tag:theconversation.com,2011:/ca-fr/topics/fairwork-commission-5733/articlesFairwork commission – La Conversation2020-02-10T01:28:38Ztag:theconversation.com,2011:article/1312862020-02-10T01:28:38Z2020-02-10T01:28:38ZAll these celebrity restaurant wage-theft scandals point to an industry norm<figure><img src="https://images.theconversation.com/files/314150/original/file-20200207-27519-1x7hc3k.jpg?ixlib=rb-1.1.0&rect=0%2C77%2C3213%2C1849&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Heston Blumenthal at a media event at Dinner by Heston in 2016. The restaurant bears his name but he does not own it. </span> <span class="attribution"><span class="source">Tracey Nearmy/AAP</span></span></figcaption></figure><p>The latest celebrity-chef-linked wage-theft scandal, with the high-end restaurant Dinner by Heston Blumenthal in Melbourne allegedly underpaying its staff by <a href="https://www.abc.net.au/news/2020-02-04/dinner-by-heston-underpaid-staff-by-more-than-4-million-dollars/11928746">A$4 million</a>, is the tip of the iceberg for wage exploitation in the hospitality industry.</p>
<p>Blumenthal joins a line of celebrity chefs linked to cases of million-dollar wage theft. </p>
<p>There’s former Masterchef judge George Calombaris’s company underpaying staff by <a href="https://www.abc.net.au/news/2019-07-31/george-calombaris-breaks-his-silence-about-underpaying-staff/11368212">$7.8 million</a>. There’s Shannon Bennett’s <a href="https://www.abc.net.au/news/2018-04-09/vue-de-monde-restaurant-staff-underpaid-former-workers-claim/9613110">Vue de monde restaurant</a> accused of forcing staff to work up to 30 hours of unpaid overtime each week. There’s Neil Perry’s <a href="https://thenewdaily.com.au/news/national/2019/10/24/rockpool-wage-theft/">Rockpool Dining Group</a>, accused of “audacious” time-sheet tampering potentially worth up to $10 million in unpaid overtime. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/shocking-yet-not-surprising-wage-theft-has-become-a-culturally-accepted-part-of-business-121038">Shocking yet not surprising: wage theft has become a culturally accepted part of business</a>
</strong>
</em>
</p>
<hr>
<p>While the Rockpool claim has yet to be adjudicated by Australia’s <a href="https://www.fairwork.gov.au/">Fair Work Ombudsman</a>, it did agree in October 2018 to <a href="https://www.abc.net.au/news/2018-10-14/neil-perry-restaurant-group-forks-out-$1.6-million-in-staff-pay/10374894">back-pay</a> staff $1.6 million. Perry <a href="https://www.smh.com.au/business/workplace/high-end-chef-guillaume-brahimi-s-restaurant-ripping-off-workers-20181020-p50aw1.html">told Fairfax Media</a> Rockpool had made “a few changes” to better comply with the law. “It’s always hard in restaurants,” he said, “but I believe we would be one of very few, if any, that are complying with it currently.”</p>
<p>Our research, in partnership with <a href="https://www.angliss.edu.au/">William Angliss Institute</a>, suggests he’s right about that. Since mid-2018 we’ve interviewed 180 culinary students, apprentice chefs and mature chefs as part of an ongoing study into mental health and wellbeing in the hospitality industry. </p>
<p>What they’ve told us confirms worker exploitation is institutionalised. In particular it takes three forms: unpaid overtime; not paying correct penalty rates; and making those looking for jobs do free work trials. </p>
<p>Our provisional findings confirm those of the 2018 Senate inquiry into <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/AvoidanceofFairWork/Report/c06">corporate avoidance of the Fair Work Act</a>. The inquiry’s final report cited Victorian estimates that 79% of hospitality employers did not comply with the national award wage system.</p>
<p>What we’ve found isn’t just that wage theft is rife. What’s notable is that it is less like burglary and more like daylight robbery. Most staff know they are being paid less than what they are entitled to but accept it as “the norm”. </p>
<h2>Unpaid overtime</h2>
<p>Dinner by Heston, which went into liquidation in December, allegedly underpaid staff by at least A$4 million over four years, according to the administrator’s report <a href="https://thenewdaily.com.au/news/2020/02/05/dinner-by-heston-under-paid-staff/">leaked to the New Daily</a>. The restaurant carries Blumenthal’s name though he does not own it. </p>
<p>Former Dinner by Heston chef William Trist told the New Daily he never worked fewer than 60 hours a week, and sometimes more than 80 hours.</p>
<p>Our findings are in line with this and the other celebrity-linked cases mentioned above. Unpaid overtime is the most common form of wage theft. Many chefs and apprentices told us of working more than 20 hours of unpaid work a week during peak periods.</p>
<p>Expectations of unpaid overtime was described to us an intrinsic part of the hospitality business model. It wasn’t a case of inadvertent compliance due to a complicated award system (as suggested by one-time <a href="https://www.smh.com.au/national/restaurateurs-call-for-amnesty-to-deal-with-wage-compliance-20190928-p52vrm.html">MasterChef Australia judge Matt Moran</a>).</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-a-complex-system-is-not-to-blame-for-corporate-wage-theft-126279">No, a 'complex' system is not to blame for corporate wage theft</a>
</strong>
</em>
</p>
<hr>
<p>It was clear to both bosses and workers. One apprentice told us their employer justified it in the following terms: “We don’t have the budget for it. So we need to wait until we have the budget and pay you.”</p>
<h2>Penalty rates and entitlements</h2>
