Unions’ youth pay push ‘catastrophic’, says business

Employers have condemned as ‘catastrophic’ a union bid to scrap junior pay rates for more than 500,000 workers aged 18 and older across the retail, fast-food and pharmacy sectors.

ACTU secretary Sally McManus. Picture: Liam Kidston

Employers have condemned as “catastrophic” a union bid to scrap junior pay rates for more than 500,000 workers aged 18 and older across the retail, fast-food and pharmacy sectors, warning it would deter businesses from taking on young workers.

The shop assistants union made the ground-breaking claim in the Fair Work Commission ahead of union leaders at the ACTU congress in Adelaide vowing to campaign to lift youth wages across the workforce and “end youth wage discrimination”.

ACTU secretary Sally McManus said unions also wanted junior apprentice rates scrapped. “Young people don’t get discounts on their rent or youth grocery bills, so why should they get youth wages,” she said.

But National Retail Association interim chief executive Lindsay Carroll said the retail sector was the biggest employer of young people in Australia and granting the union claim would “risk pushing young people out of the retail labour market”.

Flight Centre co-founder and managing director Graham Turner said any significant increase in wages would reduce the opportunities for younger people to join the workforce. “So it will actually hurt the very people it’s meant to benefit,” said Mr Turner. “It also will add to inflation, I presume.”

Australian Industry Group chief executive Innes Willox said the push to abolish junior and ­apprentice rates was a “short­sighted” plan that would hurt the very workers unions were trying to help.

“Younger workers already face higher unemployment rates more than double that for other workers and, in the currently weakening labour market, youth unemployment has risen much faster than the national average,” he said.

He said there were 526,000 employees on junior rates and 236,000 on apprentice rates. “They provide a vital incentive for employers to provide opportunities for young and inexperienced workers to enter the workforce,” he said. “They also reflect the inherently limited work experience of these workers relative to other employees.”

Business Council of Australia chief executive Bran Black said junior pay rates helped less skilled workers into employment while also reflecting the investment many businesses made in training young people.

“There could be unintended consequences arising from this policy, including less available jobs and less hours for young people,” he said. “At a time when there are record insolvency levels and customers curbing their spending, now is not the time to add more hurdles for businesses with new costs added to their operations.”

Australian Chamber of Commerce and Industry chief of policy and advocacy David Alexander said granting the union claim would “make it almost impossible for young workers to get their first job”. “Taking on a worker with minimal experience requires extra risk and extra effort – they do not have the work or life ­experience that older adults have,” he said.

“This would be catastrophic for young workers, especially in retail, who would struggle to get a start.”

The shop assistants union ­application, which also aims to lift existing junior rates of pay for workers aged 15 to 17, seeks to change the retail, fast-food and pharmacy awards to pay the full adult rate of pay for workers 18 and over. Workers under 21 are paid a percentage of the adult rate of pay – 70 per cent for an 18-year-old, 80 per cent for a 19-year-old and 90 per cent for a 20-year-old fast-food or pharmacy worker.

The union application seeks to lift the rate across these age groups to 100 per cent of the adult rate, while also increasing rates for 17-year-olds from 60 per cent to 75 per cent and workers under 16 from 45 per cent to 50 per cent.

SDA national secretary Gerard Dwyer said it did not make any sense that 18 and 19-year-old workers doing the exact same work as their co-workers were paid less.

“In the eyes of the law, 18, 19 and 20-year-olds are adults. They can vote, drink alcohol and join the army – why are they paid as juniors? If you’re of adult age, you should be paid an adult wage,” he said. “By the age of 18, most retail and fast-food workers have many years experience in the sector, there is no justification for them being paid 30 per cent less.”

If successful, the changes to the awards would not only lift the minimum wages in the impacted industries but flow to enterprise agreements with junior rates. The union estimates about 500,000 workers stand to benefit.

A spokesman for Workplace Relations Minister Tony Burke said the application “will be considered by the Fair Work Commission”.  

Australian Retailers Association chief executive Paul Zahra said retailers were experiencing a “cost-of-doing-business crisis”.

“Junior rates are used to incentivise employment of young people who are less skilled, giving them an entry point for their ­careers,” Mr Zahra said.

“Without these rates, these young people may otherwise struggle to compete against older, more experienced applicants.”

Bunnings managing director Mike Schneider said the company’s enterprise agreement provided for workers aged 18 and over to receive the full adult wage based on pay bands aligned to their ­experience and skills.

Additional reporting: Glen Norris