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PoliticsOctober 12, 2022

What is the minimum wage exemption and why is it so contentious?


There are currently hundreds of New Zealanders being paid as little as $2 an hour to work. How is that legal? Josh McKenzie-Brown reports for Attitude.

The Minimum Wage Act 1983

Right now in New Zealand there are men and women earning less than $3 per hour. Legally. Under the Minimum Wage Act 1983 (MWA) businesses can apply for an exemption to pay an employee with a disability less than the minimum wage, on the basis they are less productive. 

Even our national airline, Air New Zealand, hires workers at this rate. To untangle headphones. 

Our current Labour government is fundamentally opposed to this, but nothing’s changed during its term. The reality is that the MWA is not a black and white issue as one may believe looking in from the outside. Most employees and their families under this scheme don’t want it to change. Employment provides them with purpose, increased mental wellbeing, builds independence and facilitates socialisation with people other than caregivers or parents. 

According to the Ministry of Business Innovation and Employment (MBIE), 975 minimum wage exemptions are currently issued for businesses that employ disabled people.

The employers

Altus Enterprises is as much a charity as it is a business, says CEO Martin Wylie in the latest episode of Alice Snedden’s Bad News. He said the nonprofit organisation, which provides employment opportunities for people with disabilities who would otherwise be at home, wouldn’t operate at all without the minimum wage exemption. Hundreds of people with high level intellectual disability would then have no purpose.

An investigation by the NZ Herald in 2019 found that Air NZ were paying $2.30 an hour to disabled employees to untangle headphones. The woman interviewed worked at Altus, with Air NZ as one of its clients. 

All of Altus Enterprises’ clients are following the law as it currently stands. It’s not known how many people with disabilities are in illegal employment situations. 

The employees

Several Altus employees (who cannot be identified due to privacy concerns) spoke to Attitude. All maintained that they enjoyed the work and would continue to attend even if they weren’t being paid. 

The politics

The minimum wage exemption is hotly debated in parliament and parties have different views on the matter.

Labour – Committed to replacing the status quo with a fairer alternative at the start of its current term but has so far made no changes. Former minister for disability issues Carmel Sepuloni called the Minimum Wage Act exemption “discriminatory”. 

National –National will maintain the minimum wage exemption for firms hiring disabled workers if elected”, said social development spokeswoman Louise Upston in 2020. The party didn’t respond to Attitude’s request for comment.

Act – Party leader David Seymour says “Act does not support minimum wages of any kind. Employers may want to give someone a job but can’t afford to pay full minimum wage, so simply won’t do so. This affects people with disabilities acutely.

For some, the realistic alternative is not being paid a higher wage, it is sitting at home disengaged.” 

Green Party – In a written statement to Attitude, the Green Party opposed the minimum wage exemption for disabled employees.

“People with impairments should be supported to work and their workplace rights upheld – employers should not be exempted from paying them the minimum wage. 

The Greens would reform the Human Rights Act to remove the exception which allows pay discrimination for disabled people.”

The resolution

The Minimum Wage Act exemption prompts heated discussions and shock when explained to those hearing about it for the first time. But for those who are employed under the scheme, it’s a lifeline that gives purpose, independence and friendship. Forcing the businesses involved to pay their workers the minimum wage will result in closure and mass unemployment of what could be New Zealand’s most vulnerable demographic. As it stands, the Minimum Wage Act exemption is legal and doesn’t seem likely to be changed anytime soon. But is it exploitation? You decide. 

Public Interest Journalism funded through NZ On Air.

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