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Minimum Wage (Abolition of Age Discrimination) Amendment Bill

9 November 2006: Submission of the Human Rights Commission on:

Minimum Wage (Abolition of Age Discrimination) Amendment Bill

To the Transport and Industrial Relations Select Committee

21 April 2006

CONTENTS

1. Introduction 2

2. Submission Summary 4

3. Background Information 8

4. A Human Rights Approach to Policy 10

5. Lower Minimum Wage for 16 and 17 year olds 12
- Compliance with international human rights instruments 12
- Consistency with New Zealand Bill of Rights Act 1990 14
- Consistency with the Human Rights Act 1993 21

6. No Minimum Wage for those under 16 24
- Compliance with international human rights instruments 24
- Consistency with New Zealand Bill of Rights Act 1990 26
- Consistency with the Human Rights Act 1993 30

7. Lower Minimum Wage for Trainees 33

8. No Minimum Wage for Disabled People 34
- DPEP Act and s8 of the current MWA 36
- DPEP Promotion (Repeal and Related Matters) Bill 37

Appendix 1 41

1. INTRODUCTION

1.1 The Human Rights Commission (“the Commission”) is an independent statutory body operating under the Human Rights Act 1993 (HRA). The Commission’s responsibilities include advocating and promoting respect for human rights, encouraging harmonious relationships between individuals and among the diverse groups in New Zealand; receiving complaints of discrimination; and leading, monitoring and advising on Equal Employment Opportunities (EEO).

1.2 The Commission welcomes the opportunity to comment on the Minimum Wage (Abolition of Age Discrimination) Amendment Bill. The purpose of the Bill is to remove the provisions of the Minimum Wage Act (MWA) 1983 that permit the Governor-General in Council to set minimum wage rates that are defined by reference to a worker’s age. It does so by repealing subsection 4(1)(a) of the MWA and by making a consequential amendment to the Minimum Wage order, as indicated in the Bill’s schedule.

1.3 This submission starts with an executive summary outlining the key findings and recommendations. The main body of the submission begins by covering background information on the development of New Zealand’s minimum wage legislation and the Commission’s 2004 research on children and young people’s rights at work. The remaining sections of this submission apply a human rights analysis to this Bill by considering:
• compliance with international human rights instruments
• consistency with the NZ Bill of Rights Act (specifically whether it is discriminatory under s19 and, if so, whether that discrimination can be justified under s5) and
• consistency with the Human Rights Act 1993 and any possible amendments required as a result of this Bill

1.4 The submission then applies this analysis to the following groups in turn:
• 16 and 17 year olds – who receive a lower youth minimum wage
• those under the age of 16 – who have no minimum wage protection
• trainees – who are paid the youth minimum wage rate
• disabled people – who can be exempted from any minimum wage protection

2. SUMMARY OF SUBMISSION

2.1 The Commission’s research identifies young people’s concerns about the level of the youth minimum wage. In addition 81% of 458 survey respondents across all age groups considered that it was “quite” or very important” that young people have a fair wage. Yet only 32% of respondents considered that this occurs “fairly well” or “all” of the time.

2.2 The right to non-discrimination is a fundamental principle of all three components of the international Bill of Rights and other leading human rights instruments. The right to work includes the right to fair and non-discriminatory remuneration for work of equal value. Paying lower minimum wages to one group of workers, based solely on their age, is contrary to the principles of non-discrimination and equal pay for work of equal value (EPWEV).

2.3 The HRC considers that a lower minimum wage for 16 and 17 year olds compared to those aged 18 and over is prima facie discrimination under s19 of the BORA. In addition, the Commission is not satisfied that this limitation on the right to non-discrimination is justifiable under s5 of the BORA. Specifically there is no strong evidence that a youth minimum wage is necessary to increase employment of 16 and 17 year olds, nor does it advance the government’s primary objectives for the minimum wage. Finally the youth minimum wage has a significant impact on the earnings of young workers, perpetuates stereotypes about their capabilities and does little to advance understanding of Equal Employment Opportunities and EPWEV.

2.4 Therefore the Commission supports the Minimum Wage (Abolition of Age Discrimination) Amendment Bill and its repeal of ss4(1)(a) of the Minimum Wage Act (MWA) 1983.

2.5 The Commission notes that the youth minimum wage is not in breach of the HRA because ss30(2) provides an age exemption to employment discrimination provisions in s22. This allows someone not exceeding the age of 20 to be paid at a lower rate than another person employed in the same or substantially similar circumstances.

2.6 Therefore the Commission also supports repealing ss30(2) of the HRA.

2.7 The Commission notes that the Bill does not address the absence of any minimum wage protections for workers under the age of 16. The HRC considers that if child labour is accepted as a legitimate component of the socialisation of children and young people, then young people participating in paid work should have employment protections.

2.8 The HRC considers that the absence of a minimum wage for workers under the age of 16 is prima facie discrimination under s19 of the BORA. In addition, the Commission is not satisfied that this limitation on the right to non-discrimination is justifiable under s5 of the BORA. Restrictions on the labour market participation of children under the age of 16 are based on concerns about the impact on work on children’s educational and personal development. However there is no strong evidence that denying access to the minimum wage is a rational and proportionate way to reduce children’s employment participation. Nor is it the lowest impact measure required to achieve this policy objective.

2.9 The Commission notes that the absence of a minimum wage for those under the age of 16 is not unlawful discrimination because those aged under 16 are excluded from the age definition in ss21(1)(i) of the HRA. The HRC recommends that this subsection is amended to ensure there is no lower age limit on those covered under ss21(1)(i).

2.10 The upper limit for this age definition was removed during considerations of the Human Rights Bill as the Select Committee agreed that “age per se does not determine a person’s ability or productivity and should not be used as the criterion for access to employment”. However the lower age limit was retained as there was insufficient time “to identify all the areas where young persons might be adversely affected by its removal”. The Commission considers that, thirteen years later, it is timely to extend the protection of age discrimination provisions to include young people as well. This would still allow exemptions where necessary, as occurs under other prohibited grounds in the HRA.

