By Andrew Brown in Canberra

A watchdog’s decision to scrap discounted pay rates for young-adult workers in retail and fast-food jobs has been hailed as a landmark ruling akin to women winning equal pay.

The Fair Work Commission on Tuesday said employees aged from 18 to 20 should receive the full award wage for their jobs.

Currently, wages for 18-year-olds in the retail, fast food and pharmacy sector are fixed at 70 per cent of the full award wage, rising to 80 per cent for those aged 19 and 90 per cent when they reach 20.

Junior wages will remain in place for minors.

The higher wages for young workers will start to be phased in over a four-year period from December.

The commission said there would be no changes to wage rates for workers aged 18 to 20 who had less than six months of experience at their current workplaces.

The decision took into account factors such as labour market disadvantages for young people, the watchdog added.

The Shop, Distributive and Allied Employees Association, which represents workers in the affected sectors, hailed the decision as long overdue.

“This is a landmark decision, up there with the introduction of equal pay for women in the 1970s,” national secretary Gerard Dwyer said.

“It may take longer than we would have liked, but the principle has been established that no longer will 18-year-olds be treated as second-class citizens.

“Their work is as valuable as anyone else’s and, before too long, they will be paid accordingly.”

Young adults should not be paid lower wages as they faced the same cost-of-living pressures as others, Mr Dwyer added.

“They do not receive a discount on their rent or the petrol they buy to get to work just because they happen to be 18,” he said.

Treasurer Jim Chalmers said the watchdog’s decision was a great outcome.

“This is all about ensuring that Australians get fair, decent wages and the outcome announced by the Fair Work Commission will help achieve that,” he told reporters.

“(The decision) recognises there was an unfairness here when it came to younger workers who were over 18 in those industries, but also providing for a sensible phasing period for businesses to adjust to the new arrangements.”

But business groups criticised the commission’s decision, arguing it would pass on significant costs to retailers at a time of broadly higher expenses.

Australian Retail Council chief executive Chris Rodwell said it would be a financial blow for shop owners, although he noted that lower pay rates for workers aged 17 and under would remain in place.

“Junior rates have served Australia well for generations,” he said.

“They recognise that younger workers often have little or no workplace experience and help employers, particularly small businesses, give young people their first opportunity.”

Australian Chamber of Commerce and Industry chief executive Andrew McKellar said it would make it more difficult for young people to find work.

“Junior rates recognise that young workers are often new to the workforce and still developing skills,” he said.

“Removing them reduces the incentive for businesses to give young people a start.”