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Wage theft is deliberate, not a bug in the system

From the editorIn this issue, we expose how businesses cry "complexity" when they're caught out under


February 23 · Issue #31 · View online
Your weekly wrap of national affairs, society, culture and politics, published by UnionsACT.

From the editor
In this issue, we expose how businesses cry “complexity” when they’re caught out underpaying staff. We also take a look at stalling wage growth, a proposed new approach to measuring the wellbeing of the nation, and Dutton’s terrifying new plan to undermine our civil rights.
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Enjoy the issue!
Guy Mosel, editor

Wage theft is deliberate, not a bug in the system
by Guy Mosel
Photo by
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Back in October last year, when the hospitality industry was in the spotlight for its egregious and systemic wage theft abuses, celebrity chef Matt Moran had this to say: “Making any hospitality company 100 per cent compliant is hard because there are so many different awards. It takes a lot of resources. The whole thing should be simpler.”
You hear this a lot from business owners, usually right after they’ve been caught with their hands in their workers’ pockets. Woolworths boss Brad Banducci said something similar the same month, describing awards as “a very complex issue” and arguing that we need to “talk about the lack of flexibility”. He said this on the same day that his company ‘fessed up to pinching $300 million in wages from its staff.
Small Business Ombudsman Kate Carnell, a former Liberal Party politician, came to the defence of hard-done-by business owners in November in a press release cynically titled “Ombudsman calls for better protections of employee wages”. “While the vast majority of small businesses fulfil their obligations to their employees, the award system itself is overly complicated and fluid, which can sometimes lead to the employer making honest mistakes.”
“Honest mistakes.” Here, as a refresher, is an incomplete list of some of the poor organisations who just couldn’t quite work out how not to rip off their staff: Woolworths, Coles, Wesfarmers (Bunnings and Target), Qantas, the ABC, Domino’s, Subway, Commonwealth Bank, Caltex, Grill’d, Rockpool Dining Group, 7-Eleven, Coffee Club, Michael Hill, Super Retail Group and Crust Pizza.
All told, one in five Australian businesses are estimated to be engaged in wage theft. PwC estimates that 13% of Australian workers are underpaid $1.35 billion each year.
It seems weird, to me at least, that these large, sophisticated and highly profitable organisations, who seem otherwise capable of managing countless transactions, supply chains, and a genuinely convoluted tax code, are strangely inept when it comes to their payrolls.
Could they be right? Could the award system really be that complicated and onerous?
In short: nope.
For one thing, it’s telling that these supposedly accidental screw-ups always favour the employer. For another, if these underpayments were the product of genuine error you would expect there to be an even distribution across employees. But as Bernard Keane [$] in Crikey points out, that’s not the case at all: migrant workers, who comprise 6% of the workforce, account for 20% of Fair Work Ombudsman disputes; and young workers, who make up 15% of the workforce, are involved in 28%.
Also, many of the reported instances of wage underpayment over the last couple of years have been clearly deliberate: in Neil Perry’s Rockpool fine-dining empire timesheets were tampered with; 7-Eleven franchisees were intentionally rorting workers; Caltex falsified records.
Businesses have been able to get away with this much more since 1996, when the Howard government abolished award-based right of entry, preventing unions from conducting regular inspections of time records (now they must give 24 hours notice and sometimes fight off legal action by bosses to block access).
And don’t forget how much the award system has been simplified already. The Howard government’s Work Choices legislation was a raw deal for workers but the Rudd government retained the national framework when it repealed Work Choices in 2009. That consolidated thousands of state and federal awards into a huge and terrifying total of 122.
Anthony Forsyth, a professor of workplace law at RMIT, says it’s not the awards that cause complication but the use of annualised salary arrangements (a tactic used by organisations to avoid the award in the first place), which require “regular checking and monitoring”.
The bottom line is that there should be no excuses, and that complaints about award complexity are a diversion and a stalking horse for undermining the award minimums.
University of Adelaide associate professor in law Joanna Howe said businesses whose business models depend on underpaying workers “should not exist”.
“Stealing is a crime no matter how it happens or who does it.”
The week in review
👎🏽 Wage growth stuck in neutral
Wage growth has stalled at 2.2%, unemployment has crept back up to 5.3%, while underutilisation is up to 13.9% from 13.4%. As Michael Pascoe points out, 2.2% growth works out to be roughly zero in terms of take-home pay. “That’s a fact that government and employers are either ignorant of or don’t dare admit,” Pascoe writes. “And it’s actually worse than zero growth for many people. The interaction with our transfer system – family tax benefits, tax rates and such – means many households went backwards. Their real take-home pay shrank.”
👍🏽 Shots fired
Speaking to the ABC this week, Atlassian co-founder Michael Cannon-Brookes called bullshit on the Morrison-Murdoch lie that we don’t yet have the technologies we need to cut emissions. “The technology we need to get to net zero we have today,” Cannon-Brookes said, as he announced a plan to fund a solar and battery off-grid system to power communities hit by the bushfires. (We shouldn’t be relying on the billionaire class for salvation, but given the wealthy and privileged are this government’s constituency it can’t hurt that a prominent member of that elite club is calling them out.)
Meanwhile Ketan Joshi has written an excellent and excoriating critique of the government’s ”new climate action distraction“.
👎🏽 Turning a blind eye
In the same week we learned that one in six Australian children were living in poverty (that’s 17 children of every 100 living below the poverty line in arguably the richest country on Earth), new research has identified a direct link between poor mental health and housing instability. The study found that a mental health condition increased by 39% the likelihood of a forced move within 12 months, while people with poor mental health who didn’t access health services were almost 60% more likely to experience a forced move within two years.
👍🏽 Rethinking GDP
Shadow Treasurer Jim Chalmers has signalled that Labor would consider a New Zealand-style ”wellbeing budget“ to sit alongside the traditional GDP measure of economic strength. In a speech to the Australia Institute in Brisbane, Chalmers said the Wellbeing Budget had "significantly reshaped the conversation in New Zealand about the budget and the economy”. “[It] reports against specific measures under four headings: financial and physical capital, human capital, natural capital and social capital,” Chalmers said. “All geared towards meeting goals like improving mental health; reducing child poverty; addressing the inequalities faced by indigenous people; thriving in a digital age; and transitioning to a low-emission economy.”
👎🏽 Overreaching Dutton reaches even further
The government is considering giving the Australian Signals Directorate, the premier foreign cyber intelligence agency, new powers to pursue criminals in Australia, something it is currently banned from doing. Home Affairs Minister Peter Dutton says it’s all about protecting kids from paedophiles and hunting terrorists, which is the kind of thing that governments always say when they want to chip a little further away at our privacy and civil rights.
Australia’s new digital workhouses
How Hindu supremacists are tearing India apart
For your bookshelf
Fire Country: How Indigenous Fire Management Could Help Save Australia, by Victor Steffensen
Why You Should Be a Trade Unionist, by Len McCluskey
"What a unionist looks like" t-shirt
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