Amicus Curiae: No Way to Minimum Wage? The Case for a Living Wage in New Zealand

By Haya Khan

It’s safe to say employment options are limited for a university student.

Adjusting a part time job into a hectic university schedule, exams, socialising and mandatory Netflix weekend binge-watching can take a toll on work ethic and mental health. So, for all the effort a full-time university student puts into their part time job, is minimum wage truly enough? Evidently so for Restaurant Brands, as they rejected a ‘modest proposal’ from the union for a pay raise for their minimum wage employees of ‘10 cents an hour’ each year over three years.

The company operates franchises in New Zealand such as KFC, Pizza Hut, Carls Jr and Starbucks, describing themselves as ‘first job opportunities’ for students. Yet, rejection of such policies, and locking their employees and union members in a Christchurch Carls Jr store to prevent protests brings this into question.

The minimum wage in New Zealand is currently $15.75 per hour, it is required by section 5 of the Minimum Wage Act 1983 that this be reviewed by the Ministry of Labour every year and subsequent suggestions be made to the Governor General. The purpose of this legislation is intended to recognise the need for financial stability as the cost of living rises. However, there is no legal requirement for high profit employers to subsequently review what employees are paid and provide pay raises according to their time at the company.

Often employers such as Restaurant Brands, that produced a profit of $26 million in the last financial year, may treat the rise in minimum wage as a pay raise for their part-time employees. This leaves room to raise the question whether, to provide financial security for part-time working university students, employers should be legally obliged to provide pay raises? The protests by the Restaurant Brands employees seem to indicate agreement with this idea.

In defence of Restaurant Brands, they placed forward their own “generous” pay raises, in response to their rejection of the Union’s proposal. Taking their employees to a whole 50 cents above minimum adult wage after 10 weeks of work standing at $16.25.

However, working part time for retail/customer service companies such as Restaurant Brands would be anywhere between 8 – 15 hours a week, adding up to between $126 – $236 per week before tax. So realistically, accumulating savings as a full-time university student whilst paying for needs such as transport, food, cell phone bills, and potentially rent on a minimum wage job, can be incredibly difficult.

Under section 4A(3)(a)(i) of the Minimum Wage Act 1983, employers are obliged to only pay minimum ‘starting out’ wages for 6 months or until they are over 19 and in a supervising/training position. Then, they are only required by s(3)(b) to pay the ‘minimum adult wage’. What comes next? Legally speaking, nothing. The minimum “adult” wages are set for the ages of 16 and above. Therefore, an adult student, the sole earner of a small family, could be earning the same as a 16 year old in their part time job aiming only to save for a new phone.

When we apply this $15.75 rate tailored for 16-year-old high school students, living at home, to wildly different circumstances of ‘adulthood’; such as a full-time university student at the age of 20 or above, working two part time jobs to support their family/siblings. It facilitates the growing gap between rich and poor.

Pay rise proposals take baby steps seeking to combat this gap, attempting to fulfil the otherwise failing purpose of the prescribed reviews in s5 of the Minimum Wage Act 1983 and an unwillingness of corporations to tailor wages to the circumstances of adult students.

In 1943, the minimum wage was 83% of the average wage and in 2012 it stood at a disappointing 53%.

The Living Wage seeks to further facilitate this growing income inequality and legislation gap, described as ‘necessary for workers and their families with necessities of life’ to live with ‘dignity’ and ‘participate as active citizens in society.’  It proposes an average income to the government that is currently $4.55 above the Minimum Adult Wage at $20.20. Calculated officially by measuring the average hourly bill across all jobs in New Zealand, the Living Wage is facilitated by Statistics New Zealand. But without the support of legislation, the living wage remains a recommendation rather than an obligation for employers.

Understandably, the argument stands that a sudden raise to the living wage would lead to higher redundancies. The New Zealand Government believe they have struck a fair balance for employees and employers with the current adult minimum wage. Something that is pocket friendly for small business employers and functions conveniently for multi-million dollar corporations that wish to maintain their excess profits. But it may barely suffice enough rent for a part time employee’s student flat.

In a perfect world, a fair balance would be where high profiting corporations such as Restaurant Brands are legally obliged to adequately pay their employees sufficiently above minimum wage. Until then, the choice for adult students lies between having some form of income opposed to none and a dependency on a system that places them in a generic category that fails to factor in multiple individual circumstances.

So, here’s to sacrificing those $5 coffees in hopes of one day accumulating enough money to have the deposit for owning a house in the Auckland market, because a “fair” minimum wage definitely isn’t providing a foundation for that. Why would it? A 16 year old doesn’t need to buy a house.

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