Half a million young Australians working in the retail, fast food and pharmacy sectors are set for a wage increase after the Fair Work Commission abolished junior pay rates for those aged 18 and over.

The wage rises will be phased in over four years in a landmark change that unions compared to the introduction of equal pay for women in the 1970s.

Under the relevant awards, those aged 20 are paid 90% of the adult rate, while 19 year-olds are paid 80% and 18 year-olds 70%.

The decision by the commission’s full bench will boost the wages of about 500,000 workers at major retailers including Coles, Woolworths, McDonald’s and Hungry Jack’s.

The Shop, Distributive and Allied Employees Association said young adult workers struggled with the same cost-of-living pressures as every other Australian.

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

“Eighteen-year-olds can vote, drive and put their lives on the line for their country.

“Now they will be paid the same as other adults.”

The treasurer, Jim Chalmers, described the ruling as a “great outcome” for young workers.

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

Eighteen-to-20-year-old workers will need to be with an employer for six months to receive the adult rate, according to the decision. Junior rates will remain in place for those aged under 18.

The union’s legal debate focused on the “substantive unfairness” of a system where young adult employees are paid significantly less than others doing the same job under the same conditions.

The SDA’s application targeted industry awards covering general retail, fast food and pharmacies, all of which employ young workforces.

Employer groups argued that overhauling junior pay rates would deter hiring, making it harder for young adults to find a job.

In its decision, the commission said that by continuing to provide junior rates for minors, while paying those aged 18 and over adult rates, “strikes a balance between these competing perceptions that promotes both harmony and fairness”.