BNZ on Youth Employment
July 11th, 2011 at 9:39 am by David FarrarDene Mackenzie in the ODT reports:
BNZ economist Stephen Toplis wants the Government’s policy-makers to get a better understanding of the way the nation’s labour market is working.
“There’s a lot of wild and woolly stuff going on that is raising significant question marks over whether the necessary labour supply is available to meet New Zealand’s ongoing growth needs.” Policy-makers at both Treasury and the Reserve Bank would need a deep understanding of the labour market to set the ground rules, he said.
There had been a disproportionate rise in the nation’s youth unemployment rate for workers aged 15 to 19 years, which was now a “staggering” 27.5%, and the next age group – 20 to 24 years – had a rate of 13.5%.
Workers over 25 – who could be seen as a proxy for “skilled workers” – had a rate of just 4.6%, lower than the 6.3% peak level for that age group in 1998 and 8.5% in 1992.
On average, the youth unemployment rate had been 11.8 percentage points higher than the non-youth rate since 1986, but by March this year that difference had climbed to 21.9 percentage points.
So what happened? Labour and Greens got rid of youth rates, and National has not put them back.
Between the peak in youth employment at the end of 2007 and now there were 50,500 fewer workers in the 15-19 year age group, a fall of 31.6%, even though there had been an increase of 2400 in the total number of people employed.
“The oldies are on the march … it’s an oldies takeover.”
Youth rates were abolished in 2008, and there are now 50,000 less teenagers in work. This might be the worst case of putting ideology over pragmatism we have seen in terms of adverse consequences.
Related posts:
- Jim should back bringing back the youth minimum wage
- Youth Rates and Youth Unemployment
- Youth Employment
- Youth Unemployment
July 11th, 2011 at 9:51 am
And another National mistake: they implemented NCEA, the only curriculum of its kind, a huge experiment, and an utter failure given these numbers.
Vote:July 11th, 2011 at 9:51 am
One of the key reasons why ACT has my vote.
National in opposition were in favour of the youth rates. Their about turn on this issue is bewildering. The Youth Guarantees scheme is clunky and inefficient, and comes at a significant cost to the taxpayer.
Vote:I know a number of good teens who struggle to find work, simply because they’ve been priced out of the market. When you’re living with mum and dad, being allowed to work for 10bucks an hour is mostly considered a whole lot better than twiddling your thumbs and living off the state.
July 11th, 2011 at 9:59 am
Why is that? What is Labour lite waiting?
Vote:July 11th, 2011 at 10:20 am
And here is what is coming:
There are calls for the retirement age to be raised to 67 or even later. One of the reasons given for it is that people are living longer so their productive life is longer so they can keep working until they are older.
However there are other groups saying that older people are “locking youth out of jobs” by staying in them longer.
Can’t have it both ways…
Vote:July 11th, 2011 at 10:24 am
Just more brain dead politicians who believe because they deem it so it will be so. National it seems believe most of this socialist, feel good, clap trap, more fool them. Where is the common sense, better to get a wage then to be priced off the market. Why doesn’t the fucking lunatic left go for a $100 an hour pay rate for all, then we will all be rich. The logic of these morons defies belief and it is no use looking to our so called leaders, hard to have vision with your heads stuck firmly up your arses.
Vote:July 11th, 2011 at 10:28 am
It seems the reasons may be a little more complex than the abolition of the youth minimum wage, which wasnot even mentioned in the linked article.
Vote:July 11th, 2011 at 10:40 am
Berend, thats a piss poor strawman…… NCEA has nothing to do with youth unemployment. Since when did packing shelves and flipping burgers require NCEA level subjects?
Vote:July 11th, 2011 at 10:40 am
I find the idea of defending youth on full wages weird. It seems to be some sort of ideological thing, where the facts (low experience, few financial responsibilities) are completely ignored.
Vote:July 11th, 2011 at 10:49 am
From a certain practical pov there’s nothing wrong with minimum wages.. the higher the benchmark the less employment of people and the more automation you bring in. You can thus get higher productivity, but at the cost of unskilled unemployment.
Its an old trade off and one not to be sneezed at.. but its difficult to think of a worse time to implement it than the start of a major recession!
The same goes for a CGT or something like it.. its potential good points are overshadowed by a recession and the need to get through it before implementation.
Put simply, a recession is the inevitable result of a boom.. a signal that one must get rid of the bad habits developed during the boom and one must make do with less. It can’t be stressed enough.. in 2000 Core Govt expenditure was $34 billion, now its $70 billion and almost the only priority is to spend less, not muck around trying to raise wages and taxes to keep the (dead) party going.
