The Fair Work Commission has just tabled changes to junior pay rates, which the Australian Retail Council CEO Chris Rodwell said will be a financial blow to retailers across Australia.
The full bench of the FWC confirmed that after six months’ of experience, the rates payable to adult junior employees (those 18 or over), will be set at a rate of 100% of the full adult rate of pay.
The current percentage rates for adult junior employees with less than 6 months’ experience with their current employer will stay the same, with no changes to wage rates for those under the age of 18.
The Commission has also proposed a gradual transition for workers aged 18 to 20, with changes phased in over several years rather than imposed immediately.
Retail is the largest employer of young Australians, with more than 500,000 workers under the age of 24. One in eight young Australians get their first job in retail. The ARC added these changes come as youth unemployment sits at 10 per cent, compared with a national rate of 4.3 per cent.
ARC CEO Chris Rodwell said while this will be a financial blow for businesses, the decision recognises the need to maintain pathways into work and the realities facing businesses operating in a challenging economic environment.
“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,” 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.
“The move to 100 per cent adult rates is linked to experience with the same employer, and the long transition period gives businesses time to adjust. That is a practical approach that reflects current trading conditions.”
According to the ARC, small retail businesses have expressed strong concerns that removing junior rates will increase labour costs and make it harder to employ young people entering the workforce, while some small retailers said they could struggle to remain viable as a result of such a decision.
Rodwell added that many retailers already pay above-award rates to retain skilled young employees as they gain experience and take on more responsibility. He said junior pay structures have long provided a balanced pathway that supports both youth employment and business viability.
On top of this, retail businesses are now operating in significantly tougher conditions with rising rents, insurance, supply chain costs, regulatory complexity, and the escalation in global fuel prices is adding further pressure at pace.
“The reality is, this decision does add another layer of cost at a time when many retailers are dealing with a cost-of-doing-business crisis,” Rodwell said.
The decision also comes as businesses await the outcome of the FWC’s upcoming Annual Wage Review.
“When wage costs rise faster than productivity in this environment, it compounds the pressure on hiring, investment and ultimately prices.”