Kiwiblog

This debate is tomorrow (Tuesday) night.

James Sleep from the Campaign for a Living Wage (and the SWFU) is the guest speaker for the affirmative and Luke Malpass from the NZ Initiative is the guest speaker on the negative. Members of the debating society will also be speaking.

Kate Shuttleworth at NZ Herald reports on what Government agencies said on the minimum wage. The summary is:

• Treasury – $13.50
• Cabinet decision – $13.75
• Ministry of Business Innovation and Employment – $13.80
• Ministry of Social Development – $13.80
• Ministry of Women’s Affairs – $13.80
•  Ministry of Pacific Island Affairs – $15.00
• Te Puni Kokiri – $16.00

Te Puni Kokiri must think we need more unemployed people!

Narelle Henson at Stuff reports:

Frustrated bosses say they can’t find suitable workers for even the most basic of labouring jobs despite the high unemployment rate, as they deal with people who turn up drunk if they come to work at all. …

But despite the many jobless, employers say continual absenteeism, substance abuse and poor work ethic appear to be making a lot of them unemployable.

Dave Connell, vice-president of the New Zealand Contractors Federation and managing director of Connell Construction, who is juggling operations in the Waikato and for the Christchurch rebuild, said 100 people responded to a Trade Me job advertisement for a junior construction role, but not one was suitable to hire.

“We are letting seven people go for every one we keep,” he said.

“I have had some people last half a day and walk off the job with $800 worth of [work] gear on them; one guy had six sick days in two weeks, and we have had issues with physicality too.”

Mr Connell said he was desperate to fill positions, but could not find anyone with the right attitude.

It will take many years to fix these problems.

The first is we need to stop people leaving school with inadequate literacy and numeracy skills.

The second is we need to install a work ethic in people from their teenage years. That is why I don’t support a minimum wage for under 18s, and why I support welfare reform.

Audrey Young in the NZ Herald wrote:

The temperature in Parliament is sure to rocket when the law “reinstating” youth rates is debated this week.

It happens every time the emotive issue is debated, as it did last week when the bill to bring them back passed its second reading. …

The new youth rates will be called the Starting Out Wage.

Labour says youth rates will be reinstated, suggesting that they were previously abolished.

But Labour did not support the bill of former Green MP Sue Bradford to abolish youth rates. It opted instead for a dilution of her bill but which limited the amount of time that a new young worker could remain on youth rates to 200 hours or three months.

National went to the last election campaigning for a change to that regime, saying the move had contributed to a significant rise in youth unemployment.

The change is in fact quite modest. It is not full youth rates. The starting out rate will only apply:

• To a 16 or 17 year old with a new employer, for the first six months
• To an 18 or 19 year old who has been on a benefit for more than six months

The $13.50 minimum wage will be raised to $13.75 on April 1. From May 1 the Starting Out Wage would be 80 per cent of that, or $11.

Act leader John Banks said his party believed 80 per cent was too high as a minimum. In Britain the rate was 60 per cent for 16-year-olds and in Australia it was 48 per cent for 16-year-olds.

He compared the Starting Out Wage to the dole, paid to 40,000 young people every fortnight between 15 and 19 – equivalent to $4.50 an hour. He said they desperately needed the “dignity of work and a job opportunity”.

I believe getting a young person their first job is incredibly important and making it illegal for a 16 year old to work for less than $13.75 an hour is incredibly stupid.

We see the impact of this stupidity by the fact that the unemployment rate is currently 30.9% for under 20s.

Labour MP Darien Fenton compared the move to discrimination against women and Maori who at one time were paid less because some people said they were worth less. No one would tolerate that type of discrimination today.

You are remain female or Maori for ever. You do not remain 16 for ever. Also minimum wages are not maximum wages.

It would then also be acceptable, she said, to discriminate against older workers.

We don’t allow a 16 year old to vote, yet allow 70 year olds to vote so the comparison is invalid.

“It perpetuates its stereotype of young workers being unreliable and incapable, and it ignores the fact that many young workers have already had considerable work experience at the age of 16.”

if they have had work experience at 16, it can only be because they were employed under the age of 16 – when there is no minimum wage.

One of the strongest submissions against the bill came from the Human Rights Commission. It said unequivocally that the discrimination could not be justified.

