing a law in Parliament to give people higher wages, why stop at $9.50 an hour? Why not make it $12.50 an hour? Why not make it $15 an hour? Why not make it $25 an hour? I heard Sue Bradford call out: “Why not?”.
So if we can make the minimum wage $25 an hour, what is wrong with $100? I heard Ms Fenton call out that nothing is wrong with making it $25 an hour. But, of course, if the minimum wage were made $25 an hour, not one person’s wage in New Zealand would go up. What would happen is that all the people who are currently earning less than $25 an hour would find themselves unemployed. That is why I do not understand why we think we can sit in Parliament and, without regard to the cost to business and without regard to the cost to young people, legislate for a wage. That is not how the world works.
If we want to get wages up in this country, we will not do so by passing laws; we will do so by increasing the productivity of the economy. At the end of the day the dairy owner, the owner of the factory, the owner of the trucking company, and the owner of the retail store can afford to pay someone only what that person brings to the business. Employers cannot afford to pay more than that. The sad reality is that we have had a poor-performing economy for many, many years, and therefore people cannot command the high wages that we would like them to have. The answer to that problem is not to live in fairyland and pass a law that says that $25 an hour would be a good idea, which is the figure that members of the Labour Party and the Green Party called out, because unless people produce $25 an hour, it does not work—in fact, they would have to produce more than that, because one has to cover all the costs that this Government has put on someone who employs them.
The best thing that could be done for the wages of low-income people in New Zealand—and, in fact, for everyone’s income—is to make it a lot easier to employ people in the first place, and to make it a whole lot easier to do business. And here is a novel thought: what about having them pay less tax?
We put up wages at our peril, because it will not be parliamentarians who carry the cost, and it will not be civil servants. It will be businesses and young people who pay the cost, and that will result in jobs and opportunities that we will not see. I ask members of the House to think about that. I am staggered that people in the Labour Party think we can legislate for a $25-an-hour minimum wage, without that having any consequence. That shows the thinking behind this sort of legislation.
KEITH LOCKE (Green) Link to this
The Green Party says that youth rates are all about putting down the young people of this country—denigrating them, abusing them, and treating them as second-class citizens. Like all discrimination, it is not based on anything rational—any more than was the wage discrimination of the past against women, Māori, or any other group. It is based on the self-interest of employers and a certain degree of brainwashing in the population.
There is a set of myths that to give young people full wages is somehow a cost to the community. One of the myths is that full rates will make it difficult for companies, or will bankrupt them. That argument was used against women in the past in order to justify paying them less wages than men. Few people today use that argument in favour of women being paid less than men—they would rightly be called sexist if they did—and the same applies in the case of youth wages: we should call people prejudiced against youth if they justify low youth wages.
The second myth is that youth rates cause unemployment. That is not true. It is true that there is a higher rate of youth unemployment than in the rest of the population—the figures I saw stood at about 12 percent amongst youth, as against roughly 3 percent of the general population; of course, in the 1980s and 1990s it was much worse than that. The cause of the difference in the unemployment rate is the way society organises its workforce; the cause is not basic economics. If one looks at it rationally, one will see that young people have greater energy, alertness, and fitness than the rest of the population, and that they come out of school with a fairly up-to-date, modern education, so they are well fit for the workforce. The problems are more about society not properly organising the transition from school into the workforce for 16 and 17-year-olds. Certainly, young people lack one thing, and that is work experience, but when one thinks about it one will realise that youth rates are applied not to jobs that require a huge amount of experience but to relatively low-skilled jobs that people can get to know pretty quickly. So it is not an economic argument. As Sue Bradford pointed out, if we want people to be highly skilled and advancing through the education system—often 16 and 17-year-olds do part-time work when in full-time education, and sometimes they do full-time work and go to night classes or whatever—then we need them to be paid properly, so that they can afford to go through that education in order to add value to our workforce as they grow older—as 18-year-olds, 19-year-olds, and beyond.
