Employer groups predict surge in youth unemployment if junior pay rates scrapped

Employer groups predict a surge in unemployment if the industrial umpire agrees to raise wages for 18, 19 and 20-year-old workers in retail, fast food or pharmacy jobs.

The Shop Distributive and Allied Employees Union has applied to the Fair Work Commission so the youngest adults are paid the same wages as those over 21, a step national secretary Gerard Dwyer likened to the fight for gender equality.

“When women were fighting for equal pay half a century ago, employers said it would squeeze them out of the job market – now they’re using the same tired argument about paying 18 year olds adult wages,” he said. “It wasn’t true then and it won’t be true now.”

While New Zealand scrapped youth wages almost two decades ago, in Australia those aged 20 are paid 90 per cent of the adult award rate, while 19-year-olds workers receive 80 per cent of it and 18-year-old employees get 70 per cent.

Out of work

Australia’s youth unemployment rate of 10.2 per cent is already more than double the national average jobless level of 4.5 per cent.

The Australian Retailers Association and the National Retail Association, who represent McDonald’s and other employers, said it would lead to a surge in youth unemployment.

“If junior rates are tampered with, the impact on already high youth employment could be dire – particularly in regional areas,” the ARA’s chief executive, Chris Rodwell, said.

“In addition to higher youth unemployment, equalising junior and senior rates will narrow critical pathways into work for young Australians, especially in small and family-run businesses that operate on tight margins and can’t absorb additional costs.”

Associate Professor Stephen Clibborn, a University of Sydney Business School industrial relations expert, said the different wage rate for those under 21 was a hangover from the 1900s when adulthood occurred at 21 instead of 18 - something fixed with the voting age in 1973.

“I can’t predict what they’ll do but the Fair Work Commission has on this, and many issues, over the years assessed minimum standards in relation to changes in society and the economy over time so they may have the remit to maintain an awards system that is fit for purpose,” he told The Nightly.

“These junior awards have been a feature of our industrial relations system for over a hundred years, were created at a time when adulthood was regarded as being age 21. That’s an antiquated notion.”

He noted New Zealand’s youth unemployment rate didn’t rise in 2008 when youth wages were scrapped.

“They’ve been cases overseas where there have been similar changes made and similar predictions of an effect on youth employment but there hasn’t been a notable change,” Professor Clibborn said.

Greens push

Employment and Workplace Relations Minister Amanda Rishworth, a former organiser with the SDA or the “Shoppies” union, declined to take a position on the claim.

“The independent Fair Work Commission will be considering this matter and the submissions from parties involved,” a spokesman said.

Greens senator Barbara Pocock, who holds the employment and workplace relations portfolios, said young hospitality workers earn $12.58 an hour less than their adult-classified counterparts and often had the same bills.

“Junior pay rates guarantee an endless supply of cheap labour for employers willing to exploit the skills and talents of young people newly entering the workforce,” she told The Nightly.

“It’s hard to justify a system where an 18-year-old retail worker has to clock more than 50 hours just to earn what an adult makes full-time.

“Young people don’t get discounts at the supermarket checkout or on their rent. They face the same cost-of-living pressures as everyone else, so why should their pay be any less for doing the same job? The Greens believe workers’ pay should reflect their skills, not their age.”

Australia’s junior wage rates were retained in 2010 when the Fair Work Act saw national awards replace state-based arrangements.