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Seeking the Post-COVID Sunshine: Through More Feedback on the Growing Income Divide

Industrial Relations Claims - More than 2.2 million Australians are earning the minimum wage

Although the demands imposed by the Fair Work Commission (FWC) have replaced the excesses of the LNP’s old Work Choices experiments from the Howard era, Australia still has an appalling divide in take-home pay rates between a new generation of working poor and quite comfortably off fellow Australians.

The FWC is still quite upbeat about progress on the wages front in one of its latest news releases. The Labor Opposition can indeed afford to be more proactive in developing alternative wages policies. The web site of the Fair Work Ombudsman offers details of some key recent developments on the wages fronts.

The federal LNP opposed a better wage deal for poorly paid workers in its submissions to the FWC (SBS News 6 April 2021):

The Morrison government has cautioned against a major increase in Australia’s minimum wage, citing concerns about job creation. In a submission to the Fair Work Commission’s annual review, the government notes a continuing uncertain global and domestic economic outlook.

“Higher labour costs during this challenging period could present a major constraint to small business recovery and may dampen employment in the sector,” the submission says. It urges a “cautious” approach that takes into account the importance of job creation and business viability through the economic recovery post-coronavirus.

Policy caution on the wages front by the Morrison Government in the FWC comes with cheers from neoconservative lobby groups such as the National Retail Association, the Restaurant and Catering Industry Association and the National Farmers’ Federation. The Australian Council of Trade Unions which is advocating a minimum wage of $26 an hour plus additional payments offered under current fair work requirements for overtime and casual rate loadings.

Low levels of wages growth are not in the interests of economic recovery. Wages growth indicators are the lowest since the 1930s as shown in March Quarter ABS data.

Low levels of wages growth have negative efforts on superannuation accumulation. For casual employees with less than 30 hours a week employment, there is no responsibility for superannuation commitments as noted by TWU Super:

Under Australia’s Superannuation Guarantee laws, employers are required to pay at least 9.5% super for casual staff who are over 18 years old and earn more than $450 per month, before tax and are not otherwise exempted from Superannuation Guarantee contributions.

These rules also apply to any casuals who do domestic or private work (i.e. not for a business) for more than 30 hours a week, such as nannies and paid carers.

There are additional criteria for those casual employees who are under age 18.

Superannuation must also be paid for any casual employee who is under 18 years of age, works at least 30 hours per week, earns at least $450 per month (before tax) and is not otherwise exempted. This means that employers must pay super for every week that an under-18 casual works 30 hours or more.

Corporate research by McCrindle reveals the consequences of wage suppression for the welfare of the working poor in Australia:

The gap between rich and poor

Income growth has been slow over the last decade. In the ten years leading up to 2017-18, the average weekly household income has only increased $44 to $1,062.

Yet wealth growth has been strong. Average household wealth has increased from $749,000 in 2005-06 up to today’s 1-million-dollar milestone; a rise of 37%.

The average household gross income is $116,584, however the top 20% of households earn 48% of all income. Twelve times more than the bottom 20% who are left with just 4% of Australia’s income. That leaves the middle classes, 60% of Australia’s population, with the other 48% of earnings.

The top 20% also owns just shy of two thirds of Australia’s wealth (63%). To put that into perspective, that’s 92 times more than the average wealth of those who find themselves in the bottom 20% of the population, who own just 1%.

The federal LNP contributes to this income divide by its largesse to comfortably off families by hastening the transition to Phase 3 tax reforms and quite legalized forms of tax avoidance through dividend imputations, writes off for negative gearing of property investments, superannuation top-ups and that those old anomalies associated with family trusts.

As the wealth divide increases, Australia’s nouveau riche has little respect for the FWC’s universal wage standards. Commonplace practices in the dark wage economy include:

Readers might be willing to share their own experiences with such dark workplace practices.

