David Hetherington August 09, 2012
Doing it tough ... Young workers should be paid on merit rather that birthdays. Photo: Greg Ellis
In his book Blink, Malcolm Gladwell recounts how a blind audition in 1980 changed the face of symphony. To avoid a family conflict of interest, the Munich Philharmonic Orchestra used a screen to hide a trombone audition. To the horror of the male judges, the winner was a woman.
Despite their best efforts to overturn the result, the appointment stood and 30 years later, blind auditions are the norm and the share of women in leading orchestras has increased five-fold.
The story offers lessons for us. At a time when we've removed formal workplace discrimination for gender, race, religion and sexuality, we somehow retain discrimination for age. Lower minimum wages for junior employees are allowed under the Fair Work Act. So while a 22-year-old might receive $17.71 an hour, an 18-year-old gets $12.41 for the same job, a penalty of 30 per cent. The national minimum wage is $15.96.
The review of the act released last week observed that Australia offers low minimum rates for juniors compared with our international peers, but stopped short of calling for their abolition. This is a missed opportunity.
At the heart of the issue is how we value the work being done. The employer should be motivated by how much value the employee adds to the business. In the retail sector where youth wages are most common, the employer assesses value by how much a good staff member can increase revenue. That depends on how much customers value good service. And how do we assess that?
Here's where the blind audition comes in. Imagine you walk blindfolded into a store with a purchase in mind, maybe a pair of jeans or an iPad. What are you looking for from the person behind the counter? Certainly product knowledge and efficient service; a friendly manner is always a bonus. But do you care how old your salesperson is?
Before the blindfold, you might have thought it important. But once you stop thinking about it, it's just not that important, particularly if they're knowledgeable, efficient and friendly. In some industries, youth might even give an employee an advantage. If you accept this, it's a small step to agree that young workers should be paid on merit rather than birthdays. The arguments for retaining discriminatory wages are as old as the hills. The first is that youth wages reflect a reasonable discount for inexperience. This is patently untrue. Even if our 18-year-old has been employed for two years, and the 22-year-old for just two weeks, the younger worker will still face a 30 per cent penalty.
A second argument is that youth wages constrain youth unemployment by ensuring young people a start in the workplace, adding an important component to Australia's education and training system. Were it not for youth wages, the argument goes, employers would not take on first-time workers. This ignores an extremely tight labour market and the fact that most industries with young workers have inherently high staff turnover, as young people move on to higher-skilled, higher-paying jobs.
The final, most compelling argument served up in favour of youth wages is the present malaise in the retail sector. Despite strong retail sales data recently, many retailers are struggling with a high dollar and the incursion of online sales, and closing the gap between youth wages and adult wages would bring new cost pressures. For this reason, a staged phase-out of youth wages would be preferable to an overnight adjustment - or a transitional arrangement where young workers are paid on experience or qualification. But the need to proceed carefully doesn't alter the moral argument for making the change.
Happily, responsible businesses are starting to act of their own accord. Most major retailers now pay adult rates from 20 years of age under their enterprise agreements (and this has seen no reduction in the number of 20-year-olds employed). Ikea has gone further and scrapped all youth wages in its latest collective agreement.
Australia has done a wonderful job in removing all sorts of workplace discrimination, and age should not be a bridge too far. We allow 18-year-olds to vote, pay tax, marry, and go to war. If 18 is the measure of adulthood for these things, why not for the minimum wage as well? Equal pay for equal work is not too much to ask.
David Hetherington is executive director of Per Capita, a progressive think tank.