JC
Vote:July 11th, 2011 at 10:58 am
I don’t get the obsession with age. Youth rates are discriminatory and contrary to our ideas of human rights.
Minimum wage rates are bad for all, the effects are seen most dramatically in the low skilled which includes the young and poorer minorities. The current high minimum rates should be canned for all.
Vote:July 11th, 2011 at 10:59 am
seanmaitland: I’m pretty sure there’s a packing shelves unit standard in there somewhere…
Vote:July 11th, 2011 at 10:59 am
How exactly would removing the youth wage for 16 & 17 year olds increase unemployment in 18, 19, 20, 21, 22, 23, 24 & 25 year olds who were already on the adult rate?
Vote:July 11th, 2011 at 11:00 am
youth rates need to go back in place and with urgency. Kids are competing with experienced older people for the same jobs and are missing out to employers who are not only risk averse but can buy experience cheaply in this market.
berend (820) Says:
July 11th, 2011 at 9:51 am
And another National mistake: they implemented NCEA, the only curriculum of its kind, a huge experiment, and an utter failure given these numbers
I cant see how NCEA has anything to do with this issue. In fact from my kids and their friends experience kids are working harder and getting into subjects in much greater depth than when I was at secondary school. It simply seems bit of a band wagon to Bag NCEA when the reality is it appears to be working just fine.
NCEA is not the issue on youth unemployment it is economic conditions and the high cost of employing kids with no skills.
Vote:July 11th, 2011 at 11:00 am
Because of 1 scenario you can imagine that might play out in 2 or 3% of employment cases, you think a mechanism that affects all is the way to go about it?
Let us make our own decisions rather than have the know it alls compel us to do what they think is best for us.
Vote:July 11th, 2011 at 11:02 am
Because it would get them in the door and they could either stay with the employer who picked them up at 16 or 17 or the experienced gained would help them into their next job/s.
Vote:July 11th, 2011 at 11:20 am
My 2 teenage daughters had no problems getting minimum wage part time employment. They put excellent CV’s together and marketed themselves to lots of prospective employers. Both had jobs within a fortnight. Their motivation was that their parents are tight as fishes arses with the pocket money so if they wanted all the stuff that teenagers want then they would have to earn it. Maybe the increase in youth unemployment is only partially due to the abolition of youth rates. I reckon the current generation (X, Y or Z I can’t remember!) need a reality check from their parents. If they want a new iphone or whatever then get out there and get a part time job. They are there if they want to look.
Vote:July 11th, 2011 at 11:28 am
OTGO,
Unless those part time jobs never get filled, then they are not there. They are just going to older people more often than they used to.
I don’t know why so many people have such a problem with older people getting employed, I would be bloody pissed off if young people were able to undercut me but because of my age I was not allowed to compete on a level playing field.
If there is a job available at current minimum rates then it is getting filled, any increase in the youth unemployment rate is from a reduction in the older unemployment rate. The only way to get both down in a fair manner is through either economic growth or a reduction in the minimum wage equally for all workers.
Vote:July 11th, 2011 at 11:51 am
What you miss is the oppourtunity that gets created when an employer can say, “well I can afford to employ a trainee for $10 but I can’t for more”
Trainees take a lot of time and while someone is training them they are non productive employees, and worse they stop the employee(often a sole bisiness owner) from earning because his/her time is taken up with the training.
The state should acvtuallyget the hell out of these relationships just like they should with most other things.
Vote:July 11th, 2011 at 11:54 am
I understand what you mean Sonny but the fact is the jobs were filled by my daughters not older people. My point being that the increase in youth unemployment may not be 100% attributed to minimum wages.
Vote:July 11th, 2011 at 11:59 am
OTGO,
The increase that is disproportionate to the overall unemployment will be.
High quality youth candidates and older candidates have always been around, when your daughters are older I bet they will be at the head of the queue and will still get the positions they seek.
Your anecdote is somewhat like me saying ‘I just got six figure salary job as a software engineer, therefore there are high paying jobs out there for everyone’.
Vote:July 11th, 2011 at 12:04 pm
So you’re saying that for some jobs an adult doesn’t make the employer money unless they went trough the youth-rate period?
I call bs. Most low-skilled minimum wage jobs are inelastic and while I agree less 16-17 year old will be chosen, the job will still be viable and needed to be done.
Vote:July 11th, 2011 at 12:04 pm
The other thing is Viking is the position may be one in which a productive person can earn $15 an hour doing. But if people are given all they need to get by they are not as motivated to improve themselves, so if you can take people on at $8 and say to them ‘learn your job well and I’ll pay you more’, you are likely to get more productive workers capable of earning $15.