2.11 Trainees undertaking at least 60 credits of formal industry training per year are also exempt from the MWA. The HRC notes that trainees are not covered by a specific ground of discrimination in the HRA and therefore are outside the scope of a BORA assessment. The Commission also accepts a rationale can be made for this exemption as long as it does not operate as a blanket exemption for new or young employees.

2.12 Both the MWA and the Disabled Persons Employment Promotion (DPEP) Act 1960 exempt disabled people from access to the MWA. The Commission considers this amounts to prima facie discrimination under s19 of the BORA. The Disabled Persons Employment Promotion (Repeal and Related Matters) Bill is still under discussion. Its Explanatory Note fundamentally questions the justification for maintaining sheltered workshops’ blanket exemptions from the MWA. The Commission also considers that the broad exemption contained in s8 of the current MWA is also not justifiable under s5 of the BORA.

2.13 Therefore the Commission supports both the repeal of the DPEP Act and the need to amend s8 of the MWA.

2.14 The Commission has also analysed the revised minimum wage exemption permits process, as recommended in the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill. This would amend s8 of the MWA. The HRC has concerns about the ability of the new exemption process to deal with such complex issues as comparable productivity, significant and demonstrable impairment, and reasonable accommodations. Therefore the Commission does not consider that the proposed minimum wage exemption permit system is a rational and proportionate means of ensuring disabled people are paid for the work they do, and at the same rates as work of comparable productivity.

2.15 The Commission’s assessment is that there are less discriminatory means of reaching the goal of assisting disabled workers into employment. Specifically it considers that a focus on EEO and EPWEV provides a more inclusive approach than one that assumes there is likely to be a link between disability, impairment and lower productivity.

2.16 Given the repeal of the DPEP Act is still under discussion, including amendments to s8 of the MWA, this provides an opportunity to consider how the concept of minimum wage exemptions could be reframed in terms of positive EEO and EPWEV provisions. As this submission outlines, such policy discussion should consider that any limitation of disabled people’s right to non-discrimination would require sufficient justification under s5 of the BORA. The Commission considers that neither the current under-rate workers’ permit nor the proposed MWE permits meet this threshold.

3. BACKGROUND INFORMATION

Minimum Wage Legislation

3.1 The Minimum Wage Act 1983 set a binding wage floor for all workers aged 20 and older, with exemptions for workers undertaking apprenticeships and disabled workers covered by an under-rate workers’ permit.

3.2 A youth minimum wage was introduced in March 1994, set at 60% of the adult minimum, and was available for workers aged 16-19. This remained the position until March 2001 when the adult minimum wage was extended to cover 18 and 19 year olds. The youth minimum wage was also increased to 70% of the adult rate, raising to 80% of the adult minimum wage in March 2002.

Commission’s research with children and young people

3.3 Consultation with children and young people was an important part of the background work undertaken for the Commission’s September 2004 report Human Rights in NZ Today / Ngā Tika Tangata o te Motu. The Commission contracted the Children’s Issues Centre to provide a comprehensive literature review and collect primary data through an online survey and focus groups. The Centre pulled this large body of research into a stocktake report which was then used as a basis for consultation with 150 young people and 150 national decision makers at a February 2004 symposium organised by the Children’s Commissioner.

3.4 A major finding from the online survey questions about work was that 81% of the 458 respondents said that it was quite or very important that young people have a fair wage, yet only 32% thought this occurred fairly well or all the time. Just under half (227) of those surveyed provided comments in response to open-ended questions. These comments were collated within various age bands. The key issues raised by those aged from 13 to 17 were “the need to raise the minimum wage, access a wider variety of jobs and training, and for work to be safe and discrimination free”.

3.5 Human Rights in NZ Today / Ngā Tika Tangata o te Motu concluded that “young people wanted to receive better pay for their work and felt there should be more opportunities for them to earn. Various suggestions were made about increasing the minimum wage, reducing or removing tax, or both.”

4. A HUMAN RIGHTS APPROACH TO POLICY

4.1 A human rights framework for the development and delivery of legislation, policy and practice is attached as Appendix 1. Four of the six elements contained in that framework are applicable to this submission, namely identification of all relevant human rights, empowerment, participation and non-discrimination.

4.2 This submission identifies issues of compliance with relevant international human rights instruments, as well as the New Zealand Bill of Rights Act (BORA) 1990 and the HRA. In addition, the submission has drawn on the Commission’s consultation with young people and notes the significance of acknowledging young workers’ views about youth rates and age discrimination, and legitimising their involvement in the submission process. Both in New Zealand and internationally, young people are at the forefront of asserting their human rights at work. It is important that their views are considered seriously, so that democratic decision-making processes can be shown to protect the human rights of all.

4.3 A key principle that emerges in the Commission’s analysis of this Bill is non-discrimination. Currently 16 and 17 year olds can be paid a minimum wage of $8.20 per hour compared to the adult minimum rate which is $10.25 per hour. This Bill would remove the ability to set minimum wages based on age, thus it would no longer be legal to pay 16 and 17 year olds a lower minimum wage than that received by those 18 years and older.

4.4 Subsection 4(1) (a) of the MWA enables the Governor-General, by Order in Council, to prescribe minimum wages “defined in the order by reference to the age of the workers”. The main component of the proposed Bill is clause 4 which would repeal this subsection, thus removing the ability to set a lower minimum wage based on someone’s age. In addition, clause 5 makes consequential amendments to the Minimum Wage Order 2005, as indicated in the Bill’s Schedule. This would amend the definition of adult worker from those aged 18 and over, to also include 16 and 17 year olds and revoke the definition of a youth worker (which was the term used to cover those employees aged 16 and 17). In addition clause 5 revokes regulation 5 which lists the current minimum youth rates.

