Finance Finance News Wage theft: Employer calls to ‘reform’ award system are a bare-faced con job
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Wage theft: Employer calls to ‘reform’ award system are a bare-faced con job

Businesses say they want industrial awards 'simplified', which will help stop the cycle of wage theft. But that's not what they really mean. Photo: TND
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This week an already impressive list of wage theft offenders has gotten a bit longer.

On Monday, the likes of Caltex, 7-Eleven, Pizza Hut, Domino’s Pizza and Bunnings (to name a few), were joined by Coles, which underpaid its staff $20 million over six years.

On Wednesday, Target admitted to underpaying workers about $9 million.

On Thursday, Super Retail Group – whose brands include Rebel and Super Cheap Auto, said that it had short-changed workers by $8 million more than it had originally estimated, bringing the total to $61.2 million.

On Friday, cleaning and catering company Spotless admitted to underpaying workers $4 million.

The total wage theft uncovered this week: $94.2 million.

Move along, nothing to see here

Based on data from the Fair Work Ombudsman, PricewaterhouseCoopers estimates Australian workers are underpaid $1.35 billion each year, affecting 13 per cent of the total workforce. In high risk sectors 21 per cent of the workforce is affected.

That means that overall, one in seven workers are not getting their wages, penalty rates, superannuation, overtime, and entitlements such as sick or annual leave paid correctly.

In high risk sectors this happens to about one in five workers.

Given these statistics, one would imagine widespread outrage and sweeping reforms. After all, with only a handful of cases of coronavirus in Australia, a travel ban was introduced barring people in China from entering Australia.

However, the suggested measures to address wage theft fall short, and employers don’t seem to be that remorseful.

Apologising: You’re doing it wrong

Of course, the perpetrators have been publicly condemned, even by the Prime Minister and the Attorney General, and we have seen a performative mea culpa from the employers.

The apology was not a real one, however. Even children know this: ‘sorry’ is just a word.

The difference between a sincere apology and faux one has to do with the phrasing. Apologies that are followed up with a conditional word such “but” or “if” are insincere.

Coles has admitted underpaying staff to the tune of $20 million. Photo: TND

So, what did the employers say?

“We’re sorry, but the award system is overly complex!”

“Even mathematicians are confused by wages that change due to overtime and penalty rates, so how can we expect HR managers to make sense of it, or a small business owner.”

“Underpayment is unintentional, it is not deliberate. This is a matter of insufficient attention to detail, rather than companies being greedy.”

There is plenty of attention to detail when it concerns executive remuneration, however.

Who can ever forget George Calombaris being caught for underpaying employees $7.8 million, while seeking a massive pay rise for being a judge on MasterChef Australia.

Something else to consider: all of these “inadvertent” mistakes have resulted in millions upon millions in underpayment. While two CEOs of companies implicated in wage theft this week said that workers also get overpaid sometimes, neither said by how much or how often.

Turning setbacks into opportunities

If giving an insincere apology isn’t bad enough, employers and industry bodies have turned the rolling wage theft scandal into an opportunity to lobby for industrial relations reforms.

“The award system is complex, labour law is onerous, and there is too much red tape.”

“We need sensible reform to enable flexible work arrangements and increase productivity.”

“This can be achieved through the simplification of our industrial relations system.”

Only Calombaris’ Yo-Chi will continue operating. Photo: Getty

I’ve seen conservative columnists point to New Zealand as a shining example, where a conservative government abolished the award system in 1991.

Sixty-nine per cent of workers in New Zealand are on individual contracts. They have become the norm, and in reality, these contracts can be imposed by employers without negotiation.

Figures show that collective agreements in the private sector declined from 48 to 9 per cent, while private sector union membership declined from 43 to 10 per cent.

The wage share of national income in New Zealand declined to post-war lows in the 2000s. In short, the “simplification” of the industrial relations system in New Zealand has been severely detrimental for workers.

All hail the market!

When employers, industry bodies and conservative politicians talk about “simplification”, what they really want is to reduce the role of government and unions in wage setting.

Ideally, they contend, this would be entirely left to the market.

When the Fair Work Commission determines the minimum wage, employers and industry bodies argue that the minimum wage is already among the highest among OECD countries.

The Reserve Bank of Australia, another undesirable force that inhibits market functioning, is ignored when it urges employers to lift wages to contribute to economic growth.

Workers have already been told that penalty rates are an impediment to economic activity and job creation. Hence, after the cutting of penalty rates in certain industries, the market worked its magic and a total of zero new jobs were created.

Surprisingly, you never hear market fundamentalists mention how the supermarket duopoly or the banking oligarchy in Australia hinders the effective functioning of the market.

The fact that Coles and Woolworths have 61 per cent market share wouldn’t make them think they could get away with wage theft (Coles underpaid $20 million over six years, Woolworths underpaid $300 million over 10 years), neither does the fact that the big four banks control 75 per cent of the market for financial services have anything to do with their misconduct.

Double standards

Australia’s industrial relations system is broken, but not in the way that employers, industry groups and the Coalition would like you to believe.

The penalty that Calombaris received for underpaying his workers $7.8 million was limited to $200,000. In contrast, the Communications, Electrical and Plumbing Union was given a $445,000 fine for failing to lodge paperwork.

The Attorney-General and Industrial Relations minister promised the “most vigorous, robust and complete set of laws around wage underpayment that Australia’s ever seen”.

Yet at the same time, Attorney-General Christian Porter and his party are waging a war on trade unions by trying to introduce the Ensuring Integrity Bill.

This “union busting” bill includes a complex demerit point system, which can see a union official disqualified or a union deregistered if they accrue a certain amount of penalty units.

Evidently, the “simplification” argument doesn’t seem to apply.

Martijn Boersma is a lecturer in the management department at the University of Technology Sydney Business School.

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