<p>The next most common form of wage theft, our research suggests, is not paying penalty rates. The majority of interviewees worked Sunday shifts or overtime or through breaks in exchange for the promise of time off, or accepted as compensation meals that might have been thrown away anyway.</p>
<p>Our interviews also suggest underpayment of entitlements such as superannuation contributions is common. Younger workers in particular were often unaware their superannuation was not being paid correctly until it was too late.</p>
<p>One factor contributing to this is the <a href="https://www.abc.net.au/news/2018-05-18/hospitality-workers-chase-millions-in-unpaid-superannuation/9772546">cash culture</a> in the hospitality industry. As one apprentice told us: “At my first job I asked them if I could be on the books and they said yes, but I didn’t get any pay slips. When I left that job I asked my former manager if I have a superannuation account or something, and he said no.”</p>
<h2>Unpaid work trials</h2>
<p>Unpaid work trials appear to be common too. Two young chefs told us about being duped by the same Sydney restaurant, being asked to work at least three days for free. Neither were offered a job. “Talking to my classmates,” a culinary student said, “it’s common doing free trials.”</p>
<p>One cultural tradition contributing to owners pulling this stunt is the “<a href="https://www.sciencedirect.com/science/article/abs/pii/S1878450X18300155">chef’s sabbatical</a>”, when aspirational chefs do “stages”, working for free in renowned restaurants to learn from esteemed chefs. A “<a href="https://www.theworlds50best.com/stories/News/ten-tips-restaurant-stage.html">stagiaire</a>” may volunteer for up to six months to hone their craft and improve their career prospects.</p>
<p>“I’ve done loads of stages,” one chef told us. She travelled for months in the United States and Britain, working in the best restaurants for free. She accepted it was standard practice in the industry to build a career.</p>
<h2>Toxic culture</h2>
<p>When our research is complete, we hope to be able to better quantify the extent to which industry practices contribute to poor mental health among hospitality workers. </p>
<p>Our provisional qualitative results suggest the effect is significant. Those we’ve talked to have told about the stresses of putting up with wage theft or seeking to address it.</p>
<p>“It was like a mental torture for me,” said one apprentice chef, “working ‘til four o'clock, getting paid 'til one o’clock.” </p>
<p>Another apprentice told us how his boss “went ballistic”, throwing a glass jar at the wall when he asked about his entitlements. “I had a massive anxiety attack.” </p>
<p>This toxic culture is contributing to workers quitting the industry. That’s a problem for a sector facing <a href="https://www.smh.com.au/business/workplace/wage-theft-is-a-business-model-let-s-criminalise-it-20190718-p528c4.html">a shortage of 59,500 chefs by 2023</a> compounded by rising traineeship incompletion rates.</p><img src="https://counter.theconversation.com/content/131286/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Robinson receives funding from William Angliss Institute</span></em></p><p class="fine-print"><em><span>Matthew Brenner does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>High-end restaurant Dinner by Heston Blumenthal has allegedly underpaid staff by $4 million. Our research finds wage theft is accepted as the industry norm.Richard Robinson, Research Fellow/Hospitality Management, The University of QueenslandMatthew Brenner, Sessional lecturer and Research Assistant, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1210382019-07-30T20:03:17Z2019-07-30T20:03:17ZShocking yet not surprising: wage theft has become a culturally accepted part of business<figure><img src="https://images.theconversation.com/files/285962/original/file-20190729-43140-af6jqk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's Fairwork Ombudsman found wage theft in 45% of its audits In food services. </span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Many Australians are shocked by celebrity chef George Calombaris being caught for underpaying employees A$7.8 million. It didn’t help, of course, that the television personality was also reported to be <a href="https://www.abc.net.au/news/2019-07-24/masterchef-george-calombaris-matt-preston-gary-mehigan/11341090">seeking a huge pay rise</a> for appearing in the television program MasterChef Australia.</p>
<p>But what should not be a surprise is the prevalence in Australia of wage theft – typically underpaying award rates and entitlements such as overtime, superannuation and penalty rates. </p>
<p>Calombaris is not alone. In recent years there have equally large cases of wage theft involving household brand names such as <a href="https://www.smh.com.au/business/companies/76-percent-of-audited-caltex-franchises-found-to-be-underpaying-workers-20180305-p4z2u9.html">Caltex</a>, <a href="https://www.smh.com.au/business/workplace/7eleven-compensation-bill-climbs-over-110-million-20170612-gwpdfx.html">7-Eleven</a>, <a href="https://www.smh.com.au/business/companies/wage-fraud-pizza-hut-hit-with-fines-20170127-gtzrbx.html">Pizza Hut</a> and <a href="https://www.smh.com.au/business/companies/investors-savage-dominos-pizza-as-union-call-for-wage-theft-royal-commission-into-wage-fraud-20170215-gudnm5.html">Domino’s Pizza</a>. </p>
<p>The Australian Taxation Office estimated that in 2014-2015 Australian workers had been short-changed A$2.5 billion on superannuation payments alone . </p>