If the minimum wage is high enough to comfortably get by on (and at $13ph you can earn $650 or more per week) you get a less productive workforce.
Vote:July 11th, 2011 at 12:08 pm
No, I’m saying that work experience is more important than anything else for jobs at that level. If you’ve never had a job before you are hard to employ.
Now you are talking out your arse. You can’t envisage every workplace and the choices you are removing from them with one simple rule like this. There are many subtle effects of these kinds of laws, if you had experience of being turned into a minimum wage employer by the government you would know.
Vote:July 11th, 2011 at 12:19 pm
An example questlove of the way rules made by ignorant people affect some workplaces.
If you have a team of say 15 people doing low skilled work at or near the productivity of the current minimum wage. You will probably find that 2 or 3 of those workers will be natural leaders who will carry the team, those people are more likely to be slightly older and paying their own rent or supporting children or others. The other 12 or 13 workers who are less applied to the job may be many part timers or in their first job, they are more likely to be younger and living at home and spending their money on drinking in the weekends. The most productive way to organise this workforce is to give the few individuals who really carry the team higher wages and the less productive lower. With an increase in the minimum wage, the business still has to maintain its obligations and contracts probably with the expectation of spending a set amount of turnover on wages.
So the way it manages is it does not increase the wages of the 2 or 3 key staff when it has to increase the wages of the 12 or 13 less engaged staff.
People often claim that increasing minimum wages will increase the wages of those just above the minimum wage, but often their wages are depressed as that is where employers find the money to pay more to their now more costly minimum wage staff.
Vote:July 11th, 2011 at 12:22 pm
So if it IS still economical for employers to hire people at the adult rate then my original point stands ie, that increasing what 16-17 year olds get paid doesn’t significantly effect unemployment rates of adults 18 and over.
Turned into a minimum wage employer? The min, wage is there regardless of the youth-rate. Which you’ve just agreed isn’t a prerequisite for making viable paying someone the minimum wage when they turn 18. You might stop employing 16-17 year old but you’re still going to employ someone if the demand is there.
Vote:July 11th, 2011 at 12:34 pm
An 18 year old who has never held a job is not as employable as as an 18 year old who has been working for 2 years.
If I have a job paying $12.50 and the minimum wage is $12 and the youth rate is $10 I am not a minimum wage employer. If the gov changes the minimum wage to $13ph I have been turned in to a minimum wage employer.
If I have a job that can pay $12 which is more than the youth rate but less than the adult minimum wage then that job is gone if the youth rate goes.
If I employ 20 people in my restaurant, 10 at $13 and 10 at a youth rate of $10 ($230ph), when the youth rate is removed instead of employing 20 people at $13, I will employ 18 people at $13 ($234ph) and get them all to do more.
The extra cost and lower returns of the minimum wage increase also means that I will have less money to open a second restaurant which might take me a year longer to do now.
Vote:July 11th, 2011 at 12:39 pm
“Youth rates were abolished in 2008, and there are now 50,000 less teenagers in work.”
But how many of the kids not in work are at college or at university.
And are kids studying but in part-time work considered as workers? (In England they are not and that leads to a whole lot of paradoxes.) I suspect the loss of workers is that the uni kids have take the jobs but are not countered as workers because they’re primary occupation is studying.
Vote:July 11th, 2011 at 1:01 pm
What extra costs and lower returns? It looks to me like you’ve just increased your labour productivity.
Vote:July 11th, 2011 at 1:22 pm
A question for the Actoids here:
If you are so staunch about “one law for all” then how do you justify supporting age-based discriminatory rates for the minimum wage?
[DPF: A minimum wage is not a mandatory wage - there is no discrimination.]
Vote:July 11th, 2011 at 1:31 pm
I don’t toad. Minimum wage should be scrapped or set so low as to not matter for everybody.
Vote:July 11th, 2011 at 1:34 pm
You are assuming identical service levels. Lower returns would be the extra cost of employing the same 20 people at the higher rates, or the impact on revenue from less incentivised staff and poorer service.
Vote:July 11th, 2011 at 1:46 pm
So Toad, at what point and level does the Green Party’s discrimination come in. Do you think some one of 16 can vote, get paid the same as every one else, but not have access to alcohol ? And those 15 year olds, can’t even vote but have to be paid a full wage….
Me, I’d go with the Scandinavian experience here and abolish the minimum wage. Works for them…
Vote:July 11th, 2011 at 2:08 pm
Even if we scrapped minimum youth rates they would still exist by proxy, that being the unemployment benefit.
