Minimum Wage Amendment Bill

I move, That the Minimum Wage Amendment Bill be now read a third time. The bill provides protections to trainee employees, who are currently exempt from minimum wage protections, and can, in theory, be paid very little or even nothing for the work they do while they are in training. The bill does this by removing the minimum wage exemption in the principal Act for employees who are trainees, and in its place allows for a minimum training wage to be set for those employees. The changes the bill makes are based on the principle of ensuring there is payment of a socially acceptable minimum wage to industry trainees, while encouraging training. This will provide a basic equitable floor from which employers and trainee employees can negotiate a fair level of pay.

The bill provides for the level of the minimum training wage to be set by regulation, as is done with the adult and youth minimum wage rates. The training wage rate that will be set will be the same rate as the youth minimum wage, which currently is $6.80 an hour.

Eligibility criteria for the minimum training wage will be the same as those that currently cause a trainee to be exempt from the minimum wage. An employee will need to be undertaking training within the national qualifications framework of at least 60 credits per year. All other employees, including those training outside the national qualifications framework, will need to be paid the applicable minimum wage based on their age. This further protects employees who are new to jobs and still learning the ropes, but who are not undergoing training towards the national qualification.

The changes this bill makes will not affect the vast majority of employers who pay their trainee employees above the minimum wage. The object is not to add undue cost to employers who engage in fair and productive employment practices while training employees. Rather, it is to provide a potentially vulnerable section of New Zealand’s workforce with the statutory right to be fairly remunerated, bringing them into the current framework of protections that other employees already enjoy.

I believe that this bill lays the foundation for a strong and positive training environment where both employer and employee receive worthwhile benefits for participating in training. At the same time, it brings industry trainees within the general framework of minimum wage protection, giving them the opportunity to do a decent day’s work for a fair day’s pay.

I rise on the third reading of this bill to make some short comment in relation to the bill. For the record, National actually supported this bill going to a select committee to see what it was that the Government had in mind for the bill, and in particular how the legislation would affect young people in training. At that time, the National Party was open-minded about the costs that would be incurred during that process, and how the process would pan out.

In fact, the explanatory note of the bill that was referred to the select committee included a statement that caught the eye of members on this side of the House. Under “Costs”, in the section headed “Statement of net benefit of this proposal”, was the statement: “The proposed change may have a small adverse impact on the Government’s fiscal position. The fiscal impact would come from the increased benefit payments that may occur as a result of potential job losses over time.” The most crucial part, though, of that initial description was the line that followed: “It is, therefore, unclear what the overall fiscal impact would be.” So at that point National supported the bill going to a select committee, to try to get a better handle on what the fiscal impact of the introduction of this type of scheme would be.

Unfortunately, during the course of the select committee inquiry we found that staff of the advising department, the Department of Labour, were unable to advise us how those costs could be measured. They were unable to forecast for us the fiscal impact of this particular legislation, and in my view that made it impossible for members of that select committee rightly to assess the overall fiscal impact of the bill. [Interruption] Well, the member Jill Pettis chirps in, but National did support this bill proceeding to the select committee, in a genuine attempt to find out what the fiscal impact of the bill would be. I was on the select committee at that time; that member who yelled out across the House was not. I say that when the departmental officials came before the select committee, Government members on that committee—one of whom is sitting in the House now—were very concerned that the department was unable to provide accurate information about the impact of this bill. They were unable to provide us with any forecasts about how it would affect the job market, or about the fiscal implications of what this bill would do to young people in training. These are quite serious issues, and not ones that should just be tossed aside, as that member has done.

There are other costs, of course, associated with implementing this legislation. They are broken into two sets, if one likes. The first is the cost to business, in the sense that the bill adds to the already enlarging list of costs that business faces—the renationalisation of accident compensation, the Employment Relations Act, health and safety legislation, and paid parental leave, not to mention current plans to introduce a further week of annual leave. At that stage during the select committee process we were worried that the bill would further increase those costs to business by increasing the wages of trainee employees, who are only there as a result of an industry training organisation arrangement—which is a pretty straightforward and satisfactory way of bringing young people into training in the first instance.

But what made this legislation particularly difficult for members of the Opposition to support was the second impact that this bill would have—the impact on employees themselves. We could not get clear from the officials whether this bill would have an impact on whether business would take on these young people in any event. The issue that concerned members on this side of the House, quite seriously, was that business would simply stop taking young people on, because of the increase in compliance costs that would be brought about by this legislation. That raised the point that the people who would miss out were the very people this bill was designed to help. It was not acceptable to members on this side of the House that we support the enactment of legislation that would have that impact on employees, and would have the impacts on employers that I have outlined. And we were still unable to ascertain from departmental officials what the forecasts of the employment and fiscal impacts were.

I simply say, in concluding, that to pass legislation with all those factors outstanding is simply not good enough, and that is the reason National will not be supporting this bill in the third reading.

