Why do wage ‘mistakes’ always benefit the employer?

Crikey’s Bernard Keane has torn apart the claims by employer groups and senator David Leyonhjelm that the complexity and inflexibility of awards is behind the spate of wage theft ‘mistakes’:

Even as Woolworths was preparing to acknowledge yesterday that it had stolen the wages of nearly 6000 of its employees, it was getting its defence ready: it was because of the complexity and inflexibility of awards. CEO Brad Banducci declared “this is a very complex issue which needs an industry-level dialogue on it”.

Banducci had barely spoken before David Leyonhjelm appeared on the Financial Review site claiming the issue of wage theft was merely a “moral panic” that “originates in Australia’s absurdly complex industrial relation system, with its mess of awards and agreements barely changed from the middle of the 20th century”. Indeed, “the real thief is the government with its excessive taxes”.

This is now a standard defence of business when caught out ripping off their own staff: it’s really hard to follow awards…

Except, the “award complexity” claim is self-serving nonsense…

And if award complexity is the main problem, if underpayment could happen in any industry with any kind of award complexity, migrants and temporary workers wouldn’t be disproportionately the victims of it… Young workers are also disproportionately affected by this so-called award complexity…

The argument of complexity is particularly risible from larger companies like Woolworths, Bunnings, Wesfarmers, Qantas and Super Retail Group, or chains like Michael Hill, which use complex supply chains, successfully navigate the tax laws to minimise their tax liabilities, or have systems to comply with stringent safety codes and labelling requirements (often operating across different countries). In these markets, complexity in regulation is not a problem, but a barrier to entry protecting these incumbents from new entrants.

Too right. If the overwhelming majority of reported wage theft was due to honest mistakes by employers and the complexity of the industrial relations system, we would also expect to hear of businesses mistakenly overpaying their workers.

The fact that all of these ‘honest mistakes’ are underpayments, and always benefit employers over workers, suggests their claims about complexity are a smokescreen.

What we are seeing is the systemic rorting of Australian workers thanks to an out of control immigration system that has rendered industrial relations ungovernable.

It is loved by the Right because it delivers fat rentiers easier profits. It is loved by the Left because it’s not racist. It is loved by the media because it drives property listings. It is loved by Treasury because more warm bodies boost the Budget. It is loved by the RBA because it doesn’t have to account for its housing bubble.

Australia’s migrant slavery economy is the core of broader weak wages growth but that doesn’t matter either.  The macro-economic enabler is running mass immigration into material economic slack for the first time ever:

What does macro-economics 101 tell us happens when a perpetual supply shock lands on weak demand? Prices fall.

Piles of micr0-economic evidence also supports the contention that the mass immigration model does not do wage rises:

