Media release 30 January 2002

Minimum wages make it harder for the least skilled

Workers with the least skills, qualifications and experience could be disadvantaged rather than helped by increases in the minimum wage, says Business NZ.

Executive Director Anne Knowles says the changes to minimum wage rates announced today mean that unskilled workers will be competing with skilled workers for comparable pay rates.

"The smaller the margin between the minimum wage and the next wage level up from that, the harder it becomes for unskilled people to get jobs.

"An employer choosing between a skilled or experienced person and one without skills or experience, within a fairly narrow wage band, will naturally choose the one with skills or experience.

"While the minimum wage policy is undoubtedly based on good intentions, in practice it is unkind to the least skilled. The higher the minimum wage is set, the less likely it is that they will gain employment.

"For this reason it is concerning to see that the Alliance and the union movement now intend to seek an increased relativity of the minimum wage to the average wage, from 42% to 50%.

"Another problem with the policy is that it raises the expectations of all other workers - the 3.9% increase in the adult minimum wage is likely to become a base expectation for other workers in wage negotiations," Ms Knowles said.

ENDS

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