Youth wages: slavery in the free market?

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Youth wages: slavery in the free market?

By Ky Moon

On June 24, the Australian Industrial Relations Commission (AIRC) handed down its final report on junior wage rates. With the federal Coalition government and big business hailing the findings of the report, all young people should be very wary.

It was the Liberals who brought us work for the dole, literacy tests for the dole, the common youth allowance and cuts to employment training programs, so their enthusiastic claims that the AIRC report will help reduce youth unemployment should be taken with a big grain of salt.

The AIRC report argues for the retention of youth wages, claiming that if they were abolished, unemployment would increase. The report goes further and supports the expansion of youth wages, especially targeting the building and construction, metals and manufacturing industries.

The government is pushing for legislation which allows the entrenchment of youth wages because after June 2000, the exemption of youth wages from the anti-discrimination act will expire. The AIRC inquiry was initiated as a "concession" to the Australian Democrats in 1996 after they supported the Coalition's anti-worker Workplace Relations Act. The inquiry was to investigate "the feasibility of replacing the youth wage system with a non-discriminatory alternative".

Umpire's decision

Federal government and big business claim that the AIRC is an "independent" umpire and that therefore the Senate must accept its recommendation to enshrine youth wages. These claims are false. In a press release, the Shop Distributive and Allied Employees Association (SDA) explained: "In its inquiry into junior wages, the commission did not take any evidence from the industrial parties, including from young workers themselves. The union believes that the investigation of non-discriminatory wages for junior workers needs to be taken further by hearing from young workers and their authorised representatives in the trade union movement."

The commission did hear from the large retail and fast food chains, such as McDonald's and Woolworth. The SDA has called youth wages in the retail and fast food industry "discriminatory", pointing out that a 15-year-old worker receives only 40% of the adult rate for the same work. An 18-year-old worker receives 70% of the adult rate.

The union, which represents 211,000 workers in the retail industry (over 50% under 21), has called for the same wage to be paid for the same work regardless of age. John de Bruyn, SDA national secretary, explained, "Just as the fight for equal pay for women was long and hard in the 1970s ... equal pay for equal work for young workers is a long battle which will ultimately be achieved".

The government argues that if junior rates of pay were abolished, unemployment for young people would rise by 30%. A very similar argument was used to maintain lower wages for women: that if women received equal wages, unemployment for women would increase.

These arguments assume that lower rates of pay increase employment. However, there is no direct link between low wages and employment. The crucial factor is whether employers choose to invest in creating jobs, and this depends on a wide range of factors, wage levels being only one.

In many countries where wages are kept low, unemployment is still very high. A study in 1997 revealed that Spain had the highest unemployment rate in Europe (more than 50% among youth), yet its wages were 20% lower than those of most European countries.

The government says that increasing young people's wages will be a cost to business, which will lead to unemployment. If you follow that logic, then everything from maintaining safety conditions to employing workers at all is a "costs to business" and "will lead to unemployment".

The truth is that the government's agenda is set by big business, and its quest is for the highest profits. This agenda is a huge "cost" to all workers: it creates unemployment as businesses try to increase productivity and lower costs by shedding jobs and making workers who remain work harder, for longer.

Another Democrat sell-out

The AIRC report says youth wages should be assessed on a case-by-case, award-by-award basis, weighing discrimination against employment. Despite claiming to oppose the government's attempts to legislate for youth wages across the board, the Democrats have welcomed the case-by-case principle.

On June 25, Democrat Senator Andrew Murray stated: "The decision of the AIRC tabled today broadly confirms that the appropriate approach for justifying junior rates or skill-based alternatives is on an industry or award basis, and we can live with that principle".

Resistance member and young worker Nicole Berrell told Resistance, "There is no case where discrimination based on race or sex is justifiable in a workplace, so why should there be for young people? It seems the Democrats are seeking a 'nicer' way for youth wages to continue to exist.

"There are some industries, or 'cases', in which bosses would argue very strongly for youth wages, such as the retail industry, which employs large number of young workers, and others which wouldn't, like the health industry, which has fewer. Who will decide whether youth wages apply to different cases? Will it be young workers or the money-grubbing bosses?"

The Democrats argue that they support "competency-based" rates of pay, rather than youth wages. However, if introduced across the board, competency-based pay would drive down the wages of all workers, putting into question the skills and competency of each individual worker.

"This is exactly what Reith wants", argued Berrell. "Already in workplaces, such as the call centre where I work, there is performance-based pay. This means that workers' levels of productivity and performance are constantly monitored.

"Competency-based pay would put the wages of all workers on the line, on the basis of what bosses define as 'competency'. This would especially discriminate against women and non-English-speaking background workers. Bosses should pay workers based on the job that is done, and any further training necessary should be supplied by the bosses because it is they who will benefit most."

The youth wages bill is likely to go to the Senate in its next term, when the Democrats have the balance of power. At this stage the Democrats have said they will oppose the bill but with Meg Lees referring to youth wages as inevitable, and their support for case-by-case youth wages, the Democrats may still look for a parliamentary compromise.

Certainly we cannot rely on the Democrats; their deals on the GST and the Workplace Relations Act highlight that they are willing to deal away the rights of workers and the poor.

All those who stand for workers' rights — trade unions, university and TAFE student unions — need to stand together against discrimination against young workers.