Starting-out wage motive for employers to give jobs to inexperienced workers
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.
The Government's latest response to their plight is controversial. Employers will be allowed to hire teenagers at just 80 per cent of the adult minimum wage, $10.80 and hour. They will be allowed to keep them on that rate for six months, then must pay them at least the adult minimum, $13.50.
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.
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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.
National calls its new youth minimum rate a "starting out" wage. Since it can be paid only to 16-19 year-olds and only for six months with the same employer, the Government has taken some care to ensure it is unlikely to displace existing workers. A firm is surely not going to dismiss staff to hire untried, inexperienced youths who might be cheaper for six months.
Employment is a fearful responsibility. Hiring people is much easier than firing them under New Zealand law. This Government has reduced employers' risk a little with a 90-day immunity to personal grievance claims but any employer who dismissed someone at the expiry of the new youth minimum rate period would need a better reason than that in the Employment Court.
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.