Wage rage and penalty rates

With last week’s reaction to the template retail agreement between the South Australian Shop Distributive and Allied Employees’ Association (SDA) and Business SA, what passes for IR debate in this country reached its Seinfeld moment – a great show was made about nothing.

The first thing worth noting about the deal is that it’s not even an agreement. It’s a template agreement. In other words, a document that smaller retailers (members and prospective members of Business SA) can use as the basis of a workplace agreement under the Fair Work Act 2009 with which to bind their workers. The deal is actually a document between a union and a business lobby that some retail businesses might use as an initial draft of a finalised agreement.

It is, therefore, impossible to predict the material impact of this news for retail workers. The very nature of this document means we cannot know how many retail workers it will end up applying to and what financial impact any finalised document will have on those workers. Its relevance is, at best, contingent on future events.

In the document, the central economic change Business SA and the SDA contemplate is the extension of the ordinary hours of work and the lowering of weekend, public holiday and evening rates of pay in a return for a one-off $1.48 increase in the hourly pay for a shop assistant and some additional rights to refuse weekend work. This table sets out those changes:

Hours of work Current retail min loading Template loading
Saturday, 5am–6pm 25% Removed
Saturday, before 5am and
after 6pm
25% 30%
Sunday, 9am–5pm 100% 50%
Sunday, before 9am and
after 5pm
100% 100%
Public holidays 150% 100%
Monday–Friday, 6pm until midnight 25% Removed


In addition, the template provides for a 3 per cent annual pay rise, with the SDA recommending a three-year term for any actual agreement. But there is nothing to prevent the final agreement remaining silent on further pay rises or linking them to an indicator which, based on historical experience, will likely be less than 3 per cent (see the Fair Work Commission minimum wage case or the headline annual figure for the Consumer Price Index).

As news of the template broke early last week, my social media feeds were full of descriptions of the retail union, the SDA, and its leadership as ‘treacherous’, ‘conniving’ and ‘putrid’. As far as the template document goes, I will leave the value judgments to SDA members and retail workers. In so far as the left goes, casting the SDA leadership as traitorous villains in a morality tale misses the point.

In truth, this was yet another example of the trading away of workplace rights and conditions in return for pay (whether that’s increasing real pay, maintaining pay or attempting to slow its decline). It’s called concession bargaining and every union has engaged in it.

Enterprise-based bargaining has been the dominant feature our IR system since 1993. One of the key changes the then Keating Labor government introduced was the notion that union workers may only take legally protected strike action in support of a new workplace-level agreement. As a system, it sought to largely limit the operation of collective agreements to the workplace or enterprise-level while placing strict limitations on workers attempting to exercise industry, sector or class-level solidarity. This feature of the system has persisted through the Howard, Rudd-Gillard and Abbott federal governments and three entirely new IR acts. It has effectively curtailed strike action and assisted capital to take a rising share of economic output.

Enterprise-based bargaining has restricted union power to a few militant ‘hot shops’ and generally restricted collective action to issues of wages and conditions in those same workplaces. This allows capital to attack the wages and conditions of workers in less militant workplaces by making them concede hard-won rights and conditions in order to gain pay rises that still see workers falling relatively backwards over time. Eventually these tactics overwhelm the ‘hot shops’.

This shift greatly leverages the opportunities to turn the very employment relationship into a site of profit. A greater volume of agreements means more work for large-scale law firms and privileged elites – here one can detect the financial motive of the template document for Business SA. In addition, linking employment obligations to specific legal corporations in set geographical workplaces allows for the wholesale outsourcing of work, or the insourcing of labour-hire employees with a different legal employer. While a handful of big actors sweep up the extra profits, the rest of us have to cope with the insecurity.

In this context, the debate around individual contracts – and most of the Howard-era IR agenda (or its reheated variations) – merely becomes a distraction. Those who would fight for change are raging at the sideshow, while the capitalist machine enjoys a legal architecture that allows it to suck maximum value from the employment relationship with the minimum of actual resistance. This is how the industrial relations debate becomes divorced from the economic reality of daily life.

In contrast to all the fuss surrounding the SDA template, last week also saw the commencement of the Fair Work Commission’s annual minimum wage case, which attracted little attention. We already know that the outcome of this decision will impact the pay of millions of workers including most of the retail sector. Since the introduction of the enterprise-agreement system, Australia’s minimum wage has declined from nearly 60 per cent of the average full-time wage to just above 40 per cent. This is because decentralised bargaining severs the direct link organised workers have with the outcome of the case, and, therefore, depoliticises the state’s containment of labour costs (on behalf of capital).

We should not judge union leaders primarily on how they operate within such a flawed system, but instead on their efforts and strategies to replace it with something new and better. This will only come through the activity and resistance of those who seem to be missing from the IR debate these days – actual workers. By this measure, it’s not just the SDA, but rather the entire union movement leadership (I include myself here) that is found wanting. We need to do better.

Godfrey Moase

Godfrey Moase is an Executive Director, United Workers Union. He’s previously written for the Guardian, Overland, Jacobin and New Matilda.

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