from YAPRap November-December 2006
by John Ferguson, Policy & Training Officer, YAPA
Earlier in 2006, we asked for contributions from young people who had experiences with minimum, or very low, wages in our 'Your Pay, Your Say' campaign. We used these contributions to assist us with our submission to the Australian Fair Pay Commission (AFPC).
The AFPC were taking submissions in order to make their first decision on minimum wages since the Commission was established under the WorkChoices legislation. In considering these submissions, the Commission has seemingly delivered a fair pay rise of $27.36 per week to the minimum wage, with proportional increases for young workers as well. These increases will take effect from December 1, 2006.
Young workers & the increase in the minimum wage
In our submission, we recommended that the AFPC preserve the rates of pay from existing federal and state awards for young workers and trainees. Similarly, we made the recommendation that any increases in junior rates of pay be in line with the increase to the Federal minimum wage. The Commission has done this by preserving the rates of pay and allowing the increase of the minimum wage to flow on to junior rates and training rates. For example, a junior rate of pay may have been set at 60% in an award prior to WorkChoices. Now, that rate will still be 60%, but it will be applied to the new higher rate.
The AFPC has provided a clear example to demonstrate this increase for young workers:
Using the example of a 17 year old junior worker employed in the retail industry working 12 hours per week:
This worker currently earns $9.80 an hour, which represents 70 per cent of the adult Pay Scale rate of $14.00 per hour, and earns $117.60 per week.
As a result of the October decision, the adult Pay Scale rate increases to $14.72 per hour. The junior employee's earnings will therefore increase to $10.30 per hour or $123.60 per week.
Trainees & the increase in the minimum wage
A similar principle applies to training wages for young people. The increases will be applied to trainees through the formulas that have been used previously to determine these wages.
Again, an example from the AFPC demonstrates this:
A full time trainee school leaver with a year 10 level of education will have their weekly wage increased from $5.82 per hour or $221.16 per week to $6.11 per hour or $232.18 per week.
A full time trainee school leaver with a year 10 level of education and 5 or more years out of schooling, will have their weekly wage increased from $11.92 an hour or $452.96 to $12.50 an hour or $475.00 per week.
A critical review of youth wages in early 2007
A review of Pay Scales for young people and trainees will be undertaken in 2007 by the AFPC. It will be crucial for us to demonstrate the real issues and concerns for young people to negate opposing views. There will inevitably be the calls from some organisations and societies to scrap minimum wages and allow the employer to determine the 'worth' of the job. This will be framed under competitiveness and economic growth.
Reframing the debate on youth wages & competitiveness
It has been widely criticised that the AFPC does not have to consider fairness in setting minimum wages. Fairness, however, has made way for the term 'competitiveness', which is repeatedly used in the instructions that guide the AFPC. From the contributions we received for our submission, the general consensus among young workers was clear:
I honestly don't understand how people can be expected to live on this wage, I've been looking for a second job since forever, and am now looking at leaving my current job (traineeship) which I love, to go to a higher paying job that I possibly won't love or like.
This situation was highlighted in our submission to shed light on the low training wages that force young people to leave traineeships and apprenticeships for more casualised and less career enhancing work. We were able to give real life examples in our submission that showed the relationships between minimum wages, lifestyle and career employment.
To reframe the issue of competitiveness, we need to outline the issues for young people in this way:
Young workers are not competitive if:
- They are forced to leave education to take up casual or low skilled work, reducing the possibility of adding to their employability and career prospects
- They are forced to leave a traineeship or apprenticeship due to inadequate pay, only to pursue a job with fewer career prospects
- The pay and conditions of a job fall below an adequate standard of living, rendering them unable to function in the workplace, let alone their life overall
- Due to a number of factors, the power imbalance is so great that there is no negotiation
- They are at serious risk of, or currently experiencing, workplace injury, harassment and exploitation
Early signs from the AFPC indicate an understanding of these issues:
"The Commission interprets 'economic prosperity' broadly rather than narrowly. An economically prosperous Australia is one where those seeking work have ample opportunity to find it and where a safety net mitigates hardship."
It is imperative that these interpretations remain broadly defined. To assist in maintaining this broad definition, we also need to draw attention to the notion of an adequate standard of living, as addressed in our submission:
The issue of a safety net for young people directly relates to an adequate standard of living. No one would argue that the safety net be set below this adequate standard of living. YAPA is aware however, that there will also be an ongoing debate regarding what is an adequate standard of living, and consequently, what constitutes poverty in this country. This submission has briefly discussed the issues that need to be accounted for when setting minimum wages and the safety net for young people. YAPA completely rejects the simple economic theory that claims to reduce youth unemployment by reducing the pay and conditions of young people. YAPA does not believe that by pushing young people closer to the poverty line, just to allow other young people to be 'employed' in this precarious situation, is beneficial for young people or the economy overall. This economic principle will only exacerbate the aforementioned workplace issues, creating tremendous harm for our young people, both now and into the future. (YAPA Submission to AFPC)
Again, there are signs that the AFPC will take these issues into consideration when reviewing youth wages:
"There is a general agreement minimum wages should... provide an income well above poverty. Minimum wages form part of the safety net and help to sustain the living standards of the low paid."
Overall, the first decision on minimum wages from the AFPC has been a positive one. In the explanations of this decision, they have also displayed an understanding of the issues facing young workers and those on low pay. This is due in no small part to the welfare and community groups that have been so vocal on this issue and Work Choices overall. What we need now is a continued effort to ensure the reality and genuine needs of young workers and the low paid are not lost on the AFPC.
More information or comment
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Do you want fair pay with that?
YAPA's work to protect young people's rights at work
www.yapa.org.au/yapa/policy/negotiate.php - If you have any comments on this article, or the issue of youth wages, you can contact me on ext. 5, 02 9319 1100 or 1800 627 323, or policy@yapa.org.au