I will take only a very brief call on this bill. I was interested to hear what the previous speaker had to say. Unfortunately, I did not have the opportunity to sit on the select committee, but I have to say that the reasons for not supporting this legislation are very tenuous and very slim. The National Party is saying: “How can you support it going to a select committee?”. Morally, it really had no other option. How can we say we do not support paying young people a decent wage? That was the National Party’s way of politically getting out of it—and then: “Please God, let us find an excuse not to support this bill.” So, hello, it seized upon the excuse of not knowing the certainty of the fiscal impacts. Well, for goodness’ sake!

It reminds me of when Parnell, a man who is much revered by a lot of us in New Zealand, suggested that an 8-hour day would be a civilised way for people to work. The end of the world as people knew it at the time was going to occur because of that. Well, hello, it has not happened. It reminds me also of the Blackball coalminers who wanted a half-hour for their crib—their lunch, in common terminology—but they were denied it, until it was discovered that the boss was having 2 hours for lunch. Then it seemed to be a matter of: “Well, all right, perhaps these poor miserable sods who work down in the black centre of the earth could have a mere half-hour, after all.”

I do not think there was a great deal of conviction in the National Party’s argument that it was because of the fiscal impact that it could not support this bill. That is just a feeble excuse. This bill ensures that young people will be protected during their period of training—and if we do not know the importance of training in the workforce by now, there is something seriously wrong with us. I just have to question the Christian spirit and the good-heartedness of people who do not believe that young people are worth paying a decent, liveable wage to. After all, are not most of us here parents? Would we not want our children to be paid a decent wage while they are in training? As a parent, I most certainly think my children should be paid a fair, decent, and liveable wage.

I am supporting this bill, because it is good for young people and it is good for society—and “Do unto others as you would have them do unto you.”

New Zealand First has supported this bill and it intends to continue to do so—

💬 Jill Pettis: Well done!

I appreciate the support from Jill Pettis, which is not often forthcoming—indeed, I have to ask myself whether we have made a mistake! But, no, I am positive we have not and that we are making the right move.

The bill is a very short bill. It relates to minimum wages, particularly in respect of young people who are employed under contracts of service. Under these they are required to undergo training, instruction, or examination for the purpose of becoming qualified for the occupation to which their contract of service relates. We can all probably remember when we were at the stage of trying to get our first job, not having had any experience or having gained any qualifications. Often one might be competing against somebody else who does have some qualifications, or whatever. It is always so very hard to get one’s very first job and to gain some experience. I feel that one of the best things I ever did in my legal practice was to give young people their first-ever job. Almost always it was a secretarial job. After interviewing many young people for those jobs, I found it was wonderful to see the look of delight on the faces of those who got them. The fact that those young people would often then stay for many years proved very encouraging all round.

Giving someone his or her first job is probably the best thing one can ever do, and one finds that most people—and we are talking about young people—will reciprocate by working pretty well. I think that would also apply to older people. I expect that this bill should apply to people who want to be retrained so they can move into other areas. There are any number of people who perhaps have had no computing experience, or similar, and who might want to change their lifestyles and are prepared to take a drop in wages. I am not exactly sure whether it is the case that this bill applies to them. Perhaps the next speaker could clarify that.

However, this bill encourages at least some decent payment to be made, although there would not be many employers in any type of industry in New Zealand today who would pay just the minimum wage. It would be very, very unusual to find employers who were paying just the minimum wage. If they were, it would be almost a criticism of them, as much as anything else. If they were able to pay their staff only along the lines of a minimum wage, one would have to wonder just how worthwhile their businesses were.

I guess that that applies to many industries around the country. I am sure that my friend Edwin Perry here will tell me that this bill should advantage people who want to become farming cadets in the Wairarapa, and places like that. Employers in industries such as the motor-car industry are only too pleased to take on young people, probably in places such as the garage, to assist them in getting some on-the-jobtraining, instruction, and so on. New Zealand First believes that education is the key to the future, and this is a form of education, on-the-job education, which is the best education one can possibly get in any industry.

I had many years of education as a law clerk. In those days, by the time one finished one’s degree one had gained a lot of experience—in fact 4 years’ more experience than law graduates today who get their degrees with absolutely no legal experience whatsoever and who are of very little use to employers in a legal practice. One almost wonders whether this particular bill would apply to them, even though they have university degrees. However, those graduates are very well trained in our universities. They are very intelligent people, so they get on and do well.

As I said, New Zealand First supports education in all areas. We have a strong Māori vote, and we feel that this bill will do a lot to encourage young Māori boys and girls. However, more should be made of the legislation so that they are encouraged to realise their rights. New Zealand First supports their right to be paid a reasonable amount along the minimum wage line. We think that when they are undergoing their instruction, they are entitled to that; and that should encourage them to respond to a good employer. New Zealand First supports this legislation.

