McDonald's pay deal: dirty little secret of the penalty rates debate

McDonald's employees are being underpaid tens of millions of dollars per year thanks to an agreement struck between the fast food giant and the retal workers' union.

Bill Shorten and the ACTU have made "protecting" penalty rates a key election issue.

This, while Australia's biggest private sector union is cutting deals that leave workers without penalties.

Two demonstrators dressed as Ronald McDonald protest for better wages for McDonald's employees in Sao Paulo, Brazil. Photo: Andre Penner

The McDonald's agreement with the Shop, Distributive & Allied Employees Association is an example. Under the deal, McDonald's pays no penalty rates on weekends, not a cracker.

But the fast food award – the legal pay and conditions safety net – sets penalty rates at 25 per cent on Saturday and 50 per cent on Sunday (higher still for casuals).

The Macca's deal underlines the grotesque unreality of the penalties debate.

Meatworkers union members protest outside the shop assistants' union over its wages deal with Coles. Photo: Penny Stephens

Australia's award system looks great on paper, a safety net of generally decent wages and conditions that compares well to the pittance earned by the low paid in the US and elsewhere.

Yet at the cowboy end of the labour market, foreign workers are routinely exploited in "black jobs", the 7-Eleven scandal the most high-profile case to date.

Anecdotally, judging from the flood of emails after the Fairfax "black jobs" series in October, paying penalty rates is regarded as optional by many small hospitality businesses.

But you'd assume that those who work for the country's largest employers, under union agreements, would be paid proper, award rates.

Not so.

Coles, McDonald's and Woolworths, Australia's three biggest employers, have agreements that substantially undercut minimum conditions, including penalty rates.

It is likely that hundreds of thousands of workers are worse off as a result.

Trading off penalty rates for higher ordinary-hour wages can be fine, as long as the wages are raised sufficiently.

At McDonald's, and elsewhere, they clearly are not.

The Macca's army of young workers are at least $50 million worse off than they would be if no deal existed with the "shoppies" union.This is a company that made a profit in 2013 of $234 million. It can afford to pay its workers properly.

The SDA is the largest affiliate of the ALP and one of the biggest ACTU unions. Its numbers give it a powerful conservative voice on social and moral questions.

It often appears more interested in wielding political power in such debates – same-sex marriage for instance – than in representing vulnerable workers.

It's business model is peculiar: it pays large commissions – about $5 million a year –ostensibly to reimburse the cost of payroll deductions.

As a result, it has about 200,000 members, many more than the dwindling blue-collar unions that once dominated the labour movement, such as the AWU and AMWU.

Unionism in Australia is critically ill. Just one in 11 private sector workers is a member. Wages across the economy are barely growing and exploitation is rife.This is terrible news for vulnerable, low-paid workers.

If the ACTU and Labor want to pretend they are campaigning for penalty rates, the first call they should make is to their own big backer, the "shoppies" union.

Then they should order them to stop cutting sweetheart deals with big business.

Reprinted from: The Age
May 19, 2016
Ben Schneiders