Peanuts and paper money: Why NZ’s Minimum Wage Exemption needs to end

By Rebecca Park, CCS Disability Action National Marketing, Communications & Fundraising Advisor.

Would you work for just $3 an hour? What about $1.50? Most people would say that is unfair, but for many disabled employees in New Zealand, this has been their reality.

Historically, the Minimum Wage Act 1983 has allowed Labour Inspectors to issue minimum wage exemptions that permit disabled employees to be paid less than the minimum wage on the grounds that they are less productive, or that their impairment limits their ability to perform the job. There are around 900 people nationwide who are affected by this exemption, 70% of whom are paid less than $5 per hour. Most of these workers have a learning disability.

Although the 2023 Budget announced that the exemption will come to an end by mid-2025, as it currently stands, this discriminatory system still affects disabled people across the country.

Like many disability advocacy organisations around the country, CCS Disability Action is strongly opposed to the minimum wage exemption, affirming that disabled people have a right to be fairly compensated for their work and should have adequate support (if needed) to undertake meaningful employment.

For Debbie Ward, CCS Disability Action’s National Disability Leadership Coordinator, the exemption is nothing short of exploitative.

“You've got these big businesses benefitting from disabled people who are perceived as being unable to get jobs any other way, yet the work they're doing contributes to those businesses’ profits,” she says. “Every bit of work that each of these people is doing is contributing to the final product, but they are not even receiving the minimum wage for those efforts.”

“In any work environment, you should benefit both financially and personally, whether that is through social interaction or a sense of fulfilment. However, disabled people under this scheme are not receiving the same financial benefits as everyone else for the same job.”

A complex machine

Despite the consensus from disability advocates that the minimum wage exemption is discriminatory, wider opinions on the issue have been firmly divided. There are some in the disability community, including the families of those affected, who do not want to see it abolished. They feel that work provides their disabled loved ones with purpose and social interaction which they would not have the opportunity to enjoy without the exemption.

Debbie suggests that these concerns point to a wider systemic issue around how support, funding and allowances are currently allocated, which affects both disabled people and non-disabled people.

Debbie also questions the idea working in these “sheltered workshops” is the best way to provide true purpose and social interaction to disabled people. She says that, rather than facilitating inclusion, the minimum wage exemption creates an inherent division in the workplace.

“I've been into these places before and the disabled people that are working there all refer to the non-disabled people as staff, while the disabled people are called clients,” she says.

For the employers who hire these individuals, the arguments for keeping the exemption in place range from reduced productivity to health and safety concerns. But is productivity a reasonable yardstick for compensation, or for that matter, value? As disability activist Robyn Hunt noted in a Spinoff article, for disabled people (unlike their non-disabled counterparts), deficit is the default assumption, and they are consequently obliged to prove otherwise, often without the support they need to do so.

Likewise, the idea that disabled people have a fundamental impact on health and safety could be seen as contentious, at best.

“Employers don't want to employ disabled people because of the perceived health and safety risk, but actually they have exactly the same obligations as employers under the Health and Safety at Work Act to provide a safe workplace to every person who comes into their building,” Debbie says.

What are the alternatives?

In 2019, the Labour Government announced that they would look to replace minimum wage exemptions with a wage subsidy, which is intended to support employers to take on workers with disabilities instead of penalising disabled people who want to work. Progress has been slow due to the widespread dissension surrounding the issue, but with the Budget 2023, the government finally announced that the exemption would be axed by mid-2025. The wage supplement taking its place will increase the pay of those affected to minimum wage.

Despite this, disability advocates are calling for a more holistic approach through the development of social enterprise models and greater access to employment support and personalised community participation programmes.

While ending the minimum wage exemption is a step in the right direction, the need for systemic change remains, and Debbie Ward sees this as an “opportunity for innovation”. Disability support providers such as CCS Disability Action represent a path forward by facilitating supported employment contracts to help disabled people get meaningful work, if that is what they want to do. From assessing someone’s goals and skills to assisting them with the job search process, these organisations work with disabled people to match them with a fulfilling (and properly compensated) role.

As Workbridge chief executive Jonathan Mosen points out, at the end of the day, every New Zealander is entitled to a fair day’s work for a fair day’s pay.

”We are delighted to hear of, and work with, companies in many areas of business who have come to appreciate disabled people as hard-working, diligent, productive people who are worth paying for. They are an asset. They are not a liability or a health and safety risk,” says Jonathan. “We have worked with many employers over the years to provide reassurance and dispel those myths and it is always rewarding when, after taking what might initially be perceived as a risk in hiring a disabled person, employers come back to us to find more staff.”

“For many of us, work is associated with mana, the development of a social circle and economic independence. People with impairments are no less entitled to the full benefits of all the rewards of work.”