Appendix 3: Summary of submissions
Twelve written submissions were received from the following organisations: Federated Farmers of New Zealand, Hospitality Association of New Zealand, National Association of Retail Grocers and Supermarkets of New Zealand, Small Business Advisory Group, New Zealand Council of Trade Unions, National Distribution Union, New Zealand Nurses Organisation, Service and Food Workers Union, Unite Union, Mayors’ Taskforce for Jobs, National Advisory Council on the Employment of Women and Working Women’s Resource Centre. The main points are summarised as follows.
Employer representative groups
National Association of Retail Grocers and Supermarkets of New Zealand (Incorporated) (NARGON)
- Opposes any increase in the minimum wage because of the adverse effect on the labour market by reducing employment opportunities
- Continued increase in the minimum wage rate makes younger people think further formal education and training is not warranted; it also affects employer’s ability to employ, especially unskilled labour
- Minimum wage increases will increase the costs of goods and services
- A focus of training for young people as wage increases should be based on productivity increases.
Hospitality Association of New Zealand
- No increase to the minimum wage
- Expected increase in labour costs is not sustainable for competitive industries during recessionary periods and has led to a significant increase in closures, downsizing and job loss throughout the hospitality sector
- Reduced business profitability means reduced flexibility for employers to reward higher productive workers as market wage is significantly influenced by the level of the minimum wage
- Inflationary pressures of wage increases will lead to higher interest rates and consequent reduced investment and job availability
- A rise in minimum wage rates could compromise the opportunities available through the ‘Straight to Work’ programme, which the Association is involved in with the Ministry of Social Development
- The Government should direct resources to provide greater access to vocational training and employment incentives, particularly for young and less skilled people.
Federated Farmers of New Zealand
- The current minimum wage rate be held constant for the coming year as it is one of the most generous in the OECD countries (54% of the average wage, second only to France) and a further increase will hinder productivity growth and impair the Government’s goal of closing income gap with Australia
- An increase in the minimum wage would hamper the chances of an economic recovery and job growth
- Productivity growth does not support increase in the minimum wage
- Farm businesses could not afford increase in the minimum wage and its impact on wage generally
- They reject arguments for the minimum wage based on ‘income redistribution’ between different individuals and groups in society. Minimum wages should not aim to remedy relative poverty.
Small Business Advisory Group
- Acknowledge the important role of the minimum wage in addressing poverty and pay gap between different demographic groups
- Raising the minimum wage may be the place to start to achieve income parity with Australia
- Recommended adjustment of minimum wage rate is from no increase to $13.00 an hour, with a strong preference by a number of members to increase the level in line with the rate of CPI.
Employee representative groups
New Zealand Council of Trade Unions
- Raise minimum wage to 66% of the average ordinary time wage (for April 2011 it is estimated at $17.22 per hour), with an alternative to increase the minimum wage to $15.00 from 1 April 2011 and move to the 66% in 2012
- Current minimum wage protection is excluding an unacceptable number of workers and is ineffective at extending protection to non-standard working arrangements’ like contracting
- More thorough enforcement and stronger penalties should be used to ensure comprehensive adherence to the minimum wage.
New Zealand Nurses Organisation (NZNO)
- Fully supports the submission of the New Zealand Council of Trade Unions
- The current minimum wage is inadequate in the health sector because it is:
- entrenching current health and socio-economic disparities, as a disproportionate number of Māori, Pacific, and migrant workers earn the minimum wage
- affecting the safety and quality of care in aged and residential care, where the minimum wage is standard for most health care assistants
- exacerbating the outward flow of New Zealand trained health professionals, and the inward flow of transitory overseas trained health professionals
- increasing our dangerously high dependency on migrant health workers
- undermining the robust industrial and employment environment established in New Zealand over 150 years which is intrinsic to our culture of fairness and equal opportunity
- Advocates raising the minimum wage to $17.22 per hour as the single most effective way in which the Government could:
- alleviate poverty
- boost productivity
- mitigate the risks of dependency on transitory migrant labour in the health sector
- reduce future demands on health and social services and
- ensure the skilled workforce necessary to sustain a modern developed economy.
Service and Food Workers Union
- Increase the minimum wage to $15.00 an hour with further increases so that it is pegged to two-thirds of the New Zealand average ordinary time wage
- Increase training minimum wage rate to 90% of the Adult minimum wage
- Include a new objective of reducing the Gender Pay Gap – to decrease the wage gap between men and women in the New Zealand workforce
- Faith in the market to reward their members with higher pay rates is a mirage. For many employees, the only thing compelling their employer to increase pay rates is the movement in the minimum wage
- Increases in productivity has not translated into increases in wage rates
- Australian minimum wage rate (current AUS15 per hour) is much higher than New Zealand’s.
- Income disparity is widening
- Minimum wage is an essential mechanism in improving the pay gap for Māori and Pacific Island workers.
National Distribution Union (the NDU)
- The NDU supports CTU’s submission and calls for an increase in the minimum wage to $17.22 an hour
- Supports the immediate removal of new entrant rates so a minimum wage applies irrespective of age
- More clarity and effective enforcement of the minimum wage
- Low pay is prevalent in the retail sector and impacts negatively most of the retail workers. Pay rises in retail, fast food and similar customer services industries have become increasingly dependent on increases in the minimum wage
- An increase in the minimum wage is a very effective means of delivering a fiscal stimulus to an economy in recession, as those on low incomes are more likely to spend any additional income
- Affordability of minimum wage increases for retail employers as the retail sector has experienced enormous growth for more the 10 years until the recession.
- Increase in the minimum wage accords with the minimum wage review criteria:
- Fairness – to ensure that wages paid are no lower than a socially acceptable minimum
- Protection – to offer wage protection to vulnerable workers
- Income distribution – to ensure that incomes of people on low incomes do not deteriorate relative to those of other worker
- Reducing the gender pay gap – to decrease the wage gap between men and women in the New Zealand workforce.
- Move the adult minimum wage to $15 an hour and then peg it at two-thirds of the average total hourly earnings.
Working Women’s Resource Centre
- Increase the minimum wage to 66% of the average wage
- Minimum wage needs to increase to keep up with the rising cost of living which includes the recent GST increase. The recent tax cuts provided little relief to workers on the minimum wage
- Increases in the minimum wage support economic and social objectives as they increase economic independence, impact positively on retirement incomes and strengthen incentives to work
- An increase in the minimum wage can make a small but important contribution to reducing the gender pay gap.
Mayors’ Taskforce for Jobs
- Establishing a fair minimum wage sends an important signal to young people about their value to the economy and the country as a whole
- Maintaining wage levels is crucial to attract young people into the business in the future
- Information from mayors around the country suggests that any increases in the minimum wage have not resulted in constraints on job creation or fewer opportunities for young people
- Minimum wage protection is necessary for young people, to encourage employers and others to invest in skill development, to avoid increasing the disparity in wage levels between Australia and New Zealand, to reduce the gender pay gap
- Lifting minimum wage, ensuring protection and encouraging good employment practices overall, will help address some of the issues the Taskforce is working on such as retention of young people, effective transitions and greater investment in industry training. Minimum wage increases will support social as well as economic objectives particularly around independence and incentives to work.
National Advisory Council on the Employment of Women (NACEW)
- Women are highly represented amongst low income earners even a moderate increase to the minimum wage will have a direct impact on their economic conditions and that of their families
- There is a positive (though modest) relationship between protective mechanisms such as the minimum wage and reducing the gender pay gap
- Endorse the increase in minimum wage as part of a range of mechanisms that increase the likelihood of women achieving financial security and independence.