If one looks at economics on the level of the individual company, one sees that few companies would fail to survive if they paid young people a full rate. In fact, productivity actually goes up if people are paid decently and they are not hanging around feeling sullen about their low wages and the exploitation they are suffering. The argument that companies put to groups like Unite!, which organises young workers, is essentially that companies are in a competitive market, particularly in industries like fast-food outlets and supermarkets where young people are employed—and McDonald’s brought in youth rates only a couple of years ago—and they could not compete with the other fast-food outlets or supermarkets if they did not pay youth rates. So some of those employers actually favour having a higher minimum wage so that they could compete on a level basis; that is, if they are paying decent wages to their workers, they are not having to compete against other firms paying exploitation wages.
I think that the other reason for decent wages too is that we do not want young people—16 and 17-year-olds—growing up too dependent on their parents. If we are looking to the future we want them to be well-paid, confident, independent people, and we see some of those people today. At 6 o’clock today the KFC youth workers went on strike to end youth wages and to get decent wages in their industry. The strike was organised by Unite!, and we fully support them in that action.
MARK BLUMSKY (National) Link to this
I am pleased to have this chance to speak to the bill because it gives me the opportunity to tell the House to be very careful as it is sending yet another message, another signal, to businesses that it does not like them. I stand here as one who owns a business and employs staff, and probably not too many members on the other side of the House—
—if any at all—can say that, because the Government benches are full of academics and trade unionists.
I know exactly what will be going through the mind of businesses when they hear about this bill on the radio tonight, because it is going through my mind as well. I quote: “Not again—shit! I’m already suffering.”, and: “Whack me, especially when I am down, just trying to make a living.” It is tough out there. Electricity prices are up, transport costs are up, accident compensation levies are up, compliance costs are up, rates are up, and now Parliament is considering a bill that sets about hurting business owners and their livelihoods even more. How much hurt will there be? A local supermarket owner rang me just the other day and said that if he moved away from youth rates, his business would incur an extra expense of $1.6 million per year. That is an extra cost to his business, and it will mean one thing: he will put up his prices to recover. What is even worse is that that business owner cannot ask the Government for some money to recover the costs as he trains his staff to learn to read and write.
It may surprise many of the members opposite that one of the main reasons to be in business is to make money. My wife and I own a lingerie store. Now look, we would love to fit every woman in Wellington with a new bra and every man in Wellington with a new set of Jockey’s. We want to offer as much support as we can. But our real motive for being in business is to make a profit, and if we make a profit—as we do—we can open another store, which we are doing in Christchurch. And we will employ more staff and pay more wages because we can make a profit. However, as Parliament is putting yet another significant cost factor against my bottom line it will be harder.
When my business and other businesses employ youth, we are making a considered compromise at the moment. We pay a little less, and we trade that off by getting a slightly more immature young adult who still has a lot to learn about life, who needs a little more training, and who is inexperienced, so will need more supervision. Hey, let us not forget about the after-school workers who do those odd jobs around the edge. What of them? At present, those kids have the opportunity to learn about fiscal responsibility and work ethic, as well as earn a little bit of additional pocket money. Well, that after-school job will be a historical job before too long. I ask the member who introduced the bill what we will have to pay the 15 or 16-year-old babysitters. Will we soon be paying them that $12.50 minimum? I tell the member now that it will make going to the movies with one’s partner—to have a night out and leave the little kid at home—one heck of a lot more expensive.
Employing youth and paying them the adult minimum wage will entail a gamble. Maybe, just maybe, it will be a gamble that business might be prepared to take if there was a probation period when we initially hired those kids. But, at the end of the day, the National Party has all New Zealanders at heart. We want all New Zealanders to earn more money and to have a better quality of life, and the best solution to ensure high productivity and high wages is to reduce our taxes.
DARIEN FENTON (Labour) Link to this
May I say what an absolutely predictable speech that was from the Opposition side of the House. What is new? I was hoping to hear something different from Mark Blumsky. I am pleased to speak in support of the Minimum Wage (Abolition of Age Discrimination) Amendment Bill going to the Transport and Industrial Relations Committee. The issue of paying a lesser minimum wage for young workers aged 16 and 17 does need to be properly considered, and the appropriate place for that to happen is in a select committee.