  • For years we have seen Dominos, Caltex, 7-Eleven, Woolworths and many other fast food franchises busted for rorting migrant labour.
  • The issue culminated in 2016 when the Senate Education and Employment References Committee released a scathing report entitled A National Disgrace: The Exploitation of Temporary Work Visa Holders, which documented systemic abuses of Australia’s temporary visa system for foreign workers.
  • Mid 2017, ABC’s 7.30 Report ran a disturbing expose on the modern day slavery occurring across Australia.
  • Meanwhile, Fair Work Ombudsman (FWO), Natalie James, told Fairfax that people on visas continue to be exploited at an alarming rate, particularly those with limited English-language skills. It was also revealed that foreign workers are involved in more than three-quarters of legal cases initiated by the FWO against unscrupulous employers.
  • Then The ABC reported that Australia’s horticulture industry is at the centre of yet another migrant slave scandal, according to an Australian Parliamentary Inquiry into the issue.
  • The same Parliamentary Inquiry was told by an undercover Malaysian journalist that foreign workers in Victoria were “brainwashed” and trapped in debt to keep them on farms.
  • UNSW Sydney and UTS survey painted the most damning picture of all, reporting that wages theft is endemic among international students, backpackers and other temporary migrants.
  • A few months ago, Fair Work warned that most of Western Sydney had become a virtual special economic zone in which two-thirds of businesses were underpaying workers, with the worst offenders being high-migrant areas.
  • Dr Bob Birrell from the Australian Population Research Institute latest released a report, based on 2016 Census data, revealed that most recently arrived skilled migrants (i.e. arrived between 2011 and 2016) cannot find professional jobs, with only 24% of skilled migrants from Non-English-Speaking-Countries (who comprise 84% of the total skilled migrant intake) employed as professionals as of 2016, compared with 50% of skilled migrants from Main English-Speaking-Countries and 58% of the same aged Australian-born graduates. These results accord with a survey from the Bankwest Curtin Economics Centre, which found that 53% of skilled migrants in Western Australia said they are working in lower skilled jobs than before they arrived, with underemployment also rife.
  • The Australian Bureau of Statistics (ABS) latest Characteristics of Recent Migrants reportrevealed that migrants have generally worse labour market outcomes than the Australian born population, with recent migrants and temporary residents having an unemployment rate of 7.4% versus 5.4% for the Australian born population, and lower labour force participation (69.8%) than the Australian born population (70.2%).
  • ABC Radio recently highlighted the absurdity of Australia’s ‘skilled’ migration program in which skilled migrants have grown increasingly frustrated at not being able to gain work in Australia despite leaving their homelands to fill so-called ‘skills shortages’. As a result, they are now demanding that taxpayers provide government-sponsored internships to help skilled migrants gain local experience, and a chance to work in their chosen field.
  • In early 2018 the senate launched the”The operation and effectiveness of the Franchising Code of Conduct” owing in part to systematic abuse of migrant labour.
  • Then there is new was research from the University of Sydney documenting the complete corruption of the temporary visas system, and arguing that Australia running a “de-facto low-skilled immigration policy” (also discussed here at the ABC).
  • In late June 2018 the government released new laws to combat modern slavery which, bizarrely, imposed zero punishment for enslaving coolies.
  • Over the following few months we witnessed widespread visa rorting across cafes and restaurants, including among high end establishments like the Rockpool Group.
  • Then Alan Fels, head of the Migrant Workers Taskforce, revealed that international students are systematically exploited particularly by bosses of the same ethnicity.

Academic research also supports it. Below are key excepts from Chapter 13 entitled Temporary migrant workers (TMWs), underpayment and predatory business models, written by Iain Campbell:

This chapter argues that the expansion of temporary labour migration is a significant development in Australia and that it has implications for wage stagnation…

Three main facts about their presence in Australia are relevant to the discussion of wage stagnation. First, there are large numbers of TMWs in Australia, currently around 1.2 million persons. Second, those numbers have increased strongly over the past 15 years. Third, when employed, many TMWs are subject to exploitation, including wage payments that fall below — sometimes well below — the minimum levels specified in employment regulation…

One link to slow wages growth, as highlighted by orthodox economics, stems from the simple fact of increased numbers, which add to labour supply and thereby help to moderate wages growth. This chapter argues, however, that the more salient point concerns the way many TMWs are mistreated within the workplace in industry sectors such as food services, horticulture, construction, personal services and cleaning. TMW underpayments, which appear both widespread in these sectors and systemic, offer insights into labour market dynamics that are also relevant to the general problem of slow wages growth…

Official stock data indicate that the visa programmes for international students, temporary skilled workers and working holiday makers have tripled in numbers since the late 1990s… In all, the total number of TMWs in Australia is around 1.2 million persons. If we include New Zealand citizens and permanent residents, who can enter Australia under a special subclass 444 visa, without time limits on their stay and with unrestricted work rights (though without access to most social security payments), then the total is close to 2 million persons… TMWs now make up around 6% of the total Australian workforce…

Decisions by the federal Coalition government under John Howard to introduce easier pathways to permanent residency for temporary visa holders, especially international students and temporary skilled workers, gave a major impetus to TMW visa programmes.

