Poverty Wages

Abolish poverty wages

Poverty wages are any wage structures that mean workers are earning below the poverty line.

There is no official definition of poverty in Australia, but the poverty line is most often described as being as 50% of median adult full-time wages.

One in eight people, including one in six children, lives in poverty in Australia.

A significant number of workers in Australia are only earning poverty wages.

The enforceable minimum wages in retail and fast food mean:

• Workers under the age of 21 (other than those in retail who are 20 and have 6 months or more service) are paid a poverty wage
• Every worker with a disability paid a supported wage is paid a poverty wage
• Trainees paid a trainee wage are on poverty wages
• Every apprentice paid apprentice wages is paid a poverty wage

An increasing number of workers, even those earning above the poverty line, are are also unable to meet their expenses because of the cost-of-living crisis.

Rent increases, interest rate rises and the spiralling cost of living mean that more people than ever are struggling to get by, and are at risk of falling into poverty.

Junior rates discriminate

Australia is one of the few countries in the world that still maintains junior wage rates for workers under 21 years of age.

South Korea abolished its junior rates as long ago as 2005.

In Aotearoa / New Zealand, junior rates were abolished in 2008 due to worker organising. They were reintroduced in the form of a “Starting Out” wage in 2013, which applies to young workers who have less than six months of continuous employment with an employer, and are paid at 80% of the full adult minimum wage. After six months, young workers in Aotearoa must legally be paid the same minimum wage as an adult.

But in Australia, workers under the age of 21 are still being exploited and discriminated against due a tiered junior wage system.

Many Australian workplaces, especially in the retail and fast food sector, rely almost entirely on young workers, who can be earning 250% less than the adult wage.

80% of McDonald’s workers, for example, are under 21 years of age. This saves employers a significant amount of money on their wages bill, while young workers are out of pocket.

Costing young workers

A 2020 report by the McKell Institute on junior rates in Australia estimated that “the individual cost [to workers] of the junior pay rates is on average $8,483 per year per junior employee, resulting in approximately $3.5 billion per year in lost wages for young Australians, further contributing to intergenerational inequity“.

Many employers argue that young workers, employed in their first job, shouldn’t be paid the same as adults because they don’t have the same amount of work experience. They also say that young workers cost businesses more to train and supervise, which justifies paying them less.

But young workers at workplaces like McDonald’s, KFC, Woolworths and Coles are doing the same work tasks and have the same responsibilities as adult workers, often with little or no on-the-job training.

Young workers aren’t expected to do 250% less work, so why do they get paid less? All workers, no matter their age or experience, deserve to be paid fairly.

Junior wage rates discriminate against young workers, and especially against young workers who may be supporting themselves and others, and/or living out of home.

Food, rent and public transport don’t cost 250% less for workers under 21. Junior rates keep young workers in poverty.

It’s time we caught up with most of the rest of the world and abolished junior rates, trainee rates and other poverty wages.