Low Pay in a Prosperous LandLow Pay in a Prosperous Land

Helen Masterman-SmithHelen Masterman-SmithCentre for Work and LifeCentre for Work and Life

University of South AustraliaUniversity of South Australia Hawke Research Institute for Sustainable SocietiesHawke Research Institute for Sustainable Societies

www.lowpayproject.com.auwww.lowpayproject.com.au

Low Paid Services Employment in Australia: Low Paid Services Employment in Australia: Dimensions, Causes, Effects and ResponsesDimensions, Causes, Effects and Responses

FundingFunding: Australian Research Council, Liquor : Australian Research Council, Liquor Hospitality Miscellaneous Workers Union, Hospitality Miscellaneous Workers Union, Brotherhood of St Laurence, SA Unions, Unions Brotherhood of St Laurence, SA Unions, Unions NSW, Victorian Trades and Labour CouncilNSW, Victorian Trades and Labour Council

Research teamResearch team: Barbara Pocock (Uni of SA), : Barbara Pocock (Uni of SA), John Buchanan (Sydney Uni), Ian Watson (Sydney John Buchanan (Sydney Uni), Ian Watson (Sydney Uni), Iain Campbell (RMIT Uni), Susan Oakley Uni), Iain Campbell (RMIT Uni), Susan Oakley (Adelaide Uni)(Adelaide Uni)

A changing regulatory A changing regulatory environmentenvironment

Implications of WorkChoices for low paid?Implications of WorkChoices for low paid? AIRC President Giudice: ‘AIRC President Giudice: ‘people with low skills, people with low skills,

low bargaining power are headed for the five low bargaining power are headed for the five minimum conditions..which will have an effect on minimum conditions..which will have an effect on their incomes..This will be accompanied by a their incomes..This will be accompanied by a slowdown in the rate of growth of minimum slowdown in the rate of growth of minimum wages - that’s what the Fair Pay Commission is wages - that’s what the Fair Pay Commission is for’for’

‘‘I can assure you it s going to affect our society’I can assure you it s going to affect our society’

Inequality has widened amongst Inequality has widened amongst wage earnerswage earners

Average pay of CEOs in 2005 was 63 times Average pay of CEOs in 2005 was 63 times average wage, compared to 18 times in 1989/90average wage, compared to 18 times in 1989/90

Now, removal of rest breaks, penalties, annual Now, removal of rest breaks, penalties, annual leave loadings, allowances and slower increases leave loadings, allowances and slower increases in minimum wagein minimum wage

Inequality is costly - and not just for the poorInequality is costly - and not just for the poor Growing prosperity built on inequality and low Growing prosperity built on inequality and low

pay?pay? But what is it like to live low paid in Australia - But what is it like to live low paid in Australia -

before ‘WorkChoices’ takes full effect?before ‘WorkChoices’ takes full effect?

The studyThe study Low paid workers: Low paid workers: $14/hr - $530/wk - $26800/year$14/hr - $530/wk - $26800/year

National researchNational research SA – childcare workersSA – childcare workers Vic - cleanersVic - cleaners NSW - luxury accommodation workersNSW - luxury accommodation workers

Focus: workers, households, communitiesFocus: workers, households, communities Recruitment: LHMU, BSL, advertisingRecruitment: LHMU, BSL, advertising Larger projectLarger project

100-200 participants (interviews/focus groups)100-200 participants (interviews/focus groups) HILDA analysisHILDA analysis

Incidence of low pay:

14% (mid 1990s) to 20% (2003)