Most international students and temporary skilled workers, together with many working holiday makers, see themselves as involved in a project of ‘staggered’ or ‘multi-step’ migration, whereby they hope to leap from their present status into a more long-term visa status, ideally permanent residency. One result, as temporary migration expands while the permanent stream remains effectively capped, is a lengthening queue of onshore applicants for permanent residency…

Though standard accounts describe Australian immigration as oriented to skilled labour, this characterisation stands at odds with the abundant evidence on expanding temporary migration and the character of TMW jobs. It is true that many TMWs, like their counterparts in the permanent stream, are highly qualified and in this sense skilled. However, the fact that their work is primarily in lower-skilled jobs suggests that it is more accurate, as several scholars point out, to speak of a shift in Australia towards a de facto low-skilled migration programme

A focus on raw numbers of TMWs may miss the main link to slow wages growth. It is the third point concerning underpayments and predatory business models that seems richest in implications. This point suggests, first and most obviously, added drag on wages growth in sectors where such underpayments and predatory business models have become embedded. If they become more widely practised, underpayments pull down average hourly wages. If a substantial number of firms in a specific labour market intensify strategies of labour cost minimisation by pushing wage rates below the legal floor, it can unleash a dynamic of competition around wage rates that foreshadows wage decline rather than wage growth for employees…

Increases in labour supply allow employers in sectors already oriented to flexible and low-wage employment, such as horticulture and food services, to sustain and extend strategies of labour cost minimisation… The arguments and evidence cited above suggest a spread of predatory business models within low-wage industries.37 They suggest an unfolding process of degradation in these labour markets…

And below are extracts from Chapter 14, entitled Is there a wages crisis facing skilled temporary migrants?, by Joanna Howe:

Scarcely a day goes by without another headline of wage theft involving temporary migrant workers…

In this chapter we explore a largely untold story in relation to temporary migrant workers… it exposes a very real wages crisis facing workers on the Temporary Skill Shortage (TSS) visa (formerly the 457 visa) in Australia. This crisis has been precipitated by the federal government’s decision to freeze the salary floor for temporary skilled migrant workers since 2013… the government has chosen to put downward pressure on real wages for temporary skilled migrants, thereby surreptitiously allowing the TSS visa to be used in lower-paid jobs…

In Australia, these workers are employed via the TSS visa and they must be paid no less than a salary floor. This salary floor is called the Temporary Skilled Migration Income Threshold (TSMIT). TSMIT was introduced in 2009 in response to widespread concerns during the Howard Government years of migrant worker exploitation. This protection was considered important because an independent review found that many 457 visa workers were not receiving wages equivalent to those received by Australian workers…

In effect, TSMIT is intended to act as a proxy for the skill level of a particular occupation. It prevents unscrupulous employers misclassifying an occupation at a higher skill level in order to employ a TSS visa holder at a lower level…

TSMIT’s protective ability is only as strong as the level at which it is set. In its original iteration back in 2009, it was set at A$45 220. This level was determined by reference to average weekly earnings for Australians, with the intention that TSMIT would be pegged to this because the Australian government considered it ‘important that TSMIT keep pace with wage growth across the Australian labour market’. This indexation occurred like clockwork for five years. But since 1 July 2013, TSMIT has been frozen at a level of A$53 900. ..

There is now a gap of more than A$26 000 between the salary floor for temporary skilled migrant workers and annual average salaries for Australian workers. This means that the TSS visa can increasingly be used to employ temporary migrant workers in occupations that attract a far lower salary than that earned by the average Australian worker. This begs the question — is the erosion of TSMIT allowing the TSS visa to morph into a general labour supply visa rather than a visa restricted to filling labour market gaps in skilled, high-wage occupations?..

But why would employers go to all the effort of hiring a temporary migrant worker on a TSS visa over an Australian worker?

