January, 2006

Last week I joined with other trade unions, community organisations, speakers from pacific and migrant communities and fast food workers themselves at a media conference organised by the Unite Union's SuperSizeMyPay.Com campaign. The meeting called for a $12 minimum wage, an end to youth rates and secure hours.

The SuperSizeMyPay.Com campaign has attracted the interest and excitement of the mainly young workers in fast food outlets such as Burger King, KFC and Starbucks. Young workers are not happy with being paid inferior rates to their older workmates, and they see no reason why at 16 or 17 they should not be paid the same as a 19 year old doing the same job.

And I agree with them wholeheartedly.

Why should a secondary school student earning some extra money to support themselves or their family be paid a meager $7.60 for their work in a fast food restaurant? Why should workers looking after our older population in rest homes be on 10 and 11 dollars an hour for such essential work? Workers deserve a fair deal, and a lift in the adult minimum wage to $12 an hour and the removal of youth rates would make a real difference to the incomes of low paid workers.

The debate around our low wage economy was a feature of last year's election, and was reflected in Labour's governance arrangements with its support parties. In both its confidence and supply agreement with New Zealand First and its co-operation agreement with the Green Party, our new Labour government committed to having the adult minimum wage set at twelve dollars an hour by the end of 2008, "if economic conditions permit".

Given the discussion in the last few weeks about the slowing of the economy, and last week's announcements of redundancies at several manufacturing plants, I expect to hear renewed calls from business groups that any increase in the minimum wage is not possible.

I would argue the opposite however. At a time when we are approaching a possible slow down in the economy, the last thing we need to do is go back to the dark old days of freezing minimum wages, and low investment in capital and skills development and training.

It was exactly that strategy in the 1990s which has substantially contributed to our vulnerability to global competition from countries like China, India and Brazil, and following the economic low road is not a sustainable path for New Zealand.

Rather, as the CTU has argued for some time, we need to be moving to a high value economy that competes in the international marketplace with value-added and innovative products and services. The way to make that transition is not through a low minimum wage, and low investment in skills training and capital.

There are plenty of overseas examples where increases in the minimum wage have been successful as part of an overall transformation to a high skill, high value and high wage economy. Ireland found that lifting the minimum wage was an important catalyst for improving skills and productivity, alongside investment in skills and training development.

Business groups have also argued that minimum wage increases will lead to decreased employment opportunities for workers, particularly younger workers. The last six years stand as evidence to the contrary ? a 36% increase in the minimum wage over the last six years has coincided with the lowest unemployment in decades.

The experience of young workers further strengthens the argument in favour of scrapping youth rates. A Treasury working paper in 2004 found that a 69% increase in the minimum wage for 18 and 19 year olds in 2001 and a 41% increase in the minimum wage for 16 and 17 year-olds over a two year period had no adverse effects on youth employment or hours worked. In fact hours of work increased for 16-17 year olds relative to other age groups.

And so a $12 minimum wage is absolutely justified both on equity and economic development grounds. It will also make a small but useful contribution to closing the gender pay gap for many low-waged private sector workers such as caregivers.

The CTU will be campaigning this year for public support for a speedier introduction of a $12 minimum wage and an end to youth rates, and I am confident that the majority of New Zealanders will back this.

The campaign ultimately needs to happen in worksites and neighborhoods, but in the end it is government that must decide on minimum wage rates, and so it's timely that the Greens' Sue Bradford had a private members bill to end youth rates for 16 and 17 year olds drawn from the ballot just before Christmas, which is due to be debated next month in Parliament.

The CTU's longer term view is that the minimum wage should be indexed at two thirds of the average adult wage, as the 1988 Royal Commission on Social Policy recommended. This needs to happen in the context of an active government, business and union led national workforce development strategy.

The Council of Trade Unions says this week's redundancy announcements highlight the need for high level, strategic engagement between unions, employers and Government to tackle the employment and industry development issues facing the manufacturing sector.

The Council of Trade Unions will be campaigning for public support in 2006 for the speedier introduction of a $12 minimum wage for all workers. Speaking at the Unite Union community panel in Auckland today, CTU President Ross Wilson said the CTU joined with other concerned community representatives in calling for a minimum wage increase now, and an end to youth rates.

"A $12 minimum wage is totally justifiable on both equity and economic development grounds," said Ross Wilson. "The CTU wants the government to phase in a minimum wage of two thirds of the average adult wage, as recommended by the International Labour Organisation, and we see an increase to $12 now as a step in that direction."

"The CTU also supports the removal of the age differential for the minimum wage by scrapping youth rates. We support fair pay for a fair days work, and we look forward to campaigning alongside other community groups this year for the abolishment of youth rates and a speedier increase in the minimum wage to $12 per hour," said Ross Wilson.

"Poverty only exists in New Zealand as long as we continue to tolerate it. The low wages that far too many New Zealand workers are paid has a direct impact on thousands of poor families, and contributes to our unacceptable rates of child poverty. Action is needed now on New Zealand's low wage crisis, and an immediate increase in the minimum wage would make a real difference to many low paid workers," said Ross Wilson.

2005 was a great year. Strongest economic growth in the OECD, lowest unemployment in decades, superb sporting achievement by our national players, unprecedented success in the film and music, and a Hui Taumata signalling a Maori economic renaissance to match the cultural one. We are a great country with a great future; but only if we continue to take up the challenges positively.