“In New Zealand, the age at which children and young people are deemed to be adult is considerably younger than 20 in many critical areas of life.

“The minimum age of criminal prosecution is 14 for most offences, 12 for serious offences and 10 for murder and manslaughter.

“Children in New Zealand are legally able to marry at 16 (with parental consent if either party is 16 or 17) and drive at 16.

“Children can enlist in the military at 17 and be deployed at 18.

“Yet they are not considered to be sufficiently adult enough to be protected by the minimum wage.”

I agree you gain you rights of adulthood at before 20. I actually support 18 and 19 year olds getting the adult minimum wage.

But I think there is no justification for having the minimum wage start at 16 instead of 15 or 17 or 14. 16 is arbitrary and capacious.

18 is when you are generally deemed an adult who can vote, marry without permission etc. It is also when most people finish school and leave home.

So what I would do is simple.

• No minimum wage at all for 16 and 17 year olds (like it is for 14 and 15 year olds). Getting a job is far more important than what it pays, especially when almost everyone at that age is still living at home. 
• Full minimum wage at age 18

Kerri Jackson at Stuff reports:

Small businesses that cannot afford to pay their staff a living wage should probably not be in business at all, a union leader says.

First Union general secretary Robert Reid said while the movement supporting a living wage of at least $18.40 an hour was generally targeted at large corporations and city councils, some undercapitalised small to medium-sized enterprises (SMEs) needed to think about their business practices as well.

“Why should a worker suffer for being employed by a business that maybe shouldn’t exist?

What an appalling statement. It shows the hatred for business that some union leaders have. Small business owners often spend months or years struggling to set up a business when they can’t even pay themselves a salary. And they create jobs for others, but Robert Reid thinks they are making their workers suffer if they pay them less than $18.40 an hour.

Katie Chapman at Stuff reports:

Kiwis need to earn nearly $5 more than the minimum wage to meet the “basic necessities of life”, a new report has found.

Bzzt Wrong. Not the story – just the report.

The wage was calculated as the necessary income for a two-adult, two-child family and is based on both adults working, one full-time and one part-time.

This is not the majority of households or the majority of adult New Zealanders. Most workers either do not have children, or their children are adults.

It is silly and wrong to say you need to earn $18.40 an hour to meet the “basic necessities of life”, even if you accept the calculations of Rev Waldegrave as gospel. This is what has been calculated as necessary to support a four person family.

Now the report (which does not appear to be online, which means it is hard to check how robust it is) seems to ignore the existence of Working for Families which can pay up to $217 a week net.

Now there is an argument to be made that you should have wages at a level where people can have a family and not need Working for Families. That is a legitimate argument.

However I bet you that not a single proponent of the living wage campaign is saying that wages should be higher so the Government can scrap Working for Families. They want both.

And the reality is that economically it is daft to have a minimum wage based on the needs of 850,000 adults yet applying to all three million workers. Targeted assistance to those with children is more efficient and fairer than a one size fits all type living or minimum wage based on one particular family structure.

I would hope that most adults who are raising kids are in a job that pays $18.40 or more an hour. There are many jobs that pay that rate. But to advocate that every job in the economy should be at that rate is again daft and would kill off many jobs. A 16 year old living at home does not need $18.40 an hour to survive.  A couple with no kids doesn’t need that much. The partner of someone who is earning say $25 an hour doesn’t need $18.40 an hour. Individual circumstances vary greatly, and a campaign based on what is a minority living situation is no template for anything.

Matt Nolan blogs at TVHE:

Let me start this by underlying everything with a certain point – living wages are idiotic if our concern is to make sure that the worst off in society have a sufficient income.  By imposing a “price floor”, you are ensuring that there are a group of people who can’t get jobs and will get hurt – unions don’t care because they don’t represent the unemployed, but I find it morally abhorrent.  You want a minimum standard of living for societies worst off – have a minimum income, it’s as easy as that.

A minimum income scheme, which has merits, would need a radical reshaping of the tax and welfare systems.

Let’s take someone working full time at $19hr.  What does this person earn pre-tax $39,420pa (this excludes benefits which they are targeting to increase it further). What is nominal GDP per capita.  $47,157pa.

