Families paying the price

When Manukau youth worker Allan Va'a was asked to explain escalating teenage gang violence in South Auckland, he fingered parents who were working long hours instead of being at home for their children after school.

"Kids are home by themselves," he said. "Their parents are working in jobs to pay the rent, get money for the shopping and give to the church."

He was tapping into a new social problem. Fifteen years of free-market wage negotiations have replaced unemployment with overemployment, often forced by low pay rates.

In 2003, working-aged New Zealanders worked more hours of the year than people in any other Western country except Iceland. Thirty per cent of working men and 10 per cent of working women worked more than 50 hours a week.

Women aged 25 to 44 going out to work have trebled in the past 50 years from 20 per cent to 60 per cent. Half of all mothers with preschoolers, and three-quarters of mothers of children aged 5 to 9, now go to work.
This month the Cabinet is expected to decide whether to raise the minimum wage another notch above $9.50 an hour, which would allow parents in low-wage jobs to cut back to more reasonable hours and spend more time with their children.

A vociferous union campaign led by former Alliance president Matt McCarten's Unite Union is pushing to raise the minimum to $12 an hour sooner than the target date of 2008.

But Business New Zealand opposes any increase at all, arguing that some poor families would suffer because businesses would have to lay off staff to cover higher wages for the rest.

Most low-paid jobs are in service industries. Forty per cent of those earning less than 10 per cent above the minimum wage work in shops, restaurants and hotels. Many of the rest are cleaners or work in resthomes, home-care or call centres. Two-thirds are solo mums or married women working part-time to help the family.

Winnie (not her real name), a mother of two children aged 9 and 10, earns only $10.40 an hour cleaning rooms in an Auckland hotel a decade after she started in the business.

Her husband, a concrete worker, gets the children up after Winnie leaves their Glen Innes home at 5am to catch the train to work. She packs her trolley in her own time so she is ready to start at 8am. She has to clean a set number of rooms - depending on the number of guests - and gets paid for her agreed hours only if she finishes all those rooms.

Her aim has been to work quickly to be home when her children return from school. "My kids - that's my first responsibility," she says.

But the company now makes her stay at work until 3.30pm, so her children get home before her. "By the time I get home the kids are doing their own homework. I have to cook and clean. What time do I have to help them with their homework?

"After we eat at 5 or 6 they have showers and go to sleep. No family talk, no nothing. All I can do is growl at them."

She would like to carry around her cellphone at work in case her children need her, but is not allowed to do so. And her boss gave her a written warning when she took a day off to attend her daughter's first day at school.

"Now they ask me to work on the weekend," she says. "I told him, 'No, I stay with my children'. He told me, 'It's your contract to work on the weekends'. I said, 'No, it's a family day'.

"Up till now I'm still fighting."

Across town in Blockhouse Bay, Jamie and her partner, Kelvin, are a bit better off financially. Both earn $15 an hour, Jamie as a social worker and Kelvin as a builder's assistant. But caring for six children aged from 5 to 16 is not easy.

When Jamie was training, her hours were more flexible and she was able to be home for the children.

Her partner worked fulltime, often from 7.30am to 6pm.

But now Jamie has to work shifts, either 8.30am to 5.30pm or 12.30pm to 9pm.

"I can't find a 9-to-3 job," she says.

"In the beginning they [her employers] did accommodate me, but it's so hectic around here. I love it. I tend to put myself into work and neglect the home."

So a few weeks ago Kelvin quit his job to be home for the children after school, cutting back to less-regular building work closer to home.

"It's really hard," Jamie says. "You have to deal with that problem of there being a role reversal. I'm juggling quitting my job so I can be home for the kids and then he can go out and get the work. I don't want to waste the time I've spent at university and waste my degree. I'd prefer to be working but at the moment I'm not finding the balance."

Colleen Fakalogotoa, of the Manukau Family Start programme, says it's common to find couples doing two jobs each.

"I have visited families where dad is doing 10 or 11 hours at night and mum is doing maybe 10 hours in the day.

"When she goes to work in the day, he's sleeping on the couch and minding the little ones, or an older grandmother in the house might be there so he can shut off for two hours.

"It's because the hourly rate is so poor. It's not unusual to be on $10 an hour on shift work as a security guard or in factory work."

Baptist Action family services manager Ruby Duncan believes society's expectations have swung too far - from expecting all mothers to stay home to expecting them all to go out to work.

"Children are being left to their own devices more. Their lives are more chaotic. The mother's ability to tune into her children, to know her children well, gets lost.

"If you can work while your child is at preschool, that's great. If you can't, then don't.

"Once your children are at school, if you can find work that fits around them, great.

"It's where children are being fitted around work rather than the other way round that it's a problem."

Unite Union organiser Joe Carolan believes the answer is his union's "supersize my pay" campaign to raise the minimum wage.

"You have parents that have to work every hour that God sends because the hourly rate is not enough to live on, and young kids whose options are sub-minimum-wage jobs or the gang culture," he says.

The Unite Union and the Council of Trade Unions wants a $12 minimum for everyone, including youths. At present there is a lower minimum of $7.60 an hour (80 per cent of the adult minimum) for 16 and 17-year-olds but no legal minimum for under-16s.

Colm McLaughlin, a New Zealander comparing labour markets in Ireland, Denmark and New Zealand for a doctorate at Britain's Cambridge University, says New Zealand's $9.50 minimum - 45 per cent of the average wage of $21.13 an hour - is lower than most European countries and Australia. The low minimum has allowed a widening spread of wages in New Zealand.