5. LOWER MINIMUM WAGE FOR 16 AND 17 YEAR OLDS

Compliance with international human rights instruments

5.1 The International Bill of Human Rights is the name given to Universal Declaration of Human Rights (UNDHR) and the two International Covenants on Economic, Social and Cultural Rights (ICESCR) and Civil and Political Rights (ICCPR). Together these form the bedrock of contemporary human rights law because of their potential worldwide application and the breadth of human rights contained in each. The right to non-discrimination is a fundamental principle of all three and of other leading human rights instruments including the Convention on the Elimination of All Forms of Racial Discrimination (CERD) and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). In addition, all young people below the age of 18 are given specific protection under the United Nations Convention on the Rights of the Child (CRC) with article 2 requiring State parties to protect children from any discrimination. Paying lower minimum wages to one group of workers, based solely on their age, is contrary to the principle of non-discrimination.

5.2 The right to work is recognised in Article 23 of the Universal Declaration (UNDHR), Article 7 of ICESCR, Article 11 of CEDAW and Article 5 of CERD. Central to the realisation of the right to work is the provision of just and favourable conditions of work. Elements of the right to just and favourable conditions of work, set out in article 7 of ICESCR, include the right to fair wages, the right to fair and non-discriminatory remuneration for work of equal value, and the right of workers to a decent living for themselves and their families. The Universal Declaration, ICESCR and CEDAW all specifically mention the right to equal pay for work of equal value (EPWEV).

5.3 The concept of equal pay recognises that two people employed to do the same or broadly similar job should be paid the same. Historically women were typically paid less than men for doing the same job – and this was entrenched in legislation stipulating lower minimum wages for women and through lower “female rates” in employment contracts. After years of campaigning by individual women, women’s organisations and unions, equal pay for women was introduced into the public service under the Government Service Equal Pay Act 1960. Twelve years later, the Equal Pay Act 1972 extended the principle of equal pay to cover the private sector, to be implemented over five years. Women did not receive the same minimum wage as men until six years later, in 1978.

5.4 The right to EPWEV encompasses the right to equal pay, but extends it to cover situations where the job is different but equivalent or of equal value. EPWEV stresses it is important to identify the demands and size of a job (e.g. skills, effort and responsibilities as well as the job environment) and then pay people based on those job requirements.

5.5 In many cases young people are being paid a lower minimum wage to do the same job as an older co-worker – and effectively are being denied the right to equal pay. It is as inequitable to pay people less because of their age as it was to have lower wage rates based solely on one’s sex.

5.6 In other circumstances the job being performed by a 16 or 17 year old requires the same skills, knowledge and effort as a different job done by an 18 year old employee who is on the adult minimum wage. Paying different wages for these equal value jobs, based on someone’s age rather than their ability to do the job, is contrary to the principle of EPWEV. For these reasons, the Human Rights Commission reiterates its position that the minimum wage for people aged 16 and 17 should be set at the same rate as the adult minimum wage.

5.7 Article 32(1) of CRC refers to the right of the child to be protected from economic exploitation and harmful work and Article 32(2) says that states shall take '”legislative, social and educational measures” including minimum age(s) for employment and “appropriate regulation of the hours and conditions of employment”. It is arguable that the existence of lower youth minimum wages could also be deemed less than appropriate regulation of children and young people’s conditions of employment. However, New Zealand continues to have the following formal reservation in relation to article 32(2), as noted in its last CRC report.
The Government of New Zealand considers that the rights of the child provided for in article 32 (1) are adequately protected by its existing law. It therefore reserves the right not to legislate further or to take additional measures as may be envisaged in article 32 (2).

Consistency with New Zealand Bill of Rights Act 1990

Is this discrimination under s19?

5.8 Section 19 of the BORA provides that everyone has the right to freedom from discrimination on the grounds prohibited under s21 of the HRA. Under Part 1A of the HRA, complaints can be made about acts by the legislative, executive or judicial branch of the Government of New Zealand which are inconsistent with this right to freedom from discrimination.

5.9 Part 1A provides that an act is inconsistent with s19 if it limits the right to freedom from discrimination affirmed in the BORA and cannot be justified under section 5. So the first step involves determining whether there has been prima facie discrimination under s19 of the BORA. This involves identifying:
• whether a distinction is being made on the basis of one of the grounds of discrimination contained in section 21 of the Human Rights Act and, if so,
• does that distinction involve a disadvantage to an individual or group?

5.10 A lower minimum age for 16 and 17 year olds compared to 18 and 19 year olds is a distinction based on age, which is one of the grounds contained in the HRA. The setting of a blanket minimum youth rate indicates that age is the distinguishing factor. A 17 year old can be paid a minimum wage of just $8.20 per hour, yet on their 18th birthday will automatically receive an extra $2.05 per hour or 25% increase. That distinction is a clear financial disadvantage to workers aged 16 or 17 and therefore the Commission considers it is prima facie discrimination under s19 of the BORA.

Can this discrimination be justified under s5?

5.11 Rules and policy which breach the right to freedom from discrimination may be consistent with the Bill of Rights if they can be justified under s5 which states:
“Subject to section 4 of this Bill of Rights, the rights and freedoms contained in this Bill of Rights may be subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society”

5.12 The onus of proving that the limitation on any particular right is reasonable lies with the agency or organisation imposing the limit. One approach approved by the Court of Appeal in determining whether a limit on a right is reasonable is outlined in Moonen v Film and Literature Board of Review. It requires identifying:
(i) the significance of the objective that the limit upon a protected right seeks to achieve;
(ii) whether the limit is rationally connected to, and reasonably proportionate to, that objective;
(iii) whether the limit interferes with a protected right to the least possible degree necessary to achieve the objective in question (the minimal impairment test)

The significance of the objective

5.13 The objectives and criteria for the minimum wage are drawn from Department of Labour (DoL) officials’ December 2005 report to the Minister of Labour on the Minimum Wage Review 2005. The overall objectives are:
• Objective 1: Fairness – to ensure that wages paid are no lower than a socially acceptable minimum
• Objective 2: Protection – to offer wage protection to vulnerable workers so that workers are paid wages that reflect their worth or productivity
• Objective 3: Income Distribution – to ensure that earnings of people on low incomes do not deteriorate relative to those of other workers
• Objective 4: Work Incentives – to increase the incentives to work for people considering work

5.14 Each of these objectives is significant in relation to both minimum wages generally and the specific issue of youth minimum wages. The explicit objectives or rationale for a lower youth minimum wage are not discussed in depth within the officials’ report. However it does consider the proportion of young people on the youth minimum wage, the relationship between the youth minimum wage and the average youth wage, and possible impacts on youth employment and education. This suggests that there may be some balance sought between 16 and 17 year olds’ participation in paid work and their participation in education – which is also an important policy objective.