Vote:July 11th, 2011 at 2:37 pm
Exactly.
And there is some hypocrisy when you consider the dole. The minimum wage exists to supposedly provide a minimum amount to live on, but where this amount is paid directly by a small minority of employers, the amount given is more than twice what taxpayers are willing to offer as a minimum standard of living through the unemployment benefit.
Which one is the minimum amount a person can live on, the minimum wage or the unemployment benefit?
Vote:July 11th, 2011 at 2:53 pm
i don’t know if the minimum wage had the huge effect you infer.
During a recession maybe there were just not the jobs regardless of hourly rate.
Vote:July 11th, 2011 at 2:58 pm
The minimum wage increased 70% in NZ from 1999 to 2007.
A lot of options for NZ workers and employers have been taken from them.
Vote:July 11th, 2011 at 3:33 pm
Speaking from or own experiences in over 45 years of budssiness and god know how many recessions rates matter especially for the young. They need a start and don’t have the living costs that families have but do contribute to easing those costs in the family they live among.
$400 a week is better than $200 a week especially when it gets someone into work.
Its way past time some of our civil rights people took the Govt. to court for vio;ating the rights of young people to earn a living. Maybe Andrwe 3 Hats might like to fire up his unions to take a case. Of course not they got the restrictions imposed in the first place.
Maybe the Commisioner for Children, oh no, no longer children once they are 14.
Maybe??? well who, who represents young people these days??
Vote:Anyone, anyone at all except people like me and DPF and others who despite all our experience get shouted down by Qualifed People”. People who think they know about human aspirations,but are actually confused with human control.
July 11th, 2011 at 4:02 pm
Sonny 2:37 – cue the braided armpit brigade supported by Unite and legions of limp liberals all calling for the dole to be increased.
Vote:July 11th, 2011 at 5:48 pm
@Sonny
The dole is less than the minimum wage because there are very little costs associated with sitting on one’s arse.
You don’t need transport, clean clothes, personal hygeine, packed lunch, a telephone etc, and you have the choice of living anywhere (ie you don’t need to be close to work or on the bus route) so can save on rent.
Vote:July 11th, 2011 at 6:26 pm
It’s not hard to walk to work. There are no significant
Vote:extra costs to working.
July 11th, 2011 at 7:14 pm
Really? No significant costs?
The last actual job I had was in central Auckland and I lived in West Auckland. Walking wasn’t an option.
Options were…
Bus – about $5 each way x2 per day
Drive – $10 or so in gas + $9 parking + vehicle maintenance
Bike – free, but requires a reasonable bike + associated maintenance
or fork out an extra $300k or so to be closer into the city so I could walk.
I needed to wear reasonable-looking business attire, that isn’t free. Lunch costs were higher, I didn’t always manage to pack a lunch in time. I was also expected to have an internet connection at home and a phone to be contacted on.
Then there’s daycare. I forget what we were paying, but that certainly ain’t free. Full-time daycare (after the 20 hours) costs over $200 per week, more in places like Auckland.
And then there’s all the shortcuts you have to take because you don’t have time. Like paying someone to fix your taps etc because you don’t have time to do it yourself. Or paying for an electric heater because you don’t have time to go gather firewood.
Living costs are definitely higher when you are working. I don’t see how anyone could suggest otherwise.
Vote:July 11th, 2011 at 9:02 pm
You can walk about 8k or bike about 25k to work. I’ve done both.
Uniforms are often paid for by the workplace. Winz will also help you with $1500 to get started if you have no money.
Daycare? Kids are optional, don’t have them until you have savings and a secure job.
Eating lunch at home or work is no different, sandwiches and leftovers cost the same no matter where you eat them.
Shortcuts? Sort your shit out, there are 144 hours in a week, you work 50, sleep 50 and have 44 hours left to fuck about with. You have 44 hours of home maintenance per week? I would assume unless you have savings and a secure job you live with family or flatmates who all help each other out with these things.
Required to have internet and phone doesn’t sound like entry level work, it sounds like a job you have chosen because you see benefits in doing it.
Most people working choose to spend more on living costs, but it is optional and there is no need to if you want to keep costs down.
Vote:July 11th, 2011 at 9:11 pm
It should be more expensive to be on the dole than working.
Because you need phone and internet access to hunt for jobs, on average you need better clothes for interviews than work. You don’t have routine and you more transportation to cover between interviews day to day. Working you need to be ideally situated for 1 workplace, job seeking you need to get to dozens if not hundreds.
