The recent announcement by the Minister of Labour of the new starting-out wage raises some interesting opportunities for debate around the pros and cons of such a concept.
The change which comes into effect in April 2013, allows eligible 16 to 19 year olds to be paid at no less that 80% ($10.80) of the minimum wage ($13.50).
Three groups of employees will be eligible (unless they are training or supervising other workers)
· 16 & 17 year olds in their first 6 months of work with a new employer
· 18 & 19 year olds entering the workforce after more than 6 months on the benefit
· 16 & 19 year old workers in a recognised industry course involving at least 40 credits per year.
Naturally there will be pundits on both sides of the fence. On one side, the government and business groups see it as an incentive to get young people into work. And on the other, worker groups and opposition parties see as it as providing an incentive to exploit, discriminate or undermine current practices.
Whilst the end objectives of the initiative are applaudable we wonder whether enough thought has been given to some of the possible disincentives that exist in our current labour laws and are acting as barriers to employment.
Two areas that spring to mind. The first is how the good faith provisions in the Employment Relations Act often get used to stifle change initiatives or company attempts to become more competitive. The second is where minor defects in process can be used to torpedo substantially fair or genuine attempts to raise the performance level of the workforce. Employers over the years have mentioned that increased litigation and complexity in our labour laws are a minefield and often a deterrent in hiring staff.
We are told that as an international comparator we have low productivity levels and that the Government has the aspiration of being a high wage and high productivity economy. I cannot see where parts of the current labour law are supportive of these aspirations.
Too much legislation? Too much complexity hell yes.
Address the current disincentives in a creative way rather than burden employers with more complexity!
by Paul Bell