Unions ask for rise in minimum wage

By MATHEW DEARNALEY

Unionists, buoyed by the abolition of the Employment Contracts Act, are pushing for an adult minimum wage of almost half the national hourly average of $17.72.

In a submission on the Government's annual review of the minimum wage, the Council of Trade Unions calls for a rise in the existing $7.55 an hour to between $8.10 and $8.85, equivalent to $324 to $354 a week, an increase of up to 17 per cent.

The cabinet will receive a report from officials before deciding whether to lift the minimum on April 1.

But one of the Government's first decisions on being elected a year ago was to increase the minimum wage from $7 to $7.55, ending a three-year freeze imposed by National.

Whatever figure the Government picks for next year, the CTU suggests that it set an ultimate policy target of 50 per cent of the average wage, compared with today's 43 per cent.

The Employers Federation warns that any increase will cost jobs, but the CTU notes that in 1947 the minimum stood at 83 per cent of the national average and says the Government has an obligation to the community to set minimum socially acceptable standards.

"The minimum wage is one income policy instrument that the Government has to stop too big a gap opening up between the new aristocracy of the deregulated economy and the low paid," it says.

The CTU accepts that the minimum wage has already been lifted almost 8 per cent this year, but says it remains inadequate.

A weekly total of $302 leaves workers with no more after tax than a married couple would collect on the dole, it says.

The CTU also wants the age from which the adult minimum wage is payable to be dropped from 20 to 18, a move to which the cabinet agreed in principle early this year but postponed while considering an increase in rates for workers aged 16 and 17.

This is because employers might be tempted to replace 18-year-olds with younger workers if the gap between adult and youth rates appears too wide.

Youth Affairs Minister Laila Harre says she and Labour Minister Margaret Wilson have reported back to the cabinet a recommendation from independent researchers that the youth rate be raised from 60 per cent to 80 per cent of the adult minimum.

That would take it from $4.55 to $6.05 based on today's adult rate.

Although the Government shied away in June from acting on that recommendation, taking fright from a slump in business confidence, Ms Harre says the minimum wage annual review brings the issue back into the spotlight.

"The youth wage has to be dealt with again but it is not yet at all clear whether it is likely to result in the implementation of earlier recommendations," she told the Herald.

She said that even a focus group of employers of young people, which included supermarkets, admitted that raising the youth rate to 80 per cent would not affect members' hiring decisions.

That was a benchmark rate already set by most employers, and such a move would be far less contentious than lowering the age covered by the adult minimum, Ms Harre said.

But the Employers Federation says in its review submission that the Government should consider doing away with any minimum for workers under 20, given that youth unemployment is still three times the national average.

It sees minimum wages as barriers to hiring young or low-skilled, and therefore less productive, workers, undermining the Government's "closing the gaps" strategy.

Ms Harre told the Mayors' Taskforce for Jobs that while young people should be encouraged into secure employment, low minimum wages amounted to subsidies to employers, which were often not justified by the poor-quality work offered.

Herald Online feature: Employment Relations Act

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