The purpose of a minimum wage is to protect vulnerable low-wage workers from exploitation in the employment relationship—to provide a safety net. It is not intended to be a primary wage-fixing instrument. But, unfortunately, in some New Zealand industries the minimum wage has become the market rate. Often firms, like the supermarket to which Mark Blumsky referred, which can very easily afford to pay more than the minimum wage, pay minimum wages because they can get away with it in our still very deregulated labour market. A couple of days ago I talked with some workers in a well-known national shoe store chain. Throughout its 52 stores in New Zealand workers are paid the minimum wage and the youth minimum wage. The workers do not have the bargaining power to do anything about it, so their response is to leave and get another job that pays better. Now, that works fine when there is a buoyant labour market—like there is under this Government—but when jobs become tight, workers are stuck in low-wage jobs, and work for employers who can afford to pay a lot more.
When Opposition members complain about the wage gap between New Zealand and Australia, they should own up as to why it has happened, and why this Government’s commitment to increasing the minimum wage has become an essential tool in increasing wages in New Zealand. When the minimum wage was introduced by Labour in 1945, it was set at 83 percent of the average weekly wage, and there was no youth minimum wage. Over the years it fluctuated, but as large numbers of workers had the protections of industrial and occupational awards, the minimum wage did not have the significance it has today.
When National introduced the Employment Contracts Act in 1991, the minimum wage became the only protection for hundreds of thousands of workers whose award wages disappeared almost overnight. Now, what did National do? It introduced the youth minimum wage for the under 20s, at 60 percent of the average weekly wage. Despite the minimum wage setting the wages that many workers came to rely on, there were many years during the 1990s when the minimum wage did not increase at all, or when only minimal adjustments were made. The effect was that the minimum wage slipped from 52.5 percent of the average wage in 1987 to 40 percent at the end of the 1990s.
Furthermore, may I say that National’s enforcement of the minimum wage during those years was pathetic. In 1997 there were just 19 labour inspectors for the whole of the country, with the consequence being that many workers who sought help to enforce the minimum wage were told to come back later, because no one was available to help them. In the climate of fear that prevailed then, and with the great stamina that was required to enforce workers’ rights, many of them simply accepted sub-minimum conditions.
Gerry BrownleeBecause the National Government made it difficult for them. This Labour-led Government has set out to incrementally address the dreadful consequences of those policies on low-wage workers. It has extended the adult minimum wage to 18 and 19-year-olds, and we have done something about 16 and 17-year-olds. [ Interruption]
I raise a point of order, Madam Speaker. I was really standing up to say that there is a bit too much barraging, and we cannot even hear down this end of the House.
The ASSISTANT SPEAKER (Ann Hartley) Link to this
The member is absolutely right. Please, members, it was far too excessive.
The Labour-led Government has stood up for 16 and 17-year-olds by increasing the application of the adult minimum wage to 18-year-olds and also by increasing the youth minimum wage to 80 percent of the average wage. I will give members a couple of figures. In 1999 the adult minimum wage was $7 an hour. From March this year it will be $10.25 an hour. In 1999 the youth minimum wage was $4.20 an hour. In March it will be $8.25 an hour. So it will almost double. But, of course, Dr Brash and the National Party want to abandon the minimum wage, as well as holiday pay entitlements, paid parental leave, and moves to close the gender pay gap.
Since Labour was elected in 1999 successive Labour-led Governments have reviewed and raised the minimum youth wage and the minimum adult wage every year. It is clear that there is a debate to be had on the suitability of paying workers at a different rate for the same job just because of their age. As a member of the Transport and Industrial Relations Committee, I look forward to considering all the issues and having robust consideration of this important matter.
