Minimum Wage-Fixing Machinery Convention, 1928 (No. 26) - New Zealand (Ratification: 1938)

Individual Case (CAS) - Discussion: 1998, Publication: 86th ILC session (1998)

A Government representative stated that the Government of New Zealand was fully committed to the principles of the Convention and believed that it complied with the instrument in all significant respects. The labour inspectorate acted to enforce and promote the minimum wage legislation in the country and the minimum code of employment rights and obligations in general. However, general labour inspectors did not work in isolation. Workers, employers and their representatives were also able to enforce general terms and conditions of employment themselves through inexpensive, accessible and widely used employment institutions. The Government, therefore, considered many of the concerns of the Committee of Experts to be unfounded and would make a detailed response to all requests for information when its next report was presented. He nevertheless addressed briefly specific points raised by the Committee of Experts.

The Minimum Wage Act, 1983, had been introduced in New Zealand following the normal legislative process, which included the receipt by parliamentary select committees of submissions on proposed legislation from interested individuals and organizations. All interested parties, including employers' and workers' groups, had the opportunity to comment on the proposed legislation as part of the process. The New Zealand Council of Trade Unions, or as it was then known the New Zealand Federation of Labour, and the New Zealand Employers' Federation had been invited to provide submissions during the process. The level of the minimum wage was required by law to be reviewed annually and employers and workers enjoyed equal standing in making submissions on such reviews to the Minister of Labour. Submissions were sought customarily from the New Zealand Council of Trade Unions and the New Zealand Employers' Federation and were considered carefully. The written submissions were thoroughly considered as part of the annual review in the context of a range of factors influencing the effect of the minimum wage.

A youth minimum wage had first been introduced in 1994 to address concerns that young workers under 20 years of age needed the protection of a minimum wage. Its level had been set at 60 per cent after careful consideration of the need to balance the prevention of exploitation of young workers and the possible negative effects of a minimum wage on their employment opportunities. Young persons faced barriers to employment that older workers had generally overcome, including lack of experience and a higher training component in their work. A youth minimum wage, set at a lower level than the adult minimum wage, helped to offset some of the disincentives to employers of employing young people.

The Committee of Experts had expressed concern that not enough penal sanctions had been imposed compared to the number of alleged breaches of the minimum wage. The Government did not agree that a high number of penal sanctions was necessarily an indication of an effective enforcement regime. Indeed, it placed emphasis on the swift resolution of any violations of the minimum wage provisions. In most cases, the intervention of the labour inspectorate resulted in a quick recovery of wages for the worker involved. Workers or their representatives were also able to take penal action themselves in the employment tribunal. Nor did the Government agree that the number of labour inspectors was too low. The most efficient approach to an enforcement policy was to maximize the use of education and information to prevent violations. The labour inspectorate actively distributed information through a variety of sources and its toll-free telephone information centre provided information to over 160,000 callers a year, one-quarter of whom were employers. Other information outlets included government departments, citizens' advice bureaus, employers' and workers' organizations and an Internet website. The labour inspectorate was constantly reviewing ways to improve the provision of information. Moreover, it investigated all complaints made to it. A proactive inspection system, as suggested by the ILO, would require a very large number of inspectors and there was no evidence that it would be any more efficient than the current approach in enforcing the minimum standards. In conclusion, he reiterated the commitment of his Government to Convention No. 26 and his belief that the Government complied with the Convention in all meaningful and substantive ways.

The Workers' members noted the few elements of information provided by the Government representative, but thanked the Government for its detailed swritten replies to the comments of the Committee of Experts, which contributed to enriching the dialogue with the supervisory bodies concerning the application of a Convention to which the Workers' members attached great importance. They agreed with the Employers' members that minimum wage fixing was a fundamental aspect of the employment relationship, as shown by the conclusions of the Conference Committee following its examination of the 1992 General Survey on this subject. On that occasion, the Conference Committee had emphasized that collective bargaining was the most appropriate method of fixing minimum wages. It was only where the system of collective agreements did not cover all workers that additional machinery needed to be established. In this respect, it was particularly regrettable that New Zealand had not yet responded to the Director-General's campaign by ratifying Conventions Nos. 87 and 98. Convention No. 26, in the same way as Conventions Nos. 99 and 131, clearly showed that minimum wage fixing was a fundamental aspect of tripartism and free collective bargaining. Workers' and employers' organizations were not merely some of the parties concerned, as the Government's report tended to suggest. Minimum wage fixing was primarily for the social partners and should at the very least be based on the wages and criteria set out in collective agreements. As emphasized by the Committee of Experts, the consultation required by the Convention should give the social partners a real possibility of influencing decisions. The mere provision of information by letter was not sufficient to fulfil this requirement. This was a position of principle on which the Conference Committee had agreed during its discussion of the General Survey and which should be reaffirmed in connection with the present case. With regard to the minimum wage for young persons, the Committee of Experts had been right to recall the principle of equal remuneration for work of equal value set out in the Preamble of the Constitution. Age in itself could not be a determining factor, and only the quality and quantity of the work performed counted. Not all young persons aged between 16 and 19 years were undergoing apprenticeship and they were not all less productive merely because of their age. The only factors that should be taken into account were the nature of the work and the capacity of those concerned. The questions raised concerning the application of the law in agriculture related broadly to the question examined in 1996 by the Conference Committee on the effectiveness of the labour inspection. The New Zealand Confederation of Trade Unions (NZCTU) had noted the very low number of actions taken by the labour inspectorate concerning non-observance of minimum wages. According to the information provided by the Government, during the period between July 1996 and March 1997, only one case had been brought before a labour court for the payment of wages due and there had only been two cases of penal sanctions for a total workforce of 1,688,000, of which many were employed in SMEs and agriculture. Admittedly, the effectiveness of the labour inspectorate could not only be measured in terms of the number of violations brought to justice and its preventive function should not be neglected. However, as noted by the Committee of Experts, the number of cases brought seemed very low. The Government should be urged to establish an effective and dissuasive system for monitoring observance of minimum wages which also covered agriculture and SMEs.

