Wage theft a silent threat to jobs and the WA economy

Things have been tough for WA workers for years now. It’s been hard to find a job, but worryingly things haven’t been much better for those who have been employed.

Data from the Australia Bureau of Statistics released last month showed that WA workers experienced the slowest wage growth in the country in 2018, at an average of just 1.6 per cent. That’s less than the inflation rate, which was 1.8 per cent last year, which means WA workers were losing real wages. 

Even in the mining industry, where employers have already started to revive talk of ‘skills shortages’ threatening forward momentum, wages grew at just 1.8 per cent across the country, the second lowest rate of any industry nationally. Compare that with 2012, when industry wages were growing at rates above 5 per cent.

Wages have been flat for some time now, much to the worry of the economists. Reserve Bank Governor Phillip Lowe declared Australia was in the midst of a "low wage crisis" in June 2017. The situation has not improved since.

Why is it that WA wage growth is so anaemic, even in industries where there is strong demand for workers right now?

There are a few factors at play but wage theft is certainly a driving force.

A 2018 study by the University of New South Wales and the University of Technology Sydney estimated Australian workers are losing $1 billion in wages each year because they are being underpaid by their employer.

Recent cases in WA disclosed by the Fair Work Ombudsman back up those claims. A commercial cleaning company called Delron Cleaning was found to have underpaid 1,174 staff members by more than $447,000. One staff member was found to have been underpaid more than $12,000.

The issue goes beyond wages. According to Industry Super Australia, a staggering one-third of eligible Australian workers are being underpaid super, with the average underpayment more than $2,000 a year. They estimate some 2.4 million Australian workers are collectively having $3.6 billion a year stolen from them each year.

“The system is broken,” UTS Lecturer Laurie Berg, one of the co-authors of the study, said

“It is rational for most workers to stay silent. The effort and risks of taking action aren’t worth it, given the slim chance they’ll get their wages back.”

In February, the State Government announced that it would hold an inquiry into the systematic and deliberate underpayment of wages and entitlements of workers in WA. "Workers should not be denied their legal pay and entitlements through employers engaging in wage theft,” Industrial Relations Minister Bill Johnston said.

This inquiry is an opportunity to help empower WA workers to stand up against this insidious practice and stop employers from paying what they owe their employees. The State Government has an opportunity to review the current ineffective system and introduce new laws to protect WA workers, provide more options for the recovery of stolen wages, and make wage theft a criminal offence.

We’ll be keeping a close eye on the inquiry and it’s findings, set to be delivered to the State Government by June. In the meantime, if you have a current or previous employment experience where you experienced deliberate underpayment of wages or entitlements, consider making a submission to the inquiry at wagetheftinquiry@dmirs.wa.gov.au. You can also complete this confidential online survey here.

It’s obvious this is a massive issue facing the WA and the country more broadly. For things to change, we’re going to need major reforms to address the power imbalance that has developed. The State Government must act to stamp out this practice and protect WA jobs being undermined by rampart wage theft.

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