Low wages for disabled workers are an embarrassment

May 26, 2022

New Zealand’s minimum wage is $21.20 an hour – but for 900 disabled workers that doesn’t apply. A quarter of them earn between $1 and $2 an hour.

Employers can pay them less than other workers by using an exemption to the minimum wage law. Of the 900 people with the minimum wage exemption (MWE), 70 percent are paid less than $5 an hour and 25 percent less than $2 – before tax.

Disability Issues Minister Carmel Sepuloni agrees that this is discrimination. In February 2019 she said she intended to replace minimum wage exemptions with a wage subsidy. But, following consultation with the sector, the plan has stalled, with Cabinet being told in November 2019 that views were sharply divided.

Disability advocates say it’s a clear breach of the United Nations Convention on the Rights of Persons with Disabilities.

IHC General Manager of Programmes Janine Stewart says it’s “embarrassing internationally” that the policy is still in place. She says it’s a leftover from a time when people were in institutions and sheltered workshops, and attitudes were different about the kind of lives disabled people could expect to live.

“We should in the sector feel absolutely outraged that nothing has happened. The announcement has been made, get on with it,” Janine says.

Under the Minimum Wage Act 1983, businesses can apply for an exemption to pay an employee with a disability less than the minimum wage on the basis they’re less productive.

There’s very strong opposition to changing the exemptions from employers and from some families. A Cabinet paper from late 2019, after the consultation, reported that views were sharply divided.

For those in favour “a wage supplement is seen as a fairer approach that will ensure that disabled employees receive fair pay for their work. In contrast, those who are opposed to changing the MWE system are mainly concerned about the potential for job losses and the flow-on effects, such as family members having to leave their own jobs to become full-time carers if their disabled relative loses their job. A recurring concern expressed in submissions is that the proposed replacement would lead to businesses using MWEs having to shut down due to increased costs, placing jobs at risk.

“We are clear that a wage supplement must be designed so that employees’ overall incomes are maintained or increased, even after the abatement of benefits and other financial assistance that results from higher hourly earnings,” the report says.

While the Government would foot the bill to top up workers’ wages under a subsidy, businesses fear they will incur extra costs like increases to KiwiSaver contributions.

In April Carmel Sepuloni told TVNZ 1News that the issue was still on the radar. “It’s our intent to realise that commitment this term. We certainly wouldn’t want to see the businesses stop in any way, but we want to make sure that we are supporting a practice that isn’t discriminatory.”

Janine says ending exemptions is not simple but it needs to happen. “They need to bring some smart people together and look at the problems and the solutions. Stop making it about the employers.  Let’s make it about the people.

“It’s a sad indictment when you have a Minister saying it’s discriminatory but not doing anything about it.”

Caption: Photograph by Jonathan Semper – Unsplash


This story was published in Strong Voices. The magazine is posted free to all IHC members. Read the full issue of Strong Voices or view more articles.