Helen Kelly’s Column

The ‘Starting Out Wage’ – it’s just wrong

 By Helen Kelly
Council of Trade Unions President

The government’s latest policy to cut wages and conditions for workers – the starting out wage, has had its First Reading in the House.  This law is unfair, its discriminatory and it won’t alleviate our high levels of youth unemployment.

The law will simply make it cheaper to employ certain people based on their age, or their experience in the work market.

The first part of this law allows employers to pay young people less based on their age. The second part would allow for 18 and 19 year olds to be paid less if they had been on any form of benefit for 6 months or more.

This could mean, for example, that a 19 year old who might have 2 or three years’ work experience, but who may have had to go on a sickness benefit for a time, could then be employed on a youth rate of $13.40 alongside an 18 year old straight out of school, with no experience who would be paid the minimum wage of $13.50.  It would still allow for young workers to be paid a lower rate while undertaking recognised training.

Discrimination ‘brushed off as acceptable’

This kind of discrimination is often brushed off as acceptable, because young people live at home and don’t need the money for anything but buying CD’s and jeans.

But the reality we know is that young people are increasingly working to help support themselves or their families. They need their jobs and the money they bring in – taking a 20% pay cut based only on their age will leave them struggling financially – rent and groceries will not be 20% cheaper.

But aside from the moral argument, the economic argument simply doesn’t add up either. They won’t bring down overall youth unemployment numbers, but switch some low paid, insecure jobs from one group of young workers earning the adult minimum wage, to the cheaper group of youth eligible to earn youth rates.

The Ministry of Business, Innovation and Employment (MoBIE) admits as much saying; “the precise nature and extent of the policy’s expected benefits are uncertain.”

MoBIE estimates that if half of 16 and 17 year olds received the starting-out wage then 3200 jobs for this age group might be created over two years, but, that it would be at the expense of 1900 jobs at the 18-19 age group.  At any one point there will be workers displaced, failing to address the bigger job shortage problem.

We stand for decent work and a living wage for all workers – this principle applies to young workers too.

Cutting young people’s wages is a step in the wrong direction, and only promotes growth of low wage, low skill employment in largely unproductive enterprises.

The Government needs to put serious investment into initiatives that work. Programmes like ‘Job Ops’ have had success and need greater support. The Government should be investing in our young people, and adopting policies that will create jobs and lift employment rather than reducing pay rates.