Why the Nats Youth Rate is just plain bollocks

Written By: - Date published: 2:03 pm, October 31st, 2011 - 20 comments
Categories: national, wages - Tags:

Labour candidate for Northcote Paula Gillon writes:

The Nats planned ‘starting-out’ youth rate is unfair, discriminatory and just plain bollocks

It’s no surprise that TV3 showed a clip on Friday night where young people talked about how they didn’t agree with National’s proposed new ‘starting-out’ youth rate and stated that it was “unfair” particularly as they weren’t old enough to vote against it.

It’s hard enough being a young person today without more discriminatory laws being thrust your way. We need to encourage young people to get a job; not slam them for six months when they do and treat them differently from their co-workers.

Being a student or in training is expensive. It never has been an ‘easy ride’ or a matter of a ‘life-style choice’, for many seeking to be productive citizens it is a necessity. Transport to and from university can be costly. Take for example your average student living in Birkdale, the bus into Auckland CBD and back costs approx $8.80 per day. If you go into classes four to five days a week then that could be an entire days wages on National’s ‘starting-out’ youth rate. It doesn’t leave much for food or rent does it? And before you say ‘move closer to the city’ a quick search of TradeMe’s ‘Flatmates Wanted’ will show you that a room in the city centre will cost you an average of $200pw while in Birkdale you are looking at approx $120 – $140pw.

What a great way to ‘start out’.

Gaining employment for young people is not just difficult, but it can also be costly. Having the right clothes for an office or retail job or getting the right work-boots are expensive up-front costs. Then, again, add on the cost of transport. You will end up with young people in training wondering if employment is really worth it. For some, it might cost more to be employed than unemployed. Many will be tempted to just get the Student Allowance and end up with double the amount of debt by the time they leave their training course. Didn’t someone say we were supposed to be reducing our debt?

But what about those young people coming off a benefit and into employment?

I’ll give you a scenario of what is likely to happen and you can tell me whether or not this is fair:

18year old ‘A’ has just finished school and is seeking full time employment. He/she has never worked before and has led a lovely cushy life living at home sponging off his/her parents (not that there is anything wrong with this!). 18year old ‘B’ has had a tough life, had to move out of home at a younger-than-normal age and ended up on the benefit, but now wants to get his/her life back on track through full-time employment. They both get employed in similar jobs: 18year old ‘A’ gets employed on $13ph but 18year old ‘B’ who is coming off the benefit is employed on $10.40ph. How is this fair? Why are we penalising young people for wanting to get off the benefit?

But don’t just take my word for it. Being the geek academic that I am, I decided to also provide you with a little bit of research. It really didn’t take me long to find the following gems.

  • On the argument that more young people will be employed: “if a business is operating so close to the bone that a $100 per week wage costs differential determines whether anyone is taken off unemployment, the viability of the whole enterprise can only be described as precarious. The answer is not to tinker with and reduce wages, which typically make up 25 to 35 percent of operating costs, but to find ways of producing more for less” (Balls, 2010, pg. 64);
  • “the economic arguments in favour of the youth wage are not inherently compelling; but rely for their credibility on the persistence of thinking that young people are not entitled to the same array of rights as adults and that they ought not be treated as if they have full human status” (Bessant, 2000, pg. 239);
  • “The ‘youth wage’ extends the dependency on parent/s and guardians in ways that sit oddly with official claims that governments want to enhance young people’s active participation” (Bessant, 2004, pg. 396); and,
  • then there is the research from academics at the London School of Economics who dismiss arguments that a youth minimum wage will increase job opportunities saying: “research has generally found few effects of the wage floor on jobs” (Petrongolo & Van Reenan, 2011, pg. 4).

I could add much, much more to this small sample.

What concerns me the most about National’s policy is not necessarily just how wrong they’ve got it, but their complete lack of empathy for young people. It wouldn’t have taken much to talk to some young people and ask them about how this would policy would affect their lives. And no, I’m not talking about discussing it with the types of young people who were in John Key’s hand-picked audience during their opening broadcast on Friday night who have wanted for nothing more than the latest iPhone. I’m talking about discussing this with young people who already find that after a small trip to the supermarket, paying rent, putting $30 petrol in the car and budgeting for bus-fares, they have nothing left over from their weekly pay.

It just shows that there really is no choice in this year’s election for young people. A vote for National is a vote for less pay and more debt. A vote for Labour is a vote for an increase in the minimum wage and more job opportunities.

And never forget, three years is a very long time…

Paula Gillon

Paula is the Labour Candidate for Northcote, has a MPhil in Public Policy and is currently completing her PhD in Public Policy, when she’s not out keeping Gotham City safe.

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References:

Balls, A. 2010. Statistical stumblings: Ashley Balls unravels the ‘spin’ on the ‘minimum wage causes unemployment’ myth. NZ Business.

Bessant, J. 2000. The Youth Wage and Age Based Discrimination: rights vs jobs. Australian Journal of Social Issues, 35:3.

Bessant, J. 2004. Mixed Messages: Youth Participation and Democratic Practice. Australian Journal of Political Science, 39:2.

Petrongolo, B. and Van Reenan, J. 2011. Youth Unemployment. Centrepiece, 16:1.