SUE BRADFORD (Green) Link to this
First of all, I would like to thank again the four parties that have shown their support for my bill tonight: Labour, New Zealand First, the Māori Party, and United Future. I would particularly like to thank Judy Turner for her frankness and her courage in convincing her party to support a Green Party bill—that is quite novel. I would also like to compliment members on the quality of the debate, from all sides. It is quite unusual in this House to hear every speaker actually addressing the issue. Even when we totally disagree with each other, I think it is fantastic that we have opportunities for this kind of debate. I wish we had longer to go into some of the deeper economic issues behind this.
In terms of the bill itself, I would first like to discuss some of the things Dr Mapp mentioned. He talked about the perverse incentive that my bill would give to school students who are working after school and on weekends. As I pointed out earlier, precisely the opposite is actually the case. I think it is a perverse incentive to pay people such low rates that they have to work longer hours than would be desirable and are spending far too much time working rather than studying, resting, or doing other things. I am not saying, though, that younger people have the same skills and experience as older workers, as Dr Mapp seemed to imply. Young workers have different skills and attributes to offer their employers. It is simply a matter of difference, and the attributes that young people bring to these jobs are different from those of a lot of mature workers. We need people to do this kind of work. We need people who are willing and able to run around in the back of a McDonald’s, and are willing and able, as Tariana Turia said, to push trolleys back into supermarkets, and to stand on their feet all day in a retail outlet and meet their sales targets. We depend on those workers to keep all sorts of businesses going, and it is an insult to them to say that because that work does not require a university degree or an apprenticeship, it is somehow worth less. The arguments that Dr Mapp and his colleague Mark Blumsky made do not counteract the fundamental principle that people doing the same work should get the same pay, and I am sure that at some deep level even the National Party members may understand that.
Finally, on the question of productivity, which Dr Mapp has talked about a lot and which is a really interesting issue, he is saying that the most important thing is that these students can get a really good education. That is true, but we believe that the National Party would really be putting its money where its mouth is if it supported our Green Party policies on education, such as getting rid of the student loan scheme altogether, providing a system to remit student debt and to reduce the level of fees that students have to pay so that we get rid of the whole system that is encumbering generation after generation of graduates. That would really help productivity and help keep our young graduates in this country and get them back from overseas. That would be a real contribution, instead of penalising young people by paying them such low wages.
I turn to Peter Brown’s arguments. He has said that abolishing youth rates totally may be doing young people a huge disservice. This bill does not actually abolish youth rates totally. Judy Turner mentioned that fact, as well. In fact, I have come in for quite a lot of criticism from colleagues in the union movement and from youth organisations because my bill does not get rid of youth rates altogether. My bill deals only with youth rates for workers aged 16 and 17. I acknowledge that that does a disservice to workers under 16 whose needs are deep—they are a very vulnerable and exploited group of workers—but I felt that it was sensible to take this one step at a time. I thought it would be great if we could achieve an end to at least one level of discrimination, and I am sure there will be a lot of submissions to the select committee criticising my bill because it has not gone far enough. This bill is not extreme, I say to Judy Turner. It is a very moderate piece of legislation.
To Tariana Turia, who talked about workers with disabilities, I would like to say that I am very well aware of that issue and the extent to which people with intellectual disability, for example, are and continue to be exploited in some situations is deeply problematic. I hope the Māori Party will join with the Green Party in encouraging the Government to proceed with the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill with alacrity.
In conclusion, I would like once again to acknowledge and thank all the parties who are taking the progressive step of backing this bill tonight. I just hope that their commitment to fairness and equity to young workers will continue all the way through until this bill becomes law.
A party vote was called for on the question,
That the Minimum Wage (Abolition of Age Discrimination) Amendment Bill be now read a first time.
Ayes 71
Noes 50
Bill read a first time.
SUE BRADFORD (Green) Link to this
I move, That the Minimum Wage (Abolition of Age Discrimination) Amendment Bill be referred to the Transport and Industrial Relations Committeereferred to Transport and Industrial Relations Committee.
A party vote was called for on the question,
That the motion be agreed to.
Ayes 71
Noes 50
Motion agreed to.