So either we have a society where different types of labour, and different peoples requirements for income (eg a 18 year old and a 57 year old), aren’t terribly different and so people shouldn’t get paid very differently – and as a result the potential worker who “offers the least” may well still get hired – or this will lead to higher unemployment and cut backs in hours for these people.  Who won’t get hired in this sort of situation – people that are risky to hire or haven’t developed skills yet.  So the young, the vulnerable, those that have been out of work.

I just think it is daft to claim an 18 year old with no experience living at home needs to be paid the same as a 45 year old with 20 years experience who is supporting a family and mortgage.

I mean I swear to god unions, and their determination to get what they want without thinking about the consequences for other people, makes me sick.  There are people who struggle, and as a society I think we should try to help them – part of this is ignoring faux research by unions, and making sure that we actually push government to sufficiently redistribute to the poorest

Instead so many on the left and unions support paying welfare to millionaire parents. That is because they are really just about growing the size of the state that they tend to live off.

A reader writes in:

I thought I’d share my experience with minimum wage, or lack of.

Earlier last year I hired a fresh graduate student – she was at the time my first hire for the new company. Her starting salary was less than 20k, an amount that would be tough (but manageable) to live off. It may seem rough considering Singapore is one of the more expensive cities in the world but she lives with her parents. I was simply unwilling/unable to pay any higher as I was starting a business however she was happy to get a job and to prove herself.

She has since proved her worth and has been a relief to my workload enabling me to focus on getting new business. Her first salary increase was after six months, she got 25%. Her second review is coming up shortly, it marks one year since she started and she is being raised to double her starting salary. Not bad for someone just one year out of uni.

 Another example – I recently hired a virtual assistant through Odesk. It was a take it or leave it proposition, I thought it could be helpful but not essential. 

There were a lot of offers from $1 an hour through to $40 an hour.

One applicant I liked, from the Philippines, offered to do the work for $3.50 which I felt was ridiculously low and unfair. I spoke to her several times on Skype and I raised my point to which she had this to say.

“Sir, if I work at local company I maybe get $1 an hour, these are long and hard jobs and I have young children. If I do this job I get more money but I can stay at home to care for my children at the same time.”

She then pointed out that many Filipinos leave their families and move overseas to work as maids and are extremely happy when they get jobs paying $400 SGD a month and here I was offering a job that paid more for her to stay at home with her family.

Long story short I hired her and she has been amazing. She is also loving her diverse role and the new skills she is learning – I have her doing anything I can think of from building databases, researching assignments, uploading for websites through to basic accounts and emailing for me.

And yes, I did ask her to stop calling me Sir.

 I realise these examples are not applicable to NZ directly however they do highlight two situations where a minimum wage would been worse off for both me and the employees. 

The minimum wage is one of those classic trade-offs. It is good for those in low paid jobs, who get more income. But it can be bad for those seeking a job. If you have a minimum wage, the challenge is setting it at a level that doesn’t drive too many people out of jobs.

Matthew Jones wrote in the NZ Herald:

I read with astonishment the contribution on Friday from Julie Fairey who seemed unaware of the facts of minimum wage increases and their dire, unintended consequences.

There is little doubt that we desire higher wages and higher standards of living for our society but this cannot be done through legislation.

The effects of a minimum wage increase, despite their good intentions, have led to those whom it is intended to help being unemployed or finding it more difficult to find jobs and learn skills as the incentive to hire gets legislated away.

American Samoa had a terrible case of this when the federal Government increased minimum wage up to US$7.25 an hour, in some cases an increase of $4 an hour.

This is good isn’t it? High incomes and more economic demand as Julie Fairey “argues”. Well no, what happened was a mass exodus of jobs, one fishing and canning company slashing thousands of jobs on the island nation, sending them to the US state of Georgia.

Those earning around US$4 an hour now had nothing and American Samoa lost enormous job-creating investment that now headed to a small town in southern America where more skilled labour can justify the higher costs.

There is only one sustainable way to lift wages – productivity.

You could increase the wage to $100 per hour, surely even a diehard socialist could see the damage it would do. But the principle is the same at every level. The ripple effect of these job losses caused by such intervention in the market can be devastating.

The damage tends to depend on where the minimum wage is set, in relation to the median wage.