In the nine years to 2003, average wages in the accommodation sector slipped from 74 per cent of the national average to 66 per cent. But other sectors lifted their rates.

"The average cycle of a restaurant is 19 months - they are making no money," McLaughlin says.

"That tells me there are too many of them because they can get by on cheap labour.

"Maybe industry bargaining and slightly higher wages might force some of those people out and might mean that people running a restaurant might make a decent return on their investment.

"The shock effect forces the economy as a whole to become a high-wage economy. If we pay better wages we'll start an upward cycle."

A decade ago, Auckland University economist Tim Maloney found that a 10 per cent increase in the adult minimum wage between 1985 and 1993, at a time when there was no minimum for those under 20, reduced employment in the 20 to 24 years age group by 3.5 per cent, while boosting jobs for those under 20 by 7 per cent.

But later research has failed to reproduce this finding in the booming job market.

A Treasury and Labour Department study last year found that a big increase in the youth minimum wage from 60 per cent to 80 per cent of the adult minimum, and a lowering of the adult threshold from 20 years to 18 in 2001, actually had the positive effect of encouraging youngsters to get jobs sooner.

Victoria University economist Prue Hyman disputes the Treasury view that wages are simply a market price set by supply and demand for labour, allowing Theresa Gattung or Paul Holmes to charge a fortune for their highly sought services while Winnie makes only $10.40 an hour because her employers think they could easily replace her.

The collapse of the collective bargaining coverage in the private sector from 48 per in 1990 to 9 per cent, has seen wage inequality balloon.

On average, the top fifth of our wage and salary earners earn 13.3 times the average of the bottom fifth before tax, a wider gap than in all but two of 19 Western nations. Only Australia and Britain are less equal.

Other countries soften the extremes of the market, recognising that companies such as Telecom or even Newstalk ZB are team efforts where Gattung or Holmes depend on the whole organisation and that the success of every firm depends on other businesses supplying services such as cleaning.

Wide extremes create resentment at the bottom, while those at the top are also people who care for their colleagues and neighbours.

It is true that the country's general level of wages is constrained by our productivity. But how widely wages diverge from this general level is a social choice as well as an individual one.

Although higher rates for nights and weekends have now all but disappeared in low-paid sectors, Council of Trade Unions economist Peter Conway says most workers still prefer daytime weekday hours. Schools keep those hours, so society still needs parents to be at home in evenings and weekends. And "Saturday and Sunday is when you try to fit in sport and recreation and family things. The two things don't gel."

Conway says that five years after the law was changed to encourage collective bargaining, the unions have made little progress towards higher pay for antisocial hours or overtime.

There are also economic risks. Business Roundtable chief executive Roger Kerr scoffs at McLaughlin's idea that raising the minimum wage to $12 could "shock" business into higher productivity.

"If $12 is a good idea, why not $24 or $36?" he says. "It's just make-believe stuff."

Employers may be able to absorb a small rise in the minimum wage. Service firms in areas like resthomes and cleaning may be able to pass on the cost in higher prices without much immediate effect. Resthome patients still need to be cared for, and buildings cleaned.

But if the cost keeps rising, at some point the resthomes might be forced to lay off staff and reduce their level of care.

Cleaners like Winnie might be told to clean rooms faster, doing the job less thoroughly. Or hotel prices might reach levels where tourists go elsewhere.

That would mean fewer jobs in resthomes or cleaning and would spill over into fewer jobs in other areas such as hotels and tourism. If that happens, the higher wage for some will have been bought at the cost of unemployment for others.

"Trying to mandate a minimum wage is a poor way of looking after those most deserving of help," Kerr says. "There are many people on the minimum wage who are living in middle-class families that are supporting them. It's much better and less distorting to give such support through the tax and welfare system."

Gail Pacheco, an economist at the Auckland University of Technology who is doing a doctorate on the youth minimum wage, says that even though the adult minimum is only 45 per cent of the adult average wage (54 per cent of the median), the youth minimum of $7.60 is already 85 per cent of the median wage of 16 to 19-year-olds.

Although raising the minimum had no discernible effect on overall employment, she found that it reduced employment for those aged 16 to 17 and in their 20s. Curiously, there was no sustained effect on those aged 18 to 19 where the biggest increase in the minimum occurred.

Like others, Pacheco concludes: "I can't see a 10 per cent increase being too harmful. But what they are talking about is adjustments over the next three years of 26 per cent [to $12].

So at least let's see some more actual debate about the alternatives."

As Kerr says, if the aim is to boost the incomes of families with children so they can spend more time with their children, it may be more efficient to boost family support.

Or, he might have added, to provide cheap housing loans or free child healthcare or education.

Fakalogotoa suggests that the Government could simply scrap taxes for low-income families with children.

In practice, no one is expecting miracles.

The Government is giving more money back to working families through measures such as next April's in-work payment, and it may find room for more.

It is also committed to raising the minimum wage towards $12, but in careful steps.

This time last year, officials gave ministers the options of raising the adult minimum from $9 to $9.50, $10 or $11 an hour.

Ministers chose the most cautious option. In October, Prime Minister Helen Clark told the Council of Trade Unions that her "aspiration" was to raise the minimum to $12 "over the next four adjustments" - that is, in December of this year and the next three years.

That implies an increase of 62.5c a year, lifting the rate this month from $9.50 to $10.12.

Winnie, on $10.40 an hour, would get precisely zero benefit from that.

On past form, she will probably have to wait.