The Employers' members recalled that this was the first occasion on which the Conference Committee had discussed the application of the Convention by New Zealand and that its discussion was based on an observation by the Committee of Experts which had itself been occasioned by comments from the NZCTU to the effect that there was insufficient participation by the social partners in minimum wage fixing. According to the Government's description, this consultation followed a written procedure, prior to the decision by the Minister of Labour. The trade union considered that the social partners were not adequately associated with this procedure. The Committee of Experts had undertaken an analysis of the concept of consultation, which it distinguished from the mere provision of information in that it presupposed that the opinions put forward would be taken into account and would have an influence on the decision that was taken. The Committee of Experts had not reached a conclusion on the application of the Convention, but had confined itself to raising a number of questions. The Government representative had stated that replies would be provided to these questions. These replies should be contained in a detailed written report. One of the issues raised concerned the minimum wage for young persons. In this respect, the Committee of Experts had recalled the principle of equal remuneration for work of equal value, as set out in the Preamble to the ILO Constitution, and had considered that the quality and quantity of the work performed should prevail over any other criteria, which might be of a discriminatory nature. The reasoning was entirely right in principle, but left open the question of whether objective criteria existed which permitted different situations to be treated in a different manner. Nothing in the Convention prohibited the determination of different minimum wage rates. The Government should therefore be requested to explain the reasons why the minimum wage rate for young workers aged between 16 and 19 years had been set at 60 per cent. The Government should respond in a detailed written report. The Committee of Experts had also raised a question concerning the application of the minimum wage legislation in general. It had wondered whether it provided sufficient coverage to the persons concerned, whether the amount envisaged was actually paid and whether remedies were envisaged and applied in the event of violations. The Government had stated that broad publicity had been given to minimum wage rates through the press and toll-free telephone services, and that the labour inspectorate ensured their observance in practice. It had stated that the direct intervention of the labour inspectorate in the event of violations succeeded in most cases in resolving situations that were not in accordance with the rules, which explained the rarity of cases giving rise to sanctions. A final question raised by the Committee of Experts concerned the application of the minimum wage legislation in agriculture. Once again, the Government considered that the measures that were in force were adequate. In its conclusions, the Committee of Experts had referred to Article 4 of the Convention as a basis for considering that the number of penal sanctions was low in comparison with the number of breaches which had been alleged, although not proven. It was not certain what conclusions could be drawn from such an improbable ratio. Although the Convention called for the necessary measures to be taken, it did not specify that such measures had to include penal sanctions. It could also be argued that the rarity of sanctions bore witness to the effectiveness of all the other measures adopted to give effect to the law in practice. The Government should reply to the Committee of Experts on this point by setting out the reasons for the low number of proven violations.

The Worker member of New Zealand recalled that her union represented the lowest paid and most vulnerable workers in her country, many of whom were, in fact, "working poor". This group of workers existed because of New Zealand's economic and labour law reforms. They depended upon a decent and enforced minimum wage. She believed that a failure to respect the principles of Convention No. 26 intimately affected the lives of these workers and their families, and felt that there was no genuine tripartism in New Zealand's minimum wage fixing. She illustrated her point with the cases of three workers: one paid the minimum wage on an hourly basis with the result of a variable take-home income; one who was paid the lower minimum wage for young workers despite the equality of her output as compared with other workers paid the normal minimum wage; and one who had been terminated for attempting to recover the difference between a sub-minimum wage she accepted in order to get a job and the established minimum and would now have to wait six to 12 months for her case to be heard. She observed that a hostile industrial environment and a climate of fear prevented workers from enforcing their rights. In combination with the great economic means and stamina required to pursue enforcement of their rights, most workers simply accepted sub-minimum conditions. The labour inspectorate was unable to respond to the level of enforcement required in this context. She agreed, therefore, with the Committee of Experts that 19 labour inspectors for the whole of New Zealand was insufficient to respond to the level of enforcement required and claimed that workers who sought their assistance were often told to come back later because no one was available to help. The Government further lacked the commitment to use all means available to inform workers of their rights. Workers in New Zealand were required to sign individual contracts at the time of their employment and in practice failed to take the time to review their terms for fear of losing the job offer. She pointed out that in the seven years since the introduction of the Employment Contracts Act she could not recall one television advertisement on workers' rights; nor, she claimed, had there been radio advertising or coordination with other organizations or educational institutions in disseminating information. She called on the Government to enforce minimum wage provisions, undertake effective education programmes, and discuss with the social partners all the issues raised in the Committee's discussion.

The Employer member of New Zealand affirmed that the New Zealand Employers' Federation was, like the Government, fully committed to the principles of Convention No. 26 and the enforcement of minimum wages in New Zealand. She maintained that the employers had been fully involved in the elaboration of the Minimum Wages Act passed in 1983. She wished to stress to the Committee that the obligation to consult both in establishing the minimum wage fixing machinery and periodically setting the minimum wage was not an obligation to negotiate. The Government was correct, therefore, in having considered in its annual review of minimum wage levels the overall economic position of the country and not just the interests of particular groups. She supported the differential applied in the youth minimum wage. Although she accepted the principle of equal pay for equal work she felt that its application should be weighed against the need to remove barriers to youth employment. Application of the adult minimum wage to unskilled young persons would act as a disincentive to their employment. She considered that penal actions were not generally appropriate, but should be used only in extreme cases of breach of the law. She favoured the Government's strategy of education intended to minimize the need for enforcement action, and pointed out that the Employers' organization had produced and distributed 20,000 posters describing minimum employment standards, and an additional 20,000 had been requested by employers in the agricultural sector. The employers' organization had also suggested to the Government that a publication describing minimum employment standards be mailed directly to new employers. In conclusion, the New Zealand Employers' Federation and its members supported the minimum wage, and the focus placed upon education as a means to enforcement, and, in instances of breach, upon recovery of unpaid wages.

The Worker member of Finland, speaking on behalf of the Worker members of Denmark, Iceland, Norway, Sweden and Finland, wished to focus his intervention upon the issue of tripartite consultation. He recalled the requirements for tripartite consultations appearing in Articles 2 and 3 of the Convention. This consultation required participation on an equal footing between the labour market partners, both at the time of determining the scope of the minimum legislation and the periodic review of the minimum wage level. He observed the reported practice of the Government in having requested submissions from labour market organizations and having considered them as only part of a more generalized review. This, he felt, was not consistent with the required consultation process as that process implied, according to the Committee of Experts, the possibility of workers' and employers' organizations having a real influence on the decision to be taken. He wondered whether the failure of the Government to meaningfully consult was grounded in misunderstanding of the requirements of the Convention, or, having observed that New Zealand had not ratified Conventions Nos. 87 and 98 nor the closely related Conventions Nos. 151 and 154, in its lack of political will. He hoped that the Government would not ignore the Committee of Experts' comments in this regard and invited the Conference Committee to ask the Government both to provide the requested information and to initiate and pursue tripartite discussions as part of the process of ensuring that the provisions and the application of the Minimum Wage Act were fully consistent with Convention No. 26.

The Worker member of Pakistan emphasized that to be genuine, consultation had to have some influence upon the decisions that were subsequently taken. Moreover, the consultation referred to in the Convention normally required an institutional framework in which workers' organizations were represented. The mere fact of seeking information did not constitute meaningful consultation. With regard to the minimum wage for young workers, he also drew the Government's attention to the need to apply the principle set out in the ILO Constitution of equal remuneration for work of equal value. With regard to workers in the informal and agricultural sectors, he reaffirmed the important role played by information activities and the labour inspectorate. Because such workers were not organized, they frequently did not benefit from the protection of the law and were therefore not in practice covered by the provisions of the Convention. Moreover since, as pointed out by the Worker member of New Zealand, the burden of ensuring the application of the minimum wage in her country fell mainly upon the workers themselves, the related problems were particularly severe amongst unorganized workers. It was for this reason, no doubt, that so few penalties had been imposed in comparison with the size of the workforce in the sectors concerned. He therefore endorsed the appeal made by the Committee of Experts for the Government to look into these important aspects of the application of the Convention with a view to ensuring meaningful consultations and the improved observance of its provisions.

