Idea to scrap scheme ‘a good intention but a bad idea’

Cargill Enterprises chief executive Geoff Kemp (standing) watches as production workers (from left) Geraldine Fowler, Tegan Howard, Cliff Pope and Yvonne McClintock put stickers on lollipops in South Dunedin last week. Photo: Shawn McAvinue
Cargill Enterprises chief executive Geoff Kemp (standing) watches as production workers (from left) Geraldine Fowler, Tegan Howard, Cliff Pope and Yvonne McClintock put stickers on lollipops in South Dunedin last week. Photo: Shawn McAvinue

The Government is aiming to scrap a scheme allowing some employers to pay disabled staff less than the minimum wage.

But a Dunedin chief executive paying some of his disabled staff $2 an hour fears the Government may have a ‘‘good intention but a bad idea’’.

Social Development Minister Carmel Sepuloni told The Star the Government was considering replacing the minimum wage exemption scheme.

The scheme allows nearly 900 disabled people in New Zealand be paid less than the minimum wage.

More than two-thirds of the workers were paid less than $5 an hour, she said.

‘‘The disability sector has argued for some time now for an end to this discrimination against a number of disabled people, and Government agrees.’’

A Ministry of Business, Innovation and Employment spokesman said 85 staff in Dunedin were employed using the scheme.

The two Dunedin employers with staff in the scheme were McDonald Holdings Ltd, trading as Pak’n Save, and the Disabled Citizens Society (Otago), trading as Cargill Enterprises.

A spokeswoman for Foodstuffs Ltd, which owns the Pak’n Save brand, declined to comment because ‘‘we respect our employees’ privacy’’.

A not-for-profit business in South Dunedin, Cargill Enterprises, employs most people in the scheme in Dunedin.

Cargill chief executive Geoff Kemp said the staff earned between $2 and $19 an hour.

A staff member paid $2 an hour could be doing a task such as placing stickers on wrapped lollipops.

A staff member driving a forklift could earn $19 an hour, he said.

Cargills employed some staff despite their work abilities affecting the bottom line of the business, which needed to be competitive on the open market to obtain work.

‘‘If you have a disability and you want to work for your good life then we will do our darndest to include you in the operation.’’

The scheme was designed to remove barriers to allow people with disabilities to find a job.

All the disabled staff received a supported living allowance from the government.

The combined total of their wages and welfare assistance was close to, if not more than, the minimum wage.

Mr Kemp said he was concerned if Cargill was forced to pay the minimum wage, the disabled staff would have their allowance reduced, or stopped, and would be worse off financially and psychologically.

If a staff member had their allowance stopped, he expected them to become ‘‘stressed’’ about job security and a lack of work in the open market for mentally disabled people.

If any disabled person lost their job because of a reform, it would show the Government had a ‘‘good intention but a bad idea’’.

He had seen previous government reforms in the sector result in disabled workers losing their jobs.

Any reform should increase the number of disabled people entering the workforce, he said.

On average, Cargill’s staff with disabilities were paid 60% of the minimum wage rate.

Cargill wants the Government to pay the 40% shortfall — a wage supplement — paid to the employers of disabled workers, to top them up to the minimum wage.

Ms Sepuloni said the Government was looking at introducing a wage supplement.

Consultation on the proposal had begun and would finish in mid-April.

IHC advocacy director Trish Grant said the IHC was ‘‘delighted’’ the Government was investigating replacing the scheme and introducing a wage supplement.

‘‘People with intellectual disabilities deserve the same right to earn the minimum wage as other people — fair pay for fair work.’’

She wanted a new scheme which would motivate more employers to hire people with an intellectual disability.

The removal of the exemption scheme altogether would not create the right incentive for employers to recognise the rights of people with an intellectual disability, so a wage supplement was ‘‘crucial’’, she said.

SHAWN.MCAVINUE@thestar.co.nz

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