Although many who study minimum wage come up with differing opinions about the amount of job losses due to minimum wage increase, the most devastating is surely what is unseen.

What we don’t see is the entry level jobs that could have been created if legislation did not distort the market, jobs that would have allowed those unskilled, maybe currently on the dole, to earn an income and provide them with hope for the future.

Have you ever wondered where those ushers went from movie cinemas? Or window washers at service stations? Bag packers at supermarkets?

There is no point in the employer hiring if the cost is greater than the value produced. This is a law that tells employers to discriminate against the young and unskilled.

It is no coincidence that youth and minority unemployment is much higher than the national average. And indeed no coincidence that it was not always like this.

Absolutely not. There was a strong correlation between youth and adult unemployment for around 25 years up until the abolition of the youth minimum wage in 2007.

Here’s a pop quiz for you all. What percentage of 16 and 17 year olds who are in employment, are currently earning more than the minimum wage?

Guess to the nearest 10%.

UPDATE: The answer is 79% or roughly 80%. So only 20% of 16 and 17 year olds are in minimum wage jobs.

David Shearer said on the starting out youth rate:

Labour Party leader David Shearer criticised the move, saying “it’s not going to create jobs by driving down wages”.

“These people are going to leave and go to Australia,” said Shearer.

Peter George has blogged the rates in Australia:

• Under 16 years of age  $5.87
• At 16 years of age   $7.55
• At 17 years of age   $9.22
• At 18 years of age   $10.90
• At 19 years of age   $13.17
• At 20 years of age   $15.59

The NZ rate is $10.80 and only for 16 to 19 year olds in some circumstances for a limited six months. Can’t really see those 16 year olds going to Aussie for the higher minimum wage.

Of course what matters is not the minimum wage, but the actual wage paid. So many people seem to think a minimum wage is a maximum wage.

The Herald editorial:

 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 youth rate will be available for all 16- and 17-year-olds for their first six months with a new employer, but for 18- and 19-year-olds it will apply only to those who are coming off a benefit after more than six months, or are taking a recognised industry training course.

The legal minimum hourly rate for trainees of any age is already 80 per cent of the adult minimum. The youth rate, to be introduced in April, could reduce the present incentive for school leavers to take a job at the minimum adult rate rather than start a training course.

But mainly the rate is aimed at youth who are least likely to gain employment on the open market and less likely to seek some formal training. The youth rate will give them something to offer that might offset the record, maturity and reliability of their older competitors for the job.

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.

It is a sensible step. There is well documented evidence that the abolition of youth rates in 2007 led to a significant increase in youth unemployment. This is no surprise.

Kate Wilkinson has announced:

The Minimum Wage (Starting-out Wage) Amendment Bill provides for eligible 16- to 19-year-olds to be paid no less than 80 per cent of the minimum wage.

“The new starting-out wage will help some of our youngest and most inexperienced workers get a much-needed foot in the door, in what is currently a tight labour market.

“The starting-out wage was one of National’s 2011 campaign promises, and designed to provide 16- to 19-year-olds with the opportunity to earn money, gain skills and get the work experience they need.”

Three groups will be eligible unless they are training or supervising others:

• 16- and 17-year-olds in their first six months of work with a new employer
• 18- and 19-year-olds entering the workforce after more than six months on benefit
• 16- to 19-year-old workers in a recognised industry training course involving at least 40 credits a year.

This is not a return to youth rates. While Labour will wail about this, the reality is that it is a modest extension of what they had in place.

Labour had a “new entrants” wage which also was at 80% of the minimum wage. It was for the first three months or 200 hours. Almost no employers (2%) utilised it due to the uncertainity over hours.

All National has done is doubled the period from three to six months, and extended its availability to those coming off a benefit.

So if you get a job at age 16, then at age 16.5 you will have to be paid the adult minimum wage if with the same employer. And please don’t tell me employers will sack staff after six months as a way to save money. Only a moron with no actual experience as an employer would think that. Staff recruitment and training is expensive.

Personally I would go far beyond what the Government has done. I would have no minimum wage at all, until people are legal adults at 18. The most important thing for a 16 or 17 year old s to start to gain some work experience. They almost invariably are living at home, and are not paying their own way in life yet. The value of an initial job in terms of skills, maturity but also references for future jobs is immense.