The Worker member of Greece considered that the comments of the Committee of Experts were hardly flattering for the Government of a country which, although far from being underdeveloped, had not ratified Conventions Nos. 87 and 98 and did not even respect the Conventions that it had ratified. Claiming that youth on its own was sufficient to justify a minimum wage rate of 60 per cent of the normal minimum wage was a flagrant violation of the Convention. On the question of sanctions, there was no need for an in-depth legal analysis to reach the conclusion that two penal sanctions for 88 violations did not signify a real will to penalize cases of failure to respect the minimum wage. If a real will had existed, the country would have appointed more than 19 labour inspectors and the number of penal actions would have been greater. Real dialogue with the Government presupposed that it would respond to these questions.

The Worker member of Jordan considered that the issue of wage negotiation was set too frequently against the modern principles of the market economy. Economic requirements too often served as a false pretext for defending practices which amounted to the exploitation of workers. Minimum wage fixing through collective bargaining was essential to ensure a balance between the protection of workers and market requirements. It was particularly necessary in developing countries. Indeed, it was even more essential for migrant workers, who were sometimes prohibited from participating in trade union activities. Trade unions were therefore justified in requiring full application of the Convention.

The Employer member of Lesotho expressed the opinion that the setting of a lower minimum wage for young people served as an incentive to employers to employ them as low-paid workers. However, it was not clear from the Government's report whether such young persons worked shorter hours than ordinary workers. In this respect, he urged the Government to review the situation and comply with the fundamental principle of equal remuneration for work of equal value. Moreover, the Committee of Experts should request information as to the number of young people who were apprentices, since every worker was entitled to training to ensure higher productivity. In conclusion, he recalled that the employers and workers of the world had subscribed to the fundamental principles of the ILO. They should therefore assist governments to comply with ILO Conventions and undertake education campaigns to ensure that all employers and workers were aware of their content. The Government should supply the Conference Committee with information on the measures that it was taking to improve participation in tripartite machinery.

The Employer member of the United States believed that the conclusion reached by the Committee of Experts regarding the number of labour inspectors, in the same way as in the case examined by the Conference Committee in 1996, had ignored the positive results achieved by the Government, for example in reducing safety and health problems at the workplace. In 1998, the Committee of Experts had argued once again that there were insufficient inspectors on the basis of a low number of penal sanctions for breaches of the minimum wage over a very short period. However, the Government had adopted proactive programmes, including information activities and the availability of easy and direct means of seeking redress. As in many other countries, priority had been placed on resolving complaints at an early stage rather than applying penal sanctions. Moreover, experience elsewhere showed that an increase in the number of inquiries often followed the establishment of information facilities, such as the toll-free telephone system. The Committee of Experts should therefore take care to refer to facts and to raise the related questions. It was beyond its role to reach conclusions about the number of labour inspectors in a country. With regard to the question of consultation, he found it interesting that the Committee of Experts had defined meaningful consultation as having "some influence on the decision" in its 1992 General Survey on minimum wages, while in the 1982 General Survey it had stated that consultation should be able to have a real influence on the decision. It was not unusual for consultation opportunities to include input through a select committee process. However, involvement in a consultation process did not mean that the decision had to include the inputs or views of the participants. In conclusion, he recalled that some violations had undoubtedly occurred in many of the countries which had established a statutory minimum wage, despite the adequacy of their regulations and supervisory systems. He therefore hoped that the present case would be kept in its true perspective.

The Government representative thanked all of the speakers for their contribution to the discussion. As he had noted previously, his Government would provide a detailed response in its report to all the questions raised. In reply to two of the issues raised by the Worker member of New Zealand, he contested the assertion that there was a real lack of consultation with trade unions with regard to the minimum wage fixing machinery. He cited recent cycles of minimum wage fixing in which the minimum wage had been set in 1997 at a rate that was some 12 per cent higher than in 1995, despite an annual inflation rate of around 2 per cent and an increase over the same period of 7 per cent in both wages and the consumer price index. He noted in this respect that the Employers' recommendation had been for no rise in the minimum wage, while the trade unions had called for a 20 per cent rise. He therefore believed that the 12 per cent rise decided upon demonstrated the influence that the trade unions had exercised through the consultation process. With regard to claims that there was a lack of knowledge of the relevant provisions, he cited a recent survey carried out by a market research firm which showed that between 80 and 90 per cent of workers had a very good understanding of minimum wage and other provisions of labour legislation.

The Committee noted the information given by the Government representative, as well as the subsequent discussion. The Committee recalled the principle of genuine consultation as set forth in the Convention and expected that the Government would provide answers next year to the questions raised on this subject in the Committee of Experts' observation. Furthermore, the Committee firmly hoped that the necessary practical measures would be taken concerning the general application, including in the agricultural sector, of the minimum wage legislation, in particular by an efficient labour inspection system with sufficient staff, in conformity with Article 4, paragraph 1, of the Convention, and also Article 4, paragraph 1, of the Minimum Wage Fixing Machinery (Agriculture) Convention, 1951 (No. 99). Concerning the minimum wage of young workers, and recalling the general principle of equal remuneration for work of equal value in the Preamble of the ILO Constitution, the Committee requested the Government, for the purpose of fixing wages, to retain criteria not based on age, but on objective criteria such as the quantity and quality of the work performed. The Committee requested the Government to report in detail on the various points raised by the Committee of Experts, in particular on the practical measures taken or envisaged to fully comply with the requirements of the Convention.

Replies received to the issues raised in a direct request which do not give rise to further comments (CEACR) - adopted 2019, published 109th ILC session (2021)

The Committee notes the information provided by the Government, which answers the points raised in its previous direct request and has no further matters to raise in this regard.

Direct Request (CEACR) - adopted 2012, published 102nd ILC session (2013)

Article 3 of the Convention. Developments on minimum wage fixing. The Committee notes the Government’s explanations concerning the most recent changes to the minimum wage. In particular, the Committee notes that in 2008, the youth minimum wage for 16- and 17-year-olds was abolished and the “new entrants” minimum wage was introduced to apply to 16- and 17-years-olds except for those employees who have completed 200 hours or three months of employment, whichever is shorter. Both the new entrants’ minimum wage and the training minimum wage are set at 80 per cent of the adult minimum wage. The Committee also notes the Government’s indications that under the 2008 minimum wage legislation, the objective of the annual minimum wage review is to set a wage floor that balances the protection of the lowest paid with employment impacts in the context of current and forecasted labour market and economic conditions and social impacts. At the same time two assessment criteria are also considered: first, the extent to which any change to the minimum wage would produce gains that are more significant than any losses, and secondly, whether a change to the minimum wage would be the best way to protect the lowest paid in the broader package of income and employment-related interventions.

As regards the effects of the new entrants’ rate on youth unemployment, the Government refers to the conclusions of a Department of Labour Report according to which the new entrants’ minimum wage was largely not used by businesses as firms generally pay the majority of 16- and 17-year-old workers the adult minimum wage. The report also concluded that the policy change led to a rise in average hourly earnings for this group which lowered the proportion of 16  and 17-year-olds in employment by between 3 and 6 per cent. However, it is estimated that the minimum wage increase accounted for between 20–40 per cent of the fall in employment, the remaining 60–80 per cent being attributed to the deteriorating economic conditions.

