Minimum wage (New Entrants) Amendment Bill

Third reading speech

It gives me great satisfaction to support the Minimum Wage (New Entrants) Amendment Bill at its third reading.

I would like to thank Sue Bradford from the Green Party for introducing this bill. Although I recognise that the bill we are considering today differs markedly from the approach Sue initially took to this issue, I believe that this bill achieves a balanced way forward for 16 and 17 year old New Zealanders.

Balance is in fact the best way to describe the bill, and the process this bill has gone through.

A balance was needed between those who wanted the abolition of youth rates, and those who supported the status quo. A balance was needed between the rights of young workers, the perspective of their unions, and the perspective of their employers. Finally, a balance was needed in this parliament to gain support for this bill - this is a reality of an MMP parliament.

This Labour-led government is very proud of this achievement; another step forward in our steady progress towards ensuring that all workers, including young workers, have fair minimum wage protection.

This bill provides a three month maximum time limit for new entrants in addition to the 200 hour maximum that Transport and Industrial Relations Committee recommended.

Those 16 and 17 year olds who work full time will now be able to reach the adult minimum wage in as little as 5 weeks, while those who work part time while pursuing their education will receive the adult minimum wage after three months.

Labour recognises that often employees who are aged 16 or 17 do the same work as adults, but we also recognise that time is needed for these workers to gain the socialisation skills required for working.

We believe that the timeframes that the new entrants rate will apply for allows for learning these “soft” skills, while respecting the value of the work young people do.

Clarification has been included in the bill that the new entrants minimum wage will not apply to youth who work as supervisors. I think this is a great step forward for our youth and I am pleased that the bill provides for this, as it fairly reflects the value of supervisory skills.

I am also pleased that the bill also allows all employment undertaken once a young worker turns 16 to be taken into account, even if it was undertaken before the commencement of this bill.

This means that the many thousands of 16 and 17 year olds will have already completed their qualifying time when this bill comes into effect, and will move immediately to the adult minimum wage, which this Labour-led government increased to $11.25 per hour on 1 April this year. This was an increase of a whole dollar per hour, the largest ever increase and something it took the previous National government almost a decade to do.

For nine years the adult minimum wage stayed at exactly the same rate under National, except for a pathetic increase of $1 an hour over the entire nine years, and at that time young people were included right up to the age of 20.

The bill comes into effect on 1 April 2008, and replaces the youth minimum wage rate, which is currently $9.00 per hour, with a new entrants minimum wage. The actual rate for the new entrants minimum wage will depend on the outcome of the minimum wage review that my officials already have under way.

Our Labour-led government has a commitment – confirmed in our confidence and supply agreement with New Zealand First and the Green Party to raise the minimum wage to $12 per hour before the end of 2008 if economic conditions allow.

If the minimum wage does rise to $12 per hour on 1 April next year, the new entrants’ minimum wage would also rise, to $9.60 per hour in line with our intention that the new entrants’ minimum wage remain 80 per cent of the adult minimum wage.

We will need to balance the positive impact that abolishing the lower rate of pay for 16 and 17 year olds will have for thousands of young workers against the possible negative impact of an incentive for them to leave school earlier with fewer qualifications.

I do not want to send the message to our young people that leaving school with minimal qualifications is a good idea. I do not think this bill will give that message.

Our increase in the youth minimum wage over the past year has shown negligible impact on the number of young people who are leaving school early. In fact, if anything, this has allowed people to stay at school longer, as part time jobs are better paid and they are able to balance work and school without doing long hours.

Under National, the youth minimum wage, which is the point of this debate, applied to 16, 17, 18, and 19-year-olds.

Under National, you did not become an adult until the age of 20 and, what is more, the youth rate was set at 60 percent of the adult rate, not the current 80 per cent.

It is new to increase the youth minimum wage; that has been happening only in the last 8 years under a Labour-led Government.

When National was last in Government there were 17,500 18 and 19-year-olds on the unemployment benefit, despite the fact that the youth rate was so low that a person could have employed 20 people in any business and it would hardly have made a little bump in his or her wage bill. The youth rates were a pittance.

What is that figure now? The rate of 18 and 19-year-olds on an unemployment benefit in our country now is fewer than 1,000 people.

Those are the statistics that National should think about before it comes into this Chamber and raises spurious arguments in opposition to improving the way that 16 and 17-year-olds are recognised through their wage packet.

I am pleased that we have been able to reach a position that is supported by the sponsor of the bill, because this bill is done for the betterment of young people so that the contribution they make in paid work is properly valued.
The amendment applies to all employment, regardless of whether it is the first, second, third, or fourth job.

I am pleased about the great step forward this bill represents for our youth. Yes, there is more debate to be had on these and related issues, but we are moving forward.

I would like to conclude by again acknowledging the voices of youth, unions and employers who submitted on this bill.

I thank my colleagues in the House for the contribution that they have made in strengthening and clarifying the intent behind this bill when they debated it during the Committee stages. I would like to particularly acknowledge the work of the other Select Committee members.

This is another great example of the Labour-led government working with other parties in an MMP environment to achieve the best solution for the diverse interests of all those affected by these changes.

I commend the speedy passage of this bill.

ENDS

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