Why have the minimum wage start at 16, not 15 or 17 or 14? 18 is the logical age.

I do like the lower starting off wage for people coming off an extended spell on a benefit. But I’d not make that age restricted. I’d have that for anyone who has been on a benefit long-term.  So long as the work is paying significantly more than the benefit, then getting them that opportunity is all important.

This change is in fact quite minor. I can guarantee you that the media will treat the minimum wage change, as a maximum wage, and interview teenagers complaining about it, and portraying it as cutting their wages when it does no such thing. No one in a current job can have their wages cut. All it means is that they can be offered a job at a 20% lower rate than the adult minimum wage, for their first six months. The trade off is that it will mean more of them get jobs, but some of them will get paid less (for six months) than what it would have been. I have no faith that the media will get this distinction at all right.

The SST reports:

Some Burger King employees say they have been working for up to 10 years on the minimum wage without receiving any performance or service-related pay rises.

If this is correct, I think BK are short-sighted as you want to give staff opportunities to earn more than the minimum wage. However I don’t think it is correct, based on the same article.

On April 1, when the minimum wage went up to $13.50 from $13, it is alleged many workers also lost a margin they were earning above the minimum wage.

How can you have spent ten years on the minimum wage, yet also lose a margin above the minimum wage? The article appears to be logically inconsistent, or very badly explained.

They were told they had to to earn back their right to that margin by completing “module” training. It is understood staff are being told they need to do the training in their own time.

And this contradicts the claim you can’t get a performance related pay rise.

The female worker said it could take months to complete all the modules and at the end of it there was no guarantee of the pay rise.

Umm, that’s because it is performance related I presume.

What would have made this a far more useful article is to state what the basic pay rate at BK is, how extra pay can be earnt and maybe compare it to the minimum wage.

Sadly thought the article just repeats a number of apparently contradictory assertions and gives us no actual hard data to decide on.

The NZ Initiative is hosting a debate between Vic and Canterbury university teams on the topic “A minimum wage helps young people get a fair start in the workforce”.

It is at:

Mac’s Brewbar
4 Taranaki Street
Thu 9 Aug 2012
5.30 pm onwards

As well as an interesting debate, there is free beer and pizza! However you need to RSVP if you wish to attend, so they can cater enough food. You can RSVP online here.

The Herald reports:

Labour MP David Clark has admitted he doesn’t know how much it will cost employers if the minimum wage is raised to $15 an hour, despite sponsoring a bill to do just that.

Of course not. Why worry about the cost!

I supported the Mondayisation bill as the impact on wages was minimal – around 0.2%, and it was standardising the practice of Mondayisation. An 11% increase in the minimum wage though is exponentially larger, and is calculated to cost around 6,000 jobs. That is too much in one go.

I think it would be useful to compare the debate on class size, to the debate on the minimum wage, specifically does class size impact on the quality of learning, and does the minimum wage impact on the level of employment?

The answer for both is yes. If you are from the left and say class sizes impacts quality of teaching but the minimum wage does not impact employment then you are a hypocrite.

Likewise if you are from the right and you say say the minimum wage does impact employment but class size does not impact quality of learning, then you are also being a hypocrite.

Let us take an extreme example for both, to prove out points. Would a child learn better in a class of one, with one on one teaching – or in a class of 1,000 people? Obviously in a class of one (all other things being equal).

Likewise imagine if the minimum wage was $10 an hour and $100 an hour. Could anyone dispute that at $100 an hour, we would have mass unemployment?

So there is no doubt both the minimum wage and class size can have an impact on the number of people employed and the quality of learning. However that doesn’t mean that every change you make has a significant impact, and that degree of that impact may be less than other benefits. Let us start with the argument over the minimum wage.

If the minimum wage goes from $5 to $6 an hour, there may be no impact on employment (as few people may have been employed at that level). Let’s say though it goes from $14 to $15 an hour, which probably will have an impact on employment. Why do the left say this should still happen? They support it, because they argue that if it gets a pay-rise of $40 a week for 150,000 families who have someone on the minimum wage, then that is a satisfactory trade-off for say 4,000 people losing their jobs. It is an issue of what do you see as more important – the level of wages or the number of people in employment.

