Magazine article New Zealand Management

Waging War over Wages

Magazine article New Zealand Management

Waging War over Wages

Article excerpt

Business people sounded predictable warnings when the Government announced the latest increase in the minimum wage. The increase in the face of an economic downturn "is not the way to economic growth", growled Business New Zealand chief executive Phil O'Reilly. "You can't just legislate higher wages into existence."

Most Organisation for Economic Cooperation and Development countries have some form of minimum wage. In many cases it is set by law. In others--Sweden and Switzerland, for example--a minimum is set by collective bargaining contracts every year.

In Britain, the Blair government introduced a national minimum wage for the first time in April 1999, for workers aged over 22. But municipal regulation of wage levels in Britain began in some towns in 1524. Much later, the Trade Boards Act of 1909 created trades boards that set minimum wages, varying from trade to trade, in sectors where collective bargaining was not well established. Trades boards became wage councils in 1945 but these were abolished in 1993. The current minimum wage for British adults aged 22 or more is 5.05 [pounds sterling].

The first attempt at establishing a minimum wage in the United States was made in 1933 when a $0.25c-an-hour standard was set as part of the National Recovery Act. The United States Supreme Court declared the Act unconstitutional in 1935 and the minimum wage was abolished but it was re-established in 1938 at $0.25c an hour (US$3.22 in 2005 dollars.)

During the Clinton presidency, states were given the power to set their minimum wages above the federal level. In January, Maryland became the 18th state in the nation to enact a law that will make Maryland's minimum wage higher than its federal equivalent.

Britain's minimum wage is much higher than in the United States. So is New Zealand's. Both countries have lower unemployment.

In this country, the minimum adult wage, which applies to people over 18, increased from $9.50 to $10.25 an hour from 27 March (enough for a couple of beers at your columnist's local boozer, or a latte, a club sandwich, a muffin and a slice of cake at his local coffee bar). The minimum youth wage--for workers aged 16 and 17 years--increased by nearly eight percent to $8.20 an hour, to stay at 80 percent of the adult minimum wage. The minimum training wage increased to the same rate.

The latest increase is expected to benefit around 91,000 adult workers, most of them women, and around 10,000 youth workers. "It can be made with confidence in the current economic and labour market conditions, without being at the expense of jobs," said Labour Minister Ruth Dyson. …

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