<p>Workplace audits by the federal Fair Work Ombudsman over the past decade suggest <a href="https://mckellinstitute.org.au/app/uploads/McKell-Ending-Wage-Theft.pdf">wage theft</a> is rising. Most vulnerable are the young, the low-skilled and <a href="https://www.mwji.org/highlights/2017/11/14/report-released-wage-theft-in-australia-findings-of-the-national-temporary-migrant-work-survey">temporary migrants</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/weve-let-wage-exploitation-become-the-default-experience-of-migrant-workers-113644">We've let wage exploitation become the default experience of migrant workers</a>
</strong>
</em>
</p>
<hr>
<p>And the sector where wage theft appears most common: food services (evident in more than 45% of audits). </p>
<h2>Structure, culture, enforcement</h2>
<p>The evidence points to wage theft being more associated with certain types of business structures. In particular, <a href="https://www.afr.com/news/policy/industrial-relations/caltex-pays-57m-to-workers-for-underpayments-20180914-h15dvo">franchise operations</a>, <a href="https://www.abc.net.au/news/2018-02-14/woolworths-cleaners-underpaid-tasmanian-inquiry-finds/9444916">outsourcing</a>, <a href="https://engage.vic.gov.au/inquiry-labour-hire-industry-and-insecure-work">insecure work</a> and the <a href="https://theconversation.com/redefining-workers-in-the-platform-economy-lessons-from-the-foodora-bunfight-107369">gig economy</a>. </p>
<p>Calombaris has had a hard time denying he knew what happened in his companies. Bigger brands have gotten away with minimising costs through supply-chain arrangements where there’s exploitation somewhere along the line. It’s the very same problem that enables modern slavery to flourish around the world. These companies can deny responsibility because they have no direct legal obligations. </p>
<p>The problem isn’t just structural. It is also cultural. </p>
<p>Wage theft seems to have become accepted as a fact of life, maybe even a necessity, in certain sectors and workplaces. As a result, employers have developed a sense of impunity, while workers have become resigned to underpayment as unavoidable. </p>
<p>More than three-quarters of international students and backpackers, for example, know they’re being <a href="https://www.mwji.org/highlights/2017/11/14/report-released-wage-theft-in-australia-findings-of-the-national-temporary-migrant-work-survey">underpaid but accept it</a> because they believe it’s standard treatment for anyone on their type of visa. </p>
<p>Cultural acceptance translates into weak enforcement rules. Wage theft is not considered a criminal offence, in the same way as stealing money from a company. Those caught face low penalties. Calombaris, for example, has to pay his employees what they are owed, but his penalty is limited to a $200,000 “contrition payment”). </p>
<h2>Finally, a reform agenda</h2>
<p>In this context – practices and attitudes making wage theft rampant – the only positive thing about Calombaris’ case is that, combined with other high profile cases, it has triggered enough outrage to make politicians get serious about reform.</p>
<p>The federal government has indicated it will propose new laws to make wage theft <a href="https://www.hcamag.com/au/specialisation/employment-law/employers-could-face-jail-time-under-new-laws/173789?utm_source=hs&utm_medium=20190726&utm_campaign=WHCA-Newsletter&utm_content=BC916A1A-A48B-418D-B07F-20CE2BCCB6D2&tu=BC916A1A-A48B-418D-B07F-20CE2BCCB6D2&_hsenc=p2ANqtz-_mMsE6xajfDkvMf36-1gUYkihUwgrylR6DTHCDf_CB_ln2dzGxQxKlqGfAeASc83mFFZ6A8fgCLSD0BmY1oBMPc2Ev6Q&_hsmi=75064392">a criminal offence</a>, punishable with prison time.</p>
<p>Along with tougher laws, more resources for enforcement are also needed. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/five-myths-about-the-informal-economy-that-need-debunking-117612">Five myths about the informal economy that need debunking</a>
</strong>
</em>
</p>
<hr>
<p>Other reforms could help too. Supply chain certification, similar to the schemes used to guarantee fairtrade coffee or sustainably caught fish, are an example. The Fairwork Ombudsman has partnered with business and unions to create a pilot certification scheme for the cleaning industry. </p>
<p>Modern slavery legislation now requires large companies to report on their efforts to keep their supply chains slave-free. Acceptance of such reporting obligations could pave the way for the expectation that companies more attention to stamping out all forms of worker exploitation. </p>
<h2>Community responsibility</h2>
<p>There is one other notable point to make about the Calombaris case. It is about our own responsibility.</p>
<p>As a community we have collectively accepted wage theft for too long. </p>
<p>Collectively we seem to have higher tolerance for the mistreatment of workers at the fringes of the labour market – such as migrants, young workers and the low-skilled. </p>
<p>It is time to take stock. Work will change drastically in coming decades. More of us face the prospect of being among the vulnerable, with the jobs we do now being taken over by AI and automation. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/artificial-intelligence-enhanced-journalism-offers-a-glimpse-of-the-future-of-the-knowledge-economy-117728">Artificial intelligence-enhanced journalism offers a glimpse of the future of the knowledge economy</a>
</strong>
</em>
</p>
<hr>
<p>Technology has also facilitated “uberisation” and the growth of the gig economy, in which companies minimise their obligations by denying workers are employees. </p>
