National, ACT barking on youth rates

I’m almost lost for words – this is so unbelievably stupid.  National and ACT want to reintroduce a discriminatory lower minimum wage rate for young people.  And they are not just talking about people under 18 who were subject to youth rates before a Green Party bill abolished them in 2008.  They are talking about extending them to people aged up to 24.

Labour Minister Kate Wilkinson says:

If you’ve got somebody who is 16 who is wanting a job and someone who is 30 at the same price, then who is the employer going to employ?

Fail, on all accounts.  Wilkinson seems to think employers create jobs because they have some spare money floating around.  They don’t.  They create jobs because they expect doing so will expand their business and/or improve its profitability.  Thanks to the Government’s failure to respond to the recession with policies that encourage employers to create jobs, there are simply not enough jobs to go around at the moment.

But Wilkinson would rather see the 30 year old, often with a mortgage and a dependent partner and children, out of work rather than the 16 year old who has the lifestyle flexibility to choose to further train or study to improve his or her chances in the labour market. Unbelievably stupid!

There is absolutely no evidence of a causal relationship between the minimum wage for young people and youth employment rates.  In  fact, a study undertaken by Treasury and the Department of Labour back in 2004 showed that when the youth rate was substantially increased (and in the case of 18 and 19 year old workers set at the adult rate) youth employment rates actually increased.

This isn’t about getting young people into work at all.  It is about an evidence-averse Government prepared to suck up to employer lobbyists’ demands for lower wages.

If there is an up-side to the Government’s barking mad discriminatory policy, I suppose it will encourage more young people to vote, and young people’s votes tend to favour the Greens.

Update: According to Danyl at the Dim Post, Kate Wilkinson’s office has denied that consideration is being given to setting the age for youth rates at 24.

Well done Kate Wilkinson

It’s not often I’ll praise a National Party Cabinet Minister. And I was about as far as you get from praising Kate Wilkinson when she was ramming the anti-worker Fire at Will Bill through Parliament under urgency as Minister of Labour last year.

But yesterday as Minister of Food Safety she got something right:

The Minister of Food Safety has spoken out strongly against the imminent compulsory addition of folic acid to most bread.

“I’m not a fan,” Kate Wilkinson said yesterday of the transtasman food standard that requires the synthetic vitamin be added to virtually all bread from September. “I sympathise with the bakers’ frustration.”

While Cabinet hasn’t yet decided exactly how it will overturn the Food Standards Australia New Zealand ruling that would require the mass medication of New Zealanders’ bread with folic acid, it is pretty clear that the ruling is on the way out.

I acknowledge that increased dosage of folic acid for pregnant women can help reduce the incidence of conditions such as spina bifida. But that doesn’t mean the rest of us should have to get it too. It does have health risks as well as health benefits.

The agenda for lower wages

The National Party’s pre-election employment relations policy was notably silent on the issue of the minimum wage. That made some of us who remembered the infamous “nil” minimum wage increases in the 1990s very suspicious.

Over the last couple of days we have seen Sue Bradford at frogblog and Steve Pierson at The Standard speculating, presumably on the basis of some inside information, that the Department of Labour is recommending an increase in the minimum wage of as little as 50c an hour, but that Labour Minister Kate Wilkinson is going even further in recommending to Cabinet a “nil” minimum wage increase.

Then, right on cue, Business New Zealand chimes in this morning with a call for Government to freeze the minimum wage at its current dollar figure.

As Sue Bradford says:

To freeze the minimum wage now is a recipe for further cuts to spending, deeper poverty for the hundreds of thousands of workers and their families directly impacted, and an intensified recessionary spiral.

And it is not just those who sit right on the minimum wage that are affected – it is also all the huge numbers of workers whose low rate of pay, often between the $12 and $15 mark – is determined by the minimum wage rate.

So it seems National may have learned nothing from their disastrous employment relations policies of the 1990s, and that, despite John Key’s talk about reducing the wage gap between Australia and New Zealand, we might be in for another stumble towards an even lower wage economy.

That would be consistent with the other employment relations policies that National have announced or implemented. Just before Christmas we saw them rush their Fire at Will Bill through Parliament under urgency with no Select Committee hearing or opportunity for public submissions. The best way to increase wages is to encourage collective bargaining, but this Bill will do just the opposite. Employers with fewer that 20 employees will be able to dismiss employees for any reason after the start of march. That includes the ability to dismiss employees who join a union. New employees are likely to be coerced into bargaining individually for fear of losing their jobs, which usually means just accepting whatever the employer offers.

And worse is yet to come. Another plank to National’s employment relations policy is this:

Restore workers’ rights to bargain collectively without having to belong to a union.

This is the Employment Contracts Act revisited in all but name – effectively allowing employers to undermine collective bargaining by bargaining separately with a small group of vulnerable non-unionised workers, striking a low wage deal with them, then telling the union they can take it or leave it and locking out the non-unionised workers if they don’t take it.

Maybe John Key wasn’t misquoted after all when he was reported to have told a Kerikeri business audience in late 2007 that he “would love to see wages drop”!

[EDIT: Just picked up on a new post from Steve Pierson at The Standard re Business NZ’s proposal to assist low income workers through tax cuts rather than increasing the minimum wage: He makes some good arguments why this is a silly idea]:

1) tax cuts for minimum wage workers have just been cancelled by National/ACT
2) tax revenue pays for the social wage – healthcare, education etc; tax cuts mean cutting the social wage, or higher debt paid for in the future. If you have to spend your tax cut paying for services that used to be paid for from tax revenue, you’re not any better off.
3) You can’t cut tax year after year to counter inflation, you run out of tax.
4) The tax cuts you would need to make up for not adjusting the minimum wage are massive. You would need to reduce them by 20% to make up for not doing the 50 cent adjustment. That’s even larger than the tax cuts National/ACT cancelled.
5) Finally, if you’re going to cut tax for minimum wage workers you’re going to cut them for all taxpayers, including the very wealthy, at enormous cost (unless you put in a counter-veiling tax rise – yeah right). If the purpose of the minimum wage is to ensure a decent income for workers, then tax cuts are an incredibility inefficient way of doing that.