5.15 The clearest rationale in the officials’ report for retaining a youth minimum wage is that:
. . . changes to the youth minimum wage . . . will have a greater proportional effect on young people than changes to the adult minimum wage will have on adults (as more young people than adults are on minimum rates and there is a narrower range of wages paid to young people) . . .

Given where the youth minimum sits in relation to average youth wages (at 75%), as compared with the adult minimum rate relative to the average adult wage (49%) reflected by the percentage of people affected in each case, the Department recommends that the 80% relativity is maintained at this time.

5.16 In other words, changes in the youth minimum wage have the ability to improve wages for a significant proportion of young people and most young people earn close to the youth minimum wage. There is no further explanation clarifying why officials recommended that the youth minimum wage should stay at 80% of the adult rate, based on these statistics. Furthermore, information provided elsewhere in the report appears to reduce the significance of these figures. For while the proportion of young people affected by changes to the youth minimum wage is potentially high, most of those young people work relatively few hours so the overall impact on their earnings is less significant.

Is the minimum youth rate rationally connected and reasonably proportionate to the objective?

5.17 It is often debated that increasing the minimum wage, or reducing the age at which an adult rate is paid, may have a detrimental impact on youth employment by pricing young people out of the labour market. However, Treasury analysis of changes to the youth minimum wage since 2001 has shown no adverse employment outcomes for young people. Chapple’s earlier 1997 study also agreed that the employment impact of minimum wage rates “suggests that conclusions regarding significant negative employment effects from real minimum wages increases are strikingly non-robust”. Therefore, there is no strong evidence to support the policy concern that increasing youth minimum wages will reduce youth employment.

5.18 In the tight labour market that has prevailed over recent years, increasing minimum wages for young people has had the opposite effect. Hyslop and Stillman found that the 45% increase in the youth minimum wage for 16 and 17 year olds between 2000 and 2003 resulted in a 10-15% rise in their hours worked. Employer organisations remain largely opposed to increases in the youth minimum wage, though the DoL’s summary of submissions on the 2005 Minimum Wage Review noted that while Business NZ, Federated Farmers and the Hospitality Association proposed no increase to the minimum wage, the Retailers Association supported matching the percentage rise in average hourly earnings over the preceding year.

5.19 In its February 2006 bimonthly survey, business advisory and accounting firm Sherwin Chan & Walsh asked 286 businesses across the greater Wellington region whether extending the adult minimum wage to cover 16 and 17 year olds would have any significant effect on their business. As the Jobs Letter reported, the responses showed relatively limited concerns from these business owners.
Of the 286 businesses surveyed in the greater Wellington area, 85% said that abolishing youth rates would have no significant effect on their business. The survey also found that even fewer businesses will be significantly affected when the minimum wage is raised from $9.50 to $10.25 per hour at the end of this month. And 69% of the businesses supported the government’s plan to lift the adult minimum wage to $12 per hour within three years.

5.20 Recently BP Oil and the Engineering, Printing and Manufacturing Union (EPMU) reached agreement over abolishing youth rates, with all those aged under 18 being paid adult rates from 3 April. In the same month, Restaurant Brands (which owns KFC, Pizza Hut and Starbucks outlets) and the union Unite negotiated to increase pay rates for staff aged under 18 to 90% of the adult wage.

5.21 Hyslop and Stillman’s research did identify some decline in educational enrolment as a result of changes to youth minimum wage rates since 2000. The DoL officials’ report also cites Pacheco and Cruikshank’s research estimating that minimum wage increases in the order of 5% may result in 500 fewer 16-17 year old students enrolled in formal study each year. However this amounts to less than 0.5% of the 108,000 16 and 17 year olds recorded in the 2001 Census. Extending the adult minimum wage to cover 16 and 17 year olds would be a 20 percentage point increase or 25% increase in the minimum wage for this group. Therefore it is likely this would have a larger impact, than previous minimum wage increases, on students’ decisions to move from study into paid employment or to increase their hours of paid employment.

5.22 Finally, there is developing Canadian and New Zealand jurisprudence about the extent to which economic objectives and implications alone can provide sufficient justification under s5 of the BORA for limiting rights and freedoms. In the Canadian Supreme Court case Singh et al v Minister of Employment and Immigration Wilson J made the following comment about limitations on s1 of the Canadian Charter of Rights and Freedoms, which is the equivalent of s5 of the BORA:
Certainly the guarantees of the Charter would be illusory if they could be ignored because it was administratively convenient to do so.

5.23 Similarly in the New Zealand Court of Appeal, Cooke P in Ministry of Transport v Noort stated that “inevitably there comes a point at which basic human rights have to be seen as transcending administrative efficiency”. Typically economic costs are considered to be one component of such administrative efficiency arguments.

5.24 Government’s primary objectives in relation to the minimum wage are to ensure that wages are fair, that they offer wage protection to vulnerable workers, enable equitable income distribution so those on low incomes do not fall behind other workers, and increase the incentives for people to consider working. Maintaining a lower minimum wage for young workers does little to enhance these objectives. However it may encourage higher levels of participation in secondary education by reducing the incentive to move into full-time paid employment.

Minimal impairment

5.25 The final component of the BORA analysis involves assessing whether young people’s employment and education objectives can be met without the age discrimination inherent in a lower youth minimum wage. Are there other ways of promoting youth employment, education and training without discriminating? Given the research results outlined above, the major factor to be addressed is whether low minimum wage rates for young people should be used as a primary policy measure to dissuade young people from paid work. It is arguable this approach may merely punish those young people most dependent upon either part-time or full-time paid work.