<p>Considering the breadth of change to come, we need more than ever to reflect on what we accept and enable.</p><img src="https://counter.theconversation.com/content/121038/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sarah Kaine receives funding from the Australian Research Council and is a Director of the McKell Institute.</span></em></p><p class="fine-print"><em><span>Emmanuel Josserand does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Underpaying workers has become rampant in Australia.Sarah Kaine, Associate Professor UTS Centre for Business and Social Innovation, University of Technology SydneyEmmanuel Josserand, Professor of management, Director of the Centre for Business and Social Innovation, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/456522015-08-04T19:36:56Z2015-08-04T19:36:56ZEnterprise contracts echo ‘take it or leave it’ world of WorkChoices<p>The Productivity Commission’s newly released draft report into <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">Australia’s workplace relations framework</a> must be treated with great caution. </p>
<p>Prima facie, it appears supportive of “the Australian way” to developing and enforcing labour standards. </p>
<blockquote>
<p>Contrary to perceptions, Australia’s labour market performance and flexibility is relatively good by global standards, and many of the concerns that pervaded historical arrangements have now abated. Strike activity is low, wages are responsive to economic downturns and there are multiple forms of employment arrangements that offer employees and employers flexible options for working.</p>
</blockquote>
<p>Closer reading reveals, however, it is committed to deepening the further erosion of Australia’s distinctive approach to achieving fairness as well as productivity at work. </p>
<p>This corrosive dynamic commenced under the Keating government in 1991. It was turbo-charged in 2006 when the Howard-era WorkChoices redefined the terms around which the debate on workplace relations reform has been couched.</p>
<p>The report makes some sensible suggestions. Prime amongst these are its proposals for a more realistic (that is, tolerant) approach to pattern bargaining and controls on non-union bargaining agents (who it suggests should gain 5% employee support to gain recognition).</p>
<p>The core recommendations, however, concern three fundamental matters.</p>
<p>First is the erosion of the independence of Australia’s labour standards setting authority.</p>
<p>The Productivity Commission report claims “several major deficiencies” must be addressed, criticising the FairWork Commission for being overly-legalistic in the way it determines awards and claiming the appointment process for FWC members leads to inconsistencies in its decisions.</p>
<p>In place of tenure, Fair Work Commissioners are to have five year contracts, be subject to performance management and be appointed by the relevant Federal minister alone. Labour standards are to be set be people with research and analytical expertise alone. </p>
<p>Those with practical experience of the operation of labour standards are to be excluded from shaping them in any way. Any notion of a quasi-judicial process to determine labour standards would be completely eradicated if these recommendations are implemented. It would mark the complete severance with Australia’s distinctive - and well respected – regime of labour standards determination.</p>
<p>The second concern is the further fragmentation of bargaining with employer driven “collective contracts”.</p>
<p>The report asserts there is “a gap in contract arrangements between individual arrangements (broadly defined) and enterprise agreements” (page 37, 57). It proposes this “gap” be filled by employer-determined collective “enterprise contracts”. There are strong echoes here of “take it or leave it” collective Australian Workplace Awards (AWAs) of WorkChoices. </p>
<p>The Commission appears to be totally unaware of decades of industrial sociology and industrial psychology on workplace dynamics. Social space of work is governed as much, if not more, by trust as well as contractual relations. Improving “trust relations”, not creating yet another form of contract is needed to fill this alleged “gap”. </p>
<p>Introducing the notion of “contract” in this context only has relevance if one is endeavouring to weaken the coherence and effectiveness of a labour standards regime.</p>
<p>The final one is further erosion of union bargaining power.</p>
<p>The final swag of recommendations have a very strong WorkChoices flavour of tilting bargaining power towards employers. The proposal that strike action can be terminated if it does “significant economic harm to the employer alone” betrays either naivety or bias of the highest order. That is the primary reason why strikes are undertaken.</p>
<p>In short, while the Commission advocates “repairing not replacing” our current system, the effects of its proposed changes would profoundly shift power in it. This would be achieved by weakening the independent standing of the Fair Work Commission as a body comprised of thoughtful practitioners and a major erosion of unions’ ability to act effectively in the labour market.</p><img src="https://counter.theconversation.com/content/45652/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span> John Buchanan is Director of the Workplace Research Centre. This is a self-financing research unit based in the University of Sydney Business School. The Centre is funded by end users of the research it produces. Clients are based in the government, non-government and private sectors. Between 2011 - 2013 he lead two large scale projects worth just over $2m for the Fair Work Commission that examined the reach of award across the private sector and the impact of minimum wage decisions on the incentive to bargain. These projects were awarded to the Centre after an open tender process.