Renowned Australian demographer Graeme Hugo observed that employers ‘will always have a “demand” for foreign workers if it results in a lowering of their costs’.  The simplistic notion that employers will only go to the trouble and expense of making a TSS visa application when they want to meet a skill shortage skims over a range of motives an employer may have for using the TSS visa. These could be a reluctance to invest in training for existing or prospective staff, or a desire to move towards a deunionised workforce. Additionally, for some employers, there could be a belief that, despite the requirement that TSS visa workers be employed on equivalent terms to locals, it is easier to avoid paying market salary rates and conditions for temporary migrant workers who have been recognised as being in a vulnerable labour market position. A recent example of this is the massive underpayments of chefs and cooks employed by Australia’s largest high-end restaurant business, Rockpool Dining Group, which found that visa holders were being paid at levels just above TSMIT but well below the award when taking into account the amount of overtime being done…

Put simply, temporary demand for migrant workers often creates a permanent need for them in the labour market. Research shows that in industries where employers have turned to temporary migrants en masse, it erodes wages and conditions in these industries over time, making them less attractive to locals…

A national survey of temporary migrant workers found that 24% of 457 visa holders who responded to the survey were paid less than A$18 an hour.  Not only are these workers not being paid in according with TSMIT, but they are also receiving less than the minimum wage. A number of cases also expose creative attempts by employers to subvert TSMIT. Given the challenges many temporary migrants face in accessing legal remedies, these cases are likely only scratching the surface in terms of employer non-compliance with TSMIT…

Combined, then, with the problems with enforcement and compliance, it is not hard to conclude that the failure to index TSMIT is contributing to a wages crisis for skilled temporary migrant workers… So the failure to index the salary floor for skilled migrant workers is likely to affect wages growth for these workers, as well as to have broader implications for all workers in the Australian labour market.

It’s not just temporary visas. It is the entire mass immigration model:

  • students, visa holders, tourists all work for nothing to gain longer terms visas;
  • their numbers are endless and so is the labour supply shock;
  • and that endless flow has now generated a supply side adjustment to businesses that thrive on cheap foreign labour – basically service economy dross – that holds up empty calorie growth, boosts asset prices and the currency, holds own productivity via capital shallowing, and hollows out tradables in an era of global lowflation.

That’s why I shop at Woolies

Leith van Onselen
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Comments

  1. “If the overwhelming majority of reported wage theft was due to honest mistakes by employers and the complexity of the industrial relations system, we would also expect to hear of businesses mistakenly overpaying their workers.”
    If overpaying workers was a crime, or even a thing, then you probably would hear about it.
    Given overpaying workers is entirely synonymous with paying workers I’m not sure how or why you would expect to hear about it?

      • HadronCollisionMEMBER

        Your value proposition is unclear if you need to say this

        I love what you guys do but still not there for me.
        People and publisher writing ”freeloader” or “subscribe” are part of the rebarbative mob bloviating the same inanities

    • I would expect to hear about it straight from Woolie’s so that they didn’t look like rapacious wage slave drivers. But that we don’t hear about it means that it didn’t happen.

    • darklydrawlMEMBER

      I could be wrong, but I feel the point of this post was the errors always fall on the side of underpayment. If it was random, then it would be more evenly distributed.

      • If your data source for the distribution of payment errors is media articles, then I suggest it may be highly biased towards a particular outcome.
        If it is completely made up, then moreso.
        Ultimately it’s a moot point because there is only a minimum that is allowable to be paid, not a maximum, so it is not technically possible to overpay someone, only pay them more than the minimum they are entitled to.

        • Absolute drivel from the freeloader – if it turned out that Woolies had given away $300m to its workers due to a clerical error and then attempted to bury this gross mismanagement the institutional investors would be all over the board of directors and senior executives of the company. Not only because that was $300m that could have gone towards dividends but it smacks of sloppy, careless management practices which may well indicate other systemic problems in the running of the business.

          • So are the shareholders all over the board for this gross mismanagement which is costing more than that and has much worse and wider ragning PR ramifications? Or is your statement mere hyperbole.

          • How is it costing Woolies far more than $300m upfront? You seem to be assuming that the $300m Woolies stole from its workers was the company’s to keep and that now it has to pay back that stolen money that somehow is a new expense. Rather, what will happen is that the company will be forced to make adjustments to the financial statements of previous years to correctly reflect that those costs were expensed back then. There is no new upfront cost to Woolies in terms of the payment to its workers.

          • triage I see your comments on overpayment and want to respond..
            ..I have seen many cases of employers effectively overpay staff – let me give an example..

            A past employer of mine (major telco) put together a commission scheme that had some, lets say, holes in it.. one of them was that there were a couple of items we could sell (or even give away), once reaching our targets that would earn us more in commission than the item could ever earn the business, and more than it cost us to dip into our own pocket to include for the customer ourselves.
            A few of us cottoned on early and took home multiples of our wage in month one, so far unnoticed by the business, in month two more employees realised and jumped on the bandwagon, and by month 3 everyone was doing it and the business finally realised that the holes in the structure were actually causing them to pay out more than they were making (remembering we were already all paid above award wages and this was an extra incentive payment).

            The business though, having in good faith put the bonus structure in place for us abided by its terms for those months before changing the structure for month 4 to make it less generous and able to be abused. I have also seen workers overpaid many times via miscalculations in HR, only some of which I have seen them withdraw. Particularly with employees leaving a business and being paid out leave etc I know of employees being over-paid but the business realising too late and deciding it is not worth pursuing now that the employee is out of the business.. it happens all the time.
            You don’t hear about overpayments because there is no “gotcha” moment to publicise.

          • You don’t hear about overpayments because there is no “gotcha” moment to publicise.

            Yes you do. The “gotcha” moment that gets publicised is when the employer tells its employees to give the money back. Because, despite what some posters here seem to think, the remuneration number in your employment contract isn’t an MVP.

            I can recall this happening with the QLD Health payroll debacle. I am struggling to bring another example to mind.

          • Possibly because any private company will just let it go to avoid the bad publicity hence it never makes media coverage which was my point. Government departments on the other hand are quite happy to get on that shovel at the bottom of their hole and dig their way out.

        • Dissenting comments are not appreciated even if they perhaps make a valid point. Or at least give pause to consider another perspective.
          Hence you are a freeloader and obfuscator.

          • Back in the day the comments on this blog were full of insightful, well reasoned and thoughtful comments representing a broad spectrum of views.
            Now you get this.
            The more the comments section morphs into an echo chamber, the less interest I have in a membership.

            Edit:
            I’m still waiting for someone to explain what an overpayment even is in this context.

          • F you and your membership. What have you contributed, other than your willingness to allow people a neo-serfdom when it is against the law?

          • I’m still waiting for someone to explain what an overpayment even is in this context.

            Your employment contract says you are paid $10,000/mo.

            Your employer “mistakenly” overpays you $12,000/mo for 6 months.

            Your employer realises the “mistake” and tells you to give them back $12,000.

        • Ultimately it’s a moot point because there is only a minimum that is allowable to be paid, not a maximum, so it is not technically possible to overpay someone, only pay them more than the minimum they are entitled to.

          An early strong showing for November’s Captain Pedantic award.

  2. I have heard of or observed over payments a number of times in my working life, both payroll errors or more systematic discrepancies.

    Why would an employer or employee take an over payment mistake to the media, a union or another reporting body?

      • I wouldn’t be surprised for some companies to now “inadvertently” overpay a small group of staff and advertise the fact that they found it but won’t ask for the money back. Pretty cheap way to get some positive PR and to validate the “mistakes” happen argument.

      • I don’t think a communication / reputation management strategy of fighting back with “well this other time we accidentally overpaid employees” is going to work that well for a company who was found to be underpaying others.

        • Why not? If it was a genuine mistake, it changes everything. But it’s not a mistake. It’s routine exploitation, I suspect. And you seem to be endorsing it hypothetically.

          • Because it doesn’t really excuse the underpayment mistake and companies would be stupid to get caught up in trying to justify the mistake by admitting to making other mistakes.

            I don’t understand what you think I am endorsing.

          • Yes, it probably is routine exploitation, and could be argued against quite succesfully, as the rest of the article does.
            Expecting to hear about “overpayment” is just a ridiculous statement though.
            I expect most of the members here are earning more than the minimum wage they are entitled to.
            Are they being overpaid?

          • You are attempting to obfuscate the issue, freeloader. The point is that the company and the employees had agreed to remuneration arrangements and then the company paid less than the agreed to rate and didn’t tell anyone about it for a number of years. Whether or not the employees had agreed to be paid the minimum rate or not is a red herring.

            Also I have had my employer notify me that by mistake they had overpaid staff and would therefore be recovering that overpayment over a period of time. It wasn’t our money to start with.

          • “Also I have had my employer notify me that by mistake they had overpaid staff and would therefore be recovering that overpayment over a period of time. It wasn’t our money to start with.”

            So how many times have you been underpaid?
            Did it make the media?
            Are you actually arguing for my point?
            smurfs?

          • You are calling into question that this is a mistake rather than engineered exploitation. As if there are mistakes that are detrimental to the payers. There are none.

          • “You are calling into question that this is a mistake rather than engineered exploitation. As if there are mistakes that are detrimental to the payers. There are none.”
            Might want to try some reading comprehension and thinking for yourself.
            This is what I wrote
            “If overpaying workers was a crime, or even a thing, then you probably would hear about it.
            Given overpaying workers is entirely synonymous with paying workers I’m not sure how or why you would expect to hear about it?”
            Did I say anything about whether it was accidental or not.
            And there are now several instances in the comments of overpayment. Did any make the media?
            Do you really think an overpayment will make the media.
            Someone higher up mentioned Queensland health overpaying. Taking the money back is what made the media.

    • Yebida!! having seen these on many occasions they usually involve top tier C suite and dealt with behind closed doors ditto cases of underpayment what seems to boverlooked is that many of the C suite have a raft of advisors involved in their personal packages so less likely to have the error as in the lowest end.

  3. GunnamattaMEMBER

    Why do wage ‘mistakes’ always benefit the employer?

    1. Because the entire industrial relations system is structured to promote, encourage, facilitate & forgive employer and management rorting.
    2. Because conservative politicians (both ALP and LNP) have more in common with psychopathic, self serving, bullying frauds in the guise of small business owners and mid and upper level management than they do with wage earning Australians.
    3 Because there are no globally competitive employees or managers to be found anywhere in the Australian economy and owners and management assume that if there is no need or no point to being competitive and the entire income side of the Australian economy is simply a ‘game’ then it doesnt really matter if they rip off staff at the margins.
    4 Because a significant number of businesses and employees have recent foreign origins and they are just doing what they did back in (China, India, Italy, UK) wherever, and this is ‘normal’.
    5. Because all business owners and all managements are infallible by the divine right of kings bestowed by almighty god, and cannot be questioned.
    6. Because all jobs are largely bullshit and people getting pay to do them should just suck it up.
    7. Because almost every given management or ownership structure assumes there is no problem with employee underpayments because ‘they should thank their lucky stars they are not contractors or sub contractors’
    8. Because workplace flexibility = the right to bully, rip off, and harrass staff, and if staff dont understand that they should do another mindfulness session.
    9. All of the above

  4. Some Friday humour:
    George Calombaris teams up with Woolworths to launch new line of cooked books
    Celebrity chef and convicted wage thief George Calombaris has today launched a new series of instructional manuals, informing others about the many great methods he’s discovered for cooking books.

    “With a dash of red marker, and a pinch of creativity,” glowed Calombaris, “you can be enjoying a delightfully light yet scummy salary shortening in no time.”

    https://chaser.com.au/general-news/george-calombaris-teams-up-with-woolworths-to-launch-new-line-of-cooked-books/

  5. reusachtigeMEMBER

    What all this demonstrates is that there shouldn’t be any awards or minimum wages and the payment for the help should be set by the free market!

  6. Jumping jack flash

    Obtaining debt is mandatory if you want to be successful.
    For banks, it is vital that debt grows faster than the interest rate so it can be used to pay off the previous round of debt plus the interest.

    The entire point of importing hundreds of thousands of workers was for them to take on debt to keep the machine running and the debt ponzi ponzi-ing.

    Unfortunately, employers had other ideas and enslaved almost all of these extra workers. The difference between a fair wage – which would probably be capable of obtaining the necessary amounts of debt required to be successful, and what these workers were paid, was paid to the employers and their upper echelons so they could obtain more debt to become even more successful.

    This is why you don’t get overpayments because overpaying the slaves would be impossible. There simply isn’t the available capacity to do so because it is all being paid to the employers and used to obtain and/or service their necessary debt.

    This is also why they had better tread very carefully when correcting the underpayments. That wage capacity that has been stolen has already been used for obtaining debt and is happily servicing it.

    The debt is constant and so are the repayments (more or less). To keep repaying the debt PLUS correct the wage theft something has to give. You can’t just magically find wage capacity to fill the wage shortfall without laying off staff or raising prices, or probably both. The stolen wages and wage capacity has already been spoken for, for the next 30 years, likely longer.

    (Ironically, wage capacity is now created by wage theft and is grabbed by those who can get at it first.)

  7. There is a severe difference between a small business potentially missing an update to a state award and hence underpaying its workers ~$2 an hour for a couple of years and a business deliberately going into the migrant market to employ workers at less than half minimum wage.

    Similarly there is a difference between a business requiring staff to be at work 15 minutes before their shift starts, and attend an hours training or meeting “off the clock” and a business making employees work a couple of days a week unpaid.

    Lastly there is a difference between a business making employees work commission only (where it is illegal and they may only make $10 an hour) and requiring them to acquire an ABN and work as a contractor where they end up with a figure above minimum wage.

    In Perth I lived with a backpacker from the Netherlands that was making $55k a year washing cars 40 hours per week at a Thrifty car rental place at the airport. Despite coming from a developed wealthy nation he did not understand how Australia could pay such high rates for labour. He thought the best a person in Europe might make in a similar role would be half as much.
    Thrifty of course could have sourced willing workers for half as much but was abiding by all the rules for penalty rates, overtime, casual loading etc. Something to contemplate when thinking about underpayment/overpayment in a globalised economy.

    • In Perth I lived with a backpacker from the Netherlands that was making $55k a year washing cars 40 hours per week at a Thrifty car rental place at the airport. Despite coming from a developed wealthy nation he did not understand how Australia could pay such high rates for labour. He thought the best a person in Europe might make in a similar role would be half as much.

      $55k is pretty much the median wage.

      Median wage in the netherlands is EUR 2,778 / month.
      (https://www.iamexpat.nl/career/working-in-the-netherlands/salary-payslip-dutch-minimum-wage)

      The minimum wage in the Netherlands is EUR 1,636 / month.
      (https://www.government.nl/topics/minimum-wage/amount-of-the-hourly-minimum-wage)

      I am surprised Thrifty pays anyone more than minimum wage to wash cars (and employs them full-time to do so). Heck, in this day and age I’d be surprised if Thrifty even paid minimum wage to wash cars.

      • “$55k is pretty much the median wage”
        But a car washer is not someone considered to be a deserving recipient of a “median wage” anywhere else in the world.. and nor do they receive such a wage anywhere else.

        And you are surprised Thrifty met its legal obligations?
        What surprises me is that it doesn’t just have a driver run the vehicles down to the Indian car wash down the road, one which mysteriously has 30+ Indian staff (and no non-Indian staff), all on student or other immigrant visas, which undercuts all other car washers on price (I wonder how they do that?)… and that very likely pays its employees around half minimum wage.. (I can’t write an essay but otherwise could explain some inside knowledge here).
        Which brings me back to some of my other posts.. how can you expect businesses to be able to consistently do the right thing when others are taking advantage of migrant labour?
        In the end the car rental business that outsources its car washes to the Indian enterprise can undercut the price of the ones doing the right thing.. making it understandable if they then too need to look at means to cut costs..

        Rather than “big bad employers” the issue is structural.. the flooding of our economy with foreign labour and people. Get rid of that and 7/8th’s of the issue will be dealt with, and the remaining 1/8 will be easier and more readily dealt with.