29% (2.6m) of all workers earn less than $500pw

LP Concentrated in service sectors

Strong correspondence between LP and casual/part-time employment

Dimensions of low payDimensions of low pay

Low Pay IndustriesLow Pay Industries Percentages, 2005Percentages, 2005

  Low paid full time workers, earnings in main job

Low paid workers, earnings in main job

All industries 10 30

Agriculture, forestry and fishing 21 33

Accommodation, restaurants, cafes 19 57

Retail trade 18 56

Construction 13 20

Cultural and recreational services 12 45

Health and community services 12 35

Personal and other services 11 30

Wholesale trade 11 21

Manufacturing 10 17

Property and business services 9 24

Transport and storage 8 18

Communication services 6 16

Finance and insurance 6 16

Education 5 26

Electricity, gas and water supply 4 7

Government administration and defence

3 11

Mining 1 2Source: Australian Bureau of Statistics 2004, Employee earnings, benefits and trade union membership, Australia. No. 6310.0. (August 2004) Australian Bureau of Statistics,

Canberra.

Low Pay and Low Pay and Precarious WorkPrecarious Work

Industry Part-time status in main job

(August 2004)

Casual employees

(1999)

All Industries 29% 27%

Accommodation, Restaurants, Cafes

53% 58%

Retail 51% 46%

Health and Community Services 45% 22%

Cultural and Recreational Services

46% 42%

Living low paidLiving low paid Not Not allall low paid in poverty low paid in poverty Working poor = Working poor = timetime and and incomeincome

povertypoverty Fewer benefits (health, travel), more Fewer benefits (health, travel), more

costs (travel, training, equipment)costs (travel, training, equipment) Narrow scope for substituting own time Narrow scope for substituting own time

for purchasesfor purchases Tough on household relationships and Tough on household relationships and

social networkssocial networks

It ‘eats you up’It ‘eats you up’

A deep sense of struggle and deprivation:A deep sense of struggle and deprivation: I only have incoming calls..my daughter’s rent pays the I only have incoming calls..my daughter’s rent pays the

groceries..no luxuries.. I will live in a rented home for the groceries..no luxuries.. I will live in a rented home for the rest of my life (Fay, 43, cleaner, Melbourne)rest of my life (Fay, 43, cleaner, Melbourne)

I don’t go to the dentist..I’m scared to go in case he finds I don’t go to the dentist..I’m scared to go in case he finds something I can’t afford (Paula, 55, mother of 2, two something I can’t afford (Paula, 55, mother of 2, two cleaning jobs, Melbourne,)cleaning jobs, Melbourne,)

Pressure for money..I have no money, upset, start trouble.. Pressure for money..I have no money, upset, start trouble.. I feel squashed, can’t relaxI feel squashed, can’t relax (Paul, 47, cleaner, Melbourne) (Paul, 47, cleaner, Melbourne)

I figure I’m going to be living in a tent..I drive an I figure I’m going to be living in a tent..I drive an unregistered car..it’s a web that slowly eats you up..we unregistered car..it’s a web that slowly eats you up..we struggle really bad (Ebony, 29, mother of 3, childcare struggle really bad (Ebony, 29, mother of 3, childcare worker, Adelaide)worker, Adelaide)

……the home frontthe home front

Low paid workers and their kids do without:Low paid workers and their kids do without: Health care, dental, medicineHealth care, dental, medicine School excursions, educational participationSchool excursions, educational participation Sports participationSports participation Home heatingHome heating Meals, good mealsMeals, good meals ClothingClothing Transport for eventsTransport for events HolidaysHolidays Basic leisureBasic leisure

Some low paid workers do long hours and kids miss Some low paid workers do long hours and kids miss out on out on bothboth time and $$s time and $$s

Social ExclusionSocial Exclusion Many examples of withdrawal from social relationships, Many examples of withdrawal from social relationships,

organisations, activitiesorganisations, activities Extended family contact shrinks, social interaction limitedExtended family contact shrinks, social interaction limited

Precarious hours/casuals always on callPrecarious hours/casuals always on call Intimidating workplace relations – no real option to refuse workIntimidating workplace relations – no real option to refuse work … if there’s ever any complaint or any trouble… people are sort of

punished. … anyone who sort of doesn’t toe the line, like it will be frowned on, me doing this interview, and the consequences would be a sudden cut back [in hours] (Vicky, 50s, childcare worker)

