CTU Submission on the 2007 Review of the Minimum Wage

The CTU submits annually to the Department of Labour on the review of the minimum wage.Download the CTU's submission from October 2007, as a word document or PDF below.  The introduction and executive summary are also below on this page.

• Word document (454 kb)
• PDF document (391 kb)

Introduction

The New Zealand Council of Trade Unions – Te Kauae Kaimahi (CTU) welcomes the opportunity to make a submission as part of the 2007 minimum wage review. The CTU is the internationally-recognised confederation of trade unions in New Zealand and represents 40 affiliated unions with a membership of over 350,000 workers.

The CTU acknowledges Te Tiriti o Waitangi as the founding document of Aotearoa New Zealand and formally acknowledges this through Te Runanga o Nga Kaimahi Maori o Aotearoa (Te Runanga) the Maori arm of Te Kauae Kaimahi (CTU) which represents approximately 60,000 Maori workers.The CTU acknowledges that since December 1999 the Government has taken several important steps in the area of minimum wages. These include lifting the adult rate, lowering the age of application for the adult rate, increasing the rate for 16/17 year olds to 70 per cent, and then 80 per cent, of the adult rate, and benchmarking the rate for trainees to no less than the youth rate. There is also now a commitment to limit the time spent for a 16 or 17 year old on the youth rate to 200 hours or 3 months whichever is the lesser. The minimum wage has increased by 61 per cent since 1999, in striking contrast to the 14 per cent increase over ten years from 1990. 

The CTU encourages the Government to continue to build on this excellent progress. In this context we note the inclusion in the Confidence and Supply Agreement with NZ First and the Co-operation Agreement with the Green Party the commitment that the Government will: “Continue the practice of annually increasing the minimum wage, with a view to it being set at $12.00 per hour by the end of 2008 if economic conditions permit.”

While the CTU welcomes this commitment, and the progress that has been made in lifting the minimum wage, we do not regard a lift to $12.00 as adequate. Given that collective bargaining density in those sectors where workers are paid at or near the minimum wage is at 4 per cent, we submit that there is a strong case for a two pronged approach to address low pay.

These are that firstly, the Government supports an increase in the minimum wage to a level that is two-thirds of the average wage and secondly that the Employment Relations Act must be significantly amended to genuinely promote industry and multi-employer collective bargaining.

Some employer groups may counter that increases impose unbearable costs on employers. But low wages in New Zealand are now more than a social issue or a debate about the balance of competing interests. Low wages are now an intrinsic barrier to the economic transformation of New Zealand. Low wages are embedded in this country. The CTU accepts that for overall wages to rise there will need to be sustained lifts in productivity along with a much stronger distributional impact through collective bargaining than what we have seen in the last 15 years. But the minimum wage represents the wage ‘floor’. It needs to rise to $15.00 to set a clear base. At the present time, the minimum wage in New Zealand is only 70 per cent of the Australian federal minimum wage. It is time for the New Zealand Government to send an unambiguous signal that low wages will not be tolerated in this country.
 

Executive Summary

The CTU is seeking an increase in the minimum wage based on indexation to 66% of the average wage. At the present time this equates to $15.03 so for practical purposes the CTU proposes that the minimum wage is increased to $15.00 an hour.

The CTU is seeking the complete removal of a lower rate for 16 and 17 year olds so that the minimum wage applies to those aged 16 years and over.

The CTU is seeking ongoing dialogue in respect to the minimum wage for those aged less than 16 years. We support the review of the employment of children and support the ratification of ILO Convention 138. We propose that the review of the employment of children should recommend sectors and occupational categories where the minimum wage should apply regardless of age.

The CTU is seeking an increase to the minimum wage of trainees to 90% of the minimum wage. This should continue to require 60 credits of training as the basis for a lower rate. Further the CTU proposes that the maximum length of time a trainee can be paid a lower rate than the minimum wage is 12 months. Alternatively a trainee could be exempted from the minimum wage on the basis of an agreed scale. We also propose that the Labour Department undertakes research on the extent to which trainees are paid less than the (adult) minimum wage.

The CTU supports the inclusion of an objective - Reducing the Gender Pay Gap – to decrease the wage gap between men and women in the New Zealand workforce.

There should be a government agency charged with gathering more information about low pay in New Zealand. This should also collect and publish information on ethnic and gender aspects of low pay.

That, as well as the minimum wage, responsible contractor policies represent an important tool in addressing low wages.

More thorough enforcement and stronger penalties should be used to ensure comprehensive adherence to the minimum wage.