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Low Pay in a Prosperous Land

Low Pay in a Prosperous Land. Helen Masterman-Smith Centre for Work and Life University of South Australia Hawke Research Institute for Sustainable Societies. www.lowpayproject.com.au. Low Paid Services Employment in Australia: Dimensions, Causes, Effects and Responses

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Low Pay in a Prosperous Land

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  1. Low Pay in a Prosperous Land Helen Masterman-Smith Centre for Work and Life University of South Australia Hawke Research Institute for Sustainable Societies

  2. www.lowpayproject.com.au • Low Paid Services Employment in Australia: Dimensions, Causes, Effects and Responses • Funding: Australian Research Council, Liquor Hospitality Miscellaneous Workers Union, Brotherhood of St Laurence, SA Unions, Unions NSW, Victorian Trades and Labour Council • Research team: Barbara Pocock (Uni of SA), John Buchanan (Sydney Uni), Ian Watson (Sydney Uni), Iain Campbell (RMIT Uni), Susan Oakley (Adelaide Uni)

  3. A changing regulatory environment • Implications of WorkChoices for low paid? • AIRC President Giudice: ‘people with low skills, low bargaining power are headed for the five minimum conditions..which will have an effect on their incomes..This will be accompanied by a slowdown in the rate of growth of minimum wages - that’s what the Fair Pay Commission is for’ • ‘I can assure you it s going to affect our society’

  4. Inequality has widened amongst wage earners • Average pay of CEOs in 2005 was 63 times average wage, compared to 18 times in 1989/90 • Now, removal of rest breaks, penalties, annual leave loadings, allowances and slower increases in minimum wage • Inequality is costly - and not just for the poor • Growing prosperity built on inequality and low pay? • But what is it like to live low paid in Australia - before ‘WorkChoices’ takes full effect?

  5. The study • Low paid workers: $14/hr - $530/wk - $26800/year • National research • SA – childcare workers • Vic - cleaners • NSW - luxury accommodation workers • Focus: workers, households, communities • Recruitment: LHMU, BSL, advertising • Larger project • 100-200 participants (interviews/focus groups) • HILDA analysis

  6. Dimensions of low pay • 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

  7. 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 2 Low Pay IndustriesPercentages, 2005 Source: Australian Bureau of Statistics 2004, Employee earnings, benefits and trade union membership, Australia. No. 6310.0. (August 2004) Australian Bureau of Statistics, Canberra. Source: (Australian Bureau of Statistics 2004a, 24-27)

  8. 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% Low Pay and Precarious Work

  9. Living low paid • Not all low paid in poverty • Working poor = time and income poverty • Fewer benefits (health, travel), more costs (travel, training, equipment) • Narrow scope for substituting own time for purchases • Tough on household relationships and social networks

  10. It ‘eats you up’ • A deep sense of struggle and deprivation: • I only have incoming calls..my daughter’s rent pays the groceries..no luxuries.. I will live in a rented home for the rest of my life (Fay, 43, cleaner, Melbourne) • 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 cleaning jobs, Melbourne,) • Pressure for money..I have no money, upset, start trouble.. I feel squashed, can’t relax (Paul, 47, cleaner, Melbourne) • 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 struggle really bad (Ebony, 29, mother of 3, childcare worker, Adelaide)

  11. …the home front • Low paid workers and their kids do without: • Health care, dental, medicine • School excursions, educational participation • Sports participation • Home heating • Meals, good meals • Clothing • Transport for events • Holidays • Basic leisure • Some low paid workers do long hours and kids miss out on both time and $$s

  12. Social Exclusion • Many examples of withdrawal from social relationships, organisations, activities • Extended family contact shrinks, social interaction limited • Precarious hours/casuals always on call • Intimidating 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 essentials • 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 and I can’t afford that (Molly, childcare worker, Adelaide) • Catching up with friends, its rare now (Jenni, 20s, childcare worker, Adelaide)

  13. Dignity on a low wage • Shame, immobility, ‘a different world’ • ‘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, childcare worker, Adelaide) • I got told by Centrelink the other day that I’m living beyond my means and I laughed..I don’t need her to tell me that...you feel like an absolute dickhead and a failure (Ebony) • 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).

  14. Making ends meet • No savings in reserve • …you’d just rob Peter to pay Paul and hope for the best (Karen, 50s, luxury hotel worker, Sydney) • Financial help seeking • Credit 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 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 • 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).

  15. Making work pay • Financial 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).

  16. Myth 1: low paid workers are protected by other earners • Some are: some childcare workers with common characteristics • In dual earner, couple households • Higher earning partners • No children • 20-30 years • But most in our study, not: • Even where other householders were earning there was financial hardship • Not all income shared, even between partners • Security fragile: dependent upon ongoing relationships, good health • Family formation deferred

  17. 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 Household Income ofLow Paid Workers

  18. Low wages are essential earnings • He occasionally resents me.. ‘Well if you don’t pay half, you can do all the cleaning and earn your keep that way’..we have ended up living separately (Jenni, 20s, childcare worker) • When they shop, they keep their purchases at opposite ends of the trolley. Their relationship is made unstable by the inequality in their earnings. • None saw their earnings as inessential pin money: • I work so we can survive (Mercedes, cleaner, 2 children)

  19. Myth 2: Take a second job, or welfare, and top up • Many already do, but still low paid • But even more time (and travel) poor • Some work unpredictable hours, and so cannot juggle a second job • Many interviewees were VERY reluctant to take welfare: ‘we never claim dole, anything..NEVER any one day claim unemployment’ (Mercedes, cleaner, immigrant) • ‘I don’t want to be known as one of those dole bludgers’ (Fay, cleaner, chronic back pain) • Or found it very complex to juggle welfare around jobs

  20. Myth 3: Low paid work is stepping stone to better work • Sad illusion: Few signs of it in childcare, cleaning or hotel work • Many male cleaners are older, unskilled, or have been made redundant from skilled work • Many women do cleaning on return to work after children • Many have experienced age discrimination ‘I applied for 200 jobs..if you’re over 40 they don’t want to know you’ • Costs of job search, travel, training • Not a sellers’ labour market in cleaning, hotel work or childcare, in terms of bargaining up wages

  21. In sum… • Low pay narrows the world of the worker, their household and children • It imposes a steady pressure - to budget, to juggle time and to stay in stable relationships and good health • It results in deferred family formation and puts pressure on relationships and social supports • It erodes health, social connection and social fabric • Building prosperity and essential services - clean buildings and the care of children - on their low pay is strikingly unjust.

  22. www.lowpayproject.com.au http://www.unisa.edu.au/hawkeinstitute/cwl/

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