Can’t commit regular time/money to anything except essentialsCan’t commit regular time/money to anything except essentials Informal (coffee, meals, visits)Informal (coffee, meals, visits)

… they always expect grandma to be able to feed them and have cakes and lollies and take them to places and that's where I get really upset that I can't (Diana, 50s, cleaner, Adelaide)

I often just order water..I don’t go out and visit because its another 20 minute drive I often just order water..I don’t go out and visit because its another 20 minute drive and I can’t afford that (Molly, childcare worker, Adelaide)and I can’t afford that (Molly, childcare worker, Adelaide)

Catching up with friends, its rare now (Jenni, 20s, childcare worker, Adelaide)Catching up with friends, its rare now (Jenni, 20s, childcare worker, Adelaide)

Dignity on a low wageDignity on a low wage

Shame, immobility, Shame, immobility, ‘a different world’‘a different world’ ‘‘these people that have got a bit of money to flash… and I these people that have got a bit of money to flash… and I

can’t even afford to buy myself a bloody meal’ (Ebony, 20s, can’t even afford to buy myself a bloody meal’ (Ebony, 20s, childcare worker, Adelaide)childcare worker, Adelaide)

I got told by Centrelink the other day that I’m I got told by Centrelink the other day that I’m living beyond my means and I laughed..I don’t living beyond my means and I laughed..I don’t need her to tell me that...you feel like an need her to tell me that...you feel like an absolute dickhead and a failureabsolute dickhead and a failure (Ebony) (Ebony)

Welfare as a last resort: Welfare as a last resort: I’m going to work til I can work. … I want to keep working and pay off my debts (John, 65, cleaner, Melbourne).

Making ends meetMaking ends meet No savings in reserveNo savings in reserve

• …you’d just rob Peter to pay Paul and hope for the best (Karen, 50s, luxury hotel worker, Sydney)

Financial help seekingFinancial help seeking Credit and indebtednessCredit and indebtedness

• I would just go into the visa and bite the bullet and do it that way like I had to [for] the plumbing, … that was $120 I had to get that out of the cash advance (Margaret, 62, cleaner, Adelaide).

Informal networks - family and friendsInformal networks - family and friends• I’d have to ring up my dear mama [for help]. … I had to come up

with $1000 in a day, or I’d lose my car (Millie, 30s, cleaner Adelaide).

• I would go to my in-laws (Bianca, 30s, cleaner, Adelaide) Community services Community services

• I’d probably be too proud (Charmaine, 40s, cleaner, Adelaide)• I found it hard to actually ring them up and to get to that point (Millie,

30s, cleaner, Adelaide).

Making work payMaking work pay Financial disincentives to low paid workFinancial disincentives to low paid work

… they’re actually going backwards by working and that’s a huge problem. (Charlie, community service worker, Adelaide).

[Many people say]… I’m giving up work because it’s more beneficial for me to stay on government money … it’s the extras like transport and health and teeth. … they’d prefer to work, but if it’s only twenty dollars difference … why travel an hour and half to try and get to work? (Simone, 50s, luxury hotel worker, Sydney).

Myth 1: low paid workers are Myth 1: low paid workers are protected by other earnersprotected by other earners

Some are: some childcare workers with common Some are: some childcare workers with common characteristicscharacteristics In dual earner, couple householdsIn dual earner, couple households Higher earning partnersHigher earning partners No childrenNo children 20-30 years20-30 years

But most in our study, not:But most in our study, not: Even where other householders were earning there Even where other householders were earning there

was financial hardshipwas financial hardship Not all income shared, even between partnersNot all income shared, even between partners Security fragile: dependent upon ongoing Security fragile: dependent upon ongoing

relationships, good healthrelationships, good health Family formation deferredFamily formation deferred

