Inequality in the land of the 'fair go'

June 16, 2016

It took more than 100 years of struggle to ensure the poorest workers in Australia received reasonable wages and conditions. But today inequality and poverty are growing rapidly. The living standards of the majority continue to drop, while at the same time there is a huge expansion of the wealth of a tiny minority.

The decline of living standards and growth of poverty have coincided with the growth of insecure or precarious employment, which is designed to maximise profits and shift the risks associated with work from the employer onto the employee. Employment, as measured by the Australian Bureau of Statistics (ABS), is defined as working one hour a week.

The 2012 Australian Council of Trade Unions independent inquiry into insecure work found there have been major changes to the experience of work in Australia in the past 30 years. Permanent full-time or part-time employment with specified hours, benefits and entitlements, has given way to insecure work that provides little economic security or control.

Impact of insecure and precarious work

Insecure work lacks many of the protections of ongoing full-time employment set out under the Fair Work Act as the National Employment Standards. These include paid leave entitlements, protection against unfair dismissal, predictability of hours and income or access to training and career development. Other forms of employment, such as independent contracting, are excluded from the act's protections entirely.

The inquiry found that about a quarter of all employees across public and private sectors are engaged in casual work. More than half of all casuals had been in their current jobs for more than a year and about 15% had been in their jobs for more than five years.

Fixed term employment in contracts for specific time periods accounted for 4% of all employees and was heavily concentrated in the public sector, particularly across all levels of education and scientific research. Often this consists of rolling fixed term contracts that stretch over many years, thus allowing the employer to avoid the cost of accrued entitlements such as leave, termination and retrenchment.
About 9% of the workforce — more than a million workers — were independent contractors, which is often used to mask employment relations. Forty per cent worked for a single client and many had no authority over their own work and were pressured into sham contracting situations.
About 300,000 workers were employed through labour hire agencies with little or no job security. This type of labour hire has expanded with the arrival of digital platforms, such as Airtasker, Programmed and Uber, where risk and costs, such as the purchase of vehicles (Uber) or equipment, tools and other materials, has shifted onto the workers but comes with no guarantee of continuing work. Workers are excluded from national work standards, protections and wages.

Some workers are in “on call” situations, which can mean either no hours stipulated or guaranteed, or very long hours demanded without notice. The unpredictable incomes and hours involved mean that workers are unable to plan ahead to spend time with friends and family.

Penalty rates for work outside the standard 38-hour, Monday to Friday working week established under Fair Work, has become vital to such workers' survival. They are financially disadvantaged as the very insecurity of the work means they find it impossible to get a car or home loan from banks.

At work, they are too afraid to speak out about health and safety issues for fear of losing their job, so they suffer work injuries. Such workers tend to not be unionised effectively, if at all, so they have no external base of support.

Super-exploitation of insecure workers

The minimum wage has recently been raised from $17.29 to $17.70 an hour to take effect from July 1. Yet many workers have been paid a much lower rate. International students are particularly vulnerable to low pay in hospitality and retail sectors. Some are required to work for an unpaid training period of up to a month with no guarantee of a job.
However, demographic trends show the workers most exploited by such work are not backpackers or foreign students who do not understand the wages system, but young people and women.

Recent headlines highlight the underpayment or outright fraud of employees by major organisations such as Coles, Woolworths, Myer, McDonald's as well as the 7-Eleven franchising scandals.

Coles is the classic example. The Fair Work Commission found in early June that some of Coles' 77,000 workers faced significant underpayment in an enterprise bargaining agreement (EBA) between Coles and the Shop Distributive and Allied Employees' Association.

The finding was based on the “better off overall test”, which is supposed to ensure that each award-covered employee would be better off overall under the EBA than under the relevant award. Part-time and casual workers, who make up 80% of Coles' workforce, were hit hardest, as the EBA reduced their penalty rates.

Coles responded by scrapping the contentious EBA but has refused to deal with the significant loss of workers' penalty rates, estimated by The Sydney Morning Herald to be worth $70 million a year. At present this is an industrial law standoff with implications for deals with other large food sector employers, such as Woolworths and McDonald's.

Creating an underclass

Now internships pose an erosion of minimum wage standards and protection of conditions for young workers.

Internships in Australia have historically focused on professional development prior to practising in a profession. An example is the supervised development of recently-qualified doctors who work in hospitals for several years for lower wages than more qualified doctors. Similarly, teaching and nursing degrees have mandatory periods of on-the-job training placements in schools and hospitals.

But the internships now being proposed focus on a different youth demographic to supposedly solve the problem of youth unemployment.

The proposal is for a 3-stage internship model, PaTH (Prepare, Trial, Hire). It would provide six weeks of pre-employment skills training, followed by the payment to a business of $1000 for a 6 to 12 week internship to give work experience to an unemployed person under 25.

The business would pay the unemployed youth $200 a fortnight — about $4 an hour — for 15 to 25 hours of work a week on top of their usual welfare payment, with no guarantee of a job offer. If at the end of the trial stage the organisation hires the intern, the business receives $10,000.

This in effect means the public pays to subsidise businesses for up to 25 hours work a week at $4 an hour. It also establishes a legal issue by bringing the weekly wage to approximately $364 when the official minimum wage is $672.70.

To rectify this situation, legislation to authorise a second-class category is needed, which would in effect remove those employees' basic rights under the Fair Work Act.

Gender inequality

Since the second wave of feminism, women have won formal equality under the law but not social equality. For example, from World War II until the early 1970s women received 75% of the male wage. This changed in 1974 when the basic (minimum) wage rose to 100%. However women's capacity to earn equal wages is a goal yet to be achieved and in fact is getting worse.

Women have increasingly entered the workforce. ABS data on labour force participation of 20- to 74- year-olds show women's participation at 65% compared with men's 78.4%. Historical gender segregation by industry and occupation remains entrenched and is reflected in lower wages and worse conditions in predominantly female industries.

Women working full time receive 18% less than men in their average weekly base rate earnings. This has risen from about 15% ten years ago. But this gap widens to about 25% when total remuneration, which includes overtime, bonuses, etc, is taken into account. If you include part-time and casual workers, the average weekly earnings for men in May 2014 was $1430 while for women it was $940.

Women comprise 48.5% of all employees — 54% work full-time and 46% part-time. They hold 70% of all part-time jobs but 494,000 women who work part-time would like more hours. More than 55% of all casual jobs with no leave benefits and little job security are held by women and Australia has one of the highest ratios of part-time to full-time work in the OECD.

Why are so many women in insecure employment? Lack of access to and the cost of childcare are the main drivers.

Just as childcare services have shifted into the private-for-profit sector, there is a huge reliance on unpaid caring responsibilities falling disproportionately on women: 70% of Australia's 825,000 unpaid primary carers (not including parents) are women. This includes elder care, child care, disability care, etc. The value of such informal care has been estimated at $43.7 billion a year.

Professor Marion Baird says women should not argue their advancement on the basis of inequality and the struggle for justice. Instead women, particularly those seeking to rise into the highest level of jobs in business, should make the “business case” argument for their advancement to be based on a loss of valuable experience and talent needed to increase productivity and business capability.

I would argue the reverse. We have already had the business case application which has led to the growth of insecure work and the erosion of women's financial independence and working conditions.

It is part of the whole thrust of neoliberalism that has led to ongoing attacks on unions and on union membership. We need to learn from the lessons of past struggles and organise collectively, not rely on competitive individual solutions that undermine the jobs and living conditions of the majority.

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