</span></em></p>Echoes of WorkChoices? The Coalition is keen to avoid any whiff of the failed policy, but some of the Productivity Commission’s recommendations have a strong flavour of it.John Buchanan, Director, Workplace Research Centre, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/456472015-08-04T04:21:57Z2015-08-04T04:21:57ZChange penalty rates, reform work agreements, urges Productivity Commission: experts respond<figure><img src="https://images.theconversation.com/files/90712/original/image-20150804-15137-19ljvdl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cafe workers are among many that stand to lose Sunday penalty rates.</span> <span class="attribution"><span class="source">Felipe Neves/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Hospitality, entertainment, retail, restaurant and cafe workers will have their Sunday penalty rates cut, while minimum wage workers can expect modest pay rises, if draft workplace reform recommendations from the Productivity Commission are accepted by the Coalition government.</p>
<p>Despite criticism from business lobby groups, the Commission has described the current system of minimum wage setting as “justified”, saying the view that existing levels are “highly prejudicial to employment is not well founded”.</p>
<p>But it says significant minimum wage increases pose a risk for employment, especially against a weakening labour market. It also says the Fair Work Commission should be allowed to make temporary variations in awards “in exceptional circumstances after an annual wage review has been completed”.</p>
<hr>
<p><a href="https://theconversation.com/sundays-are-similar-to-saturdays-for-workers-productivity-commission-45643">Michelle Grattan</a>: <em>“Nevertheless, whatever reforms the government proposes for its next term will face tough counter-attack from Labor and the unions”.</em></p>
<hr>
<p>The Commission recommends that Sunday penalty rates be removed for hospitality, retail and entertainment workers, aligning them with Saturday rates. The Commission believes lower regulated Sunday rates would increase opening hours and encourage higher staffing ratios and job opportunities.</p>
<p>Rebutting business complaints that the system needs comprehensive reform, the Commission found Australia’s labour market was performing relatively well against global standards. </p>
<p>But among other major recommendations on reforming Australia’s enterprise agreement system, the Productivity Commission has suggested the creation of an enterprise contract, a new type of enterprise agreement allowing business to negotiate individual flexibility arrangements without the need for an employee ballot. The report said the Australian Government should also replace the better off overall test for approval of enterprise agreements with a new “no-disadvantage” test.</p>
<p>The report suggests employees could only receive compensation for unfair dismissal if it was found they had been dismissed “without reasonable evidence of persistent underperformance or serious misconduct”. It also recommends the emphasis on reinstatement as the primary goal of the unfair dismissal provisions, be removed from the 2009 Fair Work Act.</p>
<p>Among recommendations that will anger unions, the Productivity Commission has said the Fair Work Commission should only grant a protected action ballot order to employees if enterprise bargaining has commenced, and suggests the Fair Work Commission be allowed suspend or terminate industrial action causing, “or threatening to cause, significant economic harm to the employer or the employees… rather than both parties (as is currently the case)”.</p>
<p>It also suggests increasing the maximum penalty for unlawful industrial action to reflect “the high costs that such actions can inflict on employers and the community”. </p>
<p>The report also addresses the potential exploitation of migrant workers by employers, suggesting penalties for underpaying staff be boosted. </p>
<hr>
<h2>Enterprise Contracts</h2>
<p><strong>David Peetz, Professor of Employment Relations at Griffith University:</strong></p>
<p>The Productivity Commission says its recommendation of an “enterprise contract” will “go a long way in allowing enterprises to negotiate with individuals without union representation if that is their wish”.</p>
<p>Unfortunately for the Productivity Commission, it would not be an “agreement”, because the Commission recommends employers be able to establish an enterprise contract “without having to negotiate” with anyone. Indeed it could be offered “to all prospective employees as a condition of employment”. </p>
<p>The EC would not be subject to the existing “better off overall test” that currently applies to enterprise agreements and individual flexibility arrangements. Instead, it would be tested against a weaker “no disadvantage” test.</p>
<p>It therefore has the key features of two previously abandoned instruments. One is “employer greenfield agreements” (EGAs), which only existed under WorkChoices. These enabled an employer to agree with itself the conditions that would apply to new employees – but only in a new establishment, whereas ECs would apply in any establishment of any size. These greenfield agreements led to frequent cuts in penalty rates and other conditions.</p>
<p>The second is Australian Workplace Agreements (AWAs), which even when they were subject to a no-disadvantage test (before WorkChoices), were shown to lead to lower pay and conditions (and/or to be used for union avoidance), and which under WorkChoices could be offered as a condition of employment. AWAs were a major factor in the defeat of the Howard government.</p>
