January 29, 2015

Horse 1830 - We Want You To Work For Less Pay

If you don’t want to work on a weekend, fair enough don’t work on a weekend. But if you do want to work on a weekend, and lots of people, particularly young people,  particularly students, would love to work on a weekend, you want to see the employers open to provide jobs, and you're dead right there.
There are lots of places that are now closed, that use to be open. The hotel that I stay in in Melbourne, doesn't open the restaurant on a Sunday night anymore because of penalty rates. You try to get to a bottle shop for Easter an it's almost impossible because of penalty rates.
Now, I don’t begrudge people the money, you know I'm a high paid worker and the last thing I want to do is begrudge comparatively low paid workers their money but in the end there is a balance that has to be struck here and my preference will always be in favour of more jobs.
- Tony Abbott, in conversation with Ben Fordham, Radio 2GB, 23rd Jan 2015.
(from 0:10:25 onwards)

Already Productivity Commission has the issues of the minimum wage on its list of things for review and has released several issues papers but essentially there are and will always be two tribes at war on the issue. This war is more or less the same war which has been raging in Australian politics from even before federation and which shows no signs of ending soon.
One which says that employees' interests are worth protecting and this includes such things as penalty rates and the other which says that penalty rates should be a choice for individual enterprises and their employees, with little or no regulation.

The employer-employee relationship is essentially an uneven one. Like so many circumstances where money is involved, the other "golden rule" applies: "whoever has the gold, makes the rules". This is also true in politics as well; it isn't necessarily by accident that the current Prime Minister and Treasurer both happen to represent two of the richest electorates in the country. Money talks, and loudly; this time it's positively yelling until all other possible voices are drowned out. Alas poor Democracy, I knew him.

The biggest single driver in the cost of wages, or rather the wages that people demand, is people's occupation costs; that is, the humble task of putting a roof over one's head. For people further up the income ladder, this includes the repayment of ever larger mortgages but at the end of the income ladder which is most likely to actually benefit from penalty rates, the best that a lot of people can hope to aspire to is keeping the rent collectors at bay.
In modern Australia where the manufacturing sector has withered on the vine or has been kicked violently to pieces, the occupations where you're most likely to find workers who are currently entitled to penalty rates is in sectors like retail and hospitality. In these sectors, workers are not only under the pump in terms of competing  with each other but also in terms of job security. Someone who is entitled to penalty rates is also more likely to be employed on a part-time or casual basis. The question of if they're likely to be even called in to work tomorrow weighs more heavily on such peoples' minds than if ever does to salaried workers.

Mr Abbott's example of a restaurant which didn't open on Sunday nights; specifically because of penalty rates, demonstrates that he either doesn't understand about people's situations or more tellingly, doesn't care about the circumstances and conditions which the people who would be affected by the abolition of penalty rates would face.
It seems that he almost expects services to be open even though a market solution has produced a different outcome; I wonder if this shows an underlying sentiment of entitlement at work here. If it isn't convenient for the workers to work on a Sunday night, Mr Abbott is openly telling people that their inconvenience is not valued and is not worth a paying a premium for. I find this all the more galling when you consider that the terms which define his own working conditions are very generous in terms of allowances; and these allowances make a few dollars an hour in penalty rates pale in comparison.

Looking closer at this restaurant (which isn't named and therefore the actual non-existence of which can not be disproven) as Mr Abbott claims can not afford to stay open specifically because of penalty rates, is already demonstrating a market outcome with respect to wages. The profit motive is the usual reason why business does anything and if it doesn't open on a Sunday night then this might show that it isn't willing to raise prices to cover those rates because it knows that its clientele isn't prepared to pay the increased prices. Mr Abbott (like the Government he leads) however, only sees this as a spending and not a revenue issue; where the only allowable solution is to drive down input costs. This is quite apart from the fact that the cooks and waiters who work in the restaurant probably can not afford to eat there as a customer. Such an attitude says that the fruits of labour do not belong to those that labour but those who derive profits from it. The attitude displayed by the statement that "if you don't want to work weekends, don't work weekends" tries to reframe the issue as one of choice, when in actual fact someone who needs the money might have very little choice at all. You might find it very difficult to quit if this particular job happens to fit with your other obligations in life such as family commitments and just quitting or not working might not be such an easy option to someone who lives from paycheque to paycheque.

History is littered with examples where if allowed, employers will pay their employees as little as possible; nothing if they can get away with it. Even today, there are organisations holding out the carrot of "experience" whilst offering that "experience" in unpaid internships; so I very much doubt that there is a lower limit to the level of nastiness that people will descend to. The only reason that awards and penalty rates exist and are protected by law is because people had to fight for them (and in some cases lose their lives in that fight). I suspect that the reason why the current push to abolish penalty rates is on, is because employers have sensed that power has again tilted back in their favour. As more people move into either white collar work where they are paid wages and unpaid overtime runs rampant and as the people who would have once worked in factories now find themselves in retail, the ability for unions to achieve anything at all has been diminished. I don't know if we're likely to see a return to the Combinations Act of 1799 which prohibited people's ability to form unions and engage in collective bargaining because I doubt if the need to pass such legislation even exists any more. There is no need to ban workers' rights to join a union in a labour market where no union exists.

I'm speculating here but it could be that the awarding of Prince Phillip with a knighthood (which I'm largely ambivalent to) was designed to create so much of a media storm as to draw attention away from the fact that decisions and negotiations are being made to erode workers' rights and rates of pay. Why not draw attention to a clumsy action if it makes people forget about the callous one about to be perpetrated against them? It's easy to fleece someone whilst you're pulling the wool over their eyes.

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