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Wednesday, 10 February 1999
Page: 2307

Ms PLIBERSEK (11:38 AM) —Listening to these arguments you would think that young Australians do not have families to support, that they are less skilled, necessarily less mature and unable to undertake complex tasks, that their work is perhaps of less value or that paying them decent wages would mean that none of them would be hired.

These arguments are all familiar to me, because I remember hearing these arguments about paying women decent wages. In those days there were many stories about the disastrous effects of paying women the same rates as men. It was said that women could not lift heavy things, that they could not undertake complex tasks, that they were too emotional for some jobs. I recall particularly that when the first woman pilot was employed for Qantas there was some concern about whether she would be emotional at particular times of the month and thus unfit for the job. The other story concerned university entrants—that women's uteruses would shrivel because all the brain would rush to their heads when they were studying. These arguments sound ridiculous to us today but, equally, the arguments about youth wages are ridiculous for many of the same reasons.

We are constantly reminded that we need new skills to utilise in the new industries that we are developing in a new global economy. We are talking about new incentives to encourage innovation, which will require new work practices. In the middle of this we come up with this old proposal—that if we cut wages employment will necessarily grow. The two do not go together.

We are being told that the single most important thing we can do for young people is entrench a system which ensures that, no matter how hard they work or how skilled they are, they will not ever be paid the same as an adult doing the same task. We are being asked to tell young people that they will always be less productive than an older person, no matter what the task is and no matter how much training or experience they have had.

This comes despite the Prime Minister's 1996 election commitment that no worker would be worse off. Yet, if this legislation is passed, young workers in workplaces which currently have no junior rates of pay will suffer a loss of income if junior rates are introduced into their awards or into their enterprise bargains.

This all comes with indecent haste as well. The Australian Industrial Relations Commission is currently preparing a report on junior rates and possible skills based alternatives to junior rates. This report is due in June 1999. Between June 1999 and the year 2000 when the current legislation expires, there will be a full 12 months to address the issue, with the benefit of the Australian Industrial Relations Commission report and its findings. The Democrats were counting on this report, and they have certainly learnt a lesson about trusting the government.

Despite all of the available evidence, the government is asking us to believe that the single most significant cause of youth unemployment is that youth wages are too high. During the period from 1982 to 1984, youth unemployment increased, despite the fact that youth wages fell significantly and that wages for the general population increased. During the same period, the casualisation of youth employment meant that, as wages dropped, the cost to employers of sick leave, holiday pay and overtime also disappeared. So it was cheaper than ever to hire young people; yet youth unemployment was higher than ever.

To suggest that lowering youth wages is the key to youth unemployment is deliberately misleading. John Buchanan and Ian Watson in the Financial Review wrote of recent research by Schmitt, Mishel and Bernstein at the Washington based Economic Policy Institute:

Recent research . . . has shown that "wages flexibility" in the US did not lead to the creation of large numbers of new jobs at lower wages. Rather wage flexibility lowered the earnings of low and middle-wage workers in the US without significantly expanding employment opportunities for low-wage earners.

So they dropped the minimum wage, and there were no increased opportunities for those low wage earners.

Even the Productivity Commission study on youth wages notes that there is little evidence to support the view that increases in youth wages will be met with a substitution of adult labour. They propose that possible negative effects may be derived from a substitution of capital for youth labour. But that is a risk in any labour market.

The problem is not as simple as the level of youth wages, but it relates to the changing nature of our economy. There is a current lack of structured skills development for young people which I believe is a much more significant factor in youth unemployment than youth wages. The Dusseldorp Skills Forum, which reported in March 1998, said:

The overriding imperative is to provide more full time jobs. However, the problem for many young people is not just that they cannot get a job but that the jobs they do acquire are not taking them very far.

That is because they are not being trained in those jobs, they are not developing skills. Some of the suggestions that the Dusseldorp Skills Forum came up with were:

. The need to minimise early school leaving but at the same time to take early action to ensure that early school leavers have more structured employment and training opportunities.

. This is also related to the importance of school to work transition programs and early intervention in the lives of young unemployed people.

. The need to improve training opportunities for young people in part-time and casual employment which will require an increased understanding of the extent and nature of casual employment itself.

