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Australia - Industry groups stand divided over FWC apprentice wage rise decision

26 August 2013

Key industry bodies are up in arms over the Fair Work Commission’s decision to increase the minimum wages for apprentices, with some declaring it a major blow for employment opportunities.

The decision announced last week will give young apprentices, trainees and juniors across many industries a wage rise of between AUD 60 (USD 54) and AUD 100 (USD 90) per week. Apprentices including electricians, plumbers, builders, hairdressers and more will be impacted, with first and second year apprentices set to benefit the most.

In addition, adult apprentice rates will be included where they are currently not present, and there will be an increase in the minimum award rates for adult apprentices. The new wage rates apply to people who commence apprenticeships after 1 January 2014.

The Australian Chamber of Commerce and Industry chief executive Peter Anderson declared the decision a “body blow” to employers wanting to offer new apprenticeships.

“Australians wanting to tackle youth unemployment should view this decision with grave concern”, he said in a statement. He said the “dramatically increased” employment costs will “cruel the capability of employers to take on apprentices in an affordable way”. He argued the increases are a “one-size-fits-all basis with no regard to differing capacity to pay”, and referred to statistics showing that there had been a 40% fall in Australian apprenticeship commencements over the past 12 months.

Anderson’s views were reflected by Master Builders Australia chief executive officer Wilhelm Harnisch.

“The Fair Work Commission’s decision today will lock thousands of young Australians out of rewarding careers in an industry crying out for more skilled workers over the next decade,” Harnisch said in a statement.

“The Commission’s decision will simply price many apprentices out of what is already a tight job market and at a time when the building and construction (industry) is struggling and less able to afford to take them on.”

The Australian Industry Group commented cautiously on the announcement, commending the win for apprentices, but raising similar concerns for employers. Chief executive Innes Willox described the changes as an attempt to “strike a careful balance between the need to modernise wages and conditions for apprentices, without jeopardizing jobs and career prospects for young people”.

Willox expressed hope the wage rises for first and second year apprentices would not impact on apprentice numbers “which are already under pressure”. “Despite this, there is the risk that the higher rates will have negative employment effects. Hopefully this will not be the case, as apprenticeships are vital in addressing skill shortages and in providing rewarding careers,” he said in a statement.

The Electrical Trades Union divisional secretary Allen Hicks was buoyed by the outcome, and declared in a statement it was a “major victory” for apprentices. He said the decision reflects that low pay rates are a “major contributor” to low apprentice retention rates, resulting in almost four in ten apprentices failing to complete their training. “For too long our apprentice pay system has been a remnant of the 1950s, when those learning a trade were teenagers living at home with mum and dad,” Hicks said.

“Shifting demographics mean that today, more than a quarter of modern apprentices are aged over 25 when they enter the trade.

“The expert advice was clear. If we want to address skills shortages, make training appealing to employers, and ensure adult apprentices can afford to live while undergoing their trade training, we needed to improve retention rates by ensuring they receive a liveable wage.”

Earlier this month, industry groups rallied together to call on the federal government and opposition to halt a flow of policies that have led to a dramatic decline in the number of apprenticeships being commenced.

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