Hon Trevor Mallard
Minister of Labour

1 April 2008 Media Statement

Minister urges employers to follow new min wage

Labour Minister Trevor Mallard today urged all employers to make sure they start paying their youth workers the new adult minimum rate of $12 an hour - from today (April 1) – if they meet the key criteria.

"Under the April 1 changes, 16 and 17 year olds who are currently on the youth rate and who have worked for 200 hours or three months since turning 16 – will automatically be entitled to move to the new adult minimum wage of $12 an hour on April 1.

"This is a significant pay increase from the current youth rate of $9 an hour. It comes with the move to entirely scrap the youth minimum rate and replace it with a new entrants minimum hourly rate of $9.60 an hour (80 per cent of the minimum adult wage) for 16 and 17 year olds for the first 200 hours or three months they work. After this period, the 16 or 17 year old must be paid the adult minimum wage.

"From April 1, the adult minimum wage will also rise to $12 an hour, from the current $11.25 rate – meaning our government has delivered on our promise of raising the minimum wage to $12 an hour ahead of time.

"Hundreds of thousands of workers will benefit from these changes – which reflect our government's promise to raise the adult minimum wage and also our commitment to ongoing support for families and workers," Trevor Mallard said.

"From April 1, 16 or 17 year olds who are supervising or training other workers will immediately be entitled to the adult minimum wage regardless of the number of hours they have worked.

"These major improvements to protections for workers have been made possible through the support of NZ First and the Green Party. I would like to thank them for their help and commitment to protecting New Zealand's youngest and most vulnerable workers," Trevor Mallard said.

"I would urge employers to make sure they follow these groundbreaking new statutory requirements. The increases mean we are ensuring that lower paid workers can share in the benefits of economic growth. I am sure they will also help employers recruit and retain staff in this time of labour shortages.

"These improvements follow other initiatives by the Labour-led government to support productive workplaces and to make sure low income families are reaping the benefits of economic growth. These include the introduction of four weeks annual leave – which marks its one year anniversary on April 1, and our introduction of paid parental leave. I would note that these improvements to the working lives of New Zealanders have all been opposed and repeatedly attacked by the National party."

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Case studies explaining how the changes affect different types of workers is attached, along with a summary of the key facts behind the changes.

Summary of changes: Minimum Wage and end to Youth Rates

Workers earning the minimum wage will receive a 6.7 per cent pay rise from 1 April 2008. This means the minimum wage, which applies to employees 16 years and over, will increase from $11.25 to $12.00 an hour ($480 for a 40 hour week) from 1 April 2008.

The youth minimum rate, for employees aged 16 and 17 years, will cease from 1 April 2008 and be replaced by a new entrants minimum hourly rate of $9.60, 80 per cent of the adult minimum wage (the youth minimum rate is currently $9 an hour).

The new entrants rate can be paid to 16 and 17 year olds for the first 200 hours or three months of employment, then the adult minimum wage must apply.

The increase to $12.00/$9.60 will benefit around 102,400 adult workers aged 18 and over, most of whom are women, and around 38,300 16 and 17 year olds.

It is not known how many workers who are currently on the youth rate will be eligible to move immediately to the adult rate, as at April 1.
Case Studies: Minimum Wage and End to Youth Rates.

Example 1
Andrew is 17 years old and has been employed at a cafe since 1 August 2007. Andrew is not a trainee and does not supervise or train other workers. He regularly works 10 hours per week. His current rate of pay is $9.50 an hour before tax. By 1 April 2008 he would have worked for 8 months and also completed 360 hours of employment. From 1 April 2008 Andrew will be entitled to be paid at least the adult minimum rate of $12.00 an hour before tax.

Example 2
Kate is 15 years old. She has worked at a garden centre for two years. She works 10 hours per week at the centre. Kate is not a trainee and does not supervise or train other workers. Kate will turn 16 on 1 May 2008. Her current rate of pay is $8.00 an hour before tax.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. On 1 May 2008 Kate will be a new entrant because she will be 16 years old and have worked less than 3 months or 200 hours at the garden centre since turning 16. As a new entrant she must be paid at least $9.60 an hour before tax.

On 1 August 2008 Kate will have worked three months at the garden centre since her 16th birthday, and will have completed 130 hours of work. Although she will not have completed at least 200 hours of employment, she has worked three months at the garden centre since her 16th birthday (May 2008 – August 2008). Therefore from 1 August 2008 she will be entitled to the adult minimum rate of $12.00 an hour before tax.

Example 3
Shane is 16 years old and studies at Polytech. He turned 16 on 1 February 2008. He has worked a newspaper round every summer since he was 14. Shane is employed to work 2 hours per day, 5 days a week in the summer holidays (December – February). His current rate of pay for delivering newspapers is $9.00 an hour before tax. He does not train or supervise other workers as part of his job. By 1 April 2008 Shane would have worked over 3 months and 200 hours delivering newspapers. However he has only worked 1 month (40 hours) delivering newspapers since he turned 16.

Shane also started work at his local video store on 1 February 2008. His current rate of pay at the store is $9.50 an hour before tax. He works 20 hours per week at the store and is not a trainee and does not supervise or train other workers. By 1 April 2008 Shane would have worked for 2 months (160 hours) at the video store since his 16th birthday.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. Since he turned 16 years of age, Shane would have worked on the newspaper round in February (1 month of employment) and at the video store in February and March (2 months of employment). Therefore he has worked 2 months since he turned 16.

Although he worked for 2 employers in February, this only counts as 1 month of employment. Shane would not have completed 3 months of employment, but Shane has worked a total of 200 hours from both jobs since turning 16 years of age (40 hours delivering newspapers + 160 hours at the video store). By 1 April 2008 he would have completed at least 200 hours of employment. Therefore from 1 April 2008 Shane will be entitled to be paid at least the adult minimum wage of $12.00 an hour before tax in both his jobs.

Example 4
Tasha is 15 years old. She turns 16 years on 1 August 2008. She works in checkout at her local supermarket and has done so since she was 14 years of age. Tasha works at the supermarket for 10 hours per week. Her current rate of pay is $11.00 an hour before tax.

As part of her role Tasha trains and supervises new employees at the checkout.

On 1 April 2008 the changes to the Minimum Wage Act and minimum wage rates will come into force. These changes will not affect Tasha as she is younger than 16 years of age and therefore the minimum wage rates do not apply to her.

On 1 August 2008 Tasha will turn 16 years of age. Because she trains and supervises other employees Tasha will be entitled to be paid at least the adult minimum wage rate of $12.00 an hour before tax.

See also www.ers.dol.govt.nz

ENDS

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