Now likewise for class sizes. Of course a class of 1 would be far greater than a class of 1,000. But does a class size of say 27 compared to a class size of 25 make a significant difference? The international research is very clear that it has not. Now this is not an argument to have class size of 40 or 50 or 100 because obviously at some stage it will have more of an impact. Hence a private school with a class size of 15 can be better than say a public school with a class size of 30. But that does not mean that a difference between 25 and 27 will make any significant difference.

If it will not make much of a difference, you might say why not then stay with the status quo? Well the reason the minimum wages goes up despite some impact on employment is because it increase wages for those who receive it.

Likewise with class sizes, the benefit of a modest increase, is the funding it frees up for investing in teacher quality – something which has a far greater impact on the quality of learning.

The focus therefore should always be on the trade off. If in the minimum wage debate you focus just on higher wages or just on employment levels, you are missing the picture. Likewise if in the education debate you focus just on class sizes you are also missing the picture.

The Herald reports:

A campaign has been launched for a “living wage” in New Zealand, inspired by policies in United States cities and London.

In New Zealand, Labour Department research shows that 103,800 workers under 25, and 161,000 aged 25 to 64, earned less than $15 an hour in the year to last June.

I have no issue with the campaign. But I caution that not all employees and not all employers are the same. I don’t think a 16 year old earning $14 an hour in an after school job is an issue. I think it is more of an issue if someone is earning that 10 years later. But also wages can only be paid if a company is earning enough income to employ people. An increase in costs can make a company unprofitable. This is why in the main individual employers negotiate agreements with individual employees – because that reflects the position of both of them.

Low wages for the Kaufisis mean the children don’t go to school when there is no money for lunch.

Leo Kaufisi, of New Lynn, earns $14 an hour as a dispatcher for Pacific Inks in Avondale. His wife Lopaini earns the legal minimum of $13.50 an hour as a cleaner.

Four adults and eight children live in the three-bedroom house which they rent for $350 a week – Mr and Mrs Kaufisi, their six children aged between four and 12 , Mrs Kaufisi’s unemployed mother, her mother’s partner, her 12-year-old sister and 10-year-old brother.

Six children sleep in one cramped bedroom.- The other children sleep with their parents.

Mr and Mrs Kaufisi are both working hard to care for their family. I have no problem with taxpayers helping them make ends meet. Sadly the article doesn’t detail what this support is.

I presume the two other adults receive the unemployment benefit. So my estimate of the weekly net income is:

• Mr Kaufisi $471
• Mrs Kaufisi $455
• Family Tax Credit $598
• UEB (couple) $342
• Accom Supplement $32

This is a total net income of $1,898. The equivalent gross before tax income (if it was a single earner) is $2,627 a week. That is a gross annual equivalent of $136,604. Now that is for a large family, but it gives a more complete picture than just talking about $13.50 an hour.

Even with family tax credits, Mr and Mrs Kaufisi say almost all their income goes on the rent and on payments to finance companies. These total about $500 a week for furniture and other items including two cars, which were both repossessed recently when Mr Kaufisi’s work permit expired.

Actually the rent is under 20% of the net income, according to my calculations. The problem is the finance company payments.

Having 12 people in a three bedroom house is massively over-crowded. It is not clear if they are in a state house, but it seems to me they would easily qualify.

Mrs Kaufisi said their combined wages now were not enough to live on and she supported the call for a “living wage”.

“With a living wage, maybe we can afford to rent our own place or buy healthy food for my kids,” she said.

I’m not sure higher wages will make a huge difference to their household. I think the biggest issue is only two out of 12 people are earning. Let’s assume that both the Kaufisi’s get paid $17.50 an hour, or $35,000 a year. What would this do to their income:

• Mr Kaufisi $584
• Mrs Kaufisi $584
• Family Tax Credit $524
• UEB (couple) $342
• Accom Supplement $0

This is a total of $2,034 a week. That is an extra $136 a week, but only a 7% increase in net income despite it being a 30% increase in wages for Mrs Kaufisi and 25% for Mr Kaufifi.

The Telegraph reports:

The adult rate of the minimum wage is to rise by 11p to £6.19 an hour from October, Business Secretary Vince Cable announced today.

That is $11.90 in NZ dollars, which is 88% of the NZ minimum wage of $13.50 an hour. So the next time Labour or the unions insist our minimum wage is set at third world standards and keeps people in poverty, remember it is 13% higher than the UK one.

