Young people could get massive pay boost in ‘totemic’ wage case

Hardworking young people are sweating on a key wage case that could boost their pay, while businesses warn it could cause a collapse in employment.

“Junior pay rates” apply to people below the age of 21 in agreements covering sectors that employ a lot of young people: retail, fast food and pharmacy.

Those discounts mean 18-year-olds are paid 70 per cent of the award rate, 80 per cent for 19-year-olds and 90 per cent for 20-year-olds. 

Twenty-year-old Ben Walker has worked at a Woolworths supermarket in Sale, in Victoria’s Gippsland region, for the past four years. 

“I have a car, I pay board at home, I’ve got a motorbike as well. I’m paying adult fuel with still a child’s wage,” he said. 

Ben Walker’s age means his employers pay him less than older people with less experience. (ABC News: Simon Tucci)

The high staff churn rate in supermarkets means he often works alongside colleagues who are less experienced but older than 21.

“I don’t think it is fair — the fact that I’ve had more experience and yet I still get paid a little less,” Mr Walker said.’People won’t be hired for jobs’

Some of our largest and most public businesses are worried about the impact of a case they have called “totemic” to the structure of employment.

In many cases, big employers like McDonald’s and Coles are a stepping stone to full-time employment, with Woolworths alone providing about one in eight Australians with their first job.

Innes Willox says changes to junior pay rates may make it harder for young people to get jobs. (ABC News: John Gunn)

Ai Group’s Innes Willox speaks on behalf of his members, who are employers, and says any big shift that increases staff costs will have dire consequences for young people.

“If there are substantial changes, that makes it incredibly difficult for employers to hire young people,” he said.

“Young people won’t be hired for jobs, and that will be to the detriment of them … the workforce and the economy as a whole.”

He said it went directly to the compensation businesses had to give to employees based on what they could do.

“Their output, their contribution to the workplace, the fact that they are new to the workforce, they’re learning new skills,” Mr Willcox said.

“It’s often the first start into the workforce for a young person.”

Union argues same was said about women 

Unions do not buy it.

“I wasn’t born at that time but when women were paid less than men for doing exactly the same work, I know they [employers] argued exactly the same,” said Sally McManus, secretary of the Australian Council of Trade Unions (ACTU).

Sally McManus says life does not cost young people less, so they should not be paid less. (Supplied: Mining and Energy Union)

Ms McManus compared the cheaper rates paid to juniors — and employers’ fears of change — to the situation more than 50 years ago, when paying women less for doing the same work as men was first outlawed. 

“[Business] said if women got paid the same for doing the same, well, there’d be less women in the workforce, we’d hire men rather than women — and that turned out to be totally untrue.”

In recent years, Australia has hit record-high levels of workforce participation, with both men and women toiling at levels never seen before.

Adulthood is 18 but full wages start at 21

Advocates argue that at 17 you can enlist in the armed forces, and at 18 you are legally entitled to vote, drive, smoke and drink alcohol. 

But youth wages continue to crimp the earnings of those below 21.

Jayda was excited about her first pay cheque, then she looked at the hourly rate

Teens question why 18-year-olds are not paid as adults at work when they can vote and drink alcohol.

Decades ago, some of those rights did not begin until people turned 21, but that has been wound back.

Ms McManus said changing wage laws would bring them into line with reality.

“Back last century in the 1970s, 21 used to be the legal adulthood for a whole lot of things, and we got rid of that,” she said.

“We made it 18 for everything except for how people are paid.

“You’ve got to draw the line somewhere about when someone’s an adult, and where you’re an adult, you should get paid the same.”

Societal trends have also changed.

More people now complete a higher level of schooling in comparison to 20 years ago. 

In 2021, 58.4 per cent of people 17 years and over reported completing year 12, compared with 39.1 per cent in 2001.  

Half a million workers could feel the impact

The Shop, Distributive and Allied Employees’ Association, better known as the SDA or “the Shoppies”, represents supermarket workers like Ben Walker.

National secretary Gerard Dwyer said people like Mr Walker were the reason they brought the case.

Gerard Dwyer says the current situation is not fair and it has to change.

  (ABC News: John Gunn)

“It’s about ensuring that anyone who’s 18 years or older gets paid the adult rate of pay,” he said.

“They can drink, they can drive, they can vote — we as a community treat them as adults on every level, except when they walk in the door to work.

“They walk in there and they’re expected to operate on discount wages. An 18-year-old only gets paid 70 per cent of what a 21-year-old gets, and we say that’s not fair and it should change.”

The Fair Work Commission’s full bench heard evidence in the case in October and November.

It is an attempt to vary three “awards” — broad agreements that span working conditions in entire industries.

If successful, junior wages would be changed for workers covered by the General Retail Industry Award 2020, Fast Food Industry Award 2020 and the Pharmacy Industry Award 2020.

These agreements cover almost half a million young people, but the application could be broader. 

If the union wins, there are around 70 other awards with provisions that let employers pay younger people less, and these would likely be challenged and changed as well.

“We’d like to think if we can get an outcome here that’s positive for young Australians, that will be able to then flow to lots of other young workers who deserve adult rates of pay once they turn 18,” Mr Dwyer added.

It is a big case for multiple reasons.

The SDA has been controversial in the union movement over accusations that, under former leadership, it made cosy deals with big employers and used union funds to campaign against abortion access and marriage equality.

Disagreement over impact and value

Businesses and unions dispute the potential impact of a change.

Ms Willox, from Ai Group, said it would be substantial.

“You can’t pay a 16-year-old the same that you pay a 21-year-old who has perhaps had five years in the workforce and is much more productive, much more skilled, much more capable and much more able,” she said.

The SDA said the claim did not seek to change rates for 16 or 17-year-olds.

In a statement, Woolworths said it was proud to be one of the nation’s largest employers of young people.

“The junior pay rate system has offered an important pathway for promoting and incentivising employment opportunities for young people for many decades,” a spokesperson said in a statement.

The supermarket pays the full adult rate from 20, rather than 21, and pays those in supervisory roles at adult rates.

Unions call for end to junior wages

Trade unions want to end the junior wages scheme, which allows hospitality and retail employees under 21 to be paid less than their adult colleagues.

“While Woolworths is already committed to paying its junior team members above award rates under its retail enterprise agreements, any changes to junior pay rates must be introduced in a sustainable and responsible manner.”

It called for a “balance” between value for its customers and “career pathways” for young people.

Ms McManus, from the ACTU, said it was a simple question of fairness for hundreds of thousands of hardworking young people.

“Think about those workers,” she said.

“They don’t get discounts on their rent, they do not get discounts when they go to a supermarket, they’ve got to pay the full amount. 

“It will make a huge difference to them — it’s about time.”

Hearings before the Fair Work Commission have ended, meaning a swathe of academics, employers, peak bodies and workers have had their say. 

The decision is pending and no date has been set for its release.