Slump, not pay move cut youth jobs officials

Kate Wilkinson. Photo / Supplied

Scrapping youth wages in 2008 resulted in the loss of between 4500 and 9000 jobs for teenagers aged 16 and 17, Department of Labour research shows.

But the report says the vast majority - 60 to 80 per cent - of job losses in that age group was because of the recession, and that most of the lost jobs were those of students working part-time.

Youth rates were abolished in 2008 and replaced with a new entrants' wage that was set at the same rate - 80 per cent of the minimum wage - but which could apply for only three months or 200 hours of work.

Youth unemployment is increasingly becoming an election issue. It was 27.6 for those aged 15 to 19 in the three months to June.

The Act Party is pushing for a return to youth wages, while Labour and the Greens defend the status quo and argue for lifting the minimum wage.

Labour Minister Kate Wilkinson continues to keep her cards close to her chest, saying the Government will not go back to the 2008 position, but refusing to rule out a return of youth rates in some form.

The report found the 2008 change had no immediate effect on the youth labour market, but over two years the proportion of 16- and 17-year-olds in jobs fell by between 3 and 6 per cent.

"[This] accounted for between 20 and 40 per cent of the fall in the proportion of 16- and 17-year-olds in work over this period.

"The remaining 60 to 80 per cent of the fall in employment can be attributed to the deteriorating economic conditions."

Ms Wilkinson said the number of job losses was significant.

"What it's showing us is that 16- and 17-year-olds are being passed over for part-time work. The longer it takes them to get their first job, the harder it is.

"Youth rates are part of the equation as we all know, and not all employers employ straight on price."

She trumpeted the 90-day trial as an example of another factor in the youth labour market, but ruled out extending the trial period for teenagers.

She would not comment on a different youth rate, or the possibility of extending the new entrants' rate.

The report found that most employers did not bother with the new entrants' wage and instead allocated part-time jobs to older workers.

The 2008 change had a significant effect on lifting what young people earn; the proportion of 16- and 17-year-olds earning the minimum wage shot up from 4 per cent in 2007 to 40 per cent in 2009.

But the proportion of this group in work fell from 43.1 per cent in the March 2008quarter to 28.5 per cent by the December 2010 quarter.

Working age

* In 2008 youth wages were replaced with a new entrants' wage, set at 80 per cent of the minimum wage to apply for three months or 200 work hours.

* A Department of Labour report found the change resulted in 4500 to 9000 job losses for 16- and 17-year-olds over two years. Between 60 and 80 per cent of youth job losses were due to the recession.

* The Government is considering reinstating youth wages, but has ruled out a return to the 2008 situation.