Vote:July 11th, 2011 at 9:15 pm
No wonder so many young people leave our shores for far better wages across the ditch. At least Australia pay decent wages.Why would a young dude stay in this confused country run by politicians who couldn’t give a flying fuck?
Vote:July 11th, 2011 at 9:32 pm
You think its minimum wage rates that drive immigration between 1st world countries?
You need new talking points.
Vote:July 11th, 2011 at 9:42 pm
“This might be the worst case of putting ideology over pragmatism we have seen in terms of adverse consequences.”
It’s got nothing to do with ideology. The minimum wage is an emotional issue that allows proponents to demonise their opponents and so win power for themselves, in the full knowledge that they are creating unemployment amongst the most vulnerable.
Basically, Labour and the Greens cynically fucked over the low skilled (and the younger workers, in the specific case of youth rates) in order to win power and privilege for themselves. And now National won’t do anything about it because they know it’ll be used against them.
Vote:July 11th, 2011 at 9:44 pm
@fatboy slim – A young dude who can’t get a decent career built up in NZ has only himself to blame – its either because (a) he is too lazy to put in the effort or (b) he is too fucking lazy to put in the effort.
Take your whinging to Australia and see if that is enough to get a decent career over there.
Vote:July 11th, 2011 at 9:55 pm
@Sadu – Life is tough. You can either roll over, or get up and overcome stuff. There will always be reasons to quit, and always other like minded people telling you that’s fine (to assuage their own consciences perhaps?) Seek out a job and do it well. Actually just do what is expected of and you’ll almost always stand out from your peers. Think laterally and look for opportunities to add value beyond/outside your nominated role. Be ready to change jobs, ask for a raise and explain why you’re worth it. There is dignity in working hard and being respected for it. Easy for me to say? Yes – I’ve been unemployed on three occasions, close to bankruptcy once, made redundant twice, do not have a tertiary education – first job out of school was driving a delivery truck, have run my own businesses (all successful, but only some made money!). You can do it!
Vote:July 11th, 2011 at 10:03 pm
Some seem to wrongly describe the Youth Rate policy as a minimum wage; but it’s the Youth Rate that more approximates a free market approach and its abolition that approximates the intervention in the market than the Minimum Wage is. (No wonder I was confused before checking the issue out properly!)
A general point on the free market (Youth Rates) v. minimum wage approach. It’s interesting to note that the white racist labour unions of South Africa actually supported a minimum wage for black workers: they wanted to exclude blacks from employment for less cost to themselves because blacks were willing to work for other, non-racist, employers for far less. The abolition of Youth Rates has excluded youth in the same way, entirely predictably.
At least the left (L & N both) in this country know how to buy the votes of those less intelligent than white racist South African labour unionists.
Vote:July 11th, 2011 at 10:19 pm
And prior to the Davis Bacon Act in the US, black unemployment was always lower than white.
Unions support minimum wages because it prevents people undercutting them and protects their jobs.
Vote:July 11th, 2011 at 11:00 pm
@krazykiwi – OK, I see my previous post reads like I’m a dole bludger having a whinge about how expensive it is to get work – that’s not the case. I’m actually self-employed, when I said “actual job” I meant regular employed work as opposed to the self-employed kind.
@Sonny – I agree there are definitely costs associated with going to interviews vs sitting on the couch. But I doubt most beneficiaries are actively seeking work to the point where they need more than one nice outfit for interviews. If I’m wrong on this, fantastic.
The 44 hours of spare time to “fuck around” with isn’t a concept I’m familiar with – the kids seem to do a pretty good job of absorbing most of my free time (I agree this is a personal choice, I’m not complaining), so sometimes I do have to pay the man to do the lawns or buy takeaways because I can’t be stuffed cooking, or not get the best value at the supermarket because I’m in a hurry. Maybe I could optimise that better, probably – but I’m sure I could do more of this stuff myself if I didn’t have 10 hours a day taken up with working. All I’m saying is that time is money, and if you are working you don’t have as much time at your disposal to get stuff done – and there are costs associated with that.
Vote:July 11th, 2011 at 11:27 pm
If you are going hard on it then you do need to wash them. I had 3 interviews and a couple of visits for tests to the same place last week, it was important to look like I had appropriate hygiene standards.
The thing about kids is they are a choice. We have this mindset that it is ok if your finances didn’t turn out as we hoped after having them. As I said, we have a responsibility to save to afford them and ensure we have a secure job and career.
Thankfully even on the lowest incomes in NZ we can afford little luxuries like takeaways, driving to work, and internet. We almost all choose to spend a bit on them but we should remember that they are costs that we choose.
Vote: