See saw Marjorie door
Johnny shall have a new master
He will earn but a penny a day
because he can’t work any faster
The unions have found a cause in Barry’s– a brother and sister run café in Melbourne’s Northcote. United Voice got a big enough crowd to fill a TV screen to protest against “wage theft”.
The café was paying casual staff the (lower) permanent staff rate but giving them free coffees and meals. The ABC, which as a taxpayer financed supplier can readily afford to pay the wage rates designated by some isolated umpire, was offering great publicity to the union campaign.
Quite reasonably, one of the owners said of the employees, “I presumed that when they accepted the job, they were happy with what they were getting.” Such a statement would be obvious in any other transaction – we are rightly outraged when the ACCC declares that petrol cannot be discounted because the discounter may hurt their competitors – but fortunately such distortions are rare in transactions involving goods and services. Not so with wages, and the restoration of the union control with a Shorten ascendency would offer the certainty of additional rigidities and cost escalations being put in place.
Sadly the militants who sought to prise higher wages from the café will have considerable difficulty getting further such work – but, the area being Northcote, the employees concerned are likely to be student activists looking for a few extra bucks.
Labour is likely to be around 70 per cent of costs of restaurants. To the degree that the café in question is forced to raise wages by the 20 per cent required under the award (pretentiously called the “modern award”) its customers will need to pay more for their food and coffee and, as the industry is highly competitive, its product is cost reflective so there will be a reduction in the supply of such cafes.
It would be very different if the restaurant were one of the many Chinese/Vietnamese restaurants where actual pay rates are commonly half of the $21 stipulated in the award – and the resultant proliferation of low cost, good quality food is a benefit to all of us.
The “award” for the hospitality industry is farcical. A duly authorised body of men and women have prescribed rates (permanent, causal, Sunday, Saturday, holidays etc) which runs to 104 pages and defines some 100,000 situations. For most employees the rate is likely to be not too different from the market rate but, especially for casuals where supply has to adjust to what consumers actually want, the rates are likely to be excessive. This is partly because, as in the words of the famous nursery rhyme, the employee is less skilled and less productive.
While many countries have minimum rates of pay, Australia’s are among the highest in the world, even compared to more wealthy countries – the Hong Kong minimum wage is $6 per hour and in Germany it is $15 per hour. No other country has a court of law that determines the wages that may be set across hundreds of thousands of different jobs. Understandably, every other country would consider such a Herculean task to be doomed to fail in setting the fair wage when such a wage is the product of the supply and demand for labor.
For Australia the intervention means those of the more marginal workers that aren’t silent about being paid under the award, cannot find employment and are forced onto the dole. The impost is represented in taxes paid and reduced profits, savings and general income levels. Labour market intervention is just one of many areas that savagely undermine the productivity and income levels that Australia could potentially enjoy.