The Government's "starting-wage" scheme will make youth "more attractive" to employers, an advocacy group says.
Labour Minister Kate Wilkinson today announced a Minimum Wage (Starting-out Wage) Amendment Bill will see eligible 16-to 19-year-olds paid no less than 80% of the $13.50 minimum wage rate, and will effectively double the time workers can be on the Government's training wage to six months.
The new measure, which is part of a raft of new Government initiatives aimed at lifting skills and bringing down youth unemployment, will be introduced next year.
While employers are praising the move, unions and opposition parties have slammed the proposal, saying it will undercut teenagers and simply send more young people to Australia.
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Council of Trade Unions youth spokesperson James Sleep said he doubts it will help to improve employment rates.
"We simply don't believe that bringing in a minimum wage for young people will get them into work," he said.
However, employers, who are not required to offer the rate, have said it will make a difference.
"People starting their first jobs at a very young age need training, they need supervision, there are risks associated, so therefore bringing the number down makes it attractive to give them a go," said Kim Campbell, a senior manager at the Employers and Manufacturers Association.
'Foot in the door'
Around 40,000 young people will be eligible for the youth rate, including some in industry training schemes.
Labour Minister, Kate Wilkinson, said the "starting-out wage" was the latest in a series of steps to help get more Kiwis into jobs in the wake of the global financial crisis.
"The new starting-out wage will create demand for young people by giving employers a real incentive to take them on," Wilkinson said at the launch of the Government's Skilled and Safe Workplaces Progress Report.
"It will help some of our youngest and most inexperienced workers get a much-needed foot in the door, in what is currently a tight labour market."
Kenna Horsfield, 16, says she is finding it difficult to get a job in today's tough economic climate.
"I've been looking for a while - because I want to get some more hours and get paid more, that kind of thing - and it's really hard because they're all looking for people with experience," she said.
A 'rip off'
Labour Party leader David Shearer criticised the move, saying "it's not going to create jobs by driving down wages".
"These people are going to leave and go to Australia," said Shearer.
"We need an economy that provides decent, secure jobs and good incomes and where young people have hope and opportunity, not the low-wage vision promoted by National."
The Green Party has also criticised the move, saying it will allow employers to "rip off" their younger staff.
"National's proposal to reintroduce pay rates for young workers is simply another mechanism to deliver cheaper labour to employers and is discriminatory," said Green Party co-leader Metiria Turei.
"Rather than offering young people a bright future, through skills and training, youth rates are about undercutting all workers' wages by ripping off young workers."
The 'starting wage'
From April next year, employers will be able to pay some 16-to-19-year-olds a new hourly rate, set at 80% of the minimum wage, approximately $10.80 per hour.
The so called "starting-out wage" for young people will only apply to 16-and 17-year-olds in their first six months of work with a new employer, and for 18-to 19-year-olds entering the workforce after being on a benefit.
The idea of a separate pay rate of young people is not a new one - a similar law was in place in New Zealand until Labour scrapped it in 2008.
However, along with a 90 day probation period, it now forms part of a National employment policy which ONE News Political Editor Corin Dann said is "designed to keep the labour market as flexible as possible".
The unemployment rate among 15-to-19-year-olds in almost 9%, compared to the national rate of 6.8%.
The Government also announced today that along with the new youth pay rate, it will produce a report each year to inform students which occupations have good career prospects.
And it has hinted that future funding could be tied to the occupation reports for universities and colleges which offer those qualifications.