Former Labour Minister of Finance, founder of the Association of Consumers and Taxpayers and current Act Party List MP Sir Roger Douglas explains why he has introduced a bill to reinstate youth minimum wage rates:

“An after-school job at the supermarket or as a check-out operator, working in the deli or even stacking shelves has been the first job for many young people as they step onto the career ladder and into paid employment for the first time.  However, in recent times that all important first job has become harder and harder to get, with youth unemployment rates rising dramatically since 2008.

Current statistics show that 30% of unemployed in New Zealand are between the ages of 15-19 and 40% are between the ages of 15-24.  This is concerning.  Instead of young New Zealanders being able to gain crucial work experience and developing a strong work ethic, they are instead unable to get a job and are stuck at home on the couch.

Since youth rates were abolished in April 2008, youth unemployment has spiked at a far higher rate than can be explained away by the recession.  The Warehouse human resources manager Paul Walsh recently told the NZ Herald that prior to the youth minimum wage being abolished, under-18-year-olds fluctuated between 30-33 percent of his company’s 7500 staff.  Since the youth rate was abolished this has plummeted to 24.1 percent.

It’s for this reason that I introduced the Minimum Wage (Mitigating Youth Unemployment) Amendment Bill that would reintroduce the capacity to establish differential minimum wages for those aged 16-17.  I believe that by setting the minimum wage at the same level as adults, it effectively priced young people out of the market.  Over 75 percent of economists agree that minimum wages create unemployment among workers with the least experience and fewest skills.

As employers, I am sure that you would agree that when you employ someone you don’t just take into account how fast the person can unload a truck, or stack groceries on a shelf – although these can important aspects of the job.  Intangible qualities such as maturity and life skills can play a big part in hiring decisions as well.  It is in these areas that young people are at a disadvantage.

By allowing a wage differentiation between adults and young people it gives employers an incentive to take the risk and employ a young person with no experience over an adult who could have been in the workforce for quite some time.

The real tragedy of setting youth wages too high is that many of those who can’t find work at $12.75 an hour – but perhaps could find work for $10 an hour – are forced to go onto the unemployment or independent youth benefit.  In other words, we prohibit them from earning $10 an hour, and instead force them to earn $3 an hour, which is how much they earn on the unemployment benefit.

It is very interesting to contrast this reality with the rhetoric that is brought to the minimum wage debate.  Labour often talks about delivering a “pay increase” and emphasise that they are helping out struggling workers.  Some employees may gain in a small way, but others who lose their jobs or do not find a job in the first place as employers cannot afford to hire them, are massively worse off.

The Bill I have drafted would only lead to lower minimum wages for 16 and 17 year olds – but given that that is where the minimum wage is having its worst effects, it’s a good place to start.”