Wage Justice - Major Pay Increase for Apprentices

Apprentices will have up to an extra $145 in their wallets following a major decision by the Fair Work Commission today that recognises they have been underpaid for far too long.

A Full Bench of the FWC has awarded significant pay rises to first and second year apprentices as well as people who start apprenticeships as adults. New apprentice pay scales to come into effect from the start of next year will see the wages of a first year electrician rise by $108, a carpenter by $72 and a hair dresser by almost $145.

The decision is the result of a case run by the ACTU and unions as part of the biennial review of Modern Awards.

Unions had argued that apprentice wages had failed to keep pace with the changing nature of the workforce, which now has more people beginning traineeships as adults, rather than straight out of school.

Fifty per cent completion rate

The low rates of pay have been blamed for the abysmal apprentice completion rate of about 50%, which was acknowledged by the Commission in its decision.

“The modern award safety net should better reflect the reality of the current day apprenticeship intake,” it said. “It must also take into account relative living standards and the needs of workers who must within the community be considered to be low-paid. We consider that the present rates of pay in the awards do not provide a fair and relevant safety net for apprentices and that an increase in the first year rate is appropriate.”

Before today’s decision, a first year apprentice carpenter would get a base rate of $317.75 a week – boosted by some allowances – while a 20-year-old fast food worker on the junior Award rate would be on $599.49. That’s a difference of $281.74. The pay rise will see pay rates for first year apprentices rise to 55% of the relevant Award rate from as little as 35% in some industries. People starting apprenticeships over the age of 21 will be entitled to 80% of the rate of a tradesperson.

Raising apprentice pay is an important part of the solution to the skills crisis in Australia.
“This is a great outcome for current and future apprentices and for the broader economy,” said ACTU Secretary Dave Oliver. “Almost half of people who embark on apprenticeships don’t complete them, with the very low wages a major factor contributing to drop-outs.

“Current wages see apprentices barely able to meet living costs; they are considerably less than other job options and barely more than the Newstart allowance. There is also little recognition of the needs of adult apprentices. Today’s decision is a real step forward.”

However, the Australian Manufacturing Workers Union said while the FWC had accepted the reality that lifting apprentice wages would help to attract and retain trade apprentices, it missed the mark by not including all current apprentices.

AMWU President Andrew Dettmer noted it would only apply to new apprentices beginning their training next year, and not to current apprentices. And no adjustment had been made to the age at which an apprentice is deemed to be an adult, which is still 21.

Mr Oliver said fixing the apprenticeship system was crucial to boosting the skill level of the Australian workforce to drive productivity and prevent future skills shortages.

“To boost skill levels, we need to increase participation and completion rates in vocational education and training. Raising apprentice pay is an important part of the solution.”

Employers slam decision

But while unions are praising the decision as delivering both some wage justice and a boost to skills, some employer groups immediately criticised it.

The chief executive officer of the Australian Chamber of Commerce and Industry, Peter Anderson, said it was “a body blow” to the capacity and confidence of employers to offer new apprenticeships.

“Dramatically increased employment costs will cruel the capability of employers to take on apprentices in an affordable way,” he said. “Increasing the costs of employing an apprentice not only impacts employers, but destroys the opportunities for many young people want to develop a career in the trades.”

But the Commission did not accept this argument, and said any cost increase would be offset by the benefits of a more skilled workforce.

“We have come to the conclusion that the rates of pay for apprentices may be increased without having a significant adverse effect on business or the national economy,” it said.