We asked Labour's Jacinda Ardern and National's Nikki Kaye: Should a youth minimum wage be reinstated?
Like so many kiwis, I too was once part of that proud tradition of young workers who donned a giant green over sized smock, a striped apron, and a name badge that proudly declared 'Jacinda, check out operator.' It wasn't my first job, but it was the first one were I became acutely aware of the debate we now find ourselves having over the youth minimum wage.
It was 1997, and I was part of a generation of young people on a lower wage than everyone else simply by virtue of my age. It might have been an issue that was easier to hide in other part time jobs, but not this one. Even if you could scan as fast, move trolleys as quickly, and pack groceries just like everyone else- you were paid less because of how old you were.
But this is not an issue that should be over simplified. I utterly accept that people should be paid according to their experience and skill level, but legislating that age alone is a legitimate way to determine that just isn't fair. A young person could have worked in a supermarket for a year, and yet someone could come in as a brand new employee and earn a higher wage simply by default. And if it is just about getting a foot in the door, then young people are already able to be paid 80% of the minimum wage for the first three months- an incentive to employers to give them that chance in the very beginning.
This issue isn't just about young people - it is about unemployment across the board. Paying one group of people less than everyone else in the longer term doesn't fix that. In fact, it has the potential to simply shift the problem from one group to another. I recall for instance hearing the story of a single mum who was low skilled and reliant on retail work to keep food on the table. The youth minimum wage made that harder- at every opportunity her employer reallocated her shifts to high school students for no other reason than they were cheaper labour.
If you've heard Don Brash and the ACT party on this issue, you'll know that some believe that casting fairness aside in the name of new opportunity is a panacea, but it's not. In the middle of 1993, when there was a lower youth minimum wage, youth unemployment sat at 24.5%, massively higher than the overall unemployment rate at that time of 10%. Unfortunately high youth unemployment is nothing new, particularly in tough economic times, but reintroducing the youth minimum wage is not a cure-all, and New Zealand can do a lot better than coming first in a race to the bottom on behalf of our young people.
The answer to this problem isn't easy, but it is obvious. When Labour was in government and the economy was growing strongly, the minimum wage rate for young people increased by 126%, and yet youth unemployment reached its lowest levels since 1987.
The reason was simple - we had a tight labour market. Focusing on long term sustainable job creation is one of the best things we can do to tackle this issue, and Labour has a plan to do that by supporting those in the private sector who create jobs, especially in the productive economy (exporters, manufacturers, and the high tech industry).
We also know that it is possible to get low youth unemployment without having a lower youth minimum wage. How do we know? Places like Germany have done it. In 2008, Germany had only 1.4% youth unemployment for every 1% of adult unemployment- much lower than the OECD average, and definitely much lower than us (we are one of the worst in the OECD). So how did they achieve their success? It was their strong commitment to vocational training, giving young people the skills to go with their energy, helping them get the jobs on offer and helping their employers expand. In contrast, this government has reduced New Zealand's commitment to vocational training cutting $145 million from skills and industry training at the very time when we need it the most.
We will be releasing our youth employment package tomorrow (and I don't want to ruin the big reveal), but one thing I know for sure - when it comes to young people, it is time we raced in a different direction.
Every day I get asked many questions in the community and on the doorstep. Sometimes these questions can be answered by a piece of legislation or a recent policy announcement or initiative. However, when someone asks me how I can help them or family members get a job, there is no one policy or piece of legislation that will see them on their way to work the next morning. The honest answer is to say that when it comes to job creation, the Government rarely directly creates the jobs.
Most of the people who create jobs in this country do not sit in the Beehive but own small businesses from coffee shops to IT companies to graphic design studios. These businesses need to have the confidence and cash flow to create jobs and that is the best recipe to combat youth unemployment.
The good news is that while we are facing ongoing global uncertainty, our economy is tracking well against many in the world. Despite the devastation caused by the Canterbury earthquakes, we are seeing some real resilience.
Make no mistake, we are not out of the woods, but now we can see a clear path to surpluses and less debt. An earlier return to surpluses gives future Governments more choices about the services and investments they make on behalf of New Zealanders.
This may seem an unlikely way to start my column about youth rates and unemployment, but the wider economy is the critical component to creating lasting and sustainable jobs. I believe that the Government can help develop the environment for enterprise to flourish, but in the end - no amount of Government-run job creation can magically solve unemployment.
That's why as a Government we have focused on improving the foundations required for a strong economy to support businesses to create jobs. Less regulation, a more flexible labour market through things like the 90-Day trial period, investment in infrastructure, and a continued commitment to education and skills training have all helped.
It's worth noting, that recently we've seen some improvement with the real youth unemployment rate dropping from 23,000 at the start of last year to 16,000. There's still plenty to do.
We haven't ruled out considering a return to youth wage rates as part of an overall package that might be considered in the future. However, I don't believe getting young people into work is just about pay, it is also about addressing the other issues that prevent young people from getting work. I think if you look at the barriers that exist then you see that we need to deliver a range of solutions not just one.
Some young people find it hard to get work because they have limited or no formal qualifications or training. As at March this year there were over 18,000 youth aged 18 to 24 receiving an unemployment related benefit. More than 3,000 (14%) young people on benefits have no formal school qualifications, and 6,000 are at high risk of long term benefit use.
This is why we are doubling the number of Trades Academies which will help ensure even more 16 and 17 year olds are engaged in education and practical skills training. We believe that without this support these people would be at risk of falling through the system. More than $63 million of funding from this year's budget and some reprioritised funding will be used to increase the promised new Trades Academies from five to ten.
This will start as soon as possible from next year, bringing the total number of Academies to 21. I am pleased that a number of these academies will be based in Auckland where a number of our young people in need of support currently live. We will see the number of students attending Trades Academies rise from over 700 to 2000 next year.
This is about ensuring they are much better able to take up apprenticeships, enter the workplace or go on to further study.
There has been huge demand from right around New Zealand to set up these new vocational skills and technology programmes for 16 and 17 year olds. It means that the total number of 16 and 17 year olds taking part in the wider Youth Guarantee, Trades Academies and Service Academies will rise to over ten thousand next year and 12,500 by 2014.
It's also about addressing why our young people are not in work. We must also acknowledge that some of our young people are not in work because their basic skills such as literacy and numeracy are so poor it is really difficult to hold down a job. We know that many young New Zealanders have been hit hard by the recession. Through the Job Ops and Community Max programmes we have helped some young people into jobs.
However, one of the best ways to get more young people into jobs is to give them the skills and confidence to find their feet in the job market. This $55 million package is an important part of our work to build skills and knowledge, and build a stronger economy. The new $55 million package has three components skills for Growth, Job Ops with Training and Limited Service Volunteers.
These young people, who have either dropped out of education or are at risk of dropping out, will now be engaged in practical skills training while earning worthwhile qualifications, free of charge.
So despite the toughest economic conditions in a generation, this Government has continued to help our most vulnerable. We are now moving to invest in the things which will help grow the economy and deliver the 170,000 new jobs forecast in the Budget.
Young people who are out of work deserve practical help to ensure they have the skills to be able to get a job. They also need a Government that understands and puts policies in place to support New Zealand businesses to have the confidence and ability to invest in our young people. In focussing on these two things the Government, businesses and tertiary institutions can all assist in helping our young people into work.
Do you have a topic you would like Nikki Kaye and Jacinda Ardern to tackle? Email us.