. The need to have a regional focus on the stimulation of employment opportunities and the delivery of labour market programs. The experience of marginalisation varies according to locality.

. The need to better understand the situation of those 20-40,000 who are not in the labour market and not studying.

The work force of the modern economy is a skilled and educated work force and this measure, which may lead to cuts in youth wages, does nothing to address that need for a skilled and educated work force.

The banking sector, which is a very important sector in my electorate of Sydney, is a sector that depends on customer service. We have already heard evidence about the fact that young people can give excellent customer service. The sector is very exposed to international competition, and it is interesting to note that it is a sector that is dispensing with junior rates. By the end of this year, none of the major Australian banks will be paying junior rates.

Some areas of the banking sector have moved to competency based pay, which sees employees come in on a base rate and have their pay increased as a range of competencies is achieved. Their slogan is `The more you learn, the more you earn.' Other areas have revamped the training wage to combine structured training with on the job experience. The banking sector has embraced pay structures which reward skills and achievement—not penalising workers for their age. It certainly puts the lie to some employers' argument that assessing competencies is `too difficult'.

The ACCI has argued in the past that `age is the only workable proxy for a lack of maturity and job skills', yet graded pay scales are already used to classify competencies and skills in many work places. Few employers are arguing that this is too difficult and that they would rather return to a system of years of service.

The average weekly wages of young people have consistently declined, both absolutely and relative to other categories of labour, since 1984. While the average hourly earnings have increased slightly, the Productivity Commission notes that this `could be more than offset by reduced non-wage costs, such as from annual and sick leave'. So, while hourly rates may have increased slightly, earnings in other areas have decreased with the casualisation of the youth labour force.

We are talking about average hourly earnings in 1997 of less than $8 an hour for young employees, and the majority of these employees are not receiving sick leave or holiday leave. Some of these people are benefiting from family support—some live at home with their parents—but many of them are not. Almost 40 per cent of young people are not living with their parents, and the tightening of government benefits for many young people who are perhaps studying or raising children means that they are relying on their wages as their only income. Of course these people get no concession for their rent, and food is no cheaper, clothing is no cheaper, for many of them transport is no cheaper, health certainly is not and entertainment is not. Their costs are the same. The only area that is being discounted is their wages. Many young people who remain at home with their parents are expected to make some contribution to the family income as well. Indeed, if parents are unemployed the rest of the family may well rely on this young person's wage as the only wage coming into the home.

This government has presided over cuts to our overall education budget, and the idea that we can improve unemployment just by cutting wages and not by improving people's skills is certainly a mistaken one, yet at the moment we have the second lowest rate of education spending in the OECD. This government has cut $1.8 billion from labour market programs, cutting 230,000 training places as one of its first measures on coming into government. We have seen reduced university grants of almost $1 billion, 21,000 student places abolished, $500 million slashed from student income support, cuts to TAFE of $240 million, cuts of $130 million to government schools, and 46,000 young people have completely lost their benefits or have had them reduced with the common youth allowance. If this government is serious about getting young people into work, surely the important thing to do is to increase their skills—not cut university funding, not cut TAFE funding and not cut government school funding.

It seems that there is some hope that entrenching junior rates will somehow deliver a quick fix to youth unemployment, but I would hope that, in modern Australia, we would have a slightly more sophisticated view of the sorts of jobs we want our young people to be doing in the future. The sorts of jobs referred to by Douglas Copeland and others as `McJobs' are not necessarily the jobs that a modern industrial nation should be pinning its future hopes on. Indeed, there is evidence that young people who take up these very low skilled jobs for which they are overqualified—instead of just gaining employment experience—find themselves moving very quickly in and out of the work force, and they remain on the margins of the permanent work force in very insecure employment.

I certainly hope that that is not the ambition we hold for the future of our young people or for our economy. I hope that the economy of the future delivers jobs for young people which involve the acquisition of new skills which allow them to live independently, with dignity, and provide incentives for learning and development. We surely wish to demonstrate to our young people that their contribution to our society is as valued as any other contribution. I think it would send a very poor message indeed if we suggest that we entrench junior rates and create another class of working poor amongst our young people.