Statement from Innes Willox, Chief Executive of the national employer association, Australian Industry Group
The magnitude of increases awarded by the Full Bench in its decision will undoubtedly have a devastating impact on significant numbers of employers in the fast food and retail sectors, including on many small family-run businesses. There has been instant alarm within industry over the decision and genuine fear about the long-term sustainability of cost increases of this kind.
For context, the decision will mean that many 17-year-old employees working in the Fast Food Industry will get a 40% increase in pay on their 18th birthday.
Employers in this sector, which is already under significant economic stress, simply don't have endless capacity to absorb these kinds of dramatic cost increases without adverse consequences. The decision will undoubtedly cause many businesses to reconsider the viability of maintaining current trading hours and staffing arrangements. Ultimately the entirely foreseeable likelihood is that there will be fewer employment opportunities for younger workers, or even employment opportunities as a whole, in these sectors.
Employers in the retail and fast-food sectors are proud to offer vast numbers of young Australians a pathway into the workforce. Many deliberately structure employment practices and workforce strategies to ensure that job opportunities are available to younger workers. This often includes factoring in the need to afford these workers greater flexibility, and implementing greater resources to providing training and guidance to these workers. These considerations don't stop applying when an employee turns 18. Sadly, many in the sector will undoubtedly now embark on a reconsideration of the utility of this approach.
Employment in these sectors is often one of the limited options available for young people balancing educational commitments, be that secondary or tertiary education, with work. This includes many 18, 19 and 20 year olds that are still studying. Providing employees the flexibility they need to undertake these commitments while still offering employment opportunities is a major challenge for these sectors. It will be devastating for many young people if these sectors are unable to continue to provide these opportunities.
While the Full Bench has recognised the ongoing role for junior rates in assisting employees under 18 to secure crucial opportunities to enter the workforce and to protect their vulnerable position in the labour market, the decision to almost completely remove junior rates of pay for employees below 21, and in particular for employees at 18 or 19 years of age, is a major curtailment of the Commission's longstanding recognition of the importance of junior rates.
We will of course now work through with impacted members the feasibility of the proposal for part of these increases to commence from later this year.
Consideration will need to be given to the cumulative impact of this decision and any increase awarded by the Fair Wok Commission in the upcoming annual wage review. Many employers in sectors covered by the decision are already struggling with a difficult trading environment and are likely set to be impacted from flow-on cost impacts of rising fuel prices. The phasing in of the decision over a period will soften the immediate blow to struggling businesses, but it won't change the seismic change in labour costs that this decision will impose on the sector.
Ultimately, increases of this magnitude won't only impact employers in the sectors affected by the decision. It will also inevitably lead to on-costs paid by consumers. This is yet another example of our increasingly unbalanced workplace relations system delivering dramatic increases in costs for employers without delivering any productivity benefits to enable employers to afford it.
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Gemma Daley – 0418 148 821