In addition, the Committee notes that a new amendment to the minimum wage legislation is currently under consideration which would repeal the new entrants’ rate and would introduce the possibility of setting one or more “starting-out” rates of wages payable at not less than 80 per cent of the adult minimum wage for young people aged 16, 17, 18 or 19 years. The Committee requests the Government to indicate the aims and purpose of the new draft legislation, give a detailed account on the consultations with the social partners regarding the proposed changes and keep the Office informed of any further developments concerning its adoption.

Moreover, the Committee notes the comments made by Business New Zealand (BNZ) according to which there is growing employer concern that increasing government involvement in wage fixing is adversely affecting employment opportunities, setting pay rates which some employers are not able to afford. The BNZ also considers that the Court of Appeal’s decision in Idea Services v. Dickson – which recognizes that sleepovers constitute work and therefore the care workers concerned must be paid at least the minimum wage for every hour worked – will result in reduced employment opportunities in the disability care sector as employers in the industry seek to adjust to the new payment requirements and the increased cost may well necessitate a return to greater institutionalization. The Committee requests the Government to transmit any comments it may wish to make in response to the observations of the BNZ.

Article 5 and Part V of the report form. Application in practice. The Committee notes that the adult minimum wage is currently set at 13.50 New Zealand dollars (NZD) per hour while the new entrants’ and the trainees’ rate is set at NZD10.80 per hour. It also notes the statistical information provided by the Government according to which 64,000 employees, or 3 per cent of the total workforce, are presently paid at the minimum wage rate, around 58 per cent of those minimum wage employees are between 16 and 24 years old and 61 per cent are women. Moreover, the Committee notes that in the period 2008–11, the Department of Labour has dealt with around 600 complaints of non-compliance with the minimum wage legislation each year. The Committee requests the Government to continue supplying up-to-date information on the practical application of the Convention.

Observation (CEACR) - adopted 2007, published 97th ILC session (2008)

The Committee notes the Government’s detailed report and the information provided in response to earlier comments made by the New Zealand Council of Trade Unions (NZCTU). It also notes the observations made by the Business New Zealand (BNZ) and the Government’s rely to these observations.

Minimum wages for training

1. The Committee notes the Government’s explanations concerning the introduction of a training minimum wage following the adoption of the Minimum Wage Amendment Act 2003 and the subsequent setting of the minimum training rate at 80 per cent of the adult minimum wage rate. The Government states that the minimum training wage strikes a balance between the payment of a socially acceptable minimum wage and the need to promote training opportunities and that the implementation of a system of “trainee scales”, as suggested by the NZCTU, is not planned at this stage.

2. The Committee notes, in this connection, the NZCTU’s observation that the current training rate is too low and is likely to act as a disincentive to workers over 20 years of age seeking to enter training. The NZCTU considers that it should be raised to 90 per cent of the adult minimum wage. The Committee requests the Government to keep it informed of any further consultations on the level of the trainee wage rate.

3. Moreover, the Committee notes the comments made by the BNZ referring to the absence of research into the effects of either the trainee rate or of the youth minimum wage on youth unemployment. In its reply, the Government indicates that there are various researches conducted on this subject, including one commissioned by the Department of Labour in 2006 entitled “Relativities between youth and adult minimum wage rates”. The Committee would appreciate receiving a copy of the research in question or of other related studies and surveys.

4. As regards the youth minimum wage, the Committee notes that the NZCTU is in favour of the Minimum Wage (Abolition of Age Discrimination) Bill currently under consideration by the Government, which would abolish the youth minimum wage and would thereby allow the adult minimum wage to apply to all workers except those with specific exemptions such as the trainee rate. The Committee asks the Government to keep it informed of all future developments concerning the adoption of the draft legislation.

Minimum wages for disabled persons

5. The Committee notes the Government’s reference to the Minimum Wage Amendment Act 2007, which removed the blanket exemptions from the minimum wage for persons with disabilities and now allows for exemptions only on an individual basis. In this regard, the Committee notes the BNZ’s concern that severely disabled persons may experience difficulty in finding appropriate employment now that blanket exemptions no longer apply. In its response, the Government states that an individualized exemption regime provides a fairer and more transparent system for persons whose disability genuinely impacts on their work performance while the system of blanket exemptions had to be repealed as inconsistent with domestic and international human rights law. The Committee also notes the position of the NZCTU, which welcomes the repeal of the Disabled Persons Employment Promotion Act and supports the right of disabled persons to receive at least the minimum wage for their work.

Enforcement of minimum wage legislation

6. With reference to the point raised by the NZCTU concerning the lack of enforcement of minimum wage provisions for workers in isolated situations and where provision of accommodation is used to justify wage deductions, the Government indicates that the number of full-time labour inspectors will be increased to 30 while the staff in the Department of Labour’s Workplace Contact Centre (responsible for proactively disseminating information on employment rights) has also been increased from 19 to 30. The Government further explains that the labour inspectorate together with the Workplace Contact Centre are part of a system designed to ensure compliance by providing information, to expedite the recovery of any underpayment and to reduce the need for sanctions. The Government also refers to other initiatives such as the Employment Relations Education Leave under which union members are entitled to paid leave to attend approved courses with a view to increasing their knowledge about employment relations.

The requirement for tripartite consultations on minimum wage issues

7. The Committee notes the view expressed by the BNZ according to which consultations on minimum wage-related issues appear to be a formality for the Government rather than a genuine advice-seeking process as the BNZ’s advice is almost invariably ignored. In its reply, the Government states that it values the views and input from the social partners, even though consultation does not always mean advice will be followed. The Committee recalls, in this respect, that as it has pointed out on numerous occasions, the term “consultation” has a different connotation both from mere “information”, at one end of the scale, and from “co-determination”, at the other end of the scale. While it is up to governments to guarantee that employers’ and workers’ organizations have a meaningful say in matters that are the subject of consultation and that their proposals are thoroughly studied and duly taken into consideration, this does not mean that prior consent, and even less so agreement, on the part of these organizations is needed before relevant decisions can be taken.

8. The Committee notes the statistical information provided by the Government, in accordance with Part V of the report form, concerning the size of the workforce (2,117,000 workers aged 15 and over as of December 2006), the evolution of minimum hourly wage rates from 2002 to 2007 (as from 1 April 2007, NZ$11.25 for adults, NZ$9 for youth between 16 and 17 years of age and for trainees), the number of workers covered by the minimum wage (as of 1 April 2007, 109,900 adults and 9,200 young workers), and the number of minimum wage inquiries, complaints, investigations and breaches observed in the period 2003–05. The Committee would be grateful if the Government would continue supplying up to date and documented information on the practical application of the Convention.

9. Finally, the Committee wishes to draw the Government’s attention to the conclusions of the ILO Governing Body on the continued relevance of the Convention based on the recommendations of the Working Party on Policy regarding the Revision of Standards (GB.283/LILS/WP/PRS/1/2, paragraphs 19 and 40). In fact, the Governing Body has decided that Conventions Nos 26 and 99 are among those instruments which may no longer be fully up to date but remain relevant in certain respects. The Committee therefore suggests that the Government should consider the possibility of ratifying the Minimum Wage Fixing Convention, 1970 (No. 131), which marks certain advances compared to older instruments on minimum wage fixing, for instance, as regards its broader scope of application, the requirement for a comprehensive minimum wage system, and the enumeration of the criteria for the determination of minimum wage levels. The Committee requests the Government to keep the Office informed of any decision taken or envisaged in this regard.

