In late March this year, a flurry of headlines declared that junior rates for workers under the age of eighteen had been abolished in Australia. It seemed like a good-news story. The only problem is that it wasn’t true.
Other articles claimed that junior rates for workers between the ages of eighteen and twenty had been abolished. This, sadly, was also untrue.
Almost all workers in Australia under twenty-one years old get paid a percentage of the adult wage. A fifteen-year-old in retail, for example, receives around 45 percent of the adult wage. The same worker at a fast-food outlet will be paid 40 percent of the adult wage.
This percentage increases incrementally as workers age up to twenty-one, even though children and young workers under that age perform the exact same jobs as adults. To add confusing insult to injury for the nation’s youth, the legal age of adulthood is actually eighteen.
The new changes lock in youth rates for those aged eighteen and under. The percentage of the adult wage that eighteen-, nineteen-, and twenty-year-olds receive will increase each year. These rates will reach parity with the adult rates in 2029, 2028, and 2027, respectively. The catch, however, is that these increases and eventual parity only apply to young people who have worked at the same employer for more than six months. This caveat is ripe for exploitation.
Employers and politicians wheel out a range of arguments around job opportunity and security to justify this arrangement. But junior rates’ only real role in the retail and fast-food sectors is to transfer wealth to employers, who are making windfall profits at the expense of exploited child laborers.
Worse, young workers in Australia are mostly employed on a casual basis, meaning they can be fired at a moment’s notice. Junior rates increase this precarity because they give employers an incentive to fire young workers as their wages approach those of older workers, replacing them with cheaper adolescents.
The recent decision by the Fair Work Commission (FWC) — Australia’s version of an industrial court — does the very opposite of what the financial press and some disingenuous trade union representatives claimed. It actually embeds rank discrimination against all young workers, including those aged eighteen to twenty. Indeed, there is very little to celebrate in this decision.
Australia added age-based discrimination to prohibited forms of discrimination in employment in 1989. International law clearly prohibits discriminatory junior rates. So how exactly do retail and fast-food employers justify them?
Employers argue that junior rates help children and young people find and secure employment because they make it more profitable for employers to hire them. The Australian Retail Council’s Rodwell stated this very clearly in response to the recent decision when he argued that “junior pay structures have long provided a balanced pathway that supports both youth employment and business viability.”
Junior rates may indeed be quite profitable, but the evidence shows that they actually negatively distort job security for young people. This distortion impacts all workers both at specific companies and across entire sectors.
Junior rates cause employers to deliberately favor cheaper labor. To celebrate the birthday of a child in retail or fast food, an employer cuts their hours. What clearer example of capitalist exploitation and insecurity could there be?
The ACCI argues that junior rates “support, rather than undermine, opportunities for young people to enter the job market.” This is a misleading, narrow definition of “opportunities.” A recent study found that 57 percent of early school leavers did so because they either had a job or were trying to get one. Without junior rates, a young person could work around 40 percent of the hours they currently work for the same income. This would remove pressure to abandon their education. It would also allow them access to the myriad opportunities gained by spending more time in school, in community activities, and with their friends and families.
The beneficiaries of child labor have posed bogus arguments like these for centuries. In reality, these employers don’t celebrate security or opportunity. They value the vulnerability and insecurity that make children less likely to raise safety concerns, complain, or make demands.
To the extent that children are provided an opportunity to learn work skills and share in the community of the workplace, they ought to be fairly rewarded by equal pay for equal work.
The trade union that brought the junior-rates case before the FWC, the Shop, Distributive and Allied Employees’ Association (SDA), played the role of junior rates’ greatest defender. It argued to the commission that a sixteen-year-old worker at KFC, Woolworths, or Kmart is only worth 50 percent of an adult wage. This argument was influential: the commission concurred “that minors’ work value was likely less, having regard to factors relating to maturity, life experience, and opportunity to have obtained work experience.”
But it’s worth examining why the SDA is playing this negative role. The union has a close working relationship with Australia’s two biggest supermarkets, Woolworths and Coles. About half of the SDA membership is at Woolworths and about one quarter is at Coles. This means the SDA’s existence is more or less entirely reliant on only two employers.
The SDA negotiates enterprise agreements that ensure lower wages for workers and continued profits for Woolworths and Coles. In return for these sweetheart deals, these companies allow and assist the SDA to recruit young workers.
SDA recruitment agents are permitted to interrupt workers, target them on their first shift, interrogate children without parents present, process payroll deductions, and more. Until 2018, SDA even gave 10 percent of the membership fees paid by workers to these two employers as recruitment commissions.
Without this kind of assistance from the bosses, SDA membership would plummet. This is because the SDA doesn’t actually achieve anything for its members. Notoriously, the SDA helped a range of big employers across retail and fast food steal billions of dollars from workers.
But the true value for Woolworths and Coles is in the SDA’s political affiliation. The SDA is the largest trade union affiliate to the Australian Labor Party (ALP). The close relationship between the SDA and the supermarket giants means the ALP has steadfastly refused to support greater regulatory powers against the duopoly to force divestment or other pro-consumer actions.
The largest employers, particularly Woolworths and Coles, secure far greater returns from the SDA than these recent, modest changes to junior rates will cost them.