Youth pay rates must go

A few weeks back I received a call from a distressed employee at one of the big fast-food chains. She had arrived at work to find she had been taken off the rosters for two weeks. She worked full time – up to 40 hours each week – although in this McJob-type employment the hours of work can fluctuate wildly from one week to the next.

She had bills to pay – where were her hours? The manager told her she should take a two-week holiday and then her shifts would resume. She was upset and angry.

The problem she faced was the school holidays. The company preferred to replace her with school students on youth rates.

So slack are New Zealand industrial relations laws in protecting employees that this is quite legal. Appalling, but legal.

At one level this is an issue about the need for security of hours to protect employees from exploitation so they can regularly work 40 hours a week to provide for their family. But it is also an issue about employers cynically using young workers to displace older workers, reduce their wage bill and increase profits.

Employers like youth rates. The argument they use is that because they are paying less they will be more likely to give a young worker a chance at employment who might otherwise not get a chance. This will be true in a small number of situations but with an economy based on competition, the built-in incentive is to pay the lowest wages possible and the problem faced by the young woman above is not uncommon.

The minimum adult wage (18 and over) is $11.25 per hour but the youth rate is pegged at 80% of the adult rate, so employers get away with paying just $9 per hour for 16 and 17-year-olds and even less (anything they like) for those under 16.

Green Party MP Sue Bradford has a private member’s bill before Parliament which would remove discrimination against young workers and ensure they are paid the adult wage. The bill has just been reported back to Parliament from a select committee, but Labour and New Zealand First have used their majority on the committee to put forward a hotch-potch compromise which has more fishhooks than a long-line fishing boat.

The select committee is suggesting that the first 200 hours worked by a young worker after he or she turns 16 will be paid at a “new entrant” rate, unless they are in a supervisory role, and thereafter they would be paid the adult minimum wage.

Ministers say this would mean only the first five weeks of work would be on youth rates but this ignores the reality of youth work. Union workforce statistics show 50% of the 16 and 17-year-olds on youth rates work 10 hours or less each week.

These are mainly school students, and on the Government’s proposal they would need to work for 20 weeks or five months before receiving the adult wage. Even if they worked full time through each school holiday it would take them close to a year before they could move on to the adult wage.

The Government says it doesn’t want to abolish youth rates altogether because it fears it may encourage young New Zealanders to leave school for the higher rates of pay. This sounds a plausible argument until you consider the current situation. Using youth rates to discourage students from leaving school is spitting into the wind. It is the supply of jobs, or lack of them, that is the most powerful deciding factor for students already thinking of leaving school.

In fact, the Government’s proposal could have the opposite effect. As a teacher, I was frequently telling students to keep down the hours they worked or it would interfere with their full-time school study.

The 200-hour target is likely to be an incentive to work longer hours to reach the adult rate, with negative effects on their study. On the other hand, if youth rates are abandoned it may encourage some to work fewer hours for better pay and concentrate more on their studies.

As with so many hotch- potch proposals it is trying to be all things to all people and misses the principle. The original bill sought to end discrimination on the basis of age between workers who do the same job and have the same amount of experience.

The Government’s proposal does not achieve this. Instead, it could be the basis for any future government to extend wage discrimination by age beyond what it is at present and to do so without referring it to Parliament.

Working New Zealanders need far greater employment protections. Ending youth rates is one part of the picture.