5.26 The DoL’s analysis shows that the benefits of increases to the youth minimum wage are most likely to be felt by the 70% of 16 and 17 year olds who are still at school or in some sort of study, and retail workers (as 64% of 16 and 17 year olds are employed in this industry). The youth minimum wage has a significant impact on the earnings of these workers, resulting in financial disadvantage relative to other young workers. Furthermore it perpetuates stereotypes about the capabilities of 16 and 17 year old workers and does nothing to increase understanding and application of EEO and EPWEV principles that ensure workers’ pay and conditions are based on the skills, qualifications and experience required for the job. The Commission’s view is that the youth minimum wage undermines the right to non-discrimination and does so in a manner that has significantly more impact than the least possible degree necessary to protect youth employment and education levels. Therefore, in our opinion, it is difficult to justify this discrimination under s5 of the BORA.

Consistency with the Human Rights Act 1993

5.27 Age is one of the prohibited grounds of discrimination set out in s21 of the HRA. Sections 22 and 23 of the HRA then describe the legislation’s employment discrimination provisions, with exceptions covered in sections 24 - 35. Subsection 22(1)(b) of the HRA clearly spells out that it is unlawful to pay someone less than a co-worker “of the same or substantially similar capabilities employed in the same or substantially similar circumstances” by reason of any of the prohibited grounds of discrimination covered in s21.

5.28 Therefore, as previously submitted, the Commission considers that the minimum wage for people aged 16 and 17 should be set at the same rate as the adult minimum wage. Specifically, the validity of paying a 16 or 17 year old less than an 18 year old for no other reason than their age, regardless of qualifications and capabilities, is difficult to justify in terms of the HRA.

5.29 However, the existence of a lower minimum wage for 16 and 17 year olds is not in breach of the Human Rights Act (HRA). This is because subsection 30(2) of the HRA provides an age exemption to the requirements in subsection 22(1)(b). Subsection 30(2) allows someone not exceeding the age of 20 to be paid at a lower rate than another person employed in the same or substantially similar circumstances. This exception covers all wage rates, not just the minimum wage.

5.30 So while subsection 30(2) permits an age differential between the adult and youth minimum wage, its intent and effect is broader and allows age discrimination in pay rates for any worker “who has not attained a particular age, not exceeding 20 years of age”. Eighteen and 19 year olds are also covered by subsection 30(2) and so can be paid less than their 20 year old co-workers. However, the ability to pay them a lower minimum wage was removed in March 2001, when the age threshold for the adult minimum wage rate was lowered from 20 to 18.

5.31 Subsection 30(2) was introduced to enable the continuation of youth rates in employment contracts, where young workers were paid less than adults (defined as those aged over 20). As the Hansard records from the second reading of the Human Rights Commission Amendment (HRCA) Bill (No. 3) note:
The payment of youth rates will continue to be lawful when paid to employees under 20 years. Employers will be able to recruit staff on the basis that they need to be paid only the youth rate.

5.32 In December 1991, after a change of Government, the Select Committee considering the HRCA Bill called for supplementary submissions focused solely on the issues of age discrimination. The Commission’s submission included the following short section on youth rates.
The Bill provides in clause 15H(3) for the retention of the payment of “youth rates”. The Commission does not support the payment of lesser rates based solely on age.

5.33 In the BORA analysis above, the Commission has explained that it is difficult to argue that the age discrimination faced by young workers is a reasonable and justifiable limit on human rights. Therefore the Commission supports:
• clause 4 of the Bill which would repeal subsection 4(1)(a) of the MWA and
• repealing subsection 30(2) of the HRA.

6. NO MINIMUM WAGE FOR THOSE UNDER 16

6.1 The Bill does not address the ability to pay those under the age of 16 less than the minimum wage. Workers aged under 16 years can be paid youth rates lower than those received by other workers, and have no minimum wage protections limiting how low these youth rates can fall. Youth under the age of 16 are not covered by the MWA and so are not entitled to a minimum wage. Consequently the DoL has no jurisdiction under the MWA to prosecute employers who pay low wages to under 16 year olds. Nor do workers under the age of 16 have any protection under s22 of the HRA against other forms of employment discrimination. This is because the definition of age as a prohibited ground of discrimination, as set out in subsection 21(1)(i) of the HRA excludes all those under the age of 16.

6.2 The HRC has previously argued that, if the Government accepts child labour as a legitimate component of the socialisation of children and young people, it is obliged to ensure that where young people participate in paid work they are, as far as possible, protected from exploitation. This submission reiterates those concerns.

Compliance with international human rights instruments

6.3 The right to non-discrimination is as applicable to children aged under 16 as it is to 16 and 17 year olds. In addition, the International Labour Organisation (ILO) conventions place limitations on the right to work for those children below the age of 16. Concerns about impact of child labour are reflected in the fact that the abolition of child labour is the subject of two of the eight core ILO conventions and is one of the four areas covered by the ILO Declaration on Fundamental Principles and Rights at Work. The ILO provides the following information about the relationship between children’s participation in work and the child labour conventions.

Children enjoy the same human rights accorded to all people. But, lacking the knowledge, experience or physical development of adults and the power to defend their own interests in an adult world, children also have distinct rights to protection by virtue of their age. One of these is protection from economic exploitation and from work that is dangerous to the health and morals of children or which hampers the child's development.

The principle of the effective abolition of child labour means ensuring that every girl and boy has the opportunity to develop physically and mentally to her or his full potential. Its aim is to stop all work by children that jeopardises their education and development. This does not mean stopping all work performed by children. International labour standards allow the distinction to be made between what constitutes acceptable and unacceptable forms of work for children at different ages and stages of development.

6.4 In June 2001, New Zealand ratified ILO 182 covering the Worst Forms of Child Labour. ILO 138 aims for the abolition of child labour and stipulates that the minimum age of admission to employment should be no less than the age of completion of compulsory schooling. NZ has not ratified this Convention and has adopted a similar position to that with respect to CRC, namely that it is both acceptable and common practice for children to engage in work outside school hours.

