Australian Workers Underpaid $850M Annually, Hindering Economic Activity
A recent analysis conducted by the McKell Institute has revealed a shocking trend of wage theft in Australia, where workers are being underpaid nearly $850 million every year. This rampant underpayment is not only detrimental to the affected workers but also strips more than $330 million in economic activity from the country.
The think tank based its findings on audits conducted by the Fair Work Ombudsman dating back to 2009. The analysis discovered that, on average, each business audited had around five wage theft victims, who were ultimately repaid an average of $610.83 each.
Alarming statistics further revealed that over 40 percent of the audited businesses had violated the Fair Work Act, while more than a quarter exhibited breaches of monetary obligations, such as award rates and agreements.
When extrapolated nationwide, these figures translate to a staggering 1.3 million workers, or approximately 11.5 percent of the country’s workforce, being taken advantage of by over 269,728 businesses. Collectively, these businesses are responsible for the annual underpayment of $847.25 million.
McKell Institute CEO Ed Cavanough emphasized that these estimates lean towards the lower end, as they do not account for cases where workers are underpaid against appropriate award rates or given incorrect penalty rates. The total amount of wage theft is suspected to be even higher than the reported figure, and such actions are unacceptable.
The analysis conducted by the think tank highlights the urgent need for strong laws to criminalize wage theft, similar to the workplace reforms currently pursued by the federal government. It is crucial that employers understand their obligations to their employees, and ignorance cannot be utilized as an excuse.
Interestingly, the McKell Institute’s findings also incorporated economic multipliers developed by the International Monetary Fund, revealing that a mere $1 increase in Australian workers’ pay results in a significant 39 cents boost to the economy. Consequently, the economic cost of unpaid wages reaches a staggering $330 million.
Regionally, New South Wales recorded the highest percentage of lost wages, accounting for nearly a third of the total amount, or $306 million affecting over 500,000 workers. The Sydney electorate particularly suffered, with an estimated 41,106 workers left unpaid, resulting in a collective amount of over $25 million.
In Melbourne’s electorate, more than 28,500 workers were deprived of nearly $17.5 million, making it the second most affected region. North Sydney ranked third, with $10 million in underpayments affecting 16,500 workers.
These distressing statistics not only impact workers’ financial stability but also hinder their ability to meet essential financial commitments. Workers struggle to pay their mortgages, keep up with rising rents, and settle their bills, making these figures even more concerning.
Addressing the issue of wage theft in Australia is essential for the well-being of both the nation’s workforce and its economy. It is vital that employers proactively educate themselves about their legal obligations to their employees, and that stricter laws and regulations are enacted to criminalize wage theft. Only then can workers receive the fair compensation they deserve and contribute effectively to the nation’s prosperity.
