Minimum Wage

Stuff reports:

Business NZ chief executive Phil O’Reilly said Labour’s policy was “the worst possible news” for young people on the dole.

“The very last thing you would want to do is make it harder to employ them. I just don’t understand where Phil Goff is coming from with this.

“He already knows the reason why there’s such high youth unemployment right now is we don’t have a youth minimum wage.”

Faced with such a steep rise in costs, businesses would probably lay off staff, Mr O’Reilly said.

Labour fundamentally do not seem to understand the difference between economic cycles.

If unemployment is low, and employers are struggling to find people to fill jobs, then yes one can increase the minimum wage with little impact on employment.

But when unemployment is relatively high, and many firms are still recovering from the recession, you can’t increase the minimum wage without a significant impact on employment.

They key thing is you need to get people into jobs first, and then once people are in jobs, then they are better placed to get wage increases.

A 15% increase in the minimum wage in one year would be the largest ever, and at a time when youth unemployment is at 27% or so. And they don’t see the correlation! How the hell will a 16 year old ever find a job if it is illegal for them to work for $14 an hour.