HALF A MILLION YOUNG WORKERS TO GET UP TO 42PC PAY INCREASE

McDonald’s is one of the big employers of young people set to be affected by the abolition of junior pay rates.

The adult rates are proposed to be phased in over four years, starting in December and ending in July 2029.

The landmark ruling is expected to affect Woolworths, Coles, McDonald’s and other major employers of young people.

Under the three industry awards, an 18-year-old is paid 70 per cent of the adult wage, a 19-year-old is paid 80 per cent and a 20-year-old is paid 90 per cent.

The Shop Distributive and Allied Employees Association argued many young workers were already experienced as they had started work aged 15 or 16, and the adult rates were needed to increase living standards of the low-paid.

The union argued that 21 years as the exit age for junior rates was a “historical accident” and that there was “no magic to the age of 21 years”.

However, employers hotly contested the increase by arguing that it would deter hiring.

The commission’s full bench, led by deputy president and former Labor MP Terri Butler, granted the adult rates for 18- to 20-year-olds but required they have six months’ employment before the rate kicked in to mitigate against disadvantaging them in the labour market.

It decided not to raise rates for workers under 18, for whom the SDA had sought to increase 17-year-olds’ junior rates from 60 per cent to 75 per cent.

The bench found many young adults typically performed the same duties, with the same skills, as those 21 and older, and it was common for them to hold supervisory or even managerial roles.

“The lay evidence of junior employees performing training, supervisory and management duties militates against a finding that, particularly, young adults have such a pronounced maturity, life experience or soft skills deficit compared to adults aged 21 and over that their work is of such lesser value as would give rise to a significant difference in work value,” said the commission’s full bench.

Referring to economists’ views, the bench found the increase’s negative impact on youth and total employment was likely to be small.

Indeed, it found that higher minimum wages attracted more workers – “suggest[ing] a possible increase in workforce participation by this age cohort”.

Employers may substitute young adults with cheaper minors, but “only to a limited extent” because of availability constraints from school and factors such as maturity and restrictions on minors delivering food or selling tobacco.

Despite Hungry Jack’s considering artificial intelligence and automation through drive-through ordering, the bench said the cost of AI was “difficult to predict” and capital-labour substitution was unlikely.

However, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the decision “obviously” would reduce the attractiveness of young workers and predicted employers would shift towards more experienced counterparts paid the same amount.

“This is a disappointing decision that will make it even harder for young adults trying to forge a career,” said McKellar.

“Junior rates recognise that young workers are often new to the workforce and still developing skills.

Removing them reduces the incentive for businesses to give young people a start.”

He said the rates also meant businesses were likely to be more accommodating with young people’s demands for flexibility to study or work part-time.

However, SDA national secretary Gerard Dwyer said this was “a landmark decision, up there with the introduction of equal pay for women in the 1970s”.

“It may take longer than we would have liked, but the principle has been established that no longer will 18-year-olds be treated as second-class citizens,” said Dwyer.

He said 18-year-olds could “vote, drive and put their lives on the line for their country”.

“They do not receive a discount on their rent or the petrol they buy to get to work just because they happen to be 18.

Now they will be paid the same as other adults.”