Pay-rise for under 20s during COVID-19 pandemic

There’s good news and bad news if you’re hoping for a pay rise in the current COVID-19 economy.

All you have to do to get one according to the Australian Bureau of Statistics is be (a) under the age of 20 and (b) eligible for JobKeeper.

New figures have revealed it pays to be a teenager in these troubled times because workers’ wages under the age of 20 have increased by a whopping 16 per cent since March 14.

The reason is simple: the $1500 a fortnight JobKeeper scheme is delivering windfall gains to workers who have never earned so much in their lives.

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Generation Z, the group that includes teenagers born in the early 2000s, is the only group in Australia that has enjoyed a pay rise during the pandemic.

Indeed’s chief economist Callam Pickering said the outlook was bleaker for just about everyone else.

“Wages are down for any workers over the age of 20,’” he said.

Teenagers have emerged as the big winners from the $130 billion wage subsidy scheme simply because it pays a flat rate of $1500 a fortnight regardless of what workers previously earned.

For a teenager who previously worked in a supermarket stacking shelves twice a week, that could be a lot more than their usual wage.

“They are now earning much more because of JobKeeper,’” Mr Pickering said.

“The people earning more than before are going to be casuals who were previously working a few hours a week. Teenagers fall into that category.

“I am sure if I was a teenager I would be very happy with that. But in terms of supporting households through this pandemic it’s not really a good design feature.”

The Morrison Government has already moved to close the JobKeeper loophole for some teenagers.

In May, Treasurer Josh Frydenberg announced that teenagers in their final years of high school will be eligible for only $4500 in JobKeeper payments.

Previously, 16 and 17 year old school students were eligible for $1500 a fortnight even if they previously only worked two shifts a week.

But teenagers over the age of 18 are eligible and even some who are younger can still get the cash if they can prove they are financially independent.

Deloitte Access Economics’ Pradeep Philip said more casual workers should be included in JobKeeper.

But he stressed that overall the JobKeeper scheme was doing the job it was designed to do.

“Look, we are going to see some perverse effects as a result of this intervention given the craziness,” he said.

“The way to think about it is JobKeeper is doing two things: it is keeping people in jobs who will otherwise be let go and secondly it is providing income support in the economy.

“We need people to have money in their pockets to go out and spend to boost money in the rest of the economy.”

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The Prime Minister has previously flagged the Treasury will review the JobKeeper scheme in June and that review could result in further changes.

To qualify for JobKeeper, workers need to be full-time or a casual with more than 12 months continuous service.

Workers get a flat rate of $1500 a fortnight regardless of what they previously earned.

That means a single parent with three children who is stood down from a casual job because of COVID-19 does not qualify for the $1500 JobKeeper scheme.

Instead, these workers must apply for $1100 a fortnight unemployment benefits.

Labor leader Anthony Albanese has called for JobKeeper to be “better targeted” hinting that he would support paying some casuals less but he also wants the scheme expanded to others casuals who don’t qualify currently due to length of service.

“I recognise coming up with the perfect scheme was always going to be very difficult,” Indeed’s Callam Pickering said.

“But the fact that some workers others are missing out and others are getting more is an obvious design flaw.

“In the modern Australian economy, so many workers are working part-time and casually. You do want to capture the casual workforce because they are quite simply the hardest hit by COVID-19.”

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The perverse outcome is likely to increase the pressure on Prime Minister Scott Morrison to “adjust” the JobKeeper scheme.

While he’s signalled that he’s not keen on turning off the JobKeeper tap early, he is prepared to address what he’s described as “anomalies”.

The big pay rise for teenagers is probably the biggest anomaly in the scheme.

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