<p>It is hard to believe that the Productivity Commission really expects that the government would agree to this recommendation, as it would form an easy basis for another political mobilisation by unions against any reform package. More likely, it would end up a sacrificial lamb, dumped by the government to protest it is only after moderate reforms.</p>
<hr>
<h2>Minimum wage</h2>
<p><strong>Rob Bray, Research Fellow at Australian National University:</strong></p>
<p>The Productivity Commission is quite cautious in its discussion, in many ways reflecting the extent to which submissions did not argue too strongly for change, and the considerable weakness of the available data. It supports the maintenance of a national minimum wage, recognising a need to “address bargaining power imbalances”, but makes <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">some recommendations</a> for change in the setting of this. These are a mixed bag. </p>
<p>Responding to special pleading from the rural sector and an employer organisation, it suggests that there should be capacity to vary awards in “exceptional circumstances” (without really saying why this mechanism, rather than say drought relief is appropriate). The Productivity Commission also suggests that the Fair Work Commission “systematically considers the risks of unexpected variations in economic circumstances” – a rather challenging concept, and one that tends to ignore the extent to which changes in wages tend to be retrospective; that is, justified on the basis of what has happened.</p>
<p>While discussing the interaction with the tax and transfer system the Productivity Commission comes to no conclusion, doesn’t come to grip with family payments, and simply issues another “Information Request” for further input from participants. Tucked away in the discussion of the minimum wage is a call for a comprehensive review into apprenticeships and traineeships, and another information request about the structure of junior wages.</p>
<p>Looking at the report overall one can only get the impression that while the Productivity Commission may have taken its first wobbling step in considering these issues it has a long way to go. Given the timing it may be sensible for it to consider what it can and cannot feasibly cover in the time available to it.</p>
<hr><img src="https://counter.theconversation.com/content/45647/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As a university employee, David Peetz has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions. His most recent major consultancy was for the New Zealand government. At present he is involved in several Australian Research Council-funded and approved projects which included contributions from the employer body Universities Australia, the superannuation fund Unisuper, the National Tertiary Education Union and the Construction, Forestry, Mining and Energy Union. The projects do not concern the subject matter of this article. He is a research associate of the T J Ryan Foundation in Brisbane and the New Zealand Work Research Institute in Auckland, a co-researcher of the Inter-University Centre for Research on Globalisation and Work (CRIMT) based in Quebec, and a Fellow of the Academy of the Social Sciences in Australia.</span></em></p><p class="fine-print"><em><span>Rob Bray received funding from the HC Coombs Policy Forum in 2013 which supported his initial research on the Australian Minimum Wage.</span></em></p>Sunday penalty rates will go under Productivity Commission recommendations, but overall our workplace system was basically operating well, it found.David Peetz, Professor of Employment Relations, Griffith UniversityRob Bray, Research Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/384402015-03-10T19:31:58Z2015-03-10T19:31:58ZProductivity Commission assumptions on minimum wage lack balance<figure><img src="https://images.theconversation.com/files/74283/original/image-20150310-13576-1bt22zu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Not everyone being paid the minimum wage will move beyond these conditions.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com">Image sourced from www.shutterstock.com</a></span></figcaption></figure><p>To those Australians who would agree with John Howard’s statement that “it would be out of step with the Australian ethos to not have a minimum wage” and Malcolm Fraser’s observation that “There is nothing as Australian as the minimum wage”, it might come as a surprise to see the Productivity Commission declare “minimum wages have been part of the industrial relations system for more than a century, but remain a persistently controversial issue”.</p>
<p>This is one of the many claims the Productivity Commission makes in a recently released <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/issues">Issues Paper</a> ahead of its inquiry into the Workplace Relations Framework. </p>
<p>The paper claims to want to “facilitate” public participation, but <a href="http://caepr.anu.edu.au/sites/default/files/bray_sub_to_PC_re_minimum_wage_24_feb_2015_submission.pdf">in my submission to the inquiry</a>, I argue that it appears to want to steer in a particular direction. In discussing the level of the minimum wage and interaction with the tax and welfare system it notes:</p>
<blockquote>
<p>…people’s decisions about whether to take a job … depend partly on the relative attractiveness of their net wages, the income they would otherwise receive through social security benefits and other considerations such as their prospect for promotion.“ </p>
</blockquote>
