The Shop Distributive and Allied Employees Association — affectionately known as the ‘Shoppies’ – is under fire from employer groups after vowing to renegotiate enterprise agreements that for more than a decade have slashed penalty rates in return for higher hourly base pay. The move follows the Fair Work Commission’s rejection of a now infamous pay deal between the embattled union and Coles on the basis that it failed the no disadvantage test by leaving thousands of workers out of pocket.
The Shoppies have now conceded similar agreements struck with KFC and Hungry Jacks are now also likely to get the axe.
Many, including firebrands on the right have lambasted the Shoppies for making agreements that leave thousands of workers worse off than they would have been under the relevant award. After all, what’s the point in joining a union if they’re going to make life worse for workers, not better? Indeed, those worst affected under these deals tend to be casuals, often students, working unsociable hours on weekends and late nights.
It’s understandable why the thought of young casuals being fleeced thousands of dollars a year makes people uneasy. However, the dynamics that drive these pay deals are more complex than media fuelled outrage tends to suggest.
Clearly part of the reason the SDA cuts penalty rates is to build a close, even cosy, working relationship with big retailers like Coles. These ‘working relationships’ are important because they grant unions privileged access to recruit newly minted employees. I would know – I was personally cajoled into joining the Shoppies in 2008 when I landed my first job as a deli assistant at Woolworths. The union rep attended our induction and took the time to introduce herself to every new staff member. Everyone signed up.
I remember feeling sceptical, but my teenage self couldn’t muster the gumption to say no to the kindly lady promising discounted movie tickets and cheap theme park entry.
Yet these agreements are symbiotic in more ways than one. The union officials who negotiate these agreements do so because they know trading overtime for a higher base of pay will increase employment, and therefore, grow their membership. With over 230,000 members in an era of seemingly inevitable union decline, this strategy has proven to be a boon for the Shoppies.
But what is critical is that these pay deals accept what economic rationalists have been arguing for aeons; over compensatory penalty rates and rigid, award mandated pay structures are a handbrake on employment.
Looking back on my short-lived stint as a deli hand, I saw this logic at play firsthand. In those days, casuals received time-and-a-half loading for Sunday work. As a 14-year-old earning a humble $8.45 hourly, I was delighted to see my rate grow to $12.67.
During my usual Sunday morning shift, the deli was manned by myself, a 15-year-old casual and the salaried department manager who received no penalty rates. The students in their 20s receiving the full adult wage – then $17 an hour – would whinge no end that they never got a Sunday shift. I remember one Sunday close to Christmas the only staff rostered on was myself, the Deli manager and his 2IC (also salaried). When I asked why, I was told the department had exceeded its wage budget and they needed to ‘cut back on casual’s hours.’ Go figure.
Consider the business model of a 24/7 McDonalds. If the enterprise agreement entitling workers to a higher base rate in exchange for reduced penalties was canned, as now seems likely, what would be the impact on casual workers? Sure, plenty of outlets would keep their doors open; especially in busy CBD and nightlife locations. But it’s wilful ignorance to believe that increasing wage costs by over 50 per cent for certain operating hours won’t end in earlier closing times or restaurants simply rostering on less staff.
If this does come to pass, do we really think McDonald’s part-timers faced with drastically reduced shift hours would be running with open arms to thank the Fair Work Commission for saving them from the exploitation?
It strikes many as implausible that even multibillion-dollar corporates are price sensitive to wages. Yet with workforces totalling tens of thousands of employees in an intensely competitive marketplace, these businesses can’t afford not to be.
For years, enterprise bargaining has acted as a backdoor proxy for market forces, allowing businesses to adjust pay to the commercial realities of running large retail chains open more than 12 hours a day, seven days a week. The net gain has been thousands more jobs, millions more hours worked and scores of young people gaining valuable early experience in the workforce.
Now that the Fair Work Commission has — sadly –started doing its job, the inefficiencies of our centrally planned system of wage arbitration seem set to be thrust upon thousands of shopfronts.
Perhaps the biggest roadblock to at least acknowledging the costs of giving the Fair Work Commission a wide-ranging veto over enterprise agreements is the cliché that anything less than double time rates for Sunday work is exploitation.
Where else in the world but Australia can a basically unskilled worker earn more than $21 an hour to operate a cash register? The earnings of a mid-level department manager at a major supermarket Australia comfortably clears the starting salary of the majority of university graduates.
Talk of ‘fairness’ and other emotive clichés misleadingly suggests the decision of how much workers are paid exists in a vacuum, only limited in its quantum by one’s generosity and goodwill. This is a false dichotomy laid bare by even a cursory glance over economic realities.
Unfortunately, for Australia’s tens of thousands of small retailers, cafes and restaurants, the substantial time, cost and energy of negotiating an enterprise agreement is simply out of reach. A recent study finding that 45,000 jobs retail and hospitality jobs would be created by standardising Saturday and Sunday pay to time-and-half penalty rates puts paid to the notion that this only a peripheral issue.
For these businesses, our unwieldy, outmoded, antediluvian workplace relations bureaucracy will continue to be a fact of life until the Coalition government musters the mettle to dismantle this last remaining vestige of Australia’s pre-modern economy.
John Slater is Executive Director of the HR Nicholls Society
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