I have a piece in The Australian this morning on the indignation that is rife against restaurateur George Calombaris and his success achieved while not paying everyone the government prescribed wage rate.
This was not a fraud – people were not duped. The employees were fully aware of how much they were being paid. They were adults who knew the industry remuneration levels and not idiots in need of protection. Indeed, employees in the industry are often hard up and acutely aware of any differences in wages offered buy alternative employers.
The industry is, of course, intensely competitive so no monopoly rents are possible. But Calombaris is the trend setter and supplier of excellence. Hence, many seeking to gain good experience at the apex of the industry would surely seek to work for him – if necessary, at a discounted wage rate. Low wages, or more onerous working conditions, are not uncommon for people seeking to gain skills at the outset of their careers and such costs will be more readily incurred the better the skill or tuition gained (university students actually pay to acquire their skills). Calombaris was unlikely to have been personally involved in setting the wage intricacies. But why should he not be able to capitalise on this skill and expertise he has developed? If he is made unable to do so he will find other means of rationing his available positions between the many aspirants for them.
The backdrop of this is that Australia is almost unique in having government wage setting arrangements that results in very high minimum wages. There are 120 “modern awards” covering the industry, which means thousands of different permutations of remuneration rates driven by ever-shifting demand. Most hospitality employers use sophisticated software packages to avoid their employees shifting into areas where penalties suddenly are required. It is unclear why the Calombaris outlets did not.
Above all, the current arrangements mean great distortions as certain activities are either priced out of the market (esp. Sundays) or required wages are so far out of line that employers break the law and offer cash in hand etc to enable costs to be kept down.