However, the Fair Work Ombudsman is quite upbeat about its capacity to address the depths of despair in the dark economy in wages and employment standards (Assistant Media Director at the Fair Work Ombudsman 4 June 2021):

Any worker seeking advice or information specific to their circumstances can obtain free advice and assistance from the Fair Work Ombudsman by visiting www.fairwork.gov.au or calling the Fair Work Infoline on 13 13 94. A free interpreter service is available by calling 13 14 50. Reports can also be made to the Fair Work Ombudsman anonymously in 16 languages, plus English. We encourage you to urge any relevant workers you speak with to contact us.

Feedback from one security company claimed that failure to pass on penalty rates for long shifts and weekend loadings were quite widespread in the night club security sector in Brisbane. This encourages a race to the bottom in the erosion of wages and employment standards in a very hazardous sector of employment.

The Fair Work Ombudsman (FWO) will make workplace investigations of complaints about wage rates or breaches of working conditions which are covered by workplace contracts. Amendments to the Fair Work Act have indeed tightened the requirements in small business enterprises to notify workers of their rights in relation to casual employment:

As a preventative measure, employers could be directed to advise all workers of their right to contact the FWO in relation to perceived breaches of contractual arrangements in workplaces. This will place pressures on employers to stick adhere to contractual agreements.

Currently, Fair Work Inspectors (FWIs) can also initiate spot checks at employment sites in industries which are prone to fair work breaches. Enforcement operations can be compromised if workers are employed under verbal agreements through ad hoc arrangements between employees and their bosses or work supervisors.

However, the latest annual report of the FWC dies show some progress with enforcement activities:

In 2019–20, as part of our compliance activities, we investigated 1432 workplaces and recovered $7,843,790 in unpaid wages.

Key compliance activities for the 2019–20 year included a series of compliance activities involving popular food precinct areas, including conducting surprise audits of a number of bars in Melbourne’s popular Chapel Street district, in response to allegations (including enquiries and anonymous reports) that workers at venues in the area were being underpaid and not receiving entitlements such as overtime and penalty rates.

The overall non-compliance rate for our audits for the year was 71%, with the most common contraventions relating to:

hourly rate underpayments (12%),

failure to provide payslips in their prescribed form (9%),

penalty rates for weekend work (9%).

The FWC is hardly awash with funding in the 2021-22 budget to address these workplace anomalies. Budget allocations to the FWC have not increased for 2021-22 under the new Attorney-General Michaelia Cash who is responsible for commitments to the FWC. Expenditure remains fixed at $127.4 million. A breakdown of trendlines in allocations for the Fair Work Ombudsman and the Fair Work Inspectorate has been requested and can be added as a footnote to this article if any reply is received.

I have yet to receive advice from the Fair Work Ombudsman about the status of verbal agreements for employment contracts as such arrangements can avoid a transparent paper trail of workplace agreements. Cash wages can also provide mechanisms for illegal tax avoidance of both state and federal taxes particularly in rural employment and small business activities.

Commitment to fair wages and working conditions made Australia a world leader in some categories of industrial relations prior to the Great War (1914-18). Such advances coincided with discrimination in indigenous employment and the misuse of Kanaka labour on the cane-fields of Queensland.

History is of course being re-written by the federal LNP to emphasize military commitments to the British Empire over selective advances in the welfare of working people who twice rejected Billy Hughes’ conscription proposals to the killing fields of Europe and the Middle East. Looks like times have not changed (Paul Daley in The Guardian 29 April 2021):

Lost, like the 125-year-old frontal lobe of Australia’s foreign war-fighting memory that compels some like Dutton (and should his job application succeed, Pezzullo) to focus on the next battlefield before we’ve vacated the last – Afghanistan.

The hawks have the drums of war beating inside their heads all right. And should they blow the whistle, it will be for others to go over the top – while they stay safe, a world away.

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Denis Bright is a member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to citizen’s journalism from a critical structuralist perspective. Comments from insiders with a specialist knowledge of the topics covered are particularly welcome.

 

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