Do youth wages create jobs — or slaves?

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Do youth wages create jobs — or slaves?

By Mel Bull

Young workers in Australia are discriminated against; because of their age, they are paid less for work of equal value. Reith and Howard claim that this gets young people a foot in the door and reduces unemployment. But do youth wages create jobs or slaves?

International labour standards and human rights conventions are against workplace discrimination, including on the grounds of age. The Australian Industrial Relations Act (1988) included age as a prohibited reason for discrimination.

The reality, however, is that junior rates of pay have continually been exempted from anti-discrimination legislation. An estimated 56% of all people under 21 years are employed on junior wage rates, the retail, food and clerical industries being the largest employers of teenager workers.

There is evidence of a significant decline in the average real income of 15-19 year olds since the late 1980s, and an overall decline in junior wages relative to adults' from approximately 55% to 47%. In some cases, young people working full time receive as little as $180 per week.

Last August the Australian Industrial Relations Commission began an inquiry into junior wages with the aim of preparing a report on the "feasibility of replacing junior rates with non-discriminatory alternatives".

On February 15 oral presentations were heard by the commission from large retail chains, such as McDonald's. The Master Plumbers and Mechanical Services Association of Australia told the inquiry that wage increases would add to industry costs and would be "recovered from customers" through higher prices.

The minister for employment, workplace relations and small business, Peter Reith, is not prepared to wait for the results of the IRC inquiry and has proposed legislation to retain junior rates of pay, the Youth Employment Bill.

Reith and Howard argue that wage increases contribute to high levels of unemployment. This is a fallacy. Information from almost every country in the world reveals no direct relationship between low wages and employment growth. For example, a study done in 1997 revealed that Spain had the highest official unemployment rate in Europe (more than 50% among youth), yet its wage levels where 20% lower than most European countries'.

If lower wages and higher profits create jobs, then why are companies like ANZ and BHP sacking workers after announcing record profits last year?

The main contributing factor for unemployment is the quest for profits. To compete in the capitalist economy, companies must constantly strive to reduce production costs by lowering wages and investing in labour-saving techniques (cutting jobs).

Youth wages are no solution to unemployment; instead they open the door to intensified exploitation in the workplace. The existence of junior rates not only means a low income for young people but also puts enormous downward pressure on all other workers' wages. Threatened with replacement by a cheaper worker, many workers have to accept lower wages. Reith's scheme will make our generation compete with our parents for jobs.

The government's push to entrench youth wages is just a part of its wider social and economic attack on young people. At the same time as it is entrenching youth wages, it is also tightening the screws on welfare payments for young people. Policy initiatives such as work for the dole, literacy tests for the dole, cuts to under-18 welfare payments, the common youth allowance, the abolition of Abstudy and cuts to employment training programs have all made life harder for young people who are studying or out of work.

Howard has described the "family" as "the natural welfare unit". These policies force many young people (working, unemployed or studying) into economic dependency on their family.

This undermines the independence of young people and can subject them to some of the problems hidden within the nuclear family, such as domestic violence and sexual abuse. It also is a cut in the social wage for all workers, because parents have to take economic responsibility for their children for longer.

Approximately one in four young people are unemployed. Unemployment figures released by the government on January 14 showed that youth unemployment rose from 23.1% in November to 26.6% in December in NSW, from 26.8% to 27.3% in Queensland, 21.1% to 22.1% in Western Australia and 29.2% to 39.6% in Tasmania.

Despite these high figures it is clear that the problem is not a lack of work that needs to be done and that young people could do. The work for the dole schemes illustrate some of the jobs that need to be done — for example, the rejuvenation of degraded land. But these should be real jobs that pay real wages and provide a real future for young people. To solve youth unemployment there needs to be massive creation of socially useful jobs.

Reith's proposed maintenance and extension of youth wages will force young people into working poverty and exert a downward pressure on all wages. They will do nothing to solve unemployment. It is important for young people, trade unions, progressive organisations and community groups to campaign for equal pay for equal work.

[Mel Bull is the western Sydney organiser for Resistance].