But the rates for younger workers will be frozen at £4.98 for 18 to 20-year-olds and £3.68 for 16 to 17-year-olds. 

Sensible when the focus is getting them into jobs.

The starting out minimum wage in NZ is $10.80 an hour, and doesn’t even apply to all under 21s like the UK one. It only applies to 16 and 17 year olds for their first six months with an employer or 18 and 19 year olds who have been on a benefit for at least six months.

The UK youth minimum wage is NZ$9.58 for 18 to 20 year olds, and NZ$7.08 for 16 and 17 year olds. That means those on the starting out minimum wage in NZ are getting 13% more and  53% more respectively.

The Government has just announce that the annual adjustment to the minimum wage will see it go from $13.00 an hour to $13.50 an hour. This is a 3.8% increase, and works out to $1,000 a year for a FT person on the minimum wage.

Since 2009, it has gone up a cumulative 12.5% over three years.

John Pagani blogs:

When ministers sit around next year asking if they what policy they can tweak here and there to increase wages and reduce poverty, they should look at increasing the minimum wage and increasing union membership so that wages rise as the economy recovers.

There – fixed, and they didn’t need to spend a dollar in the stretched budget. In fact, people who earn more pay more tax, so it helps the budget.

Pagani has made the same mistake the Greens have made. They seem to think that money prints on trees.

If an increase in the minimum wage pushes wages up for those on the minimum wage by say $800 million, then yes at 12.5% tax that will be an extra $100 million of PAYE tax collected.

However those businesses will have their profits reduced by $400 million (as money does not grow on trees as the left always assumes) and at 28% company tax, that is $224 million less tax. Hence the Government has $124m less tax revenue overall. So rather than help the budget, it actually does the opposite.

Also ironic that Pagani thinks increasing union membership will help the budget. The only budget most of them help is the Labour Party’s. And at least one of them don’t even pay PAYE tax on behalf of their employees – preferring to spend it on political campaigns instead.

I guess economic literacy is not high on Mana’s wishlist.  They say:

Immediately increase the minimum wage to $15 per hour (1 April 2012) and peg it at two-thirds of the average wage (1 April 2013).

I guess someone has to outbid Labour/Greens who think higher wages come from legislation rather than economic growth. But Mana’s policy is even more stupid than the norm. Think about their pegging it to two thirds of the average wage.

In June 2011, it was $24.78, so two thirds is $16.52. So Mana’s policy is it should be illegal for a 16 year old to be hired for less than $34,500 a year.

But their policy will lead to never-ending increases, as if you increase the minimum wage, then you automatically increase the average wage. So even if there was nil wage growth for everyone else, the minimum wage would be going up.

If their policy was to peg it to the median wage, then it would just be moderately stupid rather than idiotically stupid.

I don’t know why parties of the left bother with all this in between crap. Why don’t they just come out and announce a minimum wage of $25/hr?

I suspect we will hear from a lot of unions today. Amazingly not a single union commented on Labour’s superannuation policy yesterday, despite their decades of opposition to compulsory superannuation and raising the age of eligibility.

But National has just released their employment relations policy, and I think the unions will rediscover their voices. The policy takes a number of good steps in the right direction, and is in total contrast to Labour’s desire to return to the 1970s.

First of all there is a partial victory on the issue of the minimum wage for teenagers, which has resulted in such massively high youth unemployment.

There will be a “Starting-Out Wage” set at 80% of the adult minimum wage. At present the current law has this also, but it only applies for the first 200 hours of employment, which can be as little as five weeks. National is extending this to:

1. 16 and 17 year olds for their first six months with an employer
2. 18 and 19 year olds if they have been on a benefit for more than six months prior, for their first six months of employment
3. 16 to 19 year olds doing at least 40 credits of industry training a year (was 60)

This doesn’t go as far as I would go, which would be to simply not have the minimum wage law apply to those aged under 18 (rather than under 16), but it should give young job seekers a better opportunity to get their first job, and gain that all important experience.

National is also making it easier for employees to request flexible working arrangements:

Many workplaces already have flexible working arrangements, either formally or informally. But at the moment, the formal request mechanism applies only to those with caring responsibilities.

