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ACTION ALERT : Submission Guide for Minimum Wage (Abolition of Age Discrimination) Amendment Bill

Sue Bradford MP

1. Introduction

My private member's bill to abolish age discrimination in the setting of the minimum wage, the Minimum Wage (Abolition of Age Discrimination) Amendment Bill, passed its First Reading in Parliament on 22 February 2006. It has been sent to the Transport & Industrial Relations Select Committee for public submissions and consideration. A copy of the Bill is available at www.greens.org.nz/searchdocs/other9433.html. It is downloadable form that page as PDF or Word.

The deadline for submissions is 21 April 2006.

I am emailing you to encourage you to support the Bill with a submission. You will need to send 20 copies of your submission to:

Committee Clerk, Transport and Industrial Relations Committee, Parliament, Wellington. If this is a difficulty, you can send an electronic copy to socialjustice [at] greens [dot] org [dot] nz>Ivan Sowry, at least a couple of days before the deadline, and we can arrange to make the hard copies to send to the Committee Clerk.

If this is your first time making a submission to a Parliamentary Select Committee, you may want to read the Parliamentary guide Making a Submission to a Parliamentary Select Committee.

If you have the time and feel you have something important to add to the debate, it is really good if you can make an oral presentation in support of your written submission. The MPs on Select Committees tend to take more notice if you actually appear before them. If enough people make submissions from your area, the Select Committee is more likely to travel to somewhere close to you to hear oral submissions, or to set up a video link.

If you have the time, it is preferable for you to make your written submission in your own words. However, for people who are short of time, we have prepared a "form submission" (PDF 13KB) which you can download and complete.

2. Aim of the Bill

The aim of my Bill is to remove the provisions of the Minimum Wage Act 1983 (MWA) that permit the Governor-General in Council to prescribe minimum wages that discriminate on the basis of age.

In practice, these provisions have been used to set a lower minimum wage for young people. Prior to 2001, the youth minimum wage was set at 60% of the adult rate. This then applied to workers aged 16 to 19.

A policy change in 2001 increased the "youth" rate of minimum wage to 80% of the "adult" rate, and restricted its application to those aged 16 and 17.

The current rates of minimum wage at the time of writing of this submission guide are $7.60 an hour for those aged 16 and 17, compared with $9.50 for older workers. There rise to $8.20 and $10.25 respectively, effective from 27 March 2006.

My Bill proposes to remove the ability in law for Government to set such discriminatory rates of minimum wages for youth (those aged 16 or 17).

3. What are the reasons for the Bill?

Age is one of the prohibited grounds of discrimination under the Human Rights Act 1993 (HRA). The general anti-discrimination provisions of that Act, contained in section 21, prohibit discrimination on the basis of age, being any age commencing with the age of 16 years. There are some exceptions to that general provision, including section 30(2) of the HRA, which permits employers to discriminate on the grounds of age in paying a lower rate of pay to employees who have are aged under 20.

The primary reason for the Bill is based on the principle of equal pay for work of equal value. From 1 April 1973, with the coming into force of the Equal Pay Act 1972, discrimination in rates of pay based on gender has been unlawful. Yet, over 30 years on, section 4 of the MWA still condones similar discrimination on the basis of age in setting minimum wages, and section 30(2) of the HRA condones it in terms of the setting of wages generally.

This discrimination is arbitrary, inequitable and unjustifiable under the principle of equal pay for work of equal value. A 17 year-old filling cars with petrol at a service station or a 16 year-old fast food worker can receive nearly $2 an hour less than 18 year-olds working beside them doing exactly the same job. The work is the same, the employer expectation is the same, and the costs of food, clothing, transport and other essentials of life are the same, whether a worker 16, 17, 18 or 60 years old.

The Bill does not propose to change the "training rate" that is the lower rate payable where there is a genuine and significant training component to an employee such as an apprentice. It focuses solely on removing the discrimination in the minimum wage that applies when those aged 16 or 17 are doing the same or substantially similar work as older workers.

It is suggested that the "equal pay for work of equal value" principle should form the basis of submissions in support of the Bill.

4. Refuting the counter-arguments

The main argument put up by some employer groups and others who oppose the Bill is that it will have a negative effect on youth employment. They argue that employers will be less likely to employ 16 and 17 year old workers if they can hire adult workers at the same rate.

This argument was also used to oppose the 2001 increase in the youth minimum wage from 60% to 80% of the adult rate over a two year period. The net effect over this time was a 41% increase in the youth minimum wage payable to 16 an 17 year olds — a greater percentage than would now be required to increase it to the adult rate.

Subsequent to the 2001 changes, Treasury and the Department of Labour undertook research into the effects of those changes on youth employment. The results of that research are published in a Treasury Working Paper Youth Minimum Wage Reform and the Labour Market, Dean Hyslop and Stephen Stillman (2004).