6.5 Articles 2(3), 3(1), 33) and 7(1) of ILO 138 stipulate the sorts of work that are permissible for different age groups. The starting point is article 2 (3) which benchmarks the minimum age for general admission to work against the age of completion of compulsory schooling. In New Zealand this is 16. Article 7(1) allows young people aged 13 -15 to perform “light work”.

6.6 ILO 138 does not permit child labour for those under the age of 13 unless it is specifically exempted and justified under its “flexibility provisions” in article 4 or under article 8 which allows exemptions for those working in the entertainment industry.

6.7 In its October 2003 concluding observations, after considering the NZ Government’s second periodic report, the CRC Committee recommended that the NZ Government:
“expedite the ongoing process of reviewing and strengthening legislation protecting all persons under the age of 18 who are employed, and encourages the State party to ratify ILO Convention 138”.

Consistency with New Zealand Bill of Rights Act 1990

Significance of the objective

6.8 As already outlined in section 4, the payment of a lower minimum wage based solely on one’s age is discriminatory. However, is it reasonable and justifiable? The first hurdle, that the policy objective is significant and important, is clearly arguable. Encouraging children’s education is a significant and important objective. However, is the absence of a minimum wage for workers under the age of 16 a rational and proportionate way to meet such a policy objective?

Rationally Connected and Reasonably Proportionate

6.9 Comments collated in the Children’s Issues Centre’s stocktake undertaken for the Commission suggest that employment protection for young people can sit alongside a principal commitment to supporting children’s participation in education. This includes arguments that decent wages and conditions (including prohibition or additional safeguards around some types of work for children in various age groups) should take place within an environment where children are not forced to undertake paid work. The following comment by one adult respondent combines this dual focus:
Firstly young people should be paid real wages for the work they do, in most areas (e.g. supermarkets) as these roles are also adopted by adults on far higher wages. And secondly, I believe education is very important to children – I believe some of them are overworking to provide themselves with the necessities (in some cases their own tuition, clothing etc) or luxuries (i.e. nice cars, designer outfits). We must ensure young people’s work does not detract from their education.

6.10 New Zealand does have legislative protection that complies with article 2(3) of ILO 138, by aligning the minimum age for general admission to paid work with the age for completing compulsory schooling. Specifically s30 of the Education Act 1989 states that children aged under 16 cannot be employed during school hours. Attendance at school is compulsory in New Zealand until the student reaches the age of 16, though students aged under 16 can be authorised exemption from attendance at school by the Ministry of Education, which allows them to find full-time employment.

6.11 There are also some health and safety regulations providing additional protections for young workers, but collectively these fall well short of compliance with ILO 138. Ratification of this Convention would require New Zealand to expressly distinguish between types of work permissible for various groups of young workers based on their age, as set out in paragraph 6.5 and 6.6 of this submission. Ratification is one measure that would acknowledge the particular vulnerability of young workers.

6.12 The Commission does not consider that a strong rational connection has been made between denying minimum wage protection to workers under the age of 16 and the objective of limiting the level of children’s labour market participation. While some young workers may choose to withdraw their labour, the most vulnerable groups of workers are likely to remain in jobs with insufficient monitoring and regulation of their employment terms and conditions.

6.13 In terms of reasonable proportionality, the absence of any minimum wage cuts a sharp contrast between workers aged 15 or younger and those who are older. Seldom is such a hands-off approach in the interest of vulnerable groups. Therefore the HRC does not consider that the absence of minimum wage protection is a rational and proportionate response to concerns about child labour.

Minimal Impact

6.14 Similarly, it is difficult to argue that the total absence of any minimum wage protection is the lowest impact measure required to support the educational and employment needs of young people aged 16 and under. The DoL has noted that it will be important to monitor whether 16 and 17 year old workers are being replaced by those aged 15. In addition, it has stated that rising levels of non-compliance with the youth minimum wage need to be investigated and monitored. This suggests the need for greater employment protection for young workers rather than a laissez-faire approach which results in their exclusion from both minimum wages and the unlawful discrimination provisions of the HRA.

6.15 For the last two years, the Department’s recommendation to its Minister has noted “that the issue of minimum wages for young people under the age of 16 years may be considered once government has reached a decision around ratification of ILO Convention 138”. The Commission agrees that New Zealand should work towards ratifying ILO 138 and notes that the convention’s exemption provisions could be utilised to enable limited employment by children under the age of 16.

6.16 The HRC would welcome additional information about the effect of employment on children’s educational and personal development, with particular emphasis on the impact of a child’s age and the number of hours worked. Some US research suggests that moderate levels of work (up to 10 hours a week) can be beneficial for children, in contrast to negative outcomes associated with working more than 20 hours per week. However, recent cross-country quantitative research undertaken for the ILO found that children’s work, even in limited amounts, does adversely affect the child’s learning. As no labour markets comparable to New Zealand were included in that research, those results cannot be generalised to the situation in this country . Therefore New Zealand research would usefully inform debates about what level of paid work would support, rather than adversely affect, New Zealand children’s educational and personal development.

6.17 The HRC is concerned about the absence of protections for young people who are working, with no regulation of wages for those aged under 16 and insufficient focus on employment conditions including specific health and safety issues faced by young and often casual workers. This vulnerability is heightened because those aged under 16 are not covered by the anti-discrimination protections in the HRA. That issue is addressed in the next section of this submission.

Consistency with the Human Rights Act 1993

6.18 Section 5 of this submission notes that subsection 30(2) of the HRA permits youth rates, including youth minimum wage rates, for workers under the age of 20. However its repeal will not be sufficient to ensure that workers under the age of 16 are protected from employment discrimination under ss22 and 23. This is because those aged under 16 are excluded from the age definition in subsection 21(1)(i) of the HRA.

6.19 The 1992 Human Rights Commission Amendment Bill introduced age discrimination as a prohibited ground. During the Bill’s second reading, a number of speakers noted that protection from employment discrimination should begin when a person’s full-time working life starts. However the then Minister of Justice, the Hon. Doug Graham suggested that “these upper and lower age limits may be less appropriate in other areas and be re-examined when new human rights legislation is prepared”. In its Select Committee submission, the Commission called for no lower age limit as “all New Zealanders should gain protection from the age discrimination provisions”.