Observation (CEACR) - adopted 2004, published 93rd ILC session (2005)

The Committee notes the comments made by the New Zealand Council of Trade Unions (NZCTU) concerning the application of the Convention. While acknowledging that significant progress has been made in the period since 1999 in matters related to the minimum wage system, the NZCTU observes in its comments that two areas of concern remain, namely the proposed exemption process for trainees and the level of resources applied to enforcement of minimum wages. Concerning the proposed training minimum wage, the NZCTU considers that there should be trainee scales to be agreed between the appropriate employer and union group and notified the Department of Labour so that trainees are given the opportunity to progress through a scale rather than being stranded on a trainee commencement rate for an extended period. It adds that the minimum wage rates applicable to trainees should reflect what is generally recognized under the current structure of minimum wages, i.e. that those over 18 years of age should receive a higher amount, and notes in this connection that in 2000, only 8 per cent of all industry trainees were aged 15 to 19 years old. As regards enforcement, the NZCTU holds that the promotion material provided by the Department of Labour is not sufficient to ensure effective enforcement and that a higher number of labour inspectors is needed.

The Committee requests the Government to include in its next report any observations it may wish to make on the comments forwarded by the New Zealand Council of Trade Unions. It also asks the Government to keep it informed of all developments concerning the repeal of the training exemption and the implementation of the new training minimum wage and to transmit a copy of the legal instrument adopted to this effect.

Observation (CEACR) - adopted 2002, published 91st ILC session (2003)

The Committee notes the information provided by the Government in reply to its previous observations. It also notes the discussion held in the Committee on the Application of Standards of the International Labour Conference at its 86th Session in June 1998. The Committee notes with interest the adoption in October 2000 of the Employment Relations Act, as well as the new Minimum Wage Regulations in 1999, and the draft legislation that has been introduced into Parliament to amend the Minimum Wage Act. The Committee also notes the comments made by the employers’ organization "Business New Zealand" concerning the application of the Convention.

Establishment of a minimum training wage

1. The Government indicates the adoption in 1999 of the Minimum Wage (Industry Training) Regulations, replacing the Minimum Wage (Training in the Nature of Apprenticeship) Regulations, 1992. The latter permitted the exclusion from the scope of the Minimum Wage Act of persons undergoing training in certain industries that they specified. The new Minimum Wage Regulations are no longer limited to certain categories of activity, but exclude from the scope of the Minimum Wage Act any persons who have concluded a training agreement with their employer with a view to achieving at least 60 credits a year (representing approximately 600 hours of training), which entitles them to have their qualification recognized within the National Qualifications Framework.

2. The Government also indicates that it has introduced into Parliament an amendment to the Minimum Wage Act of 1983 to determine a minimum wage for persons undergoing training who are excluded by the Minimum Wage Regulations of 1999 from the scope of the Minimum Wage Act. It also indicates that the level of the minimum training wage will be set at the same level as the applicable minimum wage for young persons under 18 years of age.

3. The employers’ organization "Business New Zealand" observes in its comments that the draft referred to by the Government has not yet been adopted by Parliament and that, although it is intended to set a minimum training wage, it does not give an indication of the level at which the wage is to be set. Business New Zealand expresses concern at the adverse effects of minimum wage increases, and particularly any increase in the youth minimum wage. It adds that, while minimum wages may have their place, they may also have the unintended consequence of depriving individuals of the chance to become established on the labour market or, in the case of minimum training wages, to have the opportunity to train for the occupation of their choice. Business New Zealand also questions the assumption that the introduction of a minimum training wage would be of automatic benefit to those whom it is intended to assist. Finally, it regrets the lack of statistical information available at the national level on the negative effects on the employment of young persons of lowering the age at which the adult minimum wage becomes payable from 20 to 18 years and considers that statistics showing a decline in the number of persons employed could be interpreted in this sense.

4. The Committee requests the Government to provide information with its next report on developments relating to the adoption of the draft amendment to the Minimum Wage Act. It also requests the Government to make its observations on the comments forwarded by Business New Zealand.

Participation of the employers’ and workers’ organizations concerned
in the application of minimum wage fixing machinery

5. The Committee notes the information provided by the Government in its report on the consultation of the employers and workers concerned. It notes the information supplied by the Government on this matter at the 86th Session of the International Labour Conference (June 1998) and the commitment that it made to provide a detailed report on the various points raised by the Committee in its previous observation. In its report, the Government provides a summary of the procedures which have been applicable since 2000 to the holding of consultations with organizations of employers and workers and any other interested parties. The Government states that, since that date, it has invited all the interested parties to participate in the annual adjustment of minimum wages. It emphasizes in particular that the employers’ organization Business New Zealand and the New Zealand Council of Trade Unions have been associated with this process on equal terms. The Government adds that, although the consultation procedure and the submissions made are generally received in writing, it also holds meetings in which the above two organizations can put forward their views on minimum wages. These views are then incorporated into the annual report on the review of the minimum wage. The final decision on changes to minimum wages is made by the Minister of Labour.

6. The Committee however regrets to note that, despite its previous very detailed comments on the fundamental role of consultations with organizations of workers and employers on the minimum wage fixing machinery, when the Minimum Wage (Industry Training) Regulations were adopted in 1999, only the New Zealand Employers’ Federation appears to have been consulted, in addition to other institutions such as the Ministry of Youth Affairs, the Ministry of Women’s Affairs and Skill New Zealand (the industry training fund agency).

7. The Committee wishes in this respect to strongly reaffirm that one of the essential obligations set out in the instruments on minimum wages is that the minimum wage fixing machinery must be determined and applied in consultation with the organizations of employers and workers, who must participate on an equal footing and be able to exert a real influence on the decisions taken, as emphasized in the conclusions adopted by the Committee on the Application of Standards of the International Labour Conference during the discussion of the application of this Convention by New Zealand in 1998. It recalls in this respect the provisions of Article 3 of the Convention, by virtue of which representatives of the employers and workers concerned shall be consulted before the minimum wage fixing machinery is applied and during its operation. Such consultation shall in all cases be held on equal terms. The Committee therefore requests the Government to indicate the measures that it intends to adopt in order to ensure full compliance with the obligation to consult employers’ and workers’ organizations on equal terms in decisions relating to minimum wages.