        • Just a further aside.. I personally am happy for car washers in Australia to be paid well and the best in the world (although $55k might still be a little beyond the pale). The issue is more that such a wage is unsustainable in the face of flooding the nation with migrant labour and migrant employers.

          I have immigrant friends working (& looking for work) in the massage (legitimate), hospitality & quick service industries.. I can tell you with confidence the going rate for immigrant labour from most immigrant employers in these industries is around $10~$15 per hour with no sick or holiday pay. How do I know? They get job offers and apply for new jobs weekly (through their immigrant networks) and that is what they get told when attending interviews. I know hotel cleaners on the same but then others that do get proper remuneration.. perhaps some larger hotel chains more concerned with bad publicity than cutting corners.
          Many migrants are aware they are underpaid in these roles but for various reasons do not want to rock the boat.. including but not limited to failing to declare or pay tax on their real income. Many rationalise that at half the rate they are entitled in Australia it still exceeds their home nation rate by 100~300%.

        • But a car washer is not someone considered to be a deserving recipient of a “median wage” anywhere else in the world.. and nor do they receive such a wage anywhere else.

          Nor did I say they did – quite the opposite in fact.

          The point of identifying the median wage for both countries was to be able to compare proportionality of it, half that, and the relevant minimum wages.

          And you are surprised Thrifty met its legal obligations?

          Mildly. Though I am far more surprised they are paying people nearly median wage to wash cars.

          Which brings me back to some of my other posts.. how can you expect businesses to be able to consistently do the right thing when others are taking advantage of migrant labour?

          Because I expect the business who aren’t “doing the right thing” to be identified and punished or shut down. That includes both a) businesses directly breaking laws by exploiting workers (be they immigrants or natives) and b) businesses who knowingly subcontract to them for services (and my bar for “knowingly” would not be set particularly high – eg: failing a very simple calculation of whether the daily/weekly charge is less than # cleaners x # hours onsite x $minimum wage would be instant culpability).

          Rather than “big bad employers” the issue is structural.. the flooding of our economy with foreign labour and people. Get rid of that and 7/8th’s of the issue will be dealt with, and the remaining 1/8 will be easier and more readily dealt with.

          No, the structural change is the destruction of unions, undercutting of workers rights and laughably poor enforcement of what remains – changes have most assuredly happened at the behest of “big bad employers”.

          If those structures had remained in place, then immigrant workers couldn’t be employed for half minumum wage (or whatever). High immigration could certainly have still suppressed wages, but not as disastrously since the minimum wage floor would still be in place.

          Slowing immigration won’t fix the race to the bottom that has its roots in the systemic destruction of worker power. It will simply delay it. High-volume, low-skill immigration makes a bad situation worse, but it is not the cause of the bad situation.

    • Jumping jack flash

      “In Perth I lived with a backpacker from the Netherlands that was making $55k a year washing cars 40 hours per week at a Thrifty car rental place at the airport.”

      the “luxury” of being able to pay someone this much to wash cars is reflected in their prices, no doubt.

      Rental cars are completely overpriced as it is, and there is hardly any competition. The least they can do is pay their car washers well.

      The same argument holds up for anyone who is lucky enough to work for an electricity provider, especially near the top of the hierarchy, or even as a contractor.

      A mate of mine is lucky enough to run a business that currently has a maintenance contract for one of the NSW electricity providers, I forget which one, but it’s immaterial, the guy is making an absolute fortune and has all the newest gear and the trimmings and trappings you could expect for such a fortunate position as that.
      If it wasn’t the case, then something would be seriously wrong.

      However if you consider an average cafe or restaurant in a Sydney street then the situation is completely different and cheap workers are *required* to gain that competitive edge over the cafe or restaurant next door. Plus, how else is the business owner going to obtain as much debt as they need to provide the lifestyle they think they deserve, having achieved the lofty title of business owner, and all?

      This of course makes the case of woolworths puzzling, but I can only guess from their actions that there is a lot of dead wood in their ranks absorbing the proceeds of the wage theft that needs to be trimmed out.