A recent decision by the Fair Work Commission will see junior pay rates for 18, 19 and 20-year-olds phased out in sectors such as retail, fast food and pharmacies. These employees will gradually move closer to full adult pay over a three-year transition period starting later this year.
For many small businesses, particularly in customer-facing industries, this represents a steady increase in labour costs over time. It’s not an immediate hit, but it is a change that needs to be planned for now rather than reacted to later.
What’s Changing with Junior Pay Rates
At a high level, the structure of junior wages is shifting:
- Junior rates for 18–20 year olds will be phased out, moving closer to full adult wages
- The change applies to sectors like retail, fast food and pharmacies
- Implementation will be gradual over three years
- Under-18 rates remain unchanged
While the detail sits within award structures, the direction is clear. Businesses that rely on younger staff will see wage costs increase over time.
What This Means for Your Business
The impact will vary depending on your staffing model, but for many, this will be felt most during busy periods where junior staff make up a large part of the roster.
Even small increases per employee can add up quickly across a team. Combined with rising fuel, freight and utility costs, this is another pressure point on already tight margins. If pricing hasn’t kept pace with costs, this is where the squeeze becomes most noticeable.
What You Should Be Doing Now
This is where early, practical action makes the biggest difference.
Start by understanding your exposure. Look at how many 18–20 year olds you employ and what the change in wage rates will mean over the next one to three years. From there, consider where you may need to adjust.
- Review whether your pricing still reflects your true cost of doing business
- Look at rostering and ensure staffing levels align closely with demand
- Identify small efficiency gains that reduce wasted time or resources
The goal isn’t to make drastic changes overnight, but to make steady, informed adjustments.
More Than a Cost Increase
While this change will increase labour costs, it’s also an opportunity to take a closer look at how your business operates.
As wages move closer to adult rates, expectations around productivity, skills and responsibility can also shift. This may be a good time to invest in training, improve systems, or rethink how certain roles are structured so your team is working as effectively as possible.
Plan Early, Stay in Control
The advantage here is that the changes are phased in. That gives you time to respond gradually rather than all at once.
Businesses that take the time now to understand the impact, make small pricing adjustments, and tighten operations will be in a much stronger position over the next few years. Those who wait are more likely to feel the pressure when the increases fully land.
If you’re unsure how these changes apply to your business or want help working through your numbers, reach out. A bit of early planning here can save a lot of stress down the track.
