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Government consults over youth minimum wage

HON MARGARET WILSON Minister of Labour

HON LAILA HARRE Minister of Youth Affairs

MEDIA RELEASE

April 3 2000

For immediate release

Government consults over youth minimum wage

The Labour-Alliance Government is seeking public feedback on options for increasing the minimum wage of 16 and 17 year olds and employees on training contracts.

Minister of Labour Margaret Wilson and Minister of Youth Affairs Laila Harré today announced that the government has agreed in principle to lower the age threshold for the adult minimum wage from 20 to 18.

"We now need input from key stakeholders on options for 16 and 17 year olds and people on training contracts," Margaret Wilson and Laila Harré said.

Under current legislation the minimum wage for 16 and 17 year olds is 60% of the adult wage, $4.55 an hour or $182 a week.

There is no minimum wage rate for employees who have a training agreement with their employer to undertake at least 60 credits of training a year as part of the National Qualifications Framework.

"We are keen to ensure that young people have protection from very low wages and opportunities to train while earning a decent wage," Margaret Wilson said.

The government has decided to consult further on options available for 16 and 17 year olds and those in training.

New Zealanders have until April 14 to submit their views and experiences.

"We realise the consultation time is limited, but the government wishes to ensure that any new regulations are consistent with the introduction of the Modern Apprenticeship Programme in July," Laila Harré said.

As well as seeking public feedback the Ministry of Youth Affairs and Department of Labour will be consulting directly with key stakeholders and conducting focus groups with young people and employers.

A discussion paper on options around the youth minimum wage for 16 and 17 year olds and employees on training exemptions is available at www.youthaffairs.govt.nz.

The public has until April 14 to e-mail feedback to info@youthaffairs.govt.nz.

Note: Discussion paper follows


An Invitation from the Ministers of Labour and Youth Affairs to have your say on:

Minimum Wages for 16 and 17 Year Olds and Those Undertaking Training

Government is keen to ensure that young people have protection from very low wages and have opportunities to train while working. We have already increased the level of the minimum wage (adult and youth) and decided, in principle, to lower the age threshold for the adult minimum wage from 20 to 18 years of age.

We are now seeking views on which options are best for 16 and 17 year olds and the level of minimum wage for employees on training contracts. Two options we are considering are:

a.Increasing the youth minimum wage for 16-17 year olds by raising the ratio of the youth to adult minimum wage rate to somewhere between the current level of approximately 60 percent ($4.55 per hour) to 100 percent ($7.55 per hour); and b.Setting the minimum wage rate for those with a training exemption somewhere between approximately 60 percent ($4.55 per hour) and 100 percent ($7.55 per hour) of the adult minimum wage.

We are also interested to hear the experiences of those likely to be directly affected by these two options.

A discussion paper outlines some of the issues you might like to consider before submitting your reply.

Please send your views and experiences to info@youthaffairs.govt.nz or mail to Ministry of Youth Affairs, Minimum Youth Wage Consultation, P O Box 10 300, Wellington by 14 April 2000.

We realise this consultation time is limited. This is because we are aiming to have any new regulations made in time for the introduction of the Modern Apprenticeship Programme in July. We are also consulting directly with a range of key organisations including employers, trade unions, and youth organisations and conducting focus groups with young people most likely to be affected.

Hon Margaret Wilson, Minister of Labour

Hon Laila Harré, Minister of Youth Affairs

Minimum Wages for 16 and 17 Year Olds and Those Undertaking Training: Discussion Document

Here is your opportunity to have your say on options the Government is considering for the level of the youth minimum wage for 16 and 17 year olds and the level of the minimum wage for people undertaking training.

Government is keen to hear your thoughts on the options being considered and how they would affect you.

Below is some background information on the youth minimum wage and some issues to consider when thinking about changes to New Zealand’s youth minimum wage.

Youth and Adult Minimum Wage

On 6 March 2000, the adult minimum wage (for those aged 20 years of age or more) was increased from $7.00 per hour to $7.55 per hour. On the same date the youth minimum wage (for those aged 16-19 years) was increased from $4.20 to $4.55 per hour.

Since its introduction in 1994, the youth minimum wage has equated to approximately 60 percent of the adult minimum wage.

Current New Zealand Minimum Wage Rates


Rate/Hour
Rate /40 Hour
Week
Adult Rate (20+ years
old)
$7.55 per
hour
$302
Youth Rate (16-19 years
old)
$4.55 per
hour
$182

On 22 March 2000, Cabinet agreed in principle to lower the age of eligibility for the adult minimum wage from 20 years to 18 years of age.

Training Exemptions

There is no minimum wage rate for people who meet the requirements of a training exemption. This training exemption applies to the youth and adult minimum wages for employees who have a training agreement with their employer to undertake at least 60 credits of training per year, linked to the National Qualifications Framework.

Options for Consideration

The following options are being considered:

a.Increasing the youth minimum wage for 16-17 year olds by raising the ratio of the youth to adult minimum wage rate to somewhere between the current level of approximately 60 percent ($4.55 per hour) to 100 percent ($7.55 per hour); and b.Setting the minimum wage rate for those with a training exemption somewhere between approximately 60 percent ($4.55 per hour) and 100 percent ($7.55 per hour) of the adult minimum wage.

Cabinet decided to consult further on these options. The following is a brief outline of some of the issues you might like to consider before submitting your reply.

What is increasing the minimum wage for 16 and 17 year olds likely to mean for New Zealanders?

An increase from 60 percent of the adult rate would represent an improvement from the current minimum wage rate for some 16 and 17 year olds. For some this will be an immediate increase in their pay. Many of those who gain from an increase will be young people who left school early with low levels of skills or qualifications. Maori and Pacific people are likely to be a significant proportion of people in the group that will benefit.

Increasing the youth minimum wage may encourage some people who are not currently seeking work to seek work. It may also encourage those currently in work to work harder or increase productivity.

On the other hand, increasing the minimum wage may mean that young people, especially those with low levels of skills and qualifications, find it harder to find work. Employers might prefer to hire an adult rather than a youth or just not hire someone at all. Maori and Pacific people are likely to be over-represented in this group.

What is setting a minimum wage for those subject to training exemptions likely to mean for New Zealanders?

Currently little is known about the use of training exemptions due to an almost complete lack of information. Under current policy, no minimum wage applies where an employee is undertaking 60 or more credits per year of training linked to the National Qualifications Framework (equivalent to 600 hours or half a full time course).

Setting a minimum rate payable under training exemptions from the minimum wage may mean that some young people and older employees currently in training receive an increase in their wage. This may encourage some young people to seek training in employment. It may also encourage those currently in work to work harder or increase productivity. However, this option might also mean that an employer is less willing to provide training or employment to those in work or those seeking work.

An invitation to submit your views and experiences

If you would like to submit your views or experiences regarding increasing the youth minimum wage for 16-17 year olds and on setting a minimum wage for employees with training exemptions, e-mail us on the address below.

E-mail your views to: info@youthaffairs.govt.nz

Alternatively you can send your comments or ideas to the following address:

Ministry of Youth Affairs

Minimum Youth Wage Consultation

P O Box 10 300

WELLINGTON

Please send your views to us by 14 April 2000 if you want them to be considered.

Thank you

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