Hyslop and Stillman's research concluded that the substantial increase in the youth minimum wage in 2001 resulted in no adverse employment outcomes for young people. The opposite actually occurred - 16-17 year-olds actually increased their hours worked by 10-15 percent following the minimum wage changes.

Submitters are encourage to submit that the Hyslop-Stillman research indicates that the argument that further increasing the youth minimum wage to the adult level will have a negative effect on youth employment is little more than scaremongering, and has no evidential basis.

Furthermore, a survey of Wellington businesses conducted by Sherwin Chan Walshe, and reported in the Dominion Post on 27 February 2006, revealed that only 14% of businesses surveyed considered that the abolition of the youth rate of the minimum wage and paying all employees at the "adult" minimum rate would have a significant effect on their business. 85% of businesses surveyed considered it would not.

The real agenda behind the arguments of certain business groups, it could be submitted, is simply for employers, such as those in the retail and fast food sectors who employ large numbers of 16 and 17 year old workers, to maximise their profitability by minimising their wage bill.

In recognition that a small number of businesses may have genuine concerns, and that some 16 and 17 year olds are disadvantaged in the labour market on account of their age, it is submitted that these issues could be better addressed by increased accessibility to Work and Income wage subsidies to assist employees employing those workers identified in the labour market, rather than across-the board wages being paid at exploitative levels to young people.

5. What about youth rates above the minimum wage?

My Bill, as referred to the Transport and Industrial Relations Select Committee, does not address the issue of youth rates above the minimum wage that employers may negotiate into employment agreements.

These are currently permissible under section 30(2) of the HRA, and can apply to workers aged between 16 and 20.

The arguments above relating to equal pay for work of equal value also apply to youth pay rates above the minimum that are contained in employment agreements.

The Green Party would therefore welcome and support submissions calling for the repeal of section 30(2) of the HRA.

6. What about workers aged under 16?

There is currently no minimum wage for workers aged under 16. This means that employers can employ such workers at any pay rate they choose — and rates as low as $5.00 an hour are not unknown.

This offends against New Zealand's obligations in international law — in particular:

United Nations Convention on the Rights of the Child - Article 32:

  1. States Parties recognize the right of the child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with the child's education, or to be harmful to the child's health or physical, mental, spiritual, moral or social development.
  2. States Parties shall take legislative, administrative, social and educational measures to ensure the implementation of the present article. To this end, and having regard to the relevant provisions of other international instruments, States Parties shall in particular:
    1. Provide for a minimum age or minimum ages for admission to employment;
    2. Provide for appropriate regulation of the hours and conditions of employment;
    3. Provide for appropriate penalties or other sanctions to ensure the effective enforcement of the present article.

and

International Labour Organisation Convention 138.

The argument is often put, with some justification, in the context of New Zealand's obligations under these international conventions that a limited amount of work undertaken by children and young people in compulsory education is beneficial, rather than detrimental, in that it gives them experience of workplace practices and working life.

The Green Party's policy in support of full implementation in New Zealand law of the UN Convention on the Rights of the Child would suggest, however, that exploitative pay rates are unacceptable.

While discriminatory and exploitative pay rates paid to workers aged under 16 are an obvious issue that needs to be addressed, there are complicating factors that also need to be addressed. These are questions of what age children and/or young people should be working at all, and what types of work, hours of work and conditions of work are acceptable for them to work under.

These are issues that are probably beyond the scope of the Bill.

Submitters are therefore encouraged to submit that the adult minimum wage be extended to children and young people aged under 16 who are in a genuine employment relationship, and that an Inquiry be undertaken with view to establishing in legislation what types of work, hours of work and conditions of work are acceptable for such children and young people to undertake in the context of New Zealand society and New Zealand's obligations under the UN Convention on the Rights of the Child and International Labour Organisation Convention 138.

6. Recommendations

The Green Party suggest that you conclude your submission with clear recommendations, for example:

  • That the Bill be supported and its ambit extended to prevent exploitation of children and young people aged under 16 who are in employment.

  • That section 30(2) of the Human Rights Act 1993 be repealed, thereby preventing age discrimination against those aged 16 to 19 being implemented in pay rates established by employment agreements.
  • That an Inquiry be undertaken with view to establishing in legislation what types of work, hours of work and conditions of work are acceptable for such children and young people to undertake in the context of New Zealand society and New Zealand's obligations under the UN Convention on the Rights of the Child and International Labour Organisation Convention 138.

Please remember - this is only a guide - there are many other arguments and recommendations that can be made.

7. Further information

If you want further information to assist you in making your submission, contact the Green Party's Social & Economic Justice Outreach Coordinator, socialjustice [at] greens [dot] org [dot] nz>Ivan Sowry .

Don't forget the submission deadline - 21 April 2006.

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