The minimum wage for young workers

8. The Committee notes the changes which have occurred since its previous comments and following the discussion held by the Committee on the Application of Standards of the International Labour Conference at its 86th Session in June 1998 in relation to the establishment of different minimum wage rates depending on the age of the workers. It notes that since 2000 the Government has adopted measures related to the minimum wage of young workers. It has also extended the adult minimum wage to young persons of 18 and 19 years of age and has reviewed the rate of the minimum wage applicable to young workers. Since then, this usage has been set at 80 per cent of the adult minimum wage, compared with 60 per cent before. The minimum wages currently applicable to young persons and to adults are respectively: 6.40 dollars an hour, 51.20 dollars for a working day of eight hours and 256 dollars for a working week of 40 hours for the former; and 8 dollars an hour, 64 dollars for a working day of eight hours and 320 dollars for a working week of 40 hours for the latter. These hourly rates are also applicable to additional hours worked over 40 hours a week. While noting these favourable developments, the Committee is bound to reiterate its previous comments on this subject and to refer once again to paragraphs 169-181 of its 1992 General Survey on minimum wages, where it indicated that, even though minimum wage instruments contain no provisions providing for the fixing of different minimum wage rates on the basis of such criteria as sex, age or disability, the general principles laid down in other instruments have to be observed in order to prevent any discrimination, inter alia, on grounds of age, and particularly the principles contained in the Preamble to the Constitution of the ILO, which specifically refers to the application of the principle of "equal remuneration for work of equal value". With regard to age, paragraph 171 of the above General Survey specifies that the quantity and quality of work carried out should be the decisive factor in determining the wage paid. The Committee therefore recalls that, as indicated by the Conference Committee on the Application of Standards, even though the minimum wage Conventions do not forbid the determination of lower minimum wage rates for young workers, the measures in this respect should be taken in good faith and should incorporate the principle of equal remuneration for work of equal value. The reasons that prompted the adoption of lower minimum wage rates for groups of workers on account of their age and disabilities should be regularly re-examined in the light of this principle. The Committee therefore requests the Government to provide information in future reports on any developments relating to the issue of the difference in minimum wage rates based on age and strongly hopes that the Government will be in a position to inform the International Labour Office in the near future of the progress achieved with a view to the full application of the principle of "equal remuneration for work of equal value".

Application of the Minimum Wage Act

9. The Committee notes the explanations provided during the discussion of this subject in the Committee on the Application of Standards of the International Labour Conference at its 86th Session (June 1998) and the changes in the national regulations respecting the supervisory system and penalties for the enforcement of the national minimum age provisions, and particularly the new procedures established by the Employment Relations Act, which entered into force on 2 October 2000 and which enable, in accordance with the requirements of Article 4, paragraph 2, of the Convention, a worker to whom the minimum rates are applicable and who has been paid wages less than these rates to recover, by judicial or other legalized proceedings, the amount by which he or she has been underpaid, subject to such limitation of time as may be determined by national laws or regulations. The Committee notes in particular section 131(2) of the above Act, by virtue of which employees may recover the difference between the wage actually paid and the minimum wage, notwithstanding the fact that they have accepted by any expressed or implied agreement a lower rate.

10. With regard to the communication of information to employers and workers on the minimum rates of wages in force and the organization of a system of supervision and sanctions to ensure that wages are not paid at less than the applicable minimum rates, the Government indicates that the adoption of the Employment Relations Act has established a new procedure applicable in the event of violations of the regulations on minimum wages. In the context of this new procedure, following a complaint by an employee, the labour inspection services may, in the event of the failure of a demand notice addressed directly to the employer, commence an action on behalf of an employee before the Employment Relations Authority to recover wages due and against any employer who does not abide by the obligation to pay the minimum wages due in their totality. Under the new legislation, workers are also entitled to go directly to the above authority and may also decide, in common agreement with the employer, to have recourse to mediation by the authority free of charge. The Government states that the Department of Labour focuses on prevention by organizing information campaigns intended to ensure compliance with the national legislation on minimum wages through increased awareness of it. It adds that 20 labour inspectors, supported by 19 staff in the Employment Relations Service of the Department of Labour, provide assistance in the field of minimum wages through a free telephone line or by electronic mail. The Government adds that any complaint received by the Labour Inspection Services from a person other than a worker gives rise to an investigation, where appropriate, leading to action. The Government also states that the Employment Relations Act gives entitlement to paid leave for employment relations training for members of trade unions, thereby allowing them to increase their knowledge in this field. The Committee also notes the establishment of the Employment Relations Education Contestable Fund, financed by the State and intended to allow members of a trade union and other workers and employers to improve their knowledge of the subject. According to the Government, this approach is compatible with the objectives of the Employment Relations Act, namely to ensure productive and cooperative employment relationships based on the principle of good faith and to resolve employment problems at an early stage by providing information and mediation services, which consequently reduce the need for sanctions. It is from this perspective that, according to the Government, the power of inspectors should be viewed to issue demand notices to employers, the intention of which is to recover the sums due to workers, rather than engaging in legal recovery procedures and imposing penalties. The primary focus in such investigations and compliance actions is, according to the Government’s report, to recover any underpayment of the minimum wage.

11. The Government also provides statistical information on the estimated number of workers receiving the statutory minimum wage, as well as information on the number of requests for information concerning minimum wages through the free telephone service (an average of 14,000 a year since 1998), the number of complaints to the labour inspectorate for violations of the legislation on the adult minimum wage (which rose from 93 in 1998 to 222 in 2002), the number of complaints to the labour inspectorate for violations of the legislation on the youth minimum wage (an average of 15 a year since 1998) and the number of compliance actions brought to the Employment Relations Authority and the Employment Tribunal (actions under the Employment Contracts Act), which have averaged eight a year since 1998.

12. In this respect, Business New Zealand emphasizes that minimum wage infringements are rare in New Zealand and that where they are suspected both employees and unions have access to wage records and enforcement mechanisms. It adds that all the industrial relations legislation, including the minimum wage legislation, applies to every enterprise of whatever size.

13. While noting the information provided on the number of complaints lodged with the labour inspectorate, the number of requests for information and the actions of the labour inspectorate, the Committee requests the Government to continue making all the necessary efforts to ensure the appropriate application of the provisions of the Convention and to continue supplying information to the International Labour Office so that the Committee can assess the extent to which the Convention is applied.

Observation (CEACR) - adopted 1997, published 86th ILC session (1998)

The Committee notes the detailed information supplied in the Government's report in reply to its previous comments. It also notes the comments made by the New Zealand Council of Trade Unions (NZCTU) concerning the application of this Convention and Convention No. 99, as well as the Government's response to these observations.

The participation of the employers and workers concerned in the operation of the minimum wage fixing machinery

1. The Committee notes that section 4 of the Minimum Wage Act, 1983, provides that the Governor-General may from time to time prescribe the minimum rates of wages payable to workers, or class(es) of workers as defined by age. Section 5 of the same Act provides that the Minister of Labour should annually review the minimum wage. However, according to the Government, it is now established in New Zealand for the Minister of Labour to write to the New Zealand Council of Trade Unions as a central representative for employees, and the New Zealand Employers' Federation as a central representative for employers, advising them that the review is taking place and seeking submissions from them. The Minister considers their submissions and onus from other organizations as part of the review before making his or her recommendations.