I personally believe that this bill undermines the privilege that it is to learn, and it puts another unnecessary cost on business in New Zealand. There are many employers in New Zealand who are very happy to employ staff for work done, but this bill requires employers to pay staff even when they are not working, and are instead in a training programme. Many people seem to think that the poor old employer is a bottomless pit, able to pay for all and sundry, but that is simply not true. Many small businesses struggle under a tremendous load.

In my younger days, I personally found it a privilege to learn from those who had experience, and I went out of my way to glean information from others at every opportunity I could. However, it would never have entered my head to ask them to pay me for the knowledge I was receiving; it was a privilege to learn. To have sustained employment we must have two willing parties—a willing employer and a willing employee—and the arrangement must be fair to both parties. However, many small businesses are finding it harder and harder to keep up with the ever-increasing paperwork and compliance costs, and now this bill is asking them to pay staff while they are on a training programme away from their workplace.

This bill enables different minimum wage rates to be fixed for workers who are required to undergo training. United Future did support this bill going to the select committee in 2001; however, I note that even the select committee could not reach a majority decision on the necessity for this legislation. Personally, I believe that most employers do not object to workers being paid a fair day’s pay for a fair day’s work, but it is very one-sided to lay on employers the responsibility to pay for everything along the way. I believe that with all the responsibilities employers currently carry for the staff they employ—which, in my personal opinion, are currently very much in favour of the employee—this is an additional burden that employers do not require. If this measure is passed, I believe that it will be another disincentive to employ staff.

What many people fail to understand is that most employers are people, also. Yes, they may call themselves by a company name, but behind that name is a real person. In many cases, those people receive very little in the way of wages for themselves. Their wages are often far below what they pay their staff. Those people are the ones who often lie awake at night wondering whether they will receive payment for work done, to enable them to pay their staff, rent, power, GST, PAYE, etc. Many small-business owners carry a genuine concern for the families that their small businesses support, and I commend them for that.

I have been an employee and I appreciated my job, but there is something refreshing about leaving work at night, closing the door, and leaving all of the concerns of the day there. The self-employed—and, in most cases, employers—cannot do that. They carry the responsibilities with them day and night. That is a considerable burden that is not often appreciated. I have spoken to many employers over the years and I often asked them: “How many of your employees have ever thanked you for the job you have provided for them?”. Mostly, they look at me in amazement, as it is a very rare occurrence.

In my school days my mother often gave me an apple for the teacher. What was she teaching me here? She was simply teaching me to appreciate those who are instrumental in helping me on life’s journey. She taught me to go through life being a giver rather than a taker, and that principle has never let me down. We are teaching people that it is a right to have an income whether or not they work, rather than teaching them that they have a responsibility to work—if they are able—and that if they continue to learn and to do their job diligently, then rewards will naturally follow.

Most responsible employers train their staff at their own expense to enable them to do the work that is required in that particular business, but this bill is not about that training. United Future could find no information about the likely compliance cost to employers, the effect on the labour market, the impact on trainees, or the physical cost to the Government, nor is there any hard data as to how many trainees are currently paid less than the minimum wage, although anecdotal evidence suggests that there are very few. This bill may even have the perverse effect of reducing training wages to a minimum, creating job losses, or making employers reluctant to take on untrained staff. United Future will therefore not support this bill.

No one will be surprised that the ACT party will not support this bill. We regard minimum wage law as slogan law. It is cynical, and it trades on the fact that many people expect and hope the law will achieve what people claim to be its intentions, even when there is incontrovertible evidence that the intentions of a minimum wage law are rarely, if ever, achieved. Indeed, such a law is highly likely to hurt those whom it is most proclaimed to protect. The intention of Parliament, of course, is what the courts must try to ascertain when they are faced with a law, but in looking at a minimum wage law the intention is probably not what the objective is. There is a difference between the two. The objective of the parliamentarians who promote this kind of law is to obtain votes. It is to pay off their supporters, to avoid scrutiny, and to avoid a real look at what the law does in this area, whereas the proclaimed intention is to increase wages.

Of course, the sorts of people who might be covered by a minimum wage amendment are likely to be those who are hired last—the least attractive employees—those for whom it is most easy to substitute a machine, and those for whom it is most easy to look for someone else to do the job and perhaps to pay that person a little more. So often a person on the minimum wage is actually under training. There is a concession, or there may be a genuine feeling of public interest—altruism—by an employer, who wants to give someone a chance. A minimum wage simply interferes with that prospect.

This bill is likely to be an “Anti - Scruffy Person Bill”, or an “Anti - Inexperienced Person Bill”. It will be a bill that achieves more unemployment for people who need a first job, and it will achieve less job training and more frustration by employers. This bill, by imposing a one-size-fits-all approach across the country, states that the employer cannot now take the most simple way of reflecting the fact that the law has also taken away other abilities. How many employers can actually enforce the expectation that when they take on someone, and that person spends 3 or 6 months learning the job, they will at least get a couple of years out of the person?

Debate interrupted.

The House adjourned at 6 p.m.