Round Table Submission On Mimimum Wage Amendment Bill

1. Introduction

1.1 This submission on the Minimum Wage (Abolition of Age Discrimination) Amendment Bill (the bill) is made by the New Zealand Business Roundtable (NZBR), an organisation comprising primarily chief executives of major New Zealand business firms. The purpose of the NZBR is to contribute to the development of sound public policies that reflect overall New Zealand interests.

Executive Summary

The proposal to extend the adult minimum wage to 16 and 17 year-olds may be well-intentioned, but it is likely to adversely affect the employment and training of young workers.

The proposed policy change would raise the cost of hiring young workers, but would do nothing to increase their productivity.

Employers may respond to an increase in minimum wage applicable to 16 and 17 year-olds in a number of ways, including cutting jobs,hiring more highly skilled workers or making ‘compensating’ reductions in training, allowances and other employment benefits for young workers.

Reduced job opportunities would have a near-term impact on young workers, who have little work or life experience and few skills. In addition, the loss of valuable work experience and training opportunities could have a longer-term, and potentially more significant, effect on these workers.

In our view, the bill should be assessed on its impact, not on its ntentions. We recommend that the bill not proceed. If it is to proceed, we recommend that it be modified to limit its impact, either by excluding small employers or by making it apply to young workers only after a certain time in employment (eg one year). At a minimum, the ability to set a lower youth rate should be left in the Minimum Wage Act 1983, even if the youth and adult rates are aligned.

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