2. According to the NZCTU, the principle underlying the Minimum Wage Fixing Machinery Conventions is that such machinery should be implemented and operated through consultation between the government and employers' and workers' organizations. The Union considers that the Government's policy and practice is in breach of this principle for the following reasons: (i) the Minimum Wage Act was passed in 1983 without a formal tripartite consultation process between the government, employers and unions; (ii) although the Minimum Wage Act requires the Minister of Labour to review the minimum wage each year, it does not specify the purpose of that review or set a criteria against which the minimum level is to be assessed. The review is generally conducted in an arbitrary manner. Neither the Act nor any ministerial statement has a definition of the purpose of the minimum wage or criteria against which the review is to be conducted. In addition, there is no consultation process with employers and unions apart from a written submission process. Unions have no special role or function in the Minister's decision-making process.

3. In reply to the NZCTU's comments, the Government states that Article 2 of the Convention states that each Member shall be free to decide, "after consultation with the organizations, if any, of workers and employers" in the trades concerned, in which trades the minimum wage fixing machinery should be applied. The Minimum Wage Act, 1983, was introduced following the normal legislative process in New Zealand. A key component of that process is the role of the parliamentary select committee, which receives submissions on proposed legislation from individuals and organizations. The NZCTU, along with employers and all other interested parties, would have had the opportunity to comment on the proposed legislation as part of the process. With regard to the minimum wage consultation process, the Government states that it gives full and careful consideration to a wide range of factors in the review process, including the submissions which it has in the past customarily sought from the NZCTU and the New Zealand Employers' Federation, as well as any other submissions it may have received. The decision-making process is also subject to judicial review by the courts.

4. As concerns the purpose or criteria of assessment of the level of the minimum wage, the Government states that the Minimum Wage Act does not specify the criteria for the annual minimum wage review and the level at which the minimum wage is set. A thorough consideration is given by the Government to all relevant factors in the review process. Criteria for previous reviews have included: (i) the role of the minimum wage as part of the minimum code of employment; (ii) the relationship between minimum wage rates and the levels of employment and unemployment; (iii) on-the-job training; (iv) incentives for enrolment in education and training programmes; and (v) the economy in general.

5. The Committee recalls that one of the essential obligations of the minimum wage instruments is that the minimum wage fixing machinery must be set up and operated in consultation with organizations of employers and workers, who must participate on an equal footing. As specified in paragraph 190 of its 1992 General Survey on minimum wages, this obligation to consult the organizations of employers and workers concerned should be carried out at different times. Initially, it should be done at the time of determining the scope of the minimum wage to be established. Second, it should be applied during the operation of the minimum wage fixing machinery. Furthermore, in paragraphs 42 and 44 of its 1982 General Survey of the reports relating to Convention No. 144 and Recommendation No. 152 on tripartite consultation, the Committee considered the meaning of the term "consultation". It stated that "consultation" has a different connotation from mere "information" and from "co-determination". It also pointed out that the views expressed in the course of consultations were not a form of participation in decision-making , but simply one stage in the process of reaching a decision. It went on to say that "consultation must be able to have some influence on the decision". In addition, paragraph 195 of the 1992 General Survey on minimum wages specifies that the consultation referred to in the minimum wage instruments implies that employers and workers, their representatives or those of their organizations be able to have a real influence on the decisions to be taken.

6. In consideration of the above, the Committee requests the Government: (i) to provide information as to the consultation process followed in accordance with Article 3, paragraph 2(1), of the Convention; (ii) to specify to what extent employers and workers concerned are associated in equal numbers and equal terms in the operation of the minimum wage fixing machinery, in accordance with Article 3, paragraph (2); and (iii) to indicate the results of consultations of employers and workers concerned in the determination of minimum wages.

The minimum wage for young workers

7. The Committee notes that section 4 of the Minimum Wage Act 1983 provides that the Governor-General may from time to time prescribe the minimum rates of wages payable, inter alia, to class(es) of workers as defined by age. For instance, the Minimum Wage Order 1997 , which is currently in force, provides for different minimum rates for workers aged 16 to 19 years and for workers aged 20 years and upwards. In each class of workers, as defined by age, three categories of rates are provided according to the following cases: (a) if the worker is paid by the hour or piecework (for workers aged 16 to 19: NZ$4.20 or an equivalent amount having regard to the rate of production of the worker (in lieu of NZ$7, if the workers are aged 20 and upwards)); (b) if the worker is paid by the day (for workers aged 16 to 19: NZ$33.60 for each day plus NZ$4.20 for each hour in excess of eight worked by the worker on each day (in lieu of NZ$56 and NZ$7, respectively, if the workers are aged 20 and upwards)); (c) in all other cases (for workers aged 16 to 19: NZ$168 for each week plus NZ$4.20 for each hour in excess of 40 worked by the worker in each week (in lieu of NZ$280 and NZ$7, respectively, if the workers are aged 20 and upwards)).

8. The Government states that a minimum wage for employees aged 16-19 came into effect on 31 March 1994, following its decision to introduce a youth minimum wage. The youth minimum wage was set at a level that was 60 per cent of the adult rate.

9. The Committee refers to paragraphs 169 to 181 of its 1992 General Survey on minimum wages. Although minimum wage instruments contain no provisions providing for the fixing of different minimum wage rates on the basis of criteria such as sex, age or disability, the general principles laid down in other instruments have to be observed, and particularly those contained in the Preamble of the Constitution of the ILO which specifically refers to the application of the principle of "equal remuneration for work of equal value". As regards age, paragraph 171 of the above Survey specifies that the quantity and quality of work carried out should be the decisive factor in determining the wage paid. Therefore, the Committee considers that, although the minimum wage Conventions do not forbid the determination of lower minimum wage rates for young workers, the measures in this respect should be taken in good faith and should incorporate the principle of equal remuneration for work of equal value; the reasons that prompted the adoption of lower minimum wage rates for groups of workers on account of their age and disabilities should be regularly re-examined in the light of this principle.

10. The Committee requests the Government to provide information on the grounds for fixing the youth minimum wage at a level that is 60 per cent of the adult minimum wage.

The general application of the Minimum Wage Act

11. The Committee notes the Government's statement that the Department of Labour's inspectorate has the statutory power to enforce the Minimum Wage Act by initiating proceedings for recovery of wages on behalf of a worker. If necessary, a labour inspector will take a claim free of charge to the employment tribunal and may also seek an order for penalties against the employer. The great majority of labour inspectorate investigations, however, are resolved without recourse to tribunal proceedings. Workers (or their representatives) are also themselves able to bring claims against any employer who breaches the Minimum Wage Act. Employees in New Zealand, therefore, have a choice between initiating proceedings themselves or asking the labour inspectorate to pursue a claim on their behalf. The employment tribunal considers claims of breaches of the Minimum Wage Act brought by either the labour inspector or workers. Appeals of tribunal decisions are heard by the employment court. Under the Limitation Act, 1950, proceedings must be brought within six years of the breach of the Minimum Wage Act.

12. With respect to information on minimum wage, there are, according to the Government, a number of sources available for both employers and workers as to minimum wage rates. When a new minimum wage order is issued, it is published in the Gazette, an official publication which provides information about regulations that are to come into effect. The new rates are also publicized through press releases and direct mailing to employees' organizations, employers' organizations and interested community groups. The Department of Labour's industrial relations service provides information on the minimum wage and other statutory conditions of employment in a range of pamphlets which are widely available through the department, citizens advice bureaux and other interested organizations. The service operates a toll-free telephone information line which provides employees and employers with information on all industrial relations matters, including minimum wage rates. Labour inspectors also perform a general education role, providing information and speaking to interested organizations and individual employees and employers about their employment rights and obligations.