6.20 Analysis of the Hansard records shows there was very little discussion about the lower age limit during parliamentary debates on this Bill, apart from the reiteration that it reflected the school leaving age which was about to be raised from 15 to 16. Virtually all the parliamentary and Select Committee debates on age as a prohibited ground of discrimination focused on the upper age limit which had been introduced to cover those people affected by changes to the age of eligibility for national superannuation.

6.21 A year later, the Select Committee analysed submissions on the proposed Human Rights Bill and concluded there was no justification for age being used as criterion for access to employment. The Select Committee recommended abolishing the upper age limit but, in the absence of sufficient background information, retained the lower limit. The following extract from paragraph 2.5 of that Select Committee report outlines their rationale for this approach:
The bill, as introduced, contains both an upper and lower limit in the definition of age. The upper limit applies in the area of employment and is linked to the age at which a person qualifies for national superannuation under section 3 of the Social Welfare (Transitional Provisions) Act 1990.

The subcommittee believes that age per se does not determine a person’s ability or productivity and should not be used as the criterion for access to employment. Reliance should instead be placed on the person’s ability to perform the task required. The subcommittee, therefore, recommends the removal of this upper limit. This would mean that there would be no differentiation between employment and other areas of discrimination.

Mindful that this recommendation represents quite a significant departure from the present compulsory retirement regime, it is further recommended that it be introduced over a period of time, by 31 December 1999.

The lower age limit is to be retained, as it was not possible during the consideration of this bill to identify all the areas where young persons might be adversely affected by its removal.

6.22 Thirteen years later, this Select Committee has the benefit of additional information. Accordingly, it has the opportunity to accord young people the same dignity and rights as older workers by clearly stating that a young person’s ability and productivity is not determined by their age per se. There is already sufficient evidence to show that employment levels of 16 and 17 year olds will not be adversely affected by removing age limitations on employment discrimination provisions. For those aged under 16, there are limitations on participation in paid work, as set out in the Education Act and further age-based protections could be introduced to reflect ILO 138. In addition, when workers of any age are involved in recognised industry training, undertaking at least 60 credits per year, there is already an ability for them to be paid a lower training rate.

6.23 There is no justification for excluding young people aged under 16 from the discrimination protections in the HRA. Amending the age definition in ss21(1)(i) is important to counter the vulnerability experienced by young people at work and in other spheres of their life. Human Rights in New Zealand Today / Ngā Tika Tangata o Te Motu identified human rights abuses against children and young people as one of the greatest challenges facing New Zealand, especially those relating to violence and poverty. As a result, its recommendations included extending the HRA’s existing grounds of discrimination to address the fact that children under 16 years of age are not protected from age discrimination.

6.24 Amending s21 to include young people aged under 16 would still allow exemptions where necessary. Legislation in a number of Australian states and territories typically includes exemptions covering reduced fares and admission process and child protection issues.

7. LOWER MINIMUM WAGE FOR TRAINEES

7.1 There are two further exemptions to the MWA which are not amended by the proposed Bill. Firstly, as noted in the Bill’s Explanatory Note
The Bill recognises there is justification for paying a lower minimum wage to apprentices and those who are genuine trainees whose employment contains a significant training component.

7.2 These minimum training rates, which are equivalent to the youth minimum wage, are set out in regulation 6 within the Minimum Wage Order.

7.3 The position of trainees or apprentices is different from the other exemptions analysed in this submission in that, unlike age or disability, being a trainee is not covered by a specific ground of discrimination under the HRA. Therefore it falls outside the scope of a BORA assessment. In its 2000 submission, the HRC supported the minimum training rate provided there was adequate oversight to assess that a significant training component existed. This was a safeguard to ensure that the trade-off between provision of such training, and exemption from the minimum wage, was not exploitative.

7.4 The Bill’s wording, and the HRC’s previous submission, is based on the assessment that such a trade-off is rational and proportionate. It is also arguable that a trainee exemption is a minimal impact option to achieve the objective of encouraging people into entry level positions which provide access to formal structured training. The Commission would welcome additional monitoring of this provision to ensure that this objective is met, and that the training exemption does not operate as a blanket exemption to the minimum wage, particularly for young workers or new employees. Based on these reassurances the Commission considers that this discriminatory provision is justifiable.

8. NO MINIMUM WAGE FOR DISABLED PEOPLE

8.1 Disabled people are the other group currently exempted from the MWA who are specifically mentioned in the Bill’s Explanatory Note. Specifically, the Bill “recognises that it is on occasion justifiable to pay a wage lower than the minimum to a disabled worker who, on account of his or her impairment, is incapable of earning wages at the minimum rate”.

8.2 The Commission considered these issues in-depth in its 2004 submission on the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill. The Bill has not progressed further at this stage, as the Select Committee was unable to reach agreement as to whether it should be passed. Therefore, sheltered workshops still remain exempt from the MWA under the Disabled Persons Employment Promotion (DPEP) Act 1960. This blanket exemption means all disabled person working in sheltered workshop are not covered by the MWA. In addition, s8 of the MWA allows workers “incapable of earning wages at the appropriate minimum wage” to be granted under-rate workers‘ permits stipulating a lower wage. This s8 exemption has typically been applied to cover disabled people outside sheltered workshops, and applies to an individual in a specific job working for a particular employer.

8.3 The Disabled Persons Employment Promotion (Repeal and Related Matters) Bill proposed repealing sheltered workshops’ blanket exemption. It also proposed amending s8 of the MWA to clarify the criteria for issuing individual exemptions (which would now be renamed a minimum wage permit rather than an under-rate worker’s permit).

Compliance with international human rights instruments

8.4 The United Nations Committee monitoring the implementation of the ICESCR has issued a General Comment which deals with rights of disabled people under that treaty. General Comment 5 (1994) states that disability is a protected ground within the scope of the International Covenant on Economic, Social and Cultural Rights. It defines disability-based discrimination as “including any distinction, exclusion, restriction or preference or denial of reasonable accommodation based on disability which has the effect of nullifying or impairing the recognition, enjoyment or exercise of economic, social, or cultural rights.”