 

 

 

20 comments on “Why the Nats Youth Rate is just plain bollocks ”

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  1. Lanthanide 1
    31 October 2011 at 2:51 pm

    “Many will be tempted to just get the Student Allowance and end up with double the amount of debt by the time they leave their training course.”

    Student Allowance is free and does not need to be repaid to the government. It is a benefit.

    I presume what you mean is Student Loans Living Cost. Almost all students that are renting will be getting this already (interest free, so put it in your bank for a rainy day even if you don’t need it now); introductory wages for first 6 months employment is not likely to force many extra people to take this out.

  2. Colonial Viper 2
    31 October 2011 at 2:52 pm

    Bollocks? Bollocks?!!

    Choice wording written by a woman no less. This could be trouble. 😎

    • vto 2.1
      31 October 2011 at 3:40 pm

      Ha ha, yes, where is that Thorn bird and her selective outrage?

      And this one is in fact worse because it is derogatory about men’s testicles, whereas at least Goff’s reference to balls had some redeeming features i.e. implication that having balls is good cf this implication that having balls is not good.

      Outrage please someone

    • One Anonymous Bloke 2.2
      31 October 2011 at 3:42 pm

      A ballsy headline 🙂

  3. The Gormless Fool formerly known as Oleolebiscuitbarrell 3
    31 October 2011 at 3:26 pm

    That post is quite long. To save time, I have redacted it below:

    Whine, moan, whine. It’s not fair. Whine

  4. Galeandra 4
    31 October 2011 at 4:39 pm

    A lot of (school) kids work because they need to, to actually help keep family afloat, or to look after their own needs re clothing, stationery,entertainmment etc, because their caregivers require them to.

  5. Gareth 5
    31 October 2011 at 6:52 pm

    It’s not so much about being close to the bone, only $100 per week yad yada yada.
    A large supermarket or similar with say 50 youth wage employess will save $5000 per week this is all clear profit….

    It’s all about giving even more to those who need it least…

  6. Terry 6
    31 October 2011 at 6:58 pm

    Most of these comments leave one aghast. Small wonder the country is going for Key, these people have not the brain of a very stupid mouse,

    • Roy 6.1
      1 November 2011 at 3:23 pm

      It’s not their having the brain of a very stupid mouse that worries me. It’s that they are as mean as a s**thouse rat.

  7. Nick K 7
    31 October 2011 at 11:25 pm

    A recent Department of Labour study estimated 9,000 youths have lost their jobs as a result of Labour’s abolishment in 2006. Those 9,000 are now earning $4 p/h sitting on the couch; instead of $10 p/h in a job.

    Why is Labour punishing those 9,000 young people so much?

    What have they done to Labour to earn a life on the couch, and on their skateboard rather than in a job?

    • Colonial Viper 7.1
      1 November 2011 at 12:10 am

      Unless you can point to the direct quote you are making up bullshit and lies, and therefore you must work for John Key.

      Quite simply, work must be economic for the worker or its not worth doing.

      And if a business owner can’t pay a living wage to its workers, it should be bankrupted and room made for a business which can. That is after all, the ‘creative destruction’ of the capitalist market place.

  8. (A different) Nick K 8
    1 November 2011 at 10:09 am

    If a reduction in wages from $13 to $10.40 makes the difference in a youth being employed or not what happens when they reach the end of their six months Youth rate and need to be paid the real minimum wage? Do they get sacked then instead?

    Gareth is right, its another case of directing money towards those that already have money.

    For the record I’m an employer, I don’t pay anyone less than $15/hour and a youth rate would make no difference to whether or not I hired someone. Labour’s policies would have no detrimental effect on my business, National’s will have a detrimental effect on the society I live in.

    • Colonial Viper 8.1
      1 November 2011 at 3:27 pm

      Maybe if they cut youth rates to $6/hr youth unemployment would disappear permanently. Or not.

  9. deservingpoor 9
    1 November 2011 at 10:13 am

    I see red every time someone trots out the line that employing people is an onerous expense to business because:
    1) The logical conclusion to that argument is to pay them nothing.
    2) It shows a complete misunderstanding of how the tax system works. Wages, including the paye paid on behalf of the employees are a claimable expense. In plain english, wages are completely offset against the income tax of the business and effectively cost them nothing.

    Whether they are paying a youth rate or a full rate makes no difference. Either way they claim a 100% deduction against their income tax.

    What this is, is another example of the contempt our society shows it’s young people and the fact that the older generations consistently allow it to continue.

    • The Pink Postman 9.1
      1 November 2011 at 3:26 pm

      Yes Im sorry to say a lot of people in my age group are in favour of low wages for youth .The same type who believe that army traning is good for youth .These bloody types embarrass me ,have they learned nothing in life or are they just naturally mean spirited and envious of the young ?

  10. The Pink Postman 10
    1 November 2011 at 3:18 pm

    For the first five years I worked for a low wage .The problem is one is always hard up .Later on in life one realises how much is missed.
    I have always noticed that usually its the rich employer that wants to pay low wages,In NZ, farmers and the racing industry pay the low wages yet are making huge returns on their workers graft. I welcome a capital gains tax. Its about time these greedy bastards paid up . They are not backward in having a handout when ever possible.