21 April 2006

1. Introduction

2. Finsec is the union representing workers in the New Zealand finance sector.   Finsec represents 7,000 workers in banks, insurance and finance companies. Members have a broad interest in the rights of workers across New Zealand and are aware that the working conditions of workers in entrance-level jobs such as those that pay youth rates, have an impact on the base working conditions in their jobs.
3. Finsec supports the Minimum Wage (Abolition of Age Discrimination) Amendment Bill.   As an active member of the New Zealand Council of Trade Union, our concerns are represented in more detail in its submission, which we also support.
4. We believe that when young people work they should be afforded the same employment rights as adults; a guaranteed minimum wage, the removal of youth rates, job security, the opportunity for full time permanent work, an end to casualisation and an opportunity for union organisation.  
5. While not all employed children and teenagers may be aware of these issues or gain from many of these rights at this point in their employment they still benefit from being exposed to the same types of [decent] work environment as adults.   If they are genuinely working to support themselves as many teenagers do they need these basic rights immediately.   If they are working to gain spare cash, independence, experience and enjoyment, they are more likely to do that in democratic, safe and healthy workplaces.   Such employment conditions would also reduce economic competition between adults and young people and improve the economic well-being of many of New Zealand's working poor parents and caregivers who seek the same jobs as working teenagers and whom non-working children rely upon for their well-being.
   

6. Impact on our own members

7. Unfairly low entry-level wages across the economy help to drive down entry level wages for other workers in careers such as banking.
8. For instance a new employee at BNZ could earn $25,956 (or $13.27 an hour).   Our experience is that many people who take these jobs have done so after having started work in a service industry that pays a minimum wage or youth rates, thus their new salary feels like a good improvement.   The reality however, is somewhat different as illustrated below:

9. $25,956 annual salary = $497 per week before tax =$400 after tax - $172 for groceries (basic groceries costs for a family of four to purchase healthy diet in Auckland - estimated by the University of Otago Department of Nutrition Annul Food Cost Survey 2005) = $228 -$250 for renting a 3 bedroom house in Auckland, (which Statistics New Zealand estimates as the median cost of renting a 3 bedroom house in 2001). = -$22 Then they need to pay for transport, insurance, phone, electricity, superannuation savings... BNZ does not have the lowest pay rates in the banking sector.   TSB's starting rate for Customer Service Representatives works out to $11.65 per hour - not far from the current minimum wage.

10. Banks, which make huge profits and can afford to pay their employees significantly more if they choose, are able to pay these types of wages partially because the wages in the jobs that some bank employees have previously come from have been kept artificially low by youth rates.   As New Zealand moves to become a high wage, high skill economy, it will be important that employers in the service sector move away from their low wage/youth rates mentality and recognise that service workers can have jobs that are skilled and professionally respected and that this attitude is common in many other countries.