8.5 With respect to Articles 6-8 of ICESCR, General Comment 5 states in paragraph 20 that:
The field of employment is one in which disability-based discrimination has been prominent and persistent. In most countries the unemployment rate among persons with disabilities is two to three times higher than the unemployment rate for persons without disabilities. Where persons with disabilities are employed, they are mostly engaged in low-paid jobs with little social and legal security and are often segregated from the mainstream of the labour market. The integration of persons with disabilities into the regular labour market should be actively supported by States.

8.6 Paragraph 25 then goes on to state that the right to "the enjoyment of just and favourable conditions of work" (art. 7) applies to all disabled workers, whether they work in sheltered facilities or in the open labour market.
Disabled workers may not be discriminated against with respect to wages or other conditions if their work is equal to that of non-disabled workers. States parties have a responsibility to ensure that disability is not used as an excuse for creating low standards of labour protection or for paying below minimum wages.

8.7 In addition, the current draft text of the new UN Convention on the Rights and Dignity of People with Disabilities contains overarching principles of dignity, non-discrimination and equality for disabled people. There are also draft principles recognising disabled people’s right to work and promoting positive attitudes to people with disabilities.

Consistency with New Zealand Bill of Rights Act 1990

DPEP Act and s8 of the current MWA

8.8 Firstly this submission briefly considers the current exemptions from the MWA as contained in both the DPEP Act and s8 of the MWA. The DPEP Act specifically exempts sheltered workshops from the MWA and defines sheltered workshops as places, owned or controlled by an approved organisation, “in which disabled persons are employed”. Therefore sheltered workshops’ blanket exemption for anyone they employ is effectively an exemption based on the ground of disability. Given disability is a ground under s21 of the HRA, this raises a prima facie discrimination issue.

8.9 In addition, the Explanatory Note to the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill explicitly stated the Government’s concerns that the DPEP Act “is not satisfactorily compliant with domestic and international human rights legislation, . . . embodies outdated concepts about the ability, potential, and rights of people with disabilities – concepts that are no longer appropriate or acceptable [and] does not fit with government polices and strategies”. In setting out this rationale for repealing the DPEP Act, the Bill fundamentally questioned the justification for maintaining sheltered workshops’ blanket exemptions from the MWA.

8.10 Section 8 of the current MWA allows under-rate workers’ permits to be granted that stipulate a lower minimum wage for those “incapable of earning wages at the appropriate minimum rate”. Information from the DoL website confirms that these minimum wage exemptions are only applied to people with disabilities, which also raises a prima facie discrimination issue. The HRC considers that such a broad exemption process could not be justified under s5 of the BORA and therefore has supported both the amendment of the MWA and the repeal of the DPEP Act.

8.11 The following BORA assessment explores whether the revised MWE process proposed under the Disabled Persons Employment Promotion (Repeal and Related Matters) Bill could be justified under s5 of the BORA.

DPEP Promotion (Repeal and Related Matters) Bill

Significance of the objective

8.12 The objectives of the Bill were repealing the DPEP Act “to ensure that people with disabilities have the same employment conditions, rights and entitlements as other New Zealanders”, including access to minimum wage provisions. The amendments to the MWA were to make the system for considering the minimum wage exemption permits “more clearly focused and transparent” so that “in cases where people with disabilities are working to capacity and cannot earn the minimum wage, wages are paid at the same rates as for work of comparable productivity”. Employment opportunities for people in segregated (or partially segregated) settings would still continue under the Bill but, with no blanket exemption for sheltered workshops, ”wages would be paid according to the work that people do rather than the place where people work”.

8.13 These objectives are significant and therefore satisfy the first stage of an assessment as to whether discrimination could be justified under s5 of the BORA.

Is the MWE permit rationally connected and reasonably proportionate to these objectives?

8.14 The term “comparable productivity” is central to any consideration of the proposed MWE permits. The policy objective is that disabled people are paid for the work they do, and at the same rates as work of comparable productivity. However, in the absence of a robust methodology about measuring and then comparing productivity, concerns remain about the ability to make objective assessments. In segregated workplaces, where all workers have some disability, there may also be insufficient information about the pay rates workers without disabilities would receive for “work of comparable productivity”.

8.15 Any assessment of comparable productivity is also limited by the fact that adult workers without disabilities have a legal right to the minimum wage regardless of their productivity. So the MWE process starts with an inherent bias that requires only disabled workers’ productivity to be assessed.

8.16 The proposed amendments to ss8(1) of the MWA set out the Labour Inspector may issue a MWE permit to a worker if they are satisfied that:
(a) the worker is significantly and demonstrably impaired by a disability from carrying out the requirements of his or her work
(b) any reasonable accommodations that could have been made to facilitate carrying out the requirements of the work have been considered by the employer and the worker and
(c) it is reasonable and appropriate to grant the permit

8.17 Greater transparency is one of the stated objectives of the proposed changes. Therefore it is concerning that the criteria provide no guidance on how to define significant and demonstrable impairment, thus risking potentially inconsistent assessments by Labour Inspectors. This is likely to be particularly problematic in circumstances where disabilities are not visible, or may be episodic (as is the case with some mental illnesses).

8.18 Perceptions about the level and impact of any impairment are also likely to affect a Labour Inspector’s assessment of reasonable accommodations that could have been considered in order to enable disabled people to carry out the requirements of their job. Therefore it is of added concern that that the proposed Bill provided no additional information about applying this provision. The Commission has also noted the relative weakness of the requirement to merely consider reasonable accommodations. This contrasts with the relevant provision in s29 of the HRA which requires employer action up to a point where it would be deemed “not reasonable to expect the employer to provide services or facilities.”

8.19 The Bill’s effectiveness relies on Labour Inspectors having sufficient knowledge and guidance to assess three complex issues - comparable productivity, significant and demonstrable impairment and reasonable accommodations. Given this com