Ever since the economy-wide prevalence of wage theft by employers has been a matter of public attention, employers and employer groups have insisted it’s because the industrial relations award system is too complex.
Even after all these years as businesses large and small — including a large number of the country’s most well-known firms, universities and even the ABC — have been outed or confessed they’ve ripped off their staff, they insist it’s because awards need to be stripped down (stripped down of protections for workers, that is, but that’s a separate issue).
Just before Christmas, the Business Council of Australia — where 40% of the membership is guilty of wage theft — was still peddling the “complexity” line in a submission to the Fair Work Commission (FWC).
“Underpayments are very often the result of unintended errors due to the complexity of the awards,” the BCA told the FWC’s award review process. “If Australia wants to reduce underpayments, award quality, consistency, complexity and subjectivity need to be acknowledged and addressed.”
You can understand small businesses, particularly sole-owner business, struggling with the paperwork of awards in, say, a retail outlet or café. But the BCA’s members are among the biggest companies in Australia and the world. Many have HR departments with several hundred staff (BHP’s and the Commonwealth Bank’s HR departments number well over 1,000) but somehow end up underpaying staff due to award complexity.
If complexity is such a crucial issue in wage theft, it should apply across the whole economy, and to all workers wherever they are covered by these complex awards. But wage theft is not an even phenomenon. Strangely for something that is allegedly driven by the source document of the relevant award, wage theft seems highly dependent on whether a worker is a migrant with a poor command of English rather than award complexity. According to the Fair Work Ombudsman’s (FWO) most recent annual report:
Migrant workers make up around 7% of the Australian workforce, yet they are overrepresented in our compliance and enforcement work. In 2022-23 they accounted for: 17% of all formal disputes completed; 19.5% of all anonymous reports received; 15% of all litigations initiated.
Nor is this new. In 2017-18, the FWO reported “migrant workers and visa holders continue to be one of the most vulnerable worker cohorts, and are continually overrepresented in disputes as well as our compliance and enforcement outcomes. While migrant workers make up 6% of the Australian workforce, they account for 20% of all formal disputes completed by the FWO in 2017-18.”
If, as the Business Council and its long list of wage thieves is right and wage theft is down to award complexity, it’s strange that it seems to hit migrant workers at a rate of between two and three times that of local workers.
Perhaps migrant workers are clustered in industries that have particularly complex awards? The BCA’s examples of award complexity are nearly all from the hospitality and retail sectors, and indeed that’s where many migrant workers are employed (especially foreign students): the FWO says accommodation and food services (37%) is the most complained about industry by migrant workers, while retail is the third most complained about. And those industries dominate the FWO’s anonymous tip-off service: “Across all reports, the dominant industries were hospitality and retail, involving 34% and 13% of all anonymous tip-offs respectively.”
But other sectors also seem to have a lot of accidental wage theft allegedly caused by complicated awards. The FWO devoted a whole section of its annual report to contract cleaning, noting: “The contract cleaning industry was a priority for the [FWO] in 2022-23 as our intelligence continued flagging the industry as high-risk for noncompliance. Factors making this a high-risk sector include `a workforce that comprises of largely migrant, low-paid and part-time workers — all classified as vulnerable because they are at greater risk of exploitation”.
No mention of the complexities of contract cleaning awards by the BCA.
Similarly, agriculture “continues to present as a high-risk sector for worker exploitation, due to, among other features … the characteristics and culture of the workforce (comprising many young visa holders with little understanding of their workplace rights in Australia)”. In fact, the FWO just completed a two-year enforcement strategy in agriculture to try to curb exploitation in that sector.
Nor does the “it’s because of complexity” line explain why the extent of wage theft falls unevenly across different migrant groups. In a report on exploitation of migrant workers last year, Brendan Coates and his team at the Grattan Institute pointed out “working holidaymakers and students are more likely to be underpaid than temporary skilled migrants. Workers who struggled with English were more likely to report a negative work experience, such as discrimination, problems with their pay, or pressure to work outside their visa conditions. Women were more likely than men to report instances of sexual harassment.”
Complexity moves in mysterious ways, it seems.
And wage theft also reflects how long a migrant worker has been here: “We estimate that recent migrants — those who arrived in Australia within the past five years — are twice as likely to be substantially underpaid than long-term residents. In 2022, between 5% and 16% of employed recent migrants — or 27,000 to 82,000 people — were paid below the national minimum wage. And between 1.5% and 8.5% of employed recent migrants — between 6,500 and 42,000 people — were paid at least $3 an hour below the national minimum wage.
“Migrants who have been in Australia for longer, and are more likely to have secured permanent residency, are less likely to be underpaid.”
Time, perhaps, for the BCA to stop treating us as fools and blaming systematic exploitation of the most vulnerable awards on regulation, rather than pure greed and opportunism on the part of employers?
Should employers who exploit their workers face bigger penalties? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