<p>There is however no discussion of these other factors. The paper ignores questions such as whether people can actually find a job, the fact that most people on benefits in this situation are also subject to work testing which requires them to take the job, or evidence that the labour supply of many groups is quite inelastic. Rather the PC is simply concerned with a focus on financial incentives. </p>
<p>In discussing the duration of time people spend on the minimum wage, the focus is on those who "progress to a higher wage” after a short time – usually an argument for a low minimum wage – without a balancing discussion about those who remain on low wages for extended periods. It can be argued that ensuring that the minimum wage is set at an adequate level is of particular importance to the latter group.</p>
<p>The positions put forward by the Productivity Commission appear to flow from a standpoint of contrasting the situation of a labour market with a minimum wage to one which operates as a perfect market. This is a very misleading approach. The evidence is that the labour market is much more complex than this – with employers often acting as price makers – not price takers - and there is clear evidence from many Fair Work Ombudsman prosecutions and recovery actions that there are employers willing to use their market power to exploit workers. </p>
<p>This narrow approach also permeates their history of the minimum wage. While it is reasonable to identify the <a href="http://ww2.fwa.gov.au/education/doc-Harvester">1907 Harvester decision</a> as being the initial basis of the rate of the Federal Minimum Wage, the roots of the minimum wage are in fact earlier. They are in the earlier efforts to rein in the effects of an uncontrolled labour market. </p>
<p>They are in the work of the “anti-sweating” leagues of the late 19th Century and in the consequential growth of wages boards; they are in the development of the Australian Trade Union movement; and in the growth of labour politically. </p>
<p>Indeed, the Harvester decision was not the imposition of a minimum wage by arbitration, but rather arbitration seeking to apply the Federal Parliament’s legislation. That is, it was parliament which decided that there should be a tariff exemption to employers who paid a “fair and reasonable” wage. The Harvester decision simply sought to implement this, These antecedents are not mentioned by the Productivity Commission.</p>
<p>Elsewhere, in discussing options the paper claims that research “questions whether the hybrid approach [a combination of a minimum wage and in work benefits such as an earned income tax credit] helps the most disadvantaged”. It is unfortunate that they omit to mention that the work they cite explains the reason for this was that this group of the most disadvantaged were either excluded from the program or were “eligible for a trivial credit” only.</p>
<p>The discussion paper also reveals the abysmal lack of information on low wage employment in Australia. The Productivity Commission, for example, asks readers to answer the question “How many people receive the minimum wage (and for how long)? What is the best measure of this share and why?”. </p>
<p>Elsewhere they ask whether the minimum wage should be set at different levels in each state – but have to rely upon quite misleading comparisons of the minimum wage with average earnings in each state – presumably because they could not obtain median earnings – the more usual comparison, at the state level.</p>
<p>The question of the long term future of the minimum wage in Australia is important, and it does require policy attention. I have though deep concerns as to whether the current inquiry is the mechanism to do so. </p>
<p>The timing of the process, with submissions closing on Friday and a final report to be ready by November 2015 neither allows for action to address the dearth of data, nor the consultations which a policy needs to be based upon. In addition, the discussion paper issued by the Productivity Commission raises strong doubts as to whether they are approaching the issue in a coherent and balanced manner.</p><img src="https://counter.theconversation.com/content/38440/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Bray received funding from the HC Coombs Policy Forum at the ANU in 2012 which partially supported his initial work on the Australian Minimum Wage. </span></em></p>The Productivity Commission appears to want to steer public debate on the minimum wage in a particular direction.Rob Bray, Research Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/147592013-05-29T20:37:16Z2013-05-29T20:37:16ZWhat future for the minimum wage?<figure><img src="https://images.theconversation.com/files/24613/original/b2vw228b-1369807884.jpg?ixlib=rb-1.1.0&rect=436%2C34%2C3369%2C2264&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Should we continue to increase the minimum wage, or are there more effective ways to protect low income earners?</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>Shortly the Fair Work Commission will announce <a href="http://www.fairwork.gov.au/media-centre/latest-news/2013/05/pages/20130527-get-ready-2013-annual-wage-review.aspx">their decision on the minimum wage</a> for 2013. </p>
<p>This will be based on its own research and balancing the claims of employers, unions and others. <a href="http://www.actu.org.au/Issues/MinimumWagesCase/default.aspx">The ACTU is calling for the wage</a> to be increased by $30 per week, while the Australian Chamber of Commerce and Industry (ACCI) say <a href="http://www.acci.asn.au/getattachment/a962be9c-f3c0-45ed-8354-4afd16a0b949/Download--ACCI-2013-Wage-Case-Submission.aspx">it should be $5.80</a>. </p>
