Money

Not-So-Big-Mac: What 'Minimum Wage' Actually Means In Australia

Australia’s high minimum wage is once again the topic of much discussion online over how it relates to McDonald’s. While Australia does have a high minimum wage, and that means we’d have to work fewer minutes to purchase a Big Mac than most other economies, it’s not quite as simple as stating a single figure that applies to everyone. It’s entirely possible to earn less than the minimum wage in Australia without any laws being broken.

Picture: Getty Images

We visited this topic last month when we looked at how much a McDonald’s worker would make in Australia compared to the US. The short version? While working at McDonald’s isn’t going to make anyone rich, you have a much better chance of scraping a living in Australia than in America.

This week, analysts ConvergEx performed took the topic one step further, as our sibling site Business Insider Australia reported. Firstly, it ranked the minimum wage in countries across the world that enforce the concept. On this measure, Australia came out on top:

Pedant note: as of July 1 2013, the minimum wage in Australia is actually $16.37, not $16.88 — I’m presuming a weird currency conversion error here. It wouldn’t change our position in this list though.

Next, ConvergEx combined that data with the well-known Big Mac index to work out how long you would have to work at minimum wage to buy a Big Mac. In Australia, the figure appears to be 18 minutes; in the US, it’s 35; in India, it’s 347. Yes, that’s almost six hours to earn your Big Mac.

If you’re of the view that high wage costs are a problem for Australian businesses, you’d be tempted to point to these charts. However, there’s a really important proviso to remember: the minimum wage applies if your job isn’t covered by an award and you’re over 21. The Fair Work Ombudsman spells that out very clearly on its page covering the minimum wage

The national minimum wage is the minimum wage that applies to employees who aren’t covered by an award or agreement.

Given that, are there jobs that pay less than the minimum wage? Absolutely. One well-known example is apprenticeships and junior staff. The Fair Work site lists what you have to pay these roles if an award isn’t in place:

Age % of national minimum wage Minimum hourly rate
Under 16 36.8% $6.03
16 47.3% $7.74
17 57.8% $9.46
18 68.3% $11.18
19 82.5% $13.51
20 97.7% $16.00

Apprenticeships are also paid at lower levels, though slightly higher than these. If you’re employed as a casual without an award, you are entitled to a 24 per cent loading (to offset lack of holiday pay and other benefits). Even if you score this, under 18s would still be earning less than the adult minimum wage.

On an award, you should generally be earning more than the minimum wage, but how much will vary. In NSW, the hourly rate under the Fast Food Industry Award is $17.98. McDonald’s has its own award and pays a slightly lower $17.38.

None of this means that Australia doesn’t still have a high minimum wage, but it’s always worth recognising that a single figure can be misleading. And if you’ve ever wondered why so many people in fast-food outlets are under 18, now you know: it’s a cost-cutting measure.

THE LUCKY COUNTRY: Index Shows Australians Need To Work Least To Buy A Big Mac [Business Insider]

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