Increasing Minimum Wage Will Cost Jobs

National's decision to increase the minimum wage will cause unemployment among those that are least able to deal with the consequences, ACT Finance Spokesman Sir Roger Douglas said today.

"Increasing the minimum wage seems like a nice idea, but in reality creates an incentive for employers to discriminate against those with low skills. Businesses are not charities - they respond to prices just like the rest of us. If prices go up, people buy less. If wages go up, you employ fewer people," Sir Roger said.

"Minimum wages price those with few skills out of the market. That means that many young people straight out of school will not find a job, will not get on the job training, and will not be given the opportunity to move up the ladder. The minimum wage discriminates in particular against Maori and Pacific Islanders, many of whom leave school without adequate education.

"Unemployment is already occurring because of the minimum wage laws. Forty four percent of unemployed people are under 24. Since youth rates were abolished in 2008 more than 13,000 people aged 15-19 have lost their jobs. Why do we keep pretending that the minimum wage is helping people when it is stopping people from finding work?

"Worse still, the unemployment caused by minimum wages then justifies further Government intervention. Because of the rise in unemployed young people, the Government implemented a 'Job Ops' scheme, giving businesses $5,000 to hire someone aged 15-24 as otherwise these businesses can't afford to hire them.

"Increasing the minimum wage denies young people the opportunity to find a legitimate job. The Government's solution is to then tax the New Zealand public to give young people opportunities to get a job. The whole thing is ridiculous," Sir Roger said.

ENDS