13. The Government also provides figures on the number of inquiries and alleged breaches submitted to the labour inspectorate over the reporting period (July 1992 to March 1997), as well as the number of minimum wage actions brought before the employment tribunal over the same period. According to the Government, the increase in the number of inquiries submitted to the labour inspectorate over the reporting period (from 4,932 between July 1992 and June 1993 to 7,550 between July 1996 and March 1997) is largely due to the introduction of information and education initiatives by the labour inspectorate, in particular the national toll-free telephone information line.

14. However, according to the NZCTU, the Government has adopted a "hands off" policy in the enforcement of the minimum wage, thereby placing the onus on the individual. The labour inspectorate does not inspect wage and time records on its own volition and will not respond to anonymous complaints by employees, rarely seeks recoveries of underpayments when they have been detected and does not prosecute offending employers with a view to having criminal penalties imposed on them. This means that there is a risk that violations go unreported and undetected, with complainants fearing retribution if they are identified. Often complaints are only made in extreme circumstances, or when an employee is about to leave his/her job. This defeats the purpose of statutory protection. Given that the labour inspectorate only seeks recovery of sums due, breaches of the law are, in effect, crimes without punishment which confer a net gain to employers. The NZCTU refers to the figures given in the Government's report that from June 1996 to March 1997, there were only two penal sanctions and one recovery action for minimum wages before the employment tribunal. The union expresses its concern that this is a reflection of both the inadequacy of a non-proactive inspectorate mechanism and a lack of knowledge in the workplace about minimum rights.

15. In reply to the NZCTU's comments, the Government notes that when a breach of the minimum wage has occurred, the labour inspectorate's key priority is to ensure that the breach is rectified, the law is complied with and the employees receive what they are owed as soon as possible. This is generally accomplished without the need for formal legal action in the employment tribunal or employment court. However, when such action is required, penalties are sought in all cases where the breach is considered serious enough to warrant this action.

The enforcement of the Minimum Wage Act in the agriculture sector

16. As concerns the application of minimum wage in the agriculture sector, the NZCTU notes that the scope of the Minimum Wage Act is general, and hence the Government has tended to supply the same responses to the provisions of this Convention and Convention No. 99. The NZCTU considers that, while its comments regarding inadequate inspection and enforcement machinery apply in both sectors, there are additional, special problems in agriculture, which are not adequately reflected in the Government's report on Convention No. 99. According to the NZCTU, this is a by-product of the economic reform that has taken place, resulting in a significant increase in informal sectors. The Government's own studies indicated that breaches of the minimum wage are common in agriculture (cf. Situation and outlook of NZ agriculture, 1993). Workers respond to low pay by looking for a better job, rather than seeking enforcement. The small scale in New Zealand farming means that typically there is a one-to-one working relationship between the worker and the employer, and it is almost impossible for a worker to complain and maintain a working relationship. This means that extra efforts into publicizing the level of the minimum wage along with routine inspection should be part of the enforcement mechanism. Moreover, it is only in agriculture that deductions can be made from the minimum wage as payments for board and lodgings. This makes it easier to avoid paying the nominal minimum wage, and greater efforts need to be made to assess whether board and lodgings are as valuable as is claimed when minimum wages are reduced accordingly. Finally, the NZCTU believes that there is a routine and widespread avoidance of the minimum wage in horticulture, where workers are employed on a piece-rate basis, especially on short-term seasonal contracts to pick fruit and vegetables. The piece rate is a sham designed to avoid the minimum wage, and actual earnings are often below the minimum wage. Much stronger action is needed to stamp out wholesale breaches of the law.

17. In reply to the NZCTU's comments, the Government states that it takes a proactive approach to educating and providing employees and employers in all sectors with information about employment rights and obligations. One of the reasons behind the introduction of the national toll-free telephone information service was to improve access to information for rural employees and other employers who found it difficult to contact the labour inspectorate offices. While some proactive enforcement is also carried out in order to achieve more widespread compliance with relevant employment obligations, the Government believes that ensuring widespread employee and employer knowledge of the minimum wage is the most effective way to ensure compliance. As regards payroll deductions, the Minimum Wage Act provides that certain specified and limited deductions can be made in any case where an employee is provided board or lodging by his or her employer.

18. With respect to the application of the minimum wage to workers employed on a piece-rate basis in horticulture, the Government points out, however, that the Minimum Wage Act is applicable regardless of the method of payment. The statutory minimum rate must be paid whether workers are paid by the hour worked, or by the amount that they produce. If any employee believes that he or she has been paid less than the minimum wage, a complaint can be made to the labour inspectorate.

Conclusions

19. As regards the above, the Committee recalls that Article 4, paragraph 1, of this Convention, as well as Article 4, paragraph 1, of Convention No. 99, provides that necessary measures should be taken in order to ensure that wages are not paid at less than the minimum wage rates that have been fixed, including the application of sanctions in cases of infringement of the minimum wages, with a view to guaranteeing workers the payment of such rates. Compared to the number of violations of the minimum wage legislation, the number of penal sanctions (for instance, two penal sanctions out of a total of 88 alleged breaches of minimum wage legislation between July 1996 and March 1997) appears too low and not dissuasive enough to prevent such violations and to ensure the respect of minimum wage provisions. Furthermore, with reference to its comments under the Labour Inspection Convention, 1947 (No. 81) and to the 1996 Conference Committee's conclusions on the application of Convention No. 81, the Committee considers that the number of staff of the General Labour Inspectorate (19 inspectors) is too low for the number of work-sites involved. The Committee requests the Government, in accordance with Article 5 and point V of the report form: (i) to supply the available statistical data on the numbers and categories of workers covered by the minimum wage regulations; and (ii) to continue to indicate the results of inspections carried out (including in the agriculture sector), as well as the number of violations reported and the sanctions imposed.

Observation (CEACR) - adopted 1993, published 80th ILC session (1993)

The Committee notes the information supplied by the Government in its report as well as the observations made by the New Zealand Council of Trade Unions (CTU) on the application of the Convention, and the observations made by the New Zealand Employers' Federation on the application of Convention No. 99.

The CTU points out in its observations that the minimum wage rates have not been changed since September 1990, and that the consultations with the workers' organization concerning the minimum wage have not been substantial. It also considers that the scope (the coverage of workers under 20 years of age) and the enforcement of minimum rates are unsatisfactory.

The Committee notes that, although the observations made by the CTU were supplied with the Government's report, the report does not contain the Government's observations in response to these comments. It further notes that the Minimum Wage Act 1983 applies to workers "of any age" (section 2 of the Act) and includes a section concerning annual review of minimum wages (section 5).

The Committee requests the Government to supply information concerning the manner in which the employers and workers are associated in the operation of the minimum wage-fixing machinery (including the decisions not to change the current rates), in accordance with Article 3, paragraph 2(2) of the Convention, and to indicate whether minimum wage rates have been fixed as regards workers under 20 years of age.