Wilkinson Kate: Minimum Wage (New Entrants) Amendment Bill — Third Reading 
Wilkinson Kate: Minimum Wage (New Entrants) Amendment Bill — Third Reading 
[Volume:641;Page:11595] 
KATE WILKINSON (National) 
: 
 In speaking to this third reading of the Minimum Wage (New Entrants) Amendment Bill we appreciate that the purpose is to provide for an adult minimum rate for new entrants who are defined as being workers who are 16 or 17 and who have completed 3 months or 200 hours of employment whichever is the shorter. We know that the bill originally started out to abolish youth rates for 16 and 17-year-olds and then it became amended to provide for this new entrant criteria to “recognise the experience that they have gained” in that “very short time.” That experience is translated simplistically into 3 months or 200 hours of employment but there is nothing stated about the position or about the training given and received. In fact there is no mention at all of the quality of the hours worked. 
There is a limitation that the employment be with more than one employer. I still think that it should read “one or more employers” because it simply does not make sense otherwise. If a young person happens to work for four different employers doing 100 hours with one 50 for one 25 with two the total is still 200 hours. That assumes that the skills and experience in all four of those jobs are transferable. Furthermore the 90-days condition is silent absolutely silent on how much that work may actually be. Is it 1 day a month for 3 months? Is it full time for 90 days or part time for 90 days? This is uncertain law and uncertain law is not good law. 
The bill may indeed be well-intentioned law though. In fact during the second reading debate Government speakers acknowledged that this legislation is for workers who are vulnerable. Nobody condones the exploitation of vulnerable workers whatever their age. I do not think there will be much disagreement that all workers whatever their age should be valued for the work they perform. But what will this bill actually achieve? Will it prevent and outlaw exploitation of vulnerable workers or will it be a barrier to young persons getting a job? Will it be a perverse incentive for them to leave school and not complete their education? The Minister herself even acknowledged—and on this I have to agree—that “we do not want to send the message to young people that leaving school early with no qualifications is a good idea.” That is where our agreement ends. The Minister does not think this bill will drive that message. We have concerns that that is exactly what will happen. 
I have to say that our view is backed by the research paper recently of Dr Gail Pacheco and based on her thesis  
Minimum wages in New Zealand: An empirical inquiry 
 she says: “Policy-makers must consider the possible long-term harm of a rise in youth minimum wage. Given the option employers may switch to hiring people with more skills and education or older people with more experience. Older workers 20 or 25-plus will be hired because if you’re going to pay workers the same you might as well pay for skill and experience.” What good does it do a young person to know that an employer must pay him or her the adult minimum wage if the fact that he or she must be paid that amount is what keeps him or her from getting a job? This bill we fear will be that barrier. 
The  
Gisborne Herald 
—and I know the honourable member Sue Bradford mentioned some editorials—actually reinforces that view. I quote: “There are some aspects of the proposed move to increase youth wages to the same as adult rates that could be counterproductive. Instead of helping youngsters it could limit their job opportunities. What it boils down to is that the Government would be placing youngsters with little or no work experience in direct competition with people who have many years of work experience well developed work ethics and motivation. What employers don’t want is to be forced to pay a young person the same as an older person when they are not providing the same value. A business is only as good as its product. And productivity relies on the input of staff managers and owners. They are always on the lookout for people who want to work and bring their own special contribution to the workforce. They don’t need a bill.” 
Dr Pacheco also found that where youth rates increase enrolments at secondary and tertiary education institutions decrease. This bill has the potential to be a perverse incentive encouraging young people out of the education system and to leave school early. We have already announced our significant trades training policy so that more of our young people can stay engaged in schools. We should be encouraging them to stay in education for as long as possible. 
In a further research paper—this one was in the UK and I know there is a tendency by this Government to try to model if not replicate some of the UK laws—in the September issue of the  
Industrial Relations Journal 
 in the UK Jason Heyes stated: “The Low Pay Commission … the body charged with making recommendations to the government on the level and extent of minimum wage protection took the view that ‘16-17-year-olds form a distinct segment of the labour market preparing for working life rather than being full participants in the workforce … and ideally all 16-17-year-olds should be receiving education or good quality training.’ The exemption of young workers from the NMW”—national minimum wage—“was presented as a way of ‘supporting the training base’ by safeguarding opportunities for young people to gain qualifications skills and experience and ensuring that young workers would not ‘find themselves locked into low-skilled low-paid jobs—or even worse the cycle of low-paid work and unemployment.’ ” 
This bill instead of providing safeguards for our young people is removing those opportunities. Training is more than just 3 months with no criteria as to how much work in that 3 months is required. It is more than 200 hours. It relates to experience training skills obtained and qualification. This bill does not address that. The Minister herself admitted that we need to balance the positive impact that abolishing the lower rate of pay for 16 and 17-year-olds will have against the possible negative impact of an incentive for 16 and 17-year-olds to leave school earlier with fewer qualifications. We do not believe this bill achieves that balance. 
I can see no reason why a 16-year-old would not be paid the same or a similar rate to a 20-year-old a 30-year-old or even a 40-year-old provided they do the same work and make the same contribution. I mentioned earlier that one submitter said: “Younger people tend to be paid at a lower rate than older workers because age is a proxy for experience and performance on the job just as the age of 15 is a proxy for the minimum capacity and maturity required to drive a car on our roads.” Legislation like this—whatever its purpose; whatever its intention—cannot change overnight the amount of experience and performance capabilities of any worker whatever his or her age. 
We welcome a fair wage for fair work. We welcome the fact that many employers voluntarily pay above the adult minimum wage in any event because they value their staff. Staff are valuable. Businesses rely on them and productivity relies on them; they should be paid what they are worth. But this bill is not the right instrument. We do not want young people to be priced off the labour market. We do not want young people to leave education prematurely. I have asked before what good does it do a young person to know that an employer must pay him or her the adult minimum wage if the fact that he or she must be paid that amount is what keeps him or her from getting a job? This bill we fear will be that barrier.