McDonald’s expose shows the system is broken – but not in the way you think

Last week’s McDonald’s expose in The Age neatly demonstrates the extent to which Australia’s workplace relations system has been compromised by vested interests

But the problems at the heart of the system may not be the ones that first occur to many readers.

Firstly, it is not actually clear that McDonald’s has done anything wrong. According to the Fair Work Commission website, the minimum wage for 16 year olds in Australia is $8.17 per hour, cascading upwards each year with age until a worker turns 21, when the adult minimum wage of $17.29 per hour applies.

According to the articles, most employees had a base rate of pay of $20 per hour. In America, where the adult minimum wage is US$7.25 per hour, or Germany where the minimum wage is 8.5 Euros per hour, this would not be considered a bad deal.

It is also almost triple the hourly rate of $6.94 that unemployed Australians have to live on when receiving the Newstart Allowance.

Given that the employer is happy, the union is happy, the Fair Work Commission is happy and over 95 per cent of employees are reportedly happy, a legitimate question should be asked as to whose business it is to intervene?

In fact this saga highlights many of the structural and cultural problems that are slowly strangling our workplace relations system and national competitiveness.

Australia is now saddled with three competing and contradictory sets of minimum standards that are increasingly tripping over each other as they all seek to impose their own form of ‘protection’ on workers.

A complicated and cascading set of minimum wages, which are increased on demand by the Fair Work Commission every twelve months, applies to employees and businesses throughout the country.

One hundred and twenty two industrial awards, some of which prescribe pay and conditions in excruciating detail, govern workers over whole industries. The Cotton Ginning and the Cemetery Industry awards apply to this very day.

A set of ten National Employment Standards, which started in the Howard era and were expanded under the Rudd/Gillard governments, also cover all employees on matters including annual leave, personal leave, redundancy pay, and maximum hours of work.

Is it really surprising that a workplace agreement might not be able to tick every box on every piece of paper?

It is ironic that the Rudd government’s inability to countenance any lowering of conditions when it consolidated 1,500 state and federal awards into these 122 so-called ‘modern awards’ has now made them so uncompetitive in the marketplace that unions, employers and the Fair Work Commission are starting to leave them behind.

However it shouldn’t really be a surprise that trade unions are happy to trade off conditions under deals that reward them with extra members and therefore delegates at Labor conferences.

Unions are increasingly moving from a business model of voluntary associations that protect employee rights, to that of legally cocooned, tax-exempt and politically protected labour hire companies, feeding favoured large employers in exchange for support in boosting their internal membership, revenue and political influence.

While the actions of the Shop, Distributive and Allied Employees Association (SDA) have been highlighted on this occasion, they are cut from the same cloth as recently publicized deals between the Australian Workers Union and Chiquita Mushrooms as well as the Transport Workers Union and Toll.

Australia’s workplace relations system is finding it increasingly difficult to reconcile its 19th century approach to institutions and regulation, with our modern 21st century economy.

The system clearly needs a radical overhaul.

As a first step, the award system needs to be put out of its misery and abolished once and for all. Centralized and prescriptive sets of pay and conditions that apply to whole industries make as much sense in the 21st century as state government regulation of the bread industry.

A single, legislated set of National Employment Standards could easily replace awards, the minimum wage system, and remove much of the work of the Fair Work Commission.

Legislation that exempts unions and employer organisations from the heat of competition laws should be repealed, and individual workplace agreements should once more be encouraged and protected under the law.

It is ironic that if there are any McDonald’s workers that are unhappy with the SDA deal there is little they can do about it. Under Labor’s Fair Work laws, which the Coalition Government has shown little interest in changing, if one person in a workplace is a member of a relevant union then bargaining must be done with that union. There is no escape.

A workplace relations that puts precedent and institutions before the needs of people is one that is ripe for reform.


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