National will extend the right to request flexible working hours to all workers, and raise the profile of flexible working arrangements. We want to see more workers and employers benefiting from flexible working arrangements.

And also they wind back some compulsory lite unionism:

Remove the requirement that non-union members are employed under a collective agreement for their first 30-days.

The current law effectively forces you to join the union, and means you can only withdraw and go on an individual contract after 30 days. National allows an employee to decide for themselves from day one whether or not they wish to join a union.

Apply partial pay reductions for partial strikes or situations of low-level industrial action.

Currently, employees can engage in partial strike action, such as refusing to answer email or do any paper work, while continuing to receive full pay.

Partial pay for partial work.

I am really pleased to see some movement on the issue of pay rates for teenagers with no work experience who need a first job. Our youth unemployment rate is far too high.

Danya Levy at Stuff reports:

Labour says its plans to overhaul employment laws will bring New Zealand in line with other developed countries and claims it is a return to 1970s-style industrial relations are scaremongering.

No scaremongering at all. But let us look at the claims it will bring NZ in line with other developed countries.

Take the 90 day probation period. We are almost the only country in the OECD that didn’t have one. Australia has 90 days, Canada 6 months, UK 12 months and Ireland 12 months. Germany is 6 months. The only OECD country without a legal probationary period is Denmark. So don’t believe the crap that this brings us in line with other countries.

Now take the plan to price more people out of the workforce by making it illegal for an employee to work for less than $15 an hour, even an unskilled 16 year old. Wikipedia has a list of minimum wages by country and what percentage they are of GDP/capita. This allows a comparison. Under Labour’s policy NZ would go from 62% to 72%. Here’s other OECD countries:

• Australia 52%
• Austria 37%
• Belgium 53%
• Canada 44%
• Denmark 66%
• France 53%
• Ireland 49%
• Netherlands 48%
• Switzerland 38%
• UK 66%
• US 33%

So again not bringing us in line with other OECD countries, but in fact increasing the gap between us and other OECD countries.

Kate Chapman at Stuff reports:

Sosefina Masoe spends her nights in one of the most powerful offices in the country; from the top of the Beehive she can see the lights of the Wellington skyline and the moon reflecting on the harbour.

When the 49-year-old solo mum isn’t cleaning Prime Minister John Key’s office, she’s at home in her Porirua state house with her four teenage children and four grandchildren.

Masoe joined Parliament’s other cleaners in Labour’s caucus room today to push for a $15 an hour minimum wage and to remind politicians that poverty does exist in this country.

First of all good on Ms Masoe for being in work, despite having eight kids and grand kids to care for. That’s excellent.

And from my time at Parliament, my memory of the cleaners are they were very hard working and professional. I am sure Ms Masoe is the same. And she is quite entitled to her view that she should be paid $15/hour. Personally I think that it is better to achieve that through negotiation than increasing the minimum wage. You can not create a more prosperous country by simply passing a law demanding everyone gets paid more. If only it was that easy.

She earns the current minimum wage, $13.50, and says that’s about $453.34 in the hand a week.

By the time she pays $250 in rent, $90 for power and $70 for petrol to get to and from work, Masoe has about $43 left to pay for groceries.

That usually consists of budget canned spaghetti and baked beans, cheap bread, oats, noodles and margarine.

“This is what our low wages can afford. It’s budget food, it’s not healthy,” she told MPs and fellow Service and Food Union representatives this afternoon.

Parliament’s cleaners worked hard for the health of those in the complex, they were “the most important people in your life” and deserved more, Masoe said.

“The cost of everything is going up, we can’t afford to feed our families with $13.50 an hour any more.”

Except that the family doesn’t just get $13.50 an hour.

Whale does some maths:

Her take home is $453 per week. Her WFF Credits are worth at least $677 per week if the article claims of eight children (four teens) are correct.  That equates to a salary of about $70,000 per annum.

Whale is correct except I actually make it that she gets $712 of WFF, which makes her gross income equivalent around $77,000. Also on top of that the taxpayer subsidises a state house so that it is only 25% of income maximum.

So when Labour plant a story about how someone has only $43 a week to pay for groceries for their family, it would be nice if the media thought to ask about total household income, because to be frank it is dishonest to ignore the other $700 a week of income.