Disabled people employed in specialist disability workplaces - what used to be called sheltered workshops but today are more often called Australian disability enterprises - can be paid sub-minimum wages as low as $8.32 under the relevant award, the Supported Employment Services Award.
Authors
- Sam Bennett
Disability Program Director, Grattan Institute
- Reilly Polaschek
Associate, Grattan Institute
Disabled people's wages can be further reduced to a fraction of the award wage - as low as $3.31 per hour - by a mechanism called the Supported Wage System , if their productivity is assessed to be lower than that of other workers. This mechanism can be applied to disabled workers in any workplace.
That compares with the national minimum wage , which was increased to $26.44 an hour on July 1.
Main employment destinations
Australian disability enterprises employ about 17,000 people with significant disability in jobs such as packaging, manufacturing, cleaning, gardening, laundry and recycling . Most workers are part-time. Many have been in these workplaces for years .
For people in the NDIS with intellectual disability and Down syndrome, these firms are the main employment destination .
Many people with disability and their families value the routine and social connection offered by specialist disability workplaces.
But there are serious problems with these work environments too. The Disability Royal Commission in 2019-2023 identified concerns about power imbalances, poor working conditions and disabled workers' limited choice and control within these settings.
For many people with disability, the available choices are too narrow: no work, a day program, or a disability-only workplace with very low wages and few pathways into mainstream employment.
Why aren't more people moving into mainstream jobs?
Jobs in the mainstream labour market remain out of reach for too many people with high support needs.
Only about 12% of adults in the NDIS who have an intellectual disability and are in the labour force, are in open employment at full award wages. For those with Down syndrome it's only 7%. ( These latest figures from July 2026 are more recent than the 2022 data for all types of disability in the chart above.)
In theory, the disability enterprises could operate as a stepping stone to open employment. But in practice, that rarely happens. In 2022, only 4% of workers younger than 25 moved into other employment within a year. For workers aged 25 and older, it was just 2%.
More people stopped paid work altogether than moved into mainstream jobs.
Better supports needed
Employment support services should work better to support people into open employment - whether from school, a disability enterprise or a day program.
The evidence on what works is clear. People with high support needs need intensive, tailored support to prepare for work and find the right job. This can include job customisation , on-the-job training and long-term coaching .
Australia does some of this. But services are fragmented across the NDIS and the Inclusive Employment Australia program, formerly known as Disability Employment Services. They are not easy to access and are not held to a consistent quality standard.
Why not just abolish disability enterprises?
Some advocates argue Australia should phase out these enterprises and sub-minimum wages altogether.
But sequencing matters. Disabled people and their families must also retain choices about which employment options work best for them.
Many disability enterprise workers and their families worry that if these workplaces disappear before better alternatives exist, people will lose work, routine, social connection and support.
International experience shows reform works best when governments first invest in better employment services and pathways into open employment.
Where governments have focused only on closing sheltered workplaces, results have been weaker. We need to build the new bridge before removing the old one.
A better way
Our new Grattan Institute report, Opening doors: Better jobs and fairer wages for disabled workers , proposes a multi-pronged approach.
First, there should be a dedicated stream within Inclusive Employment Australia for people with high support needs. Recent reforms expanded eligibility, but support is still not tailored enough for this group.
Second, we need to incentivise employers to shift their behaviour. Large employers should publicly report on their disability employment outcomes. Procurement rules should reward employers who create good jobs for disabled workers.
Third, disability-focused employers should be held to a higher standard. Some specialist employers should have a future, but they should look more like genuine disability social enterprises: commercially viable businesses that offer inclusive work settings, award wages, career development and real progression.
Finally, Australia should move away from sub-minimum wages for disabled workers, but only after better employment pathways and stronger specialist employers are in place.
The direction should be set now, while allowing time to build credible alternatives that earn the confidence of disabled people and their families. Within the next decade, there should a review of the continued use of the Supported Employment Services Award and Supported Wage System.
The current system is not good enough.
It keeps too many disabled people out of work, funnels others into disability-only jobs, and allows wages most Australians would find unacceptable. But we cannot leave workers currently in this system behind. We need to raise expectations - and build the supports, jobs and enterprises needed to meet them.
Grattan Institute's Disability Program has support from the Summer Foundation.