Household Income ofHousehold Income ofLow Paid WorkersLow Paid Workers

  Low paid workers living in household

at or below the median income

level

Low paid workers living in lowest

household income deciles

Harding, 1995-96 40% 20%in lowest 3 deciles

Commonwealth, 2003

57% 24% in lowest 2 deciles

Low wages are essential earningsLow wages are essential earnings

He occasionally resents me.. ‘Well if you don’t He occasionally resents me.. ‘Well if you don’t pay half, you can do all the cleaning and earn pay half, you can do all the cleaning and earn your keep that way’..we have ended up living your keep that way’..we have ended up living separately (Jenni, 20s, childcare worker)separately (Jenni, 20s, childcare worker)

When they shop, they keep their purchases at When they shop, they keep their purchases at opposite ends of the trolley. Their relationship is opposite ends of the trolley. Their relationship is made unstablemade unstable by the inequality in their earnings. by the inequality in their earnings.

None saw their earnings as inessential pin None saw their earnings as inessential pin money: money:

I work so we can surviveI work so we can survive (Mercedes, cleaner, 2 (Mercedes, cleaner, 2 children)children)

Myth 2: Take a second job, or Myth 2: Take a second job, or welfare, and top upwelfare, and top up

Many already do, but still low paidMany already do, but still low paid But even more time (and travel) poorBut even more time (and travel) poor Some work unpredictable hours, and so cannot juggle Some work unpredictable hours, and so cannot juggle

a second joba second job Many interviewees were VERY reluctant to take Many interviewees were VERY reluctant to take

welfare: ‘we never claim dole, anything..NEVER any welfare: ‘we never claim dole, anything..NEVER any one day claim unemployment’ (Mercedes, cleaner, one day claim unemployment’ (Mercedes, cleaner, immigrant)immigrant)

‘‘I don’t want to be known as one of those dole I don’t want to be known as one of those dole bludgers’ (Fay, cleaner, chronic back pain)bludgers’ (Fay, cleaner, chronic back pain)

Or found it very complex to juggle welfare around jobsOr found it very complex to juggle welfare around jobs

Myth 3: Low paid work is Myth 3: Low paid work is stepping stone to better workstepping stone to better work

Sad illusion: Few signs of it in childcare, cleaning or Sad illusion: Few signs of it in childcare, cleaning or hotel workhotel work

Many male cleaners are older, unskilled, or have been Many male cleaners are older, unskilled, or have been made redundant from skilled workmade redundant from skilled work

Many women do cleaning on return to work after childrenMany women do cleaning on return to work after children Many have experienced age discrimination ‘I applied for Many have experienced age discrimination ‘I applied for

200 jobs..if you’re over 40 they don’t want to know you’200 jobs..if you’re over 40 they don’t want to know you’ Costs of job search, travel, trainingCosts of job search, travel, training Not a sellers’ labour market in cleaning, hotel work or Not a sellers’ labour market in cleaning, hotel work or

childcare, in terms of bargaining up wageschildcare, in terms of bargaining up wages

In sum…In sum… Low pay narrows the world of the Low pay narrows the world of the

worker, their household and childrenworker, their household and children It imposes a steady pressure - to It imposes a steady pressure - to

budget, to juggle time and to stay in budget, to juggle time and to stay in stable relationships and good healthstable relationships and good health

It results in deferred family It results in deferred family formation and puts pressure on formation and puts pressure on relationships and social supportsrelationships and social supports

It erodes health, social connection It erodes health, social connection and social fabricand social fabric

Building prosperity and essential Building prosperity and essential services - clean buildings and the services - clean buildings and the care of children - on their low pay is care of children - on their low pay is strikingly unjust.strikingly unjust.

www.lowpayproject.com.auwww.lowpayproject.com.au

http://http://www.unisa.edu.au/hawkeinstitute/cwl/www.unisa.edu.au/hawkeinstitute/cwl/