Minimum Wage decision a big win for workers and should be celebrated
It is a mistake to underestimate the importance of the decision to lift the minimum wage to $20 an hour by April 2021.
This will involve a significant real increase in wages for hundreds of thousands of workers in this country.
Employers will be screaming. Every time there is a bump in unemployment as a consequence of capitalism’s business cycles, the increase will be blamed on the minimum wage increase.
Minimum wages usually go up each April 1.
Unite Union's first campaign to lift minimum wages and abolish youth rates in 2005
In the last four years to April 1, 2017, there has been an overall increase of $2 an hour from $13,75 to $15.75.
In percentage terms, this was faster than the average hourly wage increase from $27.48 to $29.90 in the four years to the end of the March quarter 2017.
This means that there was an increase in the minimum wage as a percentage of the average wage from 50% to almost 53%. Bosses were grumbling under the National government about this.
Internationally, minimum wages are usually between 30 and 50% of the average wage.
But in New Zealand the minimum wage have been up to 80% of the average wage just after World War II, and was two-thirds (for adult males at least) as late as the mid-1970s.
During the nine years of the previous National government from 1990 to 1999, there was only one increase in the adult minimum wage and the real value of the minimum wage dropped from about 50% to 40% of the average wage. No minimum wage applied to workers under 20 until 1994 when one was established for 16-19 year-olds at 60% of the adult rate.
Then Labour lifted the rates from 1999 to 2008 to restore the 50% level of the average wage before leaving office.
Just as importantly, the application of a youth rate of only 60% of the adult rate from aged under 20 was progressively eliminated by increasing the percentage and dropping the age, first to 18 and then 16.
This process was in part a product of the ongoing campaign by Unite Union others to lift wages and end youth rates in the fast food industry through the SupersizeMyPay.Com campaign.
National has maintained around the 50% percentage of the average wage for the adult rate and even increased it slightly since they returned to office. But they have restored a youth rate that is 80% of the adult rate that can apply for up to six months for new employees aged 16-18 or trainees.
Again, at least in part, this was pushed along by a massive campaign by Unite Union and others to push the minimum wage from $12 to $15 at that time that involved collecting 200,000 names on a petition.
The average wage increased by 8.8% in the four years to March 2017.
If we apply a similar increase through to March 2021 then the average wage will reach $32.53.
With a minimum wage of $20 at that time it will be equal to 61.5% of the average wage.
This will be a significant step forward towards to goal of the Council of Trade Unions to make the minimum wage two-thirds of the average wage.
Currently, this percentage would equal today’s living wage number of $20.20 an hour.
Making the living wage the minimum wage is a realistic and achievable goal after stage one has been achieved when we reach $20 an hour on April 1, 2021.
Currently, most of the collective agreements that Unite has signed have been based on a “minimum wage plus” formula. That means as the minimum wage moves up all rates above the minimum move up as well.
In addition, in the last round of negotiations with fast food companies, we insisted that there needed to be at least a small increase above the minimum wage increase for workers when they started. McDonald’s and Restaurant Brands agreed to at least ten cents increase each year of their agreements. So new McDonald’s workers will be on at least 30 cents an hour above the minimum wage in April 2020.
For more senior and supervisory staff that will mean that most will be on or above the equivalent of the living wage then as well.