THE problem of wage theft is rife within hospitality and has been for at least the past 30 years that I've been part of the industry.
As a local café owner who operates according to the award, I’m frustrated that many businesses continue to pay cash and that wage theft continues.
In a highly competitive industry, wage theft allows for a commercial advantage. A competitive edge. Less labour costs, more profit or alternatively a cheaper pricing structure. Every cent counts.
There is no real incentive for businesses to pay the award (other than clean books and doing what’s right). Fines are minimal. Pay back monies owing to employees (if it goes that far). No jail time.
How to identify a
Hell, let’s add an extra 10 per cent surcharge on public holidays and pocket that as well. Happy days.
Workers often prefer cash instead of being "on the books". For the worker it means less tax, the ability to claim social welfare payments, and an opportunity to earn a little extra on the side.
Great to see "little Johnny" out in the workforce. Sure he might not be paid what he's entitled to but he's working. He’s out of the house and hopefully he will stop nagging mum and dad for cash.
In most small businesses, wages rank as the highest cost. Fifteen years ago wages were approximately 20-25 per cent of turnover; now a good operator will aim for a minimum of 35 per cent. Add to that a standard food cost of around 30 per cent. Add rent, utilities, outgoings, packaging, cleaning, advertising, replacements … the list goes on. Suddenly that $3.50 muffin doesn’t seem so expensive.
But does the consumer really care if a business operates according to the award? How many businesses accept "cash only" as payment? WHY CASH ONLY?
Are we really prepared to give up our fish `n` chips on a Friday night to make a moral stand?
The fact is, most consumers are happy to turn a blind eye to wage theft if prices remain low. If the cost of food and beverage truly reflected the cost of production cost the local cafe would be charging $6 a cup rather than $4.
We’re in a vicious cycle. Low incentive to do the right thing by employers, a dodgy and complicated pay system, a compliant consumer willing to turn a blind eye, and a highly competitive market made even more competitive by dodgy operators.
But it's not just small operators who participate in wage theft activities, or hospitality for that matter. Bunnings recently blamed a pay glitch for underpaying workers. Apparently some pay errors date back eight years. Really? All those highly paid payroll executives couldn’t work out they were underpaying staff super?
If the culture is to change it needs to be led by tougher penalties and stronger enforcement, not just for small operators but across all sectors. We need an equal playing field. I’m happy to compete but let’s do it fairly. Play by the rules.
The consumer also needs to be more aware and active if wage theft is to cease.
Indicators are hard to spot but if a business only accepts cash, chances are it’s dodgy. If the food is too cheap, then most likely the business is dodgy or struggling. If the owners of a small business are rarely working – might be dodgy. No surcharge on a public holiday – well, I don’t know any legit business that can afford double time rates and not charge a surcharge.
Consumers need to take an active role in supporting businesses that do the right thing. They need to understand and be prepared to pay the true cost for food and service. Remember the 30 per cent food cost rule? That means a $20 meal should cost no more than $6 in food cost on the plate – plus GST (forgot about that, didn’t we), and they need to stop supporting businesses that blatantly and obviously do the wrong thing.
Legit businesses can also take a lead role. Promote the payment of award conditions (perhaps on the bottom of a menu), explain the award conditions as part of the interview process, and encourage questions around wages and conditions.
Just a few ideas thrown around of late. “Pay by Award stickers on the front door? Why not!
The culture needs to change.
Unfortunately, until it does, things will continue along their merry and dodgy path. Things will stay the same.
James Archibald owns and operates a Wonthaggi café.
All in a day’s work October 11, 2019 - Wage theft isn’t restricted to high-end city restaurants and celebrity chefs. It’s common in Bass Coast as well.