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Death of the ‘Fair Go’

Opinion

Evidence of widespread wage theft and revelations of a rotten culture in the nation’s financial sector point to a social contract in tatters – and will leave a lasting legacy of distrust and decay, writes Malcolm King.

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With heads bowed let us march slowly behind the coffins of the ‘fair go’ and corporate trust, as ruthless profit and cold commerce wipe the blood from their hands.

Extraordinary evidence is emerging from the banking royal commission, confirming what many already know, that some banks and financial institutions have gone to great lengths to rip off their customers.

There are also growing reports that some small businesses are stealing the wages of young employees and migrants and paying them less than ten dollars an hour.

This breakdown in trust is unparalleled in Australian economic history. Youth wage theft and corporate greed differs only in scale.

Young workers comprise 16 per cent of the workforce but account for 25 per cent (27,000) of requests for help from the Fair Work Ombudsman. In 2016, just under half of the litigations involved young people. If Fair Work was properly resourced, prosecutions would double.

While many South Australian businesses pay their workers fairly and legally, during the past 20 years some employers, including in the trades, hospitality and agricultural industries, have ‘redistributed’ young workers’ pay into their own pockets.

Contrary to what employer groups say, most wage thefts are committed with forethought and by design.

In February this year the SA Employment Tribunal awarded six Adelaide electrical tradesmen $55,145 in back pay and superannuation, after it found their employers had underpaid them. It fined the company $120,000.

Another local business was fined $73,425. It had underpaid seven employees for a decade.

A recent Senate inquiry heard that some 7-Eleven franchises had forced recent migrant workers to pay back wages, even though there were no over payments.

The 7-Eleven wage repayment scheme as of June last year was $110,701,468 – an average of $39,089 for each of the 2832 claims by workers who were underpaid.

While 7-Eleven’s head office was not responsible for the conduct of its franchisees, it volunteered to pay back workers what they were owed.

Desperate young people are using labour hire companies to find work. They receive text messages the day before they are required to work, sometimes for just one shift. They can’t bargain for better conditions or gain security of employment to get a car or home loan.

Others must sign on as independent contractors to work delivering fast food. In reality they are employees and entitled to sick leave, superannuation and more. They suffer the costs and risks but get none of the benefits.

In some cases the union movement has been no help, with allegations of collective agreements forged between the Shop Distributive and Allied Employees union and McDonalds, Coles and Hungry Jacks, with salaries paid below the minimum wage.

Young people remain in insecure work for much longer than their parents did, with fewer opportunities for advancement.

What sort of nation have we become?

Consider youth and migrant wage theft in the light of the Commonwealth Bank of Australia’s recent disclosure to the banking royal commission that it had charged dead clients for financial advice.

A senior AMP executive testified that its financial firm had misled the Australian Securities and Investments Commission and charged their clients fees but provided no service. They desperately tried to cover this up.

Just today, the Royal Commission heard further evidence relating to some National Australia Bank financial planners impersonating customers, forging their signatures and withdrawing money from their accounts, with an external report commissioned by the institution finding that it was rare for employees to be fired for ethical breaches, creating a culture in which improper behaviour appeared to go unpunished.

If you were to walk in to a speakeasy run by Al Capone in the 1930s, the machine guns, booze and prostitutes would have given you a heads up that taking a loan from Mr Capone might be problematic.

There are no such warnings in the Australian banking sector. There are no such warnings for young people joining the Australian workforce.

What is the Federal government doing about wage rorting and the egregious rip offs by those corporate leaders in their glass towers? Not much.

Federal parliament rose for the autumn break with the government one vote short of passing the $65 billion company tax package that would cut the company tax rate from 30 per cent to 25 per cent.

Business and its lobbyists have been punching this one thought for a generation. They say that to create jobs, we must lower taxes. If you want a productive economy, lower taxes. Want to bring back the overcharged and underserviced dead? Lower taxes.

Yet the Australian Financial Review reported a secret Business Council of Australia survey of leading executives found that fewer than one in five would use the proposed tax cuts to increase wages or hire more staff.

As the Nobel Prize winning economist, Joseph Stiglitz wrote about the mythological ‘trickle down effect,’ “Seldom have so few gotten so much from so many.”

Greed is like drinking seawater. The more we drink, the thirstier we become until madness inverts the Golden Rule and instead of ‘do unto others as you would have them do unto you’, it’s, ‘do to others before they do it to you.’

The social contract – that crucially important web of reciprocal relations between employer and employee, between a banker and client – is now in tatters. The social contract is the oil that lubricates society.

Without it, events can take a wolfish turn.

The perfidious nature of many of our leading financial institutions and youth wage rorts, are not lost on those queueing for food at FoodbankSA.

Trust and the ‘fair go’ are not the only two casualties. The economic foundations of the Federal Government and the Opposition have crumbled.

To reconstitute a fair and equitable democracy, the financial sector must never again be allowed to treat Australian citizens as punching bags.

We must also show our young people that their work deserves a fair and reasonable salary and that moral and ethical behaviour in business is its own reward.

Malcolm King, an Adelaide writer, works in generational change and is a regular InDaily columnist.

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