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Issue #1893      November 6, 2019

Wage theft is theft!

Woolworths is the latest corporation in a long series of companies exposed for wage theft. Its management can make all the claims it likes about the award system being too complex. Theft is theft. And should be called out and punished as a criminal offence.

Wage theft has become a business model. It is not some occasional, accidental aberration or mistake. It is particularly rife amongst casual and other lower paid workers. It involves the super-exploitation of workers for the sake of boosting profits.

According to a University of Technology Sydney report, one in three international students and backpackers are paid about half the legal minimum wage.

There is a long list of corporations that have been caught red-handed helping themselves to workers’ wages. Big names such as Domino’s Pizza, Pizza Hut, McDonalds, Perth Donut King, Bakers Delight, Commonwealth Bank, Qantas, Coles, IGA, Bunnings, Wesfarmers, 7-Eleven, and Retail Food Group (Brumby’s, Michel’s Patisserie and Donut King).

Wages on Australia’s farms, which are being squeezed by the Woolworths/Coles supermarket duopoly, are as little as $8 an hour in some instances compared with the minimum wage of $19.49 per hour.

Many of the retail outlets exposed for wage theft have enterprise agreements with the right-wing shop assistants union (SDA) that actually left workers worse off or were not enforced by the union.

RAFFWU

The Retail and Fast Food Workers Union (RAFFWU) was set up to counter the SDA and its sweetheart deals with the big retail employers. RAFFWU has been responsible for the exposure of a number of cases of wage theft, including the latest involving Woolworths.

Contrary to media reports, Woolworths did not suddenly discover an accidental underpayment. RAFFWU was about to run a class action against Woolworths for wage theft. It then admitted the underpayment, meaning the class action could not go ahead. The SDA was not, contrary to the impression of some media, responsible.

According to the Sydney Morning Herald, at least 250,000 workers were underpaid as a result of deals between the SDA and big business and should never have been approved by the Fair Work Commission.

Woolworths is one of the largest employers in Australia with 196,000 employees. Its group of companies includes Woolworths, Big W, Dan Murphy’s, and BWS. More than one-third of its workforce is under 25 years of age.

The name George Calombaris has become synonymous with wage theft. In his court-enforceable undertaking with the Fair Work Ombudsman, Calombaris admitted his restaurants had failed to pay minimum award rates, add casual loadings, including penalty rates for weekends, and make any allowance for split shifts, overtime or making staff work through their meal breaks. He’d also failed to pay permanent staff their annual-leave loadings.

The total payout to his employees and former employees has blown out to $7.8 million. While this a tiny fraction of the $300 million or so Woolworths is believed to owe its salaried staff, relatively speaking it is still a hefty amount.

Criminalise underpayment

Young Indigenous children are locked up for shop-lifting. So why aren’t those who steal millions upon millions of dollars out of workers’ pockets locked up?

The government is tossing with the idea of making under-payment a criminal offence. But don’t hold your breath. A conviction will be close to impossible under the legislation they have in mind, and hence worthless.

This is clear from Christian Porter’s suggested conditions under which it would apply: “My instinct is that in circumstances where there has been very large amounts of underpayment over a sustained period of time, where it has been known and there’s strong evidence of that, i.e. that the person knew that they were underpaying their staff large amounts of money over long periods of time, and fourthly, where there were efforts to conceal that underpayment – that’s the type of scenario.”

Innes Willox, chief executive of the Australian Industry Group, told the Nine newspapers that the “vast majority” of employers did the right thing. Instances of underpayment were mostly “genuine errors,” Willox claimed.

Curiously, these “genuine errors” work in favour of the employer!

The claims by business organisations that the system of awards and enterprise agreements is too complex is nonsense.

If the underpayments are a result of “complex” laws, then why do we only see underpayments, and don’t hear of any overpayments?

The system of modern awards is the result of award simplification and stripping. If employers could handle a far more complex system with less sophisticated technology, there is no excuse for getting it wrong now.

All this talk about complexity is a cheap cop-out and part of a drive to further deregulate the industrial relations system.

Wage theft is endemic in the construction, retail, hospitality, and other low-paid sectors where workers are employed casually or through labour hire. It is also rife where visa workers are employed and amongst employers of immigrant workers. In the case of visa workers, even where they know they are being subjected to below award wages, fear of deportation means they do not dare speak out or go to a trade union.

Employers also use fear to rule over casual workers, who fear loss of their jobs if they join a union or speak out.

How could this happen?

Workers have always been robbed (surplus value). But wage theft, in the form of underpayment of the legal minimum, has crept up as a widespread business model over the past few decades.

Historically workers have relied on trade unions to negotiate their legal entitlements and to ensure employers meet all of their legal obligations. Since the mid-1980s, when the Hawke Labor government signed an Accord with the trade union movement, there has been a gradual decline in the ideology, numerical and industrial strength, and rights of trade unions.

Under the Accord, wage restraint and co-operation with employers became accepted. Never before, had the trade union movement agreed to co-operate with employers or restrain wages.

In the early 2000s, the Howard Coalition government set out to clobber and destroy the trade union movement. There was a series of legislation, culminating in WorkChoices and the union-busting Building and Construction Commission (ABCC). WorkChoices, with its individual non-union employment contracts took a heavy toll on wages and working conditions.

During the Gillard/Rudd years, individual contracts were abolished but trade union rights took another hit, in particular with curbs on the right to strike.

The Abbott/Turnbull/Morrison governments have continued where Howard left off, with possibly the most threatening of all legislation, the Ensuring Integrity Bill, currently before Parliament.

As a result, trade union density has been decimated. Ideologically, with a few exceptions, trade unions have been disarmed. Those who dare to defend the legal entitlements of their members are hit with a sledgehammer. In the case of building and construction unions, penalties run in the millions of dollars with restrictions on their ability to organise and recruit members.

The Fair Work Commission’s role centres around matters such as unfair dismissal, approval of enterprise agreements, right of entry permits, and dispute settlement. The Registered Organisations Commission polices trade union finances. The ABCC polices and takes trade unions to court for defending their members’ rights.

Way forward

There is no statutory body to police employers. Trade unions have also lost the right to inspect employers’ books for the purpose of checking that wage rates and other entitlements are being met.

Legislation treating wage theft as a crime is required. It should carry jail penalties and disqualification from holding office for CEOs and others responsible.

It cannot be left to government authorities to enforce workers’ rights. They should, however, ensure that all employees are provided with a statement of their rights and be protected if they or their union raise breaches of an award or enterprise agreement.

This on its own will not be enough. Trade union rights are vital. In particular, the right of entry, the right to inspect a company’s books, the right to strike and the abolition of the ABCC. The Fair Work Act should be torn up and replaced by legislation ensuring worker and trade union rights.

Next article – Editorial – Lest we forget

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