Douglas Roger: Minimum Wage and Remuneration Amendment Bill — In Committee 
Douglas Roger: Minimum Wage and Remuneration Amendment Bill — In Committee 
[Volume:654;Page:3888] 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 I was not going to speak in this debate but when I listened to the crocodile tears coming from the Labour Party I thought that maybe I should say a word or two. I probably come at this from a different point of view to that of a lot of National members and I certainly have different points of view to the ones expressed by some Labour members. Their inability to understand even some basic economics is hard for me to understand or believe. 
Assertions have been made that the minimum wage level is too low that it is not rising fast enough and that it should apply to some people who are not covered. In my view this is unfortunate given that in the long run the effect of minimum wage legislation such as this is paradoxically not to raise the take-home pay of workers or contractors who have low skill levels but in many cases to make it almost impossible for them to find jobs. That is what this legislation will do. The really low-skilled workers will be locked out of the workforce and the honourable member from the National Party who preceded me Michael Woodhouse made that point pretty well. 
The tragedy of all this is that if there is a choice of employment low-productivity workers can usually raise their skill levels and their productivity with job training to a level where they will get an increase in income to match that increase in productivity. With minimum wage legislation they are effectively barred from employment in the first place and that is what we see for so many people. Given that many of our young people are effectively barred from job training in this way it is little wonder that we have the problem of youth unemployment. Because of that it surprises me that the Maori Party would vote in favour of this legislation. I am surprised because it is often Maori who are the most disadvantaged in this way. 
The major reason for this minimum wage legislation that we have heard in this debate is that there is a fear that in its absence employers would be completely free to dictate the levels of wages paid. We have just heard that argument from the previous speaker Lynne Pillay. However we must accept the reality of the situation. Employers and others will pay a worker relative only to his or her level of productivity. Wage levels that are below workers’ productivity will be pushed up so if a worker has a productivity level of $30 an hour and he or she is on $15 an hour then the market will ensure that those wages get pushed up. Wage levels that are higher than the level of productivity will be pushed down by employers who are I agree self-serving. If workers have a productivity level of $10 an hour and they are on $20 an hour their wages will be pushed down over time. 
Members can take the example of an employee who creates value of $15 per hour and is paid $10 an hour. The employer is making an extra profit of $5 per hour out of that employee as he or she toils away hour by hour. This sounds bad for the worker but it is a situation that rarely exists in the real world. Even if it did exist it would not last for long. That is the point. The market would look after it. That situation would not last long because another employer out there would like to make a profit from that worker. So the employer would pinch the worker who is being underpaid and take that person into his or her own employment. The passing of a law such as this says that if a firm hires a worker it must pay let us say $13 an hour even if that worker’s productivity is only $10 an hour. Will those people now find a job? The answer is that some might but most will not.