<p>But in deciding what the minimum wage should be, there are some important missing questions.</p>
<p>Should working full-time be sufficient to earn an adequate income? Most people would answer yes. But the answer is more nuanced and depends largely on whether you are part of a family, or single wage earner.</p>
<h2>Family wage to single earner</h2>
<p>The Australian minimum wage has evolved considerably since the 1907 Harvester decision determined a “fair and reasonable” wage for a working man “and his family”. </p>
<p>While it remains important today with around 10% of adult employees receiving this rate of pay, over the past 25 years however there has been a major change in its role. In 1986, the minimum wage represented 99% of the disposable income of a single breadwinner couple family with two young children. Today it represents just 59%. </p>
<p>This has occurred despite the minimum wage remaining stable in real terms, through massively increased support from government to boost the living standards of low income working families. This has seen the real incomes of these families increase by 70%.</p>
<p>So to answer the first question then for families – the answer is no.</p>
<p>In contrast to this strong growth in income, a single person on the minimum wage has seen their real disposable income increase by just 11%, mainly as a result of tax cuts. Their disposable income has dropped from being 83% of that of a couple with children, to around 54%.</p>
<p>Effectively, over this period, the minimum wage has shifted from its traditional conception as being a wage for a family, to a wage for a single person. The mechanisms for this have been, as noted, increasing government support for families, and limiting growth in the real value of the minimum wage. A consequence of this wage policy has been that the labour market for low skills has been largely protected from wages pressure, enabling many jobs to be maintained.</p>
<h2>Leaving households behind</h2>
<p>In general it is a transformation which has occurred without generating significant disadvantage. It is though a process which is coming to an end. Continuing this policy will eventually leave some households behind.</p>
<p>What policies should then be put in place for the future? In thinking about this it is important to understand some other features of the minimum wage. While minimum wage employment and poor households are often seen as synonymous, the reality is different. </p>
<p>Just 31% of all minimum wage employees are in the poorest 20% of working households (after taking account of household size). Some 24% are in the richest 40% of households and a further 20% are in middle income households. </p>
<p>In large part, employment on the minimum wage supplements the earnings of others in the household who receive higher rates of pay. Where there is disadvantage in working households this is much more related to relying upon part-time work, rather than being on the minimum wage. Finally, despite holding the minimum wage stable for such a long period, Australia still has one of the highest minimum wages in the OECD, both in absolute terms, and relative to other earnings.</p>
<h2>Paths to consider</h2>
<p>With this transformation from a family wage ending, there are perhaps three major paths for consideration.</p>
<p>The first is for the minimum wage to increase in line with other increases in earnings. That is, as labour becomes more productive, real earnings grow. The difficulty with this path is that unless the productivity of minimum wage workers also increases – they produce more than they did in the past - then the price of this will be a loss of jobs. </p>
<p>The possibility exists that such improved productivity can be fostered by training and skills development, however if this policy is to be pursued then we have to be confident that this can actually be achieved for the least skilled and least productive.</p>
<p>The second option is to continue the policies of the past, holding the minimum wage steady. While there still may be some scope for this, sooner or later the gap between the living standards of some of those in receipt of the minimum wage and of the community as a whole will grow too large.</p>
<p>The third is to hold the minimum wage stable in real terms, but to complement the earnings of low income working households through an <a href="http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers">Earned Income Tax Credit</a> – an employment conditional transfer payment. This would allow these households a higher standard of living without putting pressure on the labour market. Such policies already exist in many OECD countries. For these households, as with families with children, it would mean however that the answer to the opening question would also be no.</p>
<p>This is not an issue which requires immediate attention, nor is it a matter that can simply be put aside and left to annual wage reviews. Choosing some options will require new institutional arrangements. The question is, which direction do we want to go?</p><img src="https://counter.theconversation.com/content/14759/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rob Bray received funding from the HC Coombs Policy Forum to support his work on this topic</span></em></p>Shortly the Fair Work Commission will announce their decision on the minimum wage for 2013. This will be based on its own research and balancing the claims of employers, unions and others. The ACTU is…Rob Bray, Acting Director Social Policy, Evaluation, Analysis and Research (SPEAR) Centre Research School of Economics, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.