Business think-tank proposes slashing youth minimum wage, minimum wage opt-out

Wednesday, 27 May 2026

The New Zealand Initiative, the business-aligned think-tank formerly known as the Business Roundtable, has proposed the establishment of a “training wage” at 60% that of an adult minimum wage for workers under 20, and implementing different minimum wages by region, as part of a manifesto of ideas out this morning.

Allowing individuals to opt-out of minimum wage restrictions without having to become self-employed is another idea the Initiative is championing in its 2026 “Prescription for Prosperity” manifesto.

The collection of suggestions for whichever Government grabs the wet noodles of power in November runs to 235 suggestions, up from 170 when the last election was held in 2023.

The sheer volume of reckons coming from the business think-tank is, as it says, “not [from] a fondness for lists, but the accumulation of unfinished business.

“Many of the problems we identified three years ago remain unsolved. Some have worsened. A few new ones have arrived uninvited.”

The ideas roam across 26 subject areas including fiscal and monetary policy, transport and infrastructure, law, health and education, and artificial intelligence.

But it is perhaps the workplace relations and safety section that contains some of the most potentially controversial ideas.

In general, the report lauds moves by the Luxon Government to move decisively to reverse the “dangerous experiment with centralised wage bargaining imposed by the Ardern government’s 2022 Fair Pay Agreements Act” - which it said forced “the labour of the least productive and most vulnerable workers” to be “artificially priced above its value to employers”.

“These workers are therefore more likely to be unemployed than they would under a more flexible bargaining regime.”

Many of the other changes, made notably by former Workplace Health and Safety Minister Brooke van Velden, aligned with Initiative ideas, including the Employment Relations Amendment Act 2025 that brought back 90-day trials, limited unjustified dismissal recourse for high income employees, weakened some personal grievance protections, and other changes.

However, minimum wages clearly remain a bugbear.

The current minimum wage of $23.50 functions as “an insurmountable barrier for those without skills or experience”, and the existing Starting-Out wage, theoretically set at 80% of the adult minimum, “has negligible impact due to restrictive eligibility criteria – barely two% of employers meet its bureaucratic requirements”, it writes.

The report points to Germany, which allows training wages as low as €4.10 per hour – approximately one-third of the adult minimum: “This reflects the genuine costs employers bear in training novices and their lower initial productivity.

A remedy, it proposes, would be to set a training wage at 60% of the adult minimum for workers under 20, which would align to the first 12 months with any employer: “This would make youth employment more viable.”

For the same reason, the Initiative promotes the idea of having a different level of minimum wage in different parts of the country - higher in cities reflecting elevated costs for housing, transport, and general living, and lower in rural and provincial areas, “designed to sustain local business viability and protect regional employment.”

There is also the suggestion of allowing individuals to opt out of minimum wage restrictions without having to become self-employed to do so. The rationale is that in agreeing to be paid less, those without skills or experience get a “foot in the door”.

Response

CTU secretary Melissa Ansell-Bridges said the idea of opting out of a minimum wage “would have a ‘sprinting-back-towards-a-Victorian-style’ arrangement for work. It makes a farce of the whole idea of minimum wage. It would, without a doubt, make working people's lives much worse.”

Ansell-Bridges described the New Zealand Initiative as “quite an extreme” neoliberal think tank, and said its minimum wage proposals were “anti-worker”.

She said having different minimum wages in different parts of the country would immediately create “contortions” in the labour market.

“It would potentially mean jobs would move out of Auckland. Maybe there's an argument that could be made that it would support regional employment,” she said.

“But would be practically difficult to implement - where would officials draw regional boundaries?”

The training wage idea would perpetrate existing inequalities, especially for young people and immigrants, she told The Post.

Employers might abuse the idea, and it might not only be young people who would suffer.

“You would be able to argue anybody starting a job was training on that job,” she said. “It's a dreadful idea.”

Other notable ideas

Some other noteworthy ideas put forward in “Prescription for Prosperity”:

• Introduce competition to ACC’s work account, allowing businesses to choose between ACC and approved private insurers for workplace injury cover.

• Reintroduce legislation to enable a referendum for a four-year term of Parliament.

• Increase the proportion of list MPs from 40% to 50% and increase Parliament from 120 to 170 members. It would reduce the incidence of overhang seats and improve voter accessibility and representation, provide more backbenchers for select committee scrutiny.

• Reduce the party vote threshold to 3.5%.

• Amend the Legislation Act 2019 to constrain interpretive overreach by courts.

• Adopt ministerial appointments of departmental chief executives.

• Allow compensated plasma collection alongside the existing voluntary system.

• Transition aged care toward consumer-directed funding, giving recipients the ability to choose providers .

• Pilot mental health personal budgets - individualised funding pilots for mild-to-moderate mental health conditions.

• Remove the Commerce Commission’s compulsory information-gathering powers for market studies. Instead, the body should “focus exclusively on identifying regulatory barriers to entry” without leaving their desks.

• Implement universal investment rules by removing the foreign buyer ban. “It should, at least, be radically narrowed to cover ‘sensitive land.’”