Youth rates not the answer

The National Government's decision to introduce a cut-price minimum wage of $10.80 for young people will do nothing to address high levels of youth unemployment in provincial centres like Wanganui and across the rest of the country.

The Government's youth rates policy is discriminatory. It allows for wages to be set on the basis of age. It will make it possible for an employer to hire, for example, two 19 year olds with similar skills, doing the same job - but one could be earning $13.50, while the other only $10.80.

The only thing setting these young people apart is the timing of their employment in a tight job market. One would have been lucky enough to find a job quickly and therefore would earn the adult minimum wage, the other person not as lucky and would have had to spend some time on a benefit.

This policy would therefore make the unlucky young person eligible to be paid 20 per cent less. This scenario is fundamentally unfair.

For many young workers, the difference will be affording their rent; for others it will be the cost of food.

Nationally there are 84,000 young people out of work, education and training.

That's twice the population of Wanganui. Cutting the wages of young people, or any other group that is finding it hard to get work, will not address this problem.

Youth rates will only lead to a job merry-go-round. This is shown in the advice given to the Government from the Ministry of Business, Innovation and Employment.

Jobs will be switched from one group of young people (earning $13.50 or more), to the cheaper group of young people (earning the youth rate of $10.80); potentially opening up jobs for young workers on the cheaper rate, but only at the expense of other workers.

New Zealand doesn't need a job merry-go-round. We need job creation. Cutting wages by 20 per cent will not create the jobs New Zealand needs.

The biggest users of youth rates will be large service based employers like Pak'n Save and New World. These companies are infamous for paying low wages to their workers already. This policy will allow them to save more money, at the expense of older workers.

Any older workers being paid around the minimum wage should be very worried about this policy.

Youth rates have the potential to price older people out of work. If Pak'N Save could save 20 per cent on check-out operators, they will do so.

That will mean older workers will lose hours, or not get employed in the first place. This is an unfair outcome. Older workers deserve to be treated with respect and paid a decent wage that recognises their skills and experience.

This policy will do the opposite and keep the wages of older workers in these workplaces low.

David Mair, CEO of the iconic Kiwi gumboot company, Skellerup, said last week: "Paying $10.80 per hour is not going to lead to any great advantages for anyone."

He says the way for business to grow jobs and be successful is not to drive down wages, but to think long term and be innovative.

Youth rates have the potential to put many young people into relative poverty.

Employer groups are quick to say young people don't need to earn the full minimum wage, because they are all living comfortably at home with generous parents paying the bills. This message is deeply out of touch and disingenuous.

For those living away from home paying the same living costs as everyone else, $10.80 will not go far. With the currently minimum wage being so low, $10.80 will prove to be unliveable for many people.

A Government serious about building a highly skilled, productive and innovative workforce would take an investment approach to the issue of youth unemployment.

This was the approach adopted by Australia, who boosted apprenticeship opportunities, job placements, and access to higher education.

The Government has the opportunity to do this by supporting initiatives in communities like Wanganui.

The Wanganui Chamber of Commerce Regional Trades initiative is a good example of this. It has been successful in getting a number of young people into trade training in the Wanganui region.

Alongside this is the positive impact programmes like "Job Ops" could have on bringing down youth unemployment numbers.

The programme has been successful in providing six month job placements and structured training for young people.

Unfortunately, the programme is only available to a small fraction of the 84,000 young people aged 15-24 not in work, education or training. We should be getting innovative and investing in programmes that are proven to deliver the opportunities our younger generation so desperately need.

Youth rates, however, won't work. Cutting the wages of workers is the weakest response to unemployment. Youth rates will cause more harm than good for younger and older people in Wanganui and the rest of New Zealand.

- James Sleep is the spokesperson for StandUp, the youth sector of the New Zealand Council of Trade Unions