Work Choices: the reality exposed

September 22, 2007

A damning report on the impact of Work Choices on workers in the retail and hospitality industries in New South Wales, Queensland and Victoria — Lowering the Standards, released on September 13 — documents how quickly employers have acted to legally strip wages and conditions of workers in these sectors, even though the government claims many of these conditions are "protected by law".

The report, issued by Sydney University's Workplace Research Centre, argues that low-wage private service industries such as retail and hospitality are mirroring a similar process in the USA and are the emerging new pace setters in reducing labour standards.

Researchers examined the 339 collective agreements in the two industries in NSW, Queensland and Victoria lodged federally between March 26 and December 8 last year — the first nine months of Work Choices' implementation. Previously, large numbers of workers in the industries were dependent on award conditions.

Workers under these agreements are locked into their reduced wages and conditions for the length of the agreements with no redress offered by either the introduction of the "fairness test" by the Howard government in May nor by Labor's IR policies.

The report compares the agreements to the awards and agreements (90 in all) that had previously covered these workplaces prior to Work Choices.

The majority of agreements (65%-75%) show the reduction or stripping of entitlements, while some (25-35%) show some improvements. The losses were overwhelmingly located in non-union collective agreements. All union agreements delivered gains, however minimal, and 90% maintained all protected and many unprotected award conditions.

The overall impact is that the losses far outweigh any gains for workers. Despite these agreements being legal, wages dropped on average 2%-18% in the retail sector and 6%-12% in the hospitality industry.

In an alarming number of cases protected award conditions were removed — annual leave loadings (80% of agreements); laundry allowances (79%); Saturday penalty rates (76%); Sunday penalty rates (71%); overtime rates (68%); public holiday rates (60%); and paid breaks (55%).

Conditions not protected by awards were also stripped back. For example, casual loading was decreased in 74% of agreements; severance pay in 65%; rostered days off (63%); limits on part time hours (62%); right to average hours over a one to four week period (62% — shifting to averaging over 52 weeks); minimum part-time daily hours (56%); and time off between overtime and the next working day (54%).

Wage cuts

While the average losses to wages varied up to 18% in the retail sector and 12% in hospitality, these averages concealed very significant losses of earnings. Those with losses greater than 10% percent included: Liquor stores (losses of 11.9%-31.1%); fast food (12.5%-21.3%); bakeries (17.9%-24.5%); restaurants (10%-12.8%); and cafes (10-15.7%).

As part of the study, researchers identified some of the most common work patterns for people in the two industries. This highlighted that the most affected employees are those on part-time or casual contracts who work weekends and outside standard hours.

For someone in a scenario of permanent part-time work, working 12 hours per week including one night and weekends, the loss in pay was $114.27 a week — 84.5% of agreements had earnings fall in this category. For the casual work scenario of 19 hours a week part-time with two nights and weekend work, the maximum loss was $187.38 — 85.4% agreements had an earning decrease in this category.

For full time permanent employees on 38 hours with four hours regular Saturday overtime, the loss was a maximum of $145.68 per week, with 75.1% of the agreements scheduling earnings losses.

The 'fairness test'

These collective agreements are exempt from the fairness test, which was introduced after they were settled. For the 300,000 or more employees covered by these agreements, there remain ongoing problems for years to come. If such trade-offs were compensated in the post-fairness-test period, then these workers would have to be paid 10%-30% more than was stipulated in 75% of the agreements.

The decrease in conditions and wages in the collective agreements bodes very poorly for those on individual Australian Workplace Agreements. However, secrecy provisions (which include penalties for disclosure) mean that no public scrutiny of AWAs is possible.

The introduction of the fairness audit last May has already exposed more than 1100 individual employment contracts that cut basic award conditions. The Workplace Authority released figures on September 6 showing that 15% percent of employers were still trying to undercut awards rates across all industries. To that date, only 12,700 AWAs had been checked out of the 123,000 lodged with the authority. More than 30,000 new agreements are being signed each month so the backlog is accumulating.

The spin exposed

The original justification for the shift to enterprise bargaining in the early 1990s under the Keating Labor government was deregulation and decentralisation. Then, too, the retail sector played a major role in redefining working hours standards.

Undermining unions

The Howard government's IR policies have been tailored to undermine the role of unions. With Work Choices, the justification given was increasing and empowering the direct employer/employee relationship by eliminating the intervention of "third parties" (read: unions and tribunals) and letting the market determine the outcome of the worker and employer direct negotiation.

What emerged from the Sydney University study are the similarities between many agreements. A series of similar templates was used in nearly half of the agreements — 65% percent of such agreements originated from industrial relations consultancies and legal firms. This reveals the political spin and hypocrisy of the government's "empowerment" claim. As the report says: "In understanding the decline of enforceable rights at work under Work Choices in sectors where workers have limited bargaining power, the key dynamic at work appears to involve policy induced, consultant facilitated employer determination of collective contracts."

The report concludes that those who argue that Work Choices has "gone too far" and can be modified and reformed into some softer model are wrong. The problem of Work Choices is "it has unleashed a change process that is heading in the wrong direction".

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