11. Human Rights - equal pay for work of equal value

12. The current Minimum Wage Act appears to discriminate, without justification against younger workers.   Section 21 of the Human Rights Act (1993) prohibits discrimination on the basis of age (although section 30(2) of the Act then permits employers to pay employees under 20 lower wages).   Young workers can face all the same financial pressures that their older colleagues face - many have families (either children or other adults that they need or want to support) and the ensuring pressures on accommodation, groceries and daily living costs that then ensues.   They often have the added pressure that a limited asset base and the need to make a whole collection of new purchases bring.   So it seems odd that they should be deliberately chosen to have less financial and employment rights than colleagues who are doing the same or similar jobs to them.
13. Over the last years there has been a huge increase in the number of young people in paid employment in New Zealand.   In 1986, 8% of all 15-19-year-olds were employed part time (fewer than 30 hours per week), but by 2001 this figure had risen to 26% (Statistics New Zealand, Census).   One cause is a growing service industry that values cheap, flexible, unskilled and disposable labour.   Morrow (1994) notes that teenagers are ideally suited to take on part time employment, work weekends and provide cheap flexible labour that works unsociable hours.   Klein (2001) notes that it is convenient for service sector employers to promote employment in their industries as student jobs, holiday work and part time pocket money jobs. If young workers are unlikely to stay long in their job before moving on to something else, employers are free to pay youth rates, let wages stagnate and to provide little room for upward mobility.
14. "Most of the large employers in the service sector manage their workforce as if their clerks didn't depend on their pay checks for anything essential such as rent or child support. Instead, retail and service employers view their employees as children: Students looking for summer jobs, spending money or a quick stopover on the road to a more fulfilling and better paying career." (p 232)
15. Schlosser (2002) notes of that fast food workers he interviewed, perpetuated the cycle of low paid and lowly respected jobs by moving on, finding a new job and leaving the old job to the next teenager who would take their place.
16. "Just as factory jobs that once supported families have been reconfigured in the Third World as jobs for teenagers, so have the brand name clothing companies and restaurant chains given legitimacy to the idea that fast food and retail sector jobs are disposable, and unfit for adults. As in the [export processing] zones [in developing countries], the youthfulness of the sector is far from accidental. It reflects a distinct preference on the part of the service-sector employers, achieved through a series of overt and covert management actions. Young workers are consistently hired over older ones, and workers who have been on the staff for a few years - building up higher wages and seniority - often report losing precious shifts to new batches of younger and cheaper clerks." (Klein, 2001, p 239).

17. Youth Employment

18. Some opponents of this Bill have argued that it will have a detrimental effect on youth employment. We disagree with this analysis and note that industries where youth rates are most predominant are unlikely to be the types of industries that will stop employing people if they are denied the option of offering exploitative youth rates.   It is more likely that adults and youths will be equally eligible to be employed for the available jobs rather than youths being hired ahead of their adult peers simply because they cost less.   Total employment is unlikely to be effected, but employees will be competing in a fairer job market and adults will not find their wages held down by the prevalence of youth rates in their industry.  
19. Furthermore, we note that even though the minimum wage for young workers has increased regularly over the last six years it has not had a detrimental effect on youth employment.   We draw attention to the Dominion Post's survey of Wellington businesses, published on 27 February 2006, which showed that 85% of businesses surveyed considered that the abolition of the youth rate would not have a significant effect on their business.

20. The Scope of the Bill

21. Currently the Bill covers only young workers paid youth rates below the adult minimum wage.   Employers will still have the opportunity should this bill pass in its current form to pay young workers less than their adult colleagues, so long as both groups are paid above the adult minimum wage.   While this is a significant improvement on the current situation, Finsec advocates removing the right of employers to pay discriminatory wages on the basis of age completely.   This may require a repeal of the previously mentioned section 30(2) Human Rights Act 1993.
22. The Bill currently also does not protect workers who are outside the protective scope of the existing legislation, that is workers under the age of 16.   Finsec believes that one of the most effective ways of preventing the exploitative use of young children and teenagers as child labour is to provide those children with equal employment rights to adults.   Thus we advocate the extension of the scope of this bill to cover all workers under the age of 20, rather than just those between the ages of 16 and 20.   We believe that this amendment would also help bring New Zealand in line with its international obligations under the UN Convention on the Rights of the Child and International Labour Organisation Convention 138.

Recommendations

• That the Bill be supported.
• That the scope of the Bill be extended to cover children under the age of 16.
• That the scope of the Bill be extended to protect young people who are employed on rates of less than their adult peers, but more than the adult minimum wage.   This extension of the bill would require a repeal of section 30(2) Human Rights Act (1993).

Sources:

Klein, N. (2001) No Logo .   New York: Picador

Morrow, V. (1994) Responsible children? Aspects of children's work and employment outside school in contemporary UK. pp 128-143. In B. Mayall (Ed) Children's Childhoods: Observed and Experienced . London: Falmer Press.

Schlosser, E., (2002), Fast Food Nation , Penguin, London

Statistics New Zealand, Censuses , 1986-2001

 

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