KEY POINTS:
An economist is concerned that a rise in the minimum youth wage could do more harm than good.
Auckland University of Technology senior economics lecturer Gail Pacheco fears that a wage rise for youth may be bad for the economy and future employment rates.
Citing her thesis, "Minimum Wages in New Zealand: An Empirical Inquiry", she said "policy-makers must consider the long-term harm of a rise in the minimum wage".
Her research found that a rise in the youth wage resulted in fewer young people continuing their education, either at secondary or tertiary level, in favour of getting jobs. That would lead to a less skilled workforce.
She did not believe that youth should be paid less regardless of their ability, but raising wages "may harm those that you are trying to help most".
Dr Pacheco said the youth wage rate was "a blunt instrument the Government is trying to use to fix a problem for a few people - it will harm more than it will help".
She also believed that if employers were forced to pay higher wages, they would opt to employ older staff with more experience.
This would lead to lower youth employment rates, she said.
Further contributing to unemployment were school-leavers who intended to work but did not do so.
Dr Pacheco said New Zealand had experienced a wage rise, for both youths and adults, every year for the past seven years.
She said the negative effects would become evident when New Zealand experienced an economic downturn.
- NZPA
