Normally, employer groups are among the most vocal supporters of rigorous enforcement of industrial relations laws, especially on “rogue” and “militant” unions.
But the hospitality industry, it seems, would prefer if the relevant regulator wasn’t too eager to enforce the rule of law. At least, that’s the message in the wake of the collapse of George Calombaris’ restaurant company.
The celebrity chef’s empire crumbled after revelations it underpaid staff millions over a number of years. A dramatic fall in patronage followed.
The CEO of the Restaurant and Catering Association, Wes Lambert, blamed the collapse on the Fair Work Ombudsman’s “heavy-handed enforcement” of award pay levels.
“This is what happens,” he said, having listed the pressures the industry faces, “when you add on top of that a regulator naming and shaming businesses that are coming forward and reporting underpayments.”
Perhaps he didn’t think it through, but the implication of that is Lambert would prefer underpayment be kept secret from the public, to prevent customers exercising their prerogative to avoid offenders like Calombaris’ restaurants. Would that include gag orders on employees to prevent them telling the media they’d been underpaid?
Australian Industry Group head and IR hardliner Innes Willox was exercised not so much by the FWO “naming and shaming” offenders as the use of the term “wage theft”.
“The unions, in particular, through relentlessly overinflating and politicising the issue and branding employers as ‘thieves’, should bear much of the opprobrium for the sad outcome in the Calombaris case,” Willox said.
“Anti-business rhetoric has reached fever pitch, risking jobs and investment.”
There was, Willox said, only a “very small minority of employers who deliberately underpay workers”.
Alas for Innes, that doesn’t quite stand up.
Multi-year data from the Fair Work Ombudsman (FWO) shows that more than a quarter of employers in industries targeted by the FWO — of which hospitality is a key one — underpay their workers.
The case could be made for exactly the opposite point to Willox’s — that driving employers who underpay workers out of their industries reduces the pressure on employers who do the right thing by their workers, giving them greater confidence to invest knowing they aren’t facing competitors who cheat.
The arguments of hospitality employers might have a skerrick of credibility if wages in the sector had been expanding rapidly in recent years.
But Wage Price Index data from the ABS for the food services and accommodation industry, which includes restaurants, cafes, pubs and clubs, shows average annual wages growth of only 2.2% over the last four years — slightly above the 2.1% average growth for the entire economy, but well below the fastest-growing sectors during the years of wage stagnation, health and infrastructure.
Nor has the sector had trouble attracting workers — jobs in the food and beverages services employment sub-division have grown 22% in the same period.
Wage growth was also just 0.6% above the Consumer Price Index average over the same period. Indeed, the restaurant sector benefited from the Fair Work Commission’s cuts to penalty rates, meaning many workers have actually gone backwards on pay. If the industry can’t cope with real wages growth of 0.6% a year, there’s a flawed business model somewhere.
Willox, notably, criticised both sides of politics and scolded the government for “supporting a divisive agenda”. After a slow start in the face of revelation after revelation of underpayment by major employers, the government increased the FWO’s budget by tens of millions to crack down on both wage underpayment and sham contracting. The FWO’s raiding squads now uncover at least one case of wage underpayment a week, and often more, in industries like hospitality.
The government is also set to introduce new laws in coming months that are expected to criminalise wage underpayment, to the fury of employer groups.
The term “wage theft” has only been used on a few occasions by FWO representatives in recent years, and usually in relation to its usage by others.
The government, on the other hand, has been less restrained. “Submissions on wage theft criminalisation,” were invited by Attorney-General Christian Porter in September, “to help stamp out deliberate and systematic wage theft by Australian employers.”
The Coalition might be anti-union, but even it knows blatant exploitation of workers when it sees it.
It’s all the unions fault (Willox).
The unions “politicised” (i.e. publicized) the issue and customers voted with their feet.
What happened to the idea that the customer is always right?
BK makes the central point: what about the employers who obey the law? If only a small minority “deliberately” underpay, what’s the problem with enforcing the law? Must be that Willox knows of large numbers who do it “undeliberately”. Yeah right.
Yes the central point is “giving them greater confidence to invest knowing they aren’t facing competitors who cheat.”
This is why standard reason why regulation is a good thing for all. Individual capitalist enterprise is hamstrung by the competition imperative even when the competition is unfair or drives wages down to levels that imperil the survival of existing businesses. Even worse is this drives out investment in new business and jobs because potential customers have no money.
In this case the customers did the real talking. I thought they were always right.
Agreed- I’ve spent much of my career in an industry that survives on unpaid overtime….purely as fee undercutting becomes a race to the bottom and companies then rely on unpaid hours. Yep- we are university graduates but it’s so endemic that to fight it is career suicide. I’m hoping that what is being publicised will force a myriad of employers to rethink their unwritten policies and consider charging the proper fees for services rendered.
It’s strange that businesses are arguing that they’re not financially viable without being able to exploit workers. Isn’t that the case against such businesses existing?
Either their prices aren’t adequately reflecting the costs, or they’re just trying to use labour costs as an excuse for their greedy and illegal behaviour. Either way, good enforcement of the rules in the industry should benefit everyone because it will get rid of businesses that shouldn’t exist and stop the exploitation of workers.
I enjoy eating out, and I don’t want to think about the question of whether the workers are being paid fairly as I’m eating. The systemic nature of underpayment in the industry is undermining the experience, at least for me anyway.
And me too Kel.
Legitimate employers shouldn’t have to compete with wage thieves. If it smells like a rort…………
There is plenty of hard work in the food and entertainment industries, risks, long hours, difficulties. That cannot ever allow people to have a righteous obsession with success at all costs, by robbery, deception, callousness. Fine and jail crooks, hit hard and let survivors and successful work be well rewarded and rightly paid. People will (or should) pay for honesty and reliability, quality and value. Ignore Willis Bollox, a front man bullshitter and liar.
Damn that regulator for making it harder for the well-to-do to have a posh nosh while being served by the ‘just-scrapping-by’ crowd. It’s getting harder and harder for the very lucky in the Lucky Country to enjoy life. They may have to follow their money to an off-shore haven if this keeps up.
Once again, no mention of the Landlord’s role in the business model, just the typical squarking about wages and overtime. Anyone who has ever run a retail business, and didn’t own the property, knows that the biggest and absolutely most capricious cost in the business is RENT.
Rent you say ? Wasn’t Heston Blumenthal pty ltd paying Crown a whole $1 a year rent ?..Think of all the poor mums n dads property port folios before talking about property investment rents
That doesn’t invalidate the general point that the real estate “market” is killing everything.
Yep, the rentiers are making a killing out of the real estate market killing everything .