Bridges Simon: Minimum Wage (Starting-out Wage) Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Bridges Simon: Minimum Wage (Starting-out Wage) Amendment Bill — Second Reading 
[Sitting date: 14 March 2013. Volume:688;Page:8578. Text is incorporated into the Bound Volume.] 
Hon SIMON BRIDGES (Minister of Labour) 
: 
 I move  
That the Minimum Wage (Starting-out Wage) Amendment Bill be now read a second time 
. I thank the members of the Transport and Industrial Relations Committee and its chair David Bennett for dealing with this bill so swiftly and efficiently. The select committee reported back to the House on 26 February and recommended that the bill proceed with some amendments. I agree with the amendments proposed. In addition I intend to make some minor technical changes to the bill through an amendment to be tabled at the Committee stage. These technical changes will provide further clarity around the meaning of continuous employment clarity on the timing for which a person is no longer eligible for a starting-out wage and changes consequential to the Minimum Wage Order 2013 coming into force. 
In New Zealand and worldwide young people have been severely affected by the recession. The household labour force survey shows that young people under the age of 20 have been more negatively affected in employment terms than older groups of workers. In the past 5 years there has been a drop in employment for young people aged between 15 and 19 years of about 42 percent. 
International research shows that long spells of unemployment and inactivity may permanently lower young people’s future employment prospects particularly where they are low skilled and inexperienced. Like other OECD countries New Zealand is responding to the negative effects of the global recession on young people. A reduced minimum wage is used in several countries including Australia and the United Kingdom to encourage youth employment. We need to ensure that young people are ready and equipped for work as the economic recovery gains momentum. 
I am confident that the Minimum Wage (Starting-out Wage) Amendment Bill will assist young and inexperienced workers to gain a foothold in the labour market. To achieve this aim the bill will enable the setting of reduced minimum wage rates by Order in Council for certain groups of young people aged 16 to 19 years. 
The rates will be set at no less than 80 percent of the adult minimum wage. It is intended that three groups of young people be targeted for the starting-out wage. These are 16 and 17-year-olds in their first 6 months of work with a new employer 18 and 19-year-olds who have been paid a benefit for 6 months or longer and who have not completed 6 months of continuous work with any employer since starting on the benefit and 16 to 19-year-olds in training in a recognised industry training course involving at least 40 credits a year. 
The intent of the starting-out wage is to support young people who are new to the workforce into long-term sustainable employment by providing incentives for employers to take them on. For young people the starting-out wage will provide them with an advantage in the labour market so they can gain the necessary skills and work experience that will assist them throughout their working lives. 
The bill limits the period for which an employer can pay a starting-out wage to a young person working for them who is not supervising or training others to a period of 6 months. After this time the young person will be entitled to be paid the adult rate by that employer. This bill encourages continuity with the same employer. Young people—like all employees—with a steady work history are seen as less risky for employers to take on. This puts a focus on young people gaining work experience at a steady job and becoming better equipped for their future employment. 
This Government recognises that there is a need to provide for more vocational training opportunities for 16 to 19-year-olds. It is important that young people are given opportunities to engage in training for industry. Employers so far have indicated that they are not using the training minimum wage. The bill provides for young people aged between 16 to 19 years who are required to undergo training as a condition of their work to be paid the starting-out wage rather than the minimum training wage. 
The number of annual training credits will be changed from 60 to 40 through an Order in Council for 16 to 19-year-olds to give them the flexibility to choose a range of courses without having such a heavy workload. Reducing the credit requirements to at least 40 credits per year for 16 to 19-year-olds will support more young people to gain skills in their chosen industry. The lower credit requirement means that more people will qualify for the starting-out wage than did for the training wage so more employers will opt to train young people. 
The select committee received a range of submissions on the bill and it has given thorough consideration to the issues raised by submitters. As a result some minor amendments have been recommended. An amendment is proposed to clause 2 of the bill which provides the date on which the bill comes into force. The select committee recommends changing the commencement date of the bill from 1 April to 1 May 2013 to provide sufficient time for employers and young people to be fully informed about how the starting-out wage will affect them. 
This will not affect the making of this year’s minimum wage order which as it did last year is intended to come into force on 1 April. Nor will it affect those on the new entrants wage who will receive the higher of the new entrants rate or the new starting-out wage rate for 16 and 17-year-olds until they have completed their 3 months or 200 hours of employment under the current law. 
Clause 4 replaces section 4 of the principal Act which authorises the Governor-General by Order in Council to prescribe minimum rates of wages with new sections 4 to 4B. The select committee proposed a small number of technical amendments to the bill under clause 4 to clarify its operation. One amendment clarifies that when the bill refers to “continuous employment” continuous work counts from the worker’s first day on the job and is taken to mean any amount of work regardless of hours per week done on an ongoing basis for an employer. Another amendment clarifies that the time before a young person turns the age specified in the starting-out wage Order in Council would count towards their eligibility for the starting-out wage. These are sensible recommendations and I thank the select committee. I would also like to thank the people who took the time to make a submission on the bill. 
The Minimum Wage (Starting-out Wage) Amendment Bill is the latest in a series of steps the Government is taking to get more New Zealanders into work and into jobs. The Government’s continued focus on getting young people off benefits and into work has already seen thousands of young people benefit from subsidised work placements and pre-employment training. The Minimum Wage (Starting-out Wage) Amendment Bill is part of this wider package to help get more young New Zealanders into work or training. It provides real incentives for employers to take on young people and give them the opportunity to gain work experience and skills that will stand them in good stead for their future working lives and careers. I commend this bill to the House.