Abolishing junior wage rates could lead to higher youth unemployment and reduced opportunities for young Australians to enter the workforce, according to new research commissioned by the Australian Retailers Association (ARA) and National Retail Association (NRA).
The findings come as the Fair Work Commission (FWC) considers an application from the SDA to equalise junior and adult wage rates, and amid a rising youth unemployment rate currently sitting at 10.2 per cent — more than double the national average.
The survey revealed 77 per cent of retailers would likely cut junior hiring if wage rates were equalised, while 56 per cent said it would increase business costs. Many respondents indicated those costs may ultimately be passed on to customers.
Smaller retailers, already grappling with higher wages, leasing, energy, insurance and supply chain costs, were particularly concerned. More than half of survey participants were small businesses employing fewer than 20 workers.
ARA CEO Chris Rodwell said the proposal risked eroding pathways into work for young Australians and limiting employment in regional communities.
“Retail is the single largest employer of young Australians, employing more than 500,000 workers under the age of 24 years,” said Rodwell.
“If junior rates are tampered with, the impact on already high youth employment could be dire – particularly in regional areas.”
“In addition to higher youth unemployment, equalising junior and senior rates will narrow critical pathways into work for young Australians, especially in small and family-run businesses that operate on tight margins and can’t absorb additional costs.”
Rodwell emphasised the industry’s role in helping young people build transferable skills in their first job.
“Current junior rates reflect lower levels of experience and are an incentive for employers to take a chance on younger, less experienced workers,” he said.
“Removing this structure would undoubtedly make it harder for young Australians to enter the workforce, meaning employers are likely to favour more experienced applicants.”
Emma Seymour, Chief Financial Officer at Deputy, said the debate required a balanced approach that recognised both rising expectations from young workers and the operational pressures faced by businesses.
“The debate around junior pay rates goes beyond wages. It’s a multifaceted conversation about how much we value early career workers and how to build workforces that are sustainable and fair,” said Seymour.
“Fair compensation is essential, but the impacts of wage parity are felt differently: young employees gain security, while employers face higher costs and operational challenges.”
“Junior roles in small businesses and franchises are often an entry point into the workforce for young people. Sudden pay increases can force employers to make tough trade-offs that compromise operational efficiency, such as reducing shifts or cutting training programs.”
Seymour added that modernising pay structures should support both young workers and business viability.
“The FWC review is an opportunity to modernise pay structures in a way that balances fairness with practicality,” she said.
“The answer is not choosing one over the other, but finding a model that allows both to thrive.”
Rodwell said removing junior wage rates would also run counter to national productivity goals.
“When viewed alongside the waning support of governments across the nation for supporting skills development in the retail sector, the abolition of junior pay rates would also work against the Federal Government’s plans to raise productivity,” he said.
Retail employs 1.4 million Australians and serves as the first job for one in eight young people nationally.