National has given up whatever “ambition” it ever had for a high-skills high-wage economy. Last year Bill English took to describing our low wages as a competitive advantage (and a fact of life), John Key backed him up. So now we have youth rates, undercutting the “minimum” (yeah right) wage. Here’s what the Nats would have you believe:
Starting-out wage will put young people in work
Labour Minister Kate Wilkinson has today confirmed the introduction of a new starting-out wage that will help provide young New Zealanders with more opportunities to get into the workforce. …
“The new starting-out wage will create demand for young people by giving employers a real incentive to take them on,” Ms Wilkinson says. …
“These opportunities are vital if we are to address long-term benefit dependence, as 90 per cent of 16- and 17-year-olds who leave school and drift are likely to end up on benefits when they turn 18,” Ms Wilkinson says.
”The Government’s 90-day-trial periods are also helping employers provide job opportunities for thousands of workers. The starting-out wage is another initiative to help more young people into jobs,” Ms Wilkinson says.
Here’s Labour in reply:
Low Wage Future No Future At All
National’s plan to pay young Kiwis low wages will just see them saving up their $10 an hour for a plane ticket to Australia, says Labour Leader David Shearer.
“Under National’s watch, 65,158 young Kiwis aged between 18-30 have headed to Australia looking for better jobs and opportunities – 21,733 this year alone. Paying lower wages will just drive more of them offshore. …
“John Key is resigned to New Zealand being second best. He’s content with our country being a place of low wages and less opportunity, where people are leaving in droves for jobs overseas and where we are falling behind the rest of the world. …
“Paying young workers less just shows how bankrupt of ideas the Government is when it comes to tackling unemployment and creating secure, decent jobs.
And The Greens:
National offers young workers a hefty pay cut
The National Government thinks the way forward for New Zealand is to give young workers a pay cut, Green Party Co-leader Metiria Turei said today. …
“National’s proposal to reintroduce pay rates for young workers is simply another mechanism to deliver cheaper labour to employers and is discriminatory,” said Mrs Turei.
“Rather than offering young people a bright future, through skills and training, youth rates are about undercutting all workers’ wages by ripping off young workers. …
“This policy is an incentive for bad employers to hire and fire young workers and is likely to see real wages for young workers drop significantly,” Mrs Turei said.
The combination of youth rates and 90 day “fire at will” legislation certainly creates the opportunity for employers to churn through young staff – an infinite pool of cheap labour – as Danyl at Dimpost pointed out.
Amongst the compliant MSM coverage of youth rates, today’s anonymous editorial in The Herald contained some unusually thoughtful comments:
Young people are particularly vulnerable to unemployment in times like the present. When the world economy is beset by problems and business everywhere is wary of taking on more commitments, older people cling to the jobs they have and vacancies are taken by applicants with a solid work record.
The result can be seen in queues of keen young people for the most menial of jobs and, worse, in discouraged youth hanging about with not much to do. …
A minimum wage is a powerful economic regulation. It is also a convenient one for small employers in industries well supplied with applicants for every job. It saves them the trouble of negotiating a rate for their staff, individually or collectively, and protects them from having that element of their costs undercut by competitors.
It builds into the economy an incentive to work rather than subsist on an unemployment benefit and it protects those who, for reasons of pride, identity, dedication or sheer enjoyment of a job, might work for even less than the benefit. The statutory minimum wage is an important and sensitive subject for all these reasons. Governments should not raise it unless the economy is growing and business can afford it, nor should they do anything to undermine it.
Despite these interesting observations the anonymous scribe never the less concludes:
If a temporary saving for employers can get the unskilled young taken on, they will get a chance to show their aptitude and know that after six months they have a right to a rise. It is a sensible step, approved at last year’s election. Let’s hope it works.
We should certainly be creating more training and more jobs for young people, more jobs in general. No argument there. But we should be doing though innovation and sustainable growth, by moving forwards. Youth rates (even if they worked) are the wrong tool because they have built in to them an acceptance of economic failure. They accept that we should go backwards in our quest for a high-skill high-wage economy. They are based on the same “logic” as the Nats’ argument that low wages are a competitive advantage, and they deserve exactly the same chilly reception. In the real world low wages are driving Kiwis to Australia in record numbers. Lowering them further will just hasten our race to the bottom.
Update: Read Sue Bradford’s powerful response to youth wages here…