Fair Work Commission to award young workers aged 18 to 20 pay rises up to 42 per cent

Hundreds of thousands of young Australian workers aged 18 to 20 will get pay rises up to 42 per cent after the Fair Work Commission ruled junior workers should be paid adult rates in a move that will grow the wage bills of Australia’s employers.

The new adult rates for young workers in fast food, retail and pharmaceutical industries will be phased in over four years between December and July 2029, and will only apply after a young worker has served six months with their current employer.

The workers’ union The Shop Distributive and Allied (SDA) Employees Association brought the application to increase minimum wages for all employees under age 21, although the FWC ruled against raising pay rates for 16 to 17 year olds, or younger.

On Tuesday, an SDA union spokesperson said the changes should’ve been made years ago to put young adults facing cost-of-living pressures on an equal footing with older workers.

“Delivering wage equity for these young workers is overdue, so the SDA will be arguing for the full effect of today’s decision to be applied as quickly as possible,” an SDA spokesperson said.

“The FWC has sought to phase in these overdue entitlement for young workers, who are adults by law and in every other aspect of their lives.”

The SDA added that 18-year-olds are old enough to vote and go to war for their country and therefore are entitled to pay equal to anyone in the same jobs aged 21 or over.

In making its decision, the FWC’s bench panel found that many young adults performed the same duties, as those 21 and older. It also found it was common for them to hold supervisory roles and possess the same skill set.

Employers face higher wage bills

The FWC’s decision will add to the wage bills of major retail and fast-food businesses such as Coles, Woolworths, Hungry Jacks, Domino’s Pizza and McDonalds, with The Australian Retail Council warning smaller businesses will be worst off.

According to the ARC, the retail sector is Australia’s largest youth employer, with more than 500,000 workers under the age of 24, often working at small family-run businesses at the heart of the economy.

Currently, one-in-eight Australians under 24 get their first job in retail as the jobless rate among this age group sits at 10 per cent, versus 4.3 per cent nationally, the ARC said.

“The reality is, this decision adds another layer of cost at a time when many retailers are dealing with a cost-of-doing-business crisis,” said the retail body’s chief executive Chris Rodwell.

The ARC went on to insist that the enforced pay rises may make employers less likely to hire young people given they often have no qualifications or performance record as employees.

“Junior rates have served Australia well for generations. They recognise that younger workers often have little or no workplace experience and help employers, particularly small businesses, give young people their first opportunity,” Mr Rodwell said.

“Crucially, junior rates for workers aged 17 and under will remain in place. That’s important. Early work experience is critical, and we cannot afford to make it harder for young Australians to get their first job.”

A spokesperson for McDonald’s Australia said it’s taking time to review the decision.

Spokespeople for Woolworths and Coles declined to comment, other than to reference a statement from the ARC as the retailers’ industry representative.

Shares in Coles and Woolworths fell between 0.5 per cent and one per cent on Tuesday, versus a 0.3 per cent gain for the broader S&P/ASX 200 Index.

Domino’s Pizza investors shrugged off the potential wage bill increase for its store operators, as the stock added 0.3 per cent to $16.20.