‘Starting-out wage’ a couple of months away

The Transport and Industrial Relations Select Committee recently released its report on the Minimum Wage (Starting-out Wage) Amendment Bill.  The committee has recommended passing it into law with some changes, such as moving the commencement date back from 1 April this year to 1 May.

If the bill becomes law, employers will be able to hire eligible 16- to 19-year-olds on 80% of the minimum wage. The minimum wage has just been raised to $13.75 (from $13.50), meaning that employees on the ‘starting out wage’ would receive $11 an hour.

“A ‘starting-out wage’ is an important initiative to give young people the foothold they need to enter the workforce,” Labour Minister Simon Bridges said. “It will give employers a real incentive to take on our youngest and most inexperienced workers and provide them with the skills and work experience they need,” he added.

One of New Zealand’s largest employers, Progressive Enterprises Ltd, has a collective agreement whereby young people new to the workforce are placed on a lower rate, but only for three months (as opposed to six months stipulated by the amendment). “We certainly think that it’s important for young job seekers to be given opportunities to enter the workforce,” Gillian Davie, general manager HR, said.

However, Davies also emphasised the importance of up-skilling youth. “We also believe that they should be equipped with the right skills to further develop their careers,” she added.

A spokesperson for the Same Work Same Pay campaign, James Sleep, said that the Government’s persistence with this legislation runs contrary to 98% of submissions to the select committee, which were opposed to the ‘starting-out wage’.

“The Government intends to pass legislation that will cut the pay of young workers. Submitters to the Select Committee were overwhelmingly against this draconian action but their submissions are set to being ignored,” Sleep said.

Key HR Takeaway:

• The ‘starting out’ wage should be introduced 1 May this year
• Employees on the ‘starting out’ wage would receive $11 an hour
• The following groups are eligible, unless they are supervising or training others:
• 16 and 17-year-olds in their first six months of work with a new employer
• 18 and 19-year-olds entering the workforce after more than six months on a benefit
• 16- to 19-year-old workers in a recognised industry training course involving at least 40 credits a year