A foot in the door

Dr Ruth Gasson
Dr Ruth Gasson
Amid reports of changes to children's tax, the benefits of an out-of-school job seem to have been overlooked. Shane Gilchrist reports.

Just two months into his first after-school job, Alex Stuart has yet to fully assess the personal implications of the tax changes that came into effect on April 1

Yet he is in the right line of work should he need help with any calculations.

Typically, on three days each week, the 14-year-old (he turns 15 this month) heads straight from Dunstan High School to the offices of Alexandra-based ICL Chartered Accountants, where his duties include filing, mail sorting and banking.

Sharing the job with another boy, he usually works between four and a-half to five hours a week, for which he is paid ''between $60 to $80''. If he maintains those hours for the current financial year, Alex will earn more than $2340 and is thus eligible to claim a tax refund.

Under the April 1 changes, signalled in the 2012 Budget and subsequently known as the ''paper boy tax'', young people who earn cash-in-hand (for casual jobs such as babysitting) do not have to file a tax return at the end of the financial year. However, those earning less than $2340 who have had tax deducted by their employers can no longer claim it back.

According to Inland Revenue, nearly 70,000 New Zealand children received an ''active income'' tax credit in the 2011-12 financial year. They claimed back an average of $245 a year.

Alex is unaware of the situation. ''I didn't actually know anything was happening until you contacted me,'' he says. And fair enough: the only difference he's likely to notice is the small change to his KiwiSaver contributions.

Alex Stuart sees his job in an Alexandra accountancy office as a start towards bigger things....
Alex Stuart sees his job in an Alexandra accountancy office as a start towards bigger things. Photo by Shane Gilchrist.
As a member of KiwiSaver (one of 327,000 people under the age of 18 signed up to the scheme), Alex will see his minimum contribution rise from 2% to 3%. For that, he can thank his mum, Sandra Stuart, who enrolled him two years ago.

''I signed him up to take advantage of the $1000 government credit,'' Mrs Stuart explains. ''Alex knows that he will be able to use his savings towards his first mortgage and/or his retirement. I figured if we do it from the start, he won't miss it.''

Alex says his job is not all about the money anyway.

''It is a factor but it's not the main thing. It's a foot in the door to other things, working towards bigger things in life, like head boy at Dunstan perhaps.

''Being an accountant is a good job but it's not what I want to do. I want to be a PE teacher.''

As parents often do, Mrs Stuart sees a bigger picture.

''Working while still at school gives kids an opportunity to work in a safe environment and an insight into what life could be like after they leave school.

Alex is learning many skills, such as client confidentiality, how an accountants' office works and just how important a good school education is to get ahead in life.''

Parental beliefs can have a ''huge effect'' on young workers, Ruth Gasson, of the University of Otago's College of Education, says.

In a recent study, Young People's Employment: protection or participation?, Dr Gasson highlights the benefits of children getting after-school work, though she also points out that some parents believe such jobs interfere with schooling.

''Some worry about a childhood ending too soon. Others believe it is good to give kids experience and independence and that work helps structure their day.''

Dr Gasson said most parents in her study believed having a paid job was good for their children.

''There is a work ethic message. Often - and this has been shown in other studies we've been involved in - parents will help if a child is sick but they will keep the money. The family is teaching the kids about work, how to develop a work ethic.''

However, the study also highlighted that some children were paid as little as $4 an hour.

''In my research, some parents have said that because kids are paid less they are forced to work longer hours, that they get exploited because of that. But there are others who say that they wouldn't get a job at all [if they were paid a higher rate]. All I can really say is that there are two points of view.''

Though her latest study is relatively narrow (it involved interviews with nine middle-class families, ''seven of whom were supportive of their children getting paid work''), it is part of an ongoing series of papers and follows an extensive study by her and others in 2003 involving 1500 people.

''We are actually looking at different groups of parents for each study,'' Dr Gasson explains.

''We have also interviewed a group of Pacific Island parents, a group of Maori parents. There are differences among the groups, but we have only published one at this stage. The results of the others will be coming out later.

''They do differ. In countries like New Zealand and Britain, young people from middle-income or upper-income families are the ones getting work,'' Dr Gasson says.

''It is harder for younger people from lower-income families to get such work. Perhaps their neighbours can't afford to have them mow the lawn or their parents can't employ them in a family firm. And when they do work, young people from low-income environments tend to work for longer hours.''

The 2010 report ''Schoolchildren in paid employment: a summary of research findings'', in which lead author Damien O'Neill collated information on young workers, found secondary school pupils had low levels of awareness of their employment rights, low rates of union membership and a 50% likelihood of having a formal written employment agreement.

However, according to the report, which included close analysis of Department of Labour statistics, schoolchildren on the whole appeared to be fairly paid.

One 2007 study found that 75% of secondary school pupils in work were being paid at or above the youth minimum wage rate (at the time, $9 per hour for 16- and 17-year-olds, set at 80% of the minimum adult wage; as of the start of this month, the minimum adult wage has been raised 25c to $13.75).

Part-time work is a common activity: participation rates increase steadily from about 20% for 11-year-olds (mainly boys) to more than 50% for 16- and 17-year-olds (with a slightly higher proportion being female).

Though most are motivated to work to earn money, typically for spending on extra items for their personal use, a smaller proportion of older pupils save for study-related reasons and those from lower-income families are more likely to contribute to household budgets.

The types of jobs vary substantially between boys and girls and change as pupils get older. Younger pupils are most likely to do jobs such as babysitting and cleaning (mainly females) and outdoor work such as gardening and newspaper deliveries (mainly males). As they get older, they are more likely to work in retail and hospitality.

International literature and a range of New Zealand studies have shown a correlation between hours worked and educational achievement. In New Zealand, secondary school pupils in regular part-time employment work a moderate number of hours each week.

Two-thirds work fewer than 10 hours a week, while about 15%, mainly older students, work more than 15 hours a week.

Most younger students (aged 14 and under) work fewer than five hours a week. Of concern, a small number (6%) of pupils work more than 20 hours a week in part-time jobs, putting their education at risk.

But it's not all bad.

When limited to a moderate number of hours, a part-time job during the school term does not have a negative impact on scholastic achievements or subsequent employment outcomes.

One study linking survey data with NCEA outcomes found that year 10 and 11 pupils engaging in regular part-time work of up to 15 hours a week in 2008 achieved more NCEA credits than those who did not participate in any part-time employment. The data suggests that the optimal level for year 10 and 11 students is fewer than 10 hours a week (probably in the range of six to 10 hours a week), but any level of work appears to be better than none, up to a threshold of 15 hours a week.

Working up to five hours a week, Alex is clearly in the black in regards the work-education balance, but it probably also helps that he is a motivated young man.

A boarder at Dunstan High School's hostel (at weekends he returns to Queenstown), he needs to be ''super-organised'' in order to fulfil the demands of school, including homework, as well as his job and sporting commitments, particularly rowing.

''He is coping with this remarkably well and I am very proud of the way he has stepped up to fit everything into his extremely busy day,'' Mrs Stuart says.

Or, as her son says: ''I'm used to being busy anyway and now that rowing has finished, it's kind of boring not doing anything.

''Work has been really good.''

 

Add a Comment