Australia’s long-standing junior wage system may be about to get a major shake-up. The Fair Work Commission (FWC) is currently hearing a case that could see workers aged 18- 20 in retail, fast food, and pharmacies paid full adult wages for the first time. While unions are calling it a fair go, small businesses are bracing for the fallout should the FWC rule in favour of the change.

The Shop, Distributive and Allied Employees Association (SDA), the union representing retail and fast-food workers in this case, argues it’s time for adult age to mean adult pay. Employer groups say scrapping junior rates could spell disaster for small retailers, franchisees and family-run shops, upping the cost of doing business by as much as 20–30 per cent overnight..

So, there’s a lot at stake for small business owners if the rules change.

What’s the Fair Work Junior Pay case about?

Under the current awards covering retail, fast food and pharmacies, workers under 21 are paid on a sliding scale. Eighteen-year-olds earn 70 per cent of the adult rate, 19-year-olds get 80 per cent, and 20-year-olds receive 90 per cent. Full pay only kicks in at 21.

The SDA has asked the Fair Work Commission to scrap this structure for anyone aged 18 or over. It says age shouldn’t determine pay when many of these workers are already performing the same duties as their older colleagues.

“If you’re 18, you’re legally an adult. You can vote. You can drive. You can work the late shift. But in retail and fast food, you’re still paid like a kid,” said ACTU President Michele O’Neil, backing the SDA’s case.

“An 18-year-old needs 50 plus hours a week to earn what an adult makes in 38. The bills don’t get reduced because you’re younger. The rent doesn’t care about your birthday.”

The union argues the current system is outdated, saying it’s a hangover from when 21 was considered adulthood and that young workers shoulder adult responsibilities without adult pay.

What employers (and small biz ) are worried about

Employer groups, however, warn that equalising pay could backfire. Research commissioned by the Australian Retailers Association (ARA) and National Retail Association (NRA) found that 77 per cent of retailers would likely cut junior hiring if junior and senior rates were equalised.

“Retail is the single largest employer of young Australians, employing more than 500,000 workers under the age of 24,” said ARA CEO Chris Rodwell. “If junior rates are tampered with, the impact on already high youth employment could be dire – particularly in regional areas.”

More than half (56 per cent) of retailers surveyed said they’d face higher costs if the change went through, and many feared they’d have to reduce store hours or pass costs onto customers.

Small business owners are already juggling higher rents, insurance, and power bills.  A wage increase would be another hit to the bottom line. “Small and family-run businesses operate on tight margins,” said Rodwell. “They simply can’t absorb additional costs.”

Fairness versus fallout

At the heart of the debate is a clash between fairness and opportunity. The SDA says 18-year-olds doing the same job as older colleagues deserve equal pay. Employers argue junior rates exist for a reason. They make it viable to hire and train younger, less experienced staff.

“Current junior rates reflect lower levels of experience and are an incentive for employers to take a chance on younger workers,” said Rodwell. “Removing this structure would make it harder for young Australians to enter the workforce.”

The Franchise Council of Australia agrees, warning that removing junior rates “will disrupt the model that has worked so well and enabled thousands of young Australians to get their first job.”

But unions say those arguments are outdated. SDA national secretary Gerard Dwyer said, “When women were fighting for equal pay half a century ago, employers said it would squeeze them out of the job market. Now they’re using the same tired argument about paying 18-year-olds adult wages. It wasn’t true then, and it won’t be true now.”

The ACTU’s O’Neil adds: “Fair pay doesn’t kill jobs, but ill-founded employer scare campaigns can and do.”

Lessons from overseas

Proponents of change point to New Zealand and Canada, where youth wage systems have already been phased out without major spikes in unemployment.

University of Sydney industrial relations expert Associate Professor Stephen Clibborn told The Nightly the Australian system was “a hangover from the 1900s” and out of step with modern definitions of adulthood.

“These junior awards were created at a time when adulthood was regarded as being age 21,” he said. “That’s an antiquated notion.”

He too noted that New Zealand’s youth unemployment rate didn’t rise when youth wages were scrapped in 2008.

Still, local business groups say the Australian retail landscape, which is heavily reliant on small and family-run operators, is different. They argue that what works across the ditch may not translate when businesses here are already under pressure from rising overheads and tight margins.

The cost-of-living reality

There’s no denying the cost-of-living crisis is biting young workers hard. Eighteen-year-olds in retail paid under an award currently earn around $18.59 an hour, compared with $26.55 for adult employees. That’s a big gap when you’re paying full adult prices for rent, groceries, and petrol.

As Greens Senator Barbara Pocock told The Nightly, “Young people don’t get discounts at the supermarket checkout or on their rent. They face the same cost-of-living pressures as everyone else, so why should their pay be any less for doing the same job?”

For many young workers, bridging the pay gap is about survival. But for small employers, the question is how to pay for it.

Striking a balance for fairness

Emma Seymour, Chief Financial Officer at workforce management platform Deputy, believes the solution isn’t about choosing one side over the other.

“The debate around junior pay rates goes beyond wages,” she said. “It’s about how much we value early career workers and how to build workforces that are sustainable and fair. 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.”

She warned that sudden changes could force small operators to make tough choices: “If these costs rise overnight, workers risk losing opportunities altogether, a scenario no one wants in a labour market already grappling with skill shortages.”

But she also acknowledged the need for fairness and engagement.

“When employees perform at the same level but are not rewarded accordingly, trust in the system erodes. The best approach is to ensure fairer pay while growing a skilful, confident workforce.”

What happens next?

The Fair Work Commission hearings will run through until early November, with a decision expected later in the year. If the SDA’s case succeeds, employers covered by the retail, fast food and pharmacy awards will need to pay adult rates to workers aged 18 and over.

That would mean recalculating payroll, updating rosters, and potentially rethinking hiring and training models, particularly for small operators who rely on junior staff to keep stores running affordably.

Whatever the outcome, this decision could reshape the entry point to work for hundreds of thousands of young Australians, and change the way small businesses manage their most junior staff.

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