Friday, February 05, 2010

Sir Roger on the cause of high youth unemployment

On the matter of youth unemployment, specifically 15-19 year-olds, Roger Douglas released the following yesterday,


"It's very rich of Labour's Annette King to blame National for the high rate of unemployment for young New Zealanders when it is, in fact, Labour's abolition of youth rates that has caused this problem", ACT Finance Spokesman Sir Roger Douglas said today.

"Since youth rates were abolished in early 2008, the unemployment rate for 15-19 year-olds has almost doubled. The number of unemployed youth has risen by 18,800 people," Sir Roger said.

"It is pretty clear what is causing this to happen – if you look at the 10-year period before the abolition of youth rates, youth unemployment peaked at 15.9 percent. Today, it stands at 26.5 percent."


So now that youth must be paid the adult minimum wage, their prospects of employment are diminished. Hence their current high unemployment rate. Can we test that theory?

The average 15-19 year-old rate for the 2009 was 23.4 percent. I use this figure because December is always high and I want to compare to an earlier average rate.

In 1993 the gap between the general unemployment rate and the 15-19 rate was 12.1 percentage points (10.1 percent versus 22.2 percent).

In 2009 the gap is 17.2 percentage points (6.2 percent versus 23.4 percent).

The important difference between 1993 and 2009? In 1993 under 20s were exempt from the minimum wage.

Sadly, the young always take the brunt of a recession (the primary culprit) but the abolition of the youth rate appears to have had a compounding effect.

It would be preferable to have young people working for less than the minimum wage than sitting on a benefit, but the hard Left would disagree.

7 comments:

Anonymous said...

check out farrar's graph for the decline, then the rise

http://www.kiwiblog.co.nz/2010/02/a_10_year_high_in_unemployment.html

Anonymous said...

It is very easy to abolish youth unemployment.

Abolish the youth minimum wage and the youth dole.


It is just as easy to abolish unemployment.

Abolish the minimum wage and the dole.

StephenR said...

So now that youth must be paid the adult minimum wage,

They still have a 3 month 'probation'(?) period before they start receiving the full wage though, don't they?

Lindsay said...

I don't think so Stephen;

"Employees during and at the end of their probation period have similar minimum employment rights as full-time employees."

http://www.ers.govt.nz/relationships/hiringguide/sa/sa_full.html

pdm said...

I have said this elsewhere mrs pdm used to manage the branch of a national retail store. Prior to the abolition of youth rates the store emloyed 4 to 6 high school students at weekends and some of them went in after school as well.

When youth rates were abolished they were let go and they and they as well as students of the future lost the chance of that work experience as well.

Dumb Dumb Dumb - Labour.

Anonymous said...

The hard left are as braindead as the hard right, both disgust me with their raving and ranting. jcuknz

Anonymous said...

Sir Roger is not far right but rather a meld of common sense and pragmatism in most of what he says. I see the union and department of labour's job as protecting the young worker from exploitation. jcuknz