Australia debates pros and cons of low apprentice pay

8th March 2013 at 00:00
Trade unions call for living wage as almost half drop out

Apprentices in Australia enjoy some of the highest wages in the world. But trade unions are calling for the minimum wage to be raised further, in a bid to stop almost half of apprentices dropping out.

A report from the University of Sydney found that an apprentice electrician earns less than many others in junior positions, including an 18-year-old trainee at McDonald's. The Australian Council of Trade Unions (ACTU) said that the relatively low wages are the reason why only 55 per cent of apprentices in Australia finish their course, compared with more than three-quarters in the UK.

"The prospect of living independently away from the parental home, even at the meagre low-cost standard, is beyond the reach of even second-year apprentices," said Professor John Buchanan in his report.

At the same time, just as they are in Britain, Australia's apprentices are getting older, with more than half aged 21 and above, while only 13 per cent start at age 16.

"Paying apprentices a living wage will. help ensure Australia has enough skilled tradespeople for the future," ACTU secretary Dave Oliver said. "The pay rates for apprentices are still stuck in the past and fail to reflect the reality that many apprentices are adults and have adult responsibilities."

The unions are asking Fair Work Australia, the national work tribunal that sets minimum wages, to raise the pay rates for a first-year apprentice to $11.15 an hour, or $423.66 a week (equivalent to pound;283). At the moment, a first-year electrical apprentice aged under 20 gets $288.33 a week (pound;193), while a McDonald's trainee can make $540.14 (pound;361).

By contrast, the minimum wage for apprentices in England is pound;80 a week, and on average they receive pound;170.

Wages are high in general in Australia, but the minimum apprentice wage is more than double the average pay for apprentices in countries such as Austria and Switzerland, according to a 2010 report by Hilary Steedman at the London School of Economics. Dr Steedman has argued that the success of apprenticeships in these countries and in Germany is due to low initial wages, which encourages the employer to invest in training.

Employers have filed responses to Fair Work Australia rejecting the calls for an increase in the minimum wage for apprentices, however. They said apprentice wages are meant to be a training allowance rather than a living wage, and point to research by the National Center for Vocational Education Research, which suggests that rates of pay are not an important factor in the drop-out rate.

A survey of apprentices who failed to complete their course found that only 3 per cent cited low pay as the reason. But nearly a third left for a different or better job, which could have been motivated by the desire for better pay.

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