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Issue #1705      October 7, 2015

7-Eleven scandal

The tip of a low-wage iceberg

It’s no wonder the Coalition hates the ABC. The national broadcaster’s latest exposé of Australia’s growing extreme low-wage, “black” labour market has sent industry and anti-worker state and federal politicians scurrying. The Four Corners program’s revelations of illegally inadequate pay and conditions at 7-Eleven franchised convenience stores nation-wide has prompted a reshuffle at the top of the company and protestations of “shock” that such a systemic rip-off of mostly young workers had developed within the 620-store chain.

A crack down has been promised on stores operating “visa factories” in which overseas students are “sponsored” to attend colleges linked to 7-Eleven stores. The visas were “sold” to students for between $25,000 and $70,000 and the indentured employees forced to work for half pay in the convenience stores to wipe out their debt. Greens federal member for Melbourne, Adam Bandt, has established a Senate inquiry into the developing scandal and the company has set up its own probe headed by former Australian Competition and Consumer Commission chief Allan Fels.

“I encourage current and past 7-Eleven workers as a positive signal to lodge a claim if they have not been paid fairly,” Professor Fels said recently. It is unlikely many will take up the offer. Employment Minister Eric Abetz won’t back calls for an amnesty for overseas students who may have been in breach of the 20-hour per week work limit. Such an amnesty would allow them to spill the beans on illegal workplace practices. The low limit on the number of hours that can be worked and the threat of deportation give dodgy employers a very strong whip hand under current arrangements.

Franchise holders have been attending meetings across the country to hear reports from 7-Eleven and to vent their grievances. As the Four Corners program pointed out, the convenience store and petrol station business model usually won’t work without drastically underpaying store workers. The income pie has 57 percent going to head office and 43 percent to the franchisee who then pay wages and other costs. The franchisee only keeps 1c per litre of petrol sold. Stores with little walk up trade are not permitted to open fewer than the mandated 24 hours a day. Bottom of this nasty pecking order are the workers who toil away, sometimes for as little as $10 an hour, way below the legal ordinary minimum wage rate of $17.29.

Federal government’s crooked stance

Franchises often fail. The “churning” of franchisees makes $140,514 on average for the company. The system as it stands has made some handsome profits for 7-Eleven and some personal fortunes along the way. Fallout from the Four Corners program has seen chairman Russ Withers, chief executive Warren Wilmot and general operations manager Natalie Dalbo resign their posts. Incoming chairman Michael Smith says he was surprised at how the current scandalous situation had developed.

“There’s a kind of Petri dish of factors all acting with each other. One on their own could not have caused it all. You’ve had a bit of a boiling frog,” Mr Smith said.

“A week ago I could have walked around these city blocks ignorant. I can now walk around here and say ‘underpayment, underpayment, underpayment’.”

Low wages and substandard workplace conditions should come as no surprise to the federal government. It was warned long ago about the abuse of type 457 and 417 visas, that they would be used to undermine local wage level and standards. A joint Fairfax Media and Monash University study has shown that 80 percent of ads targeting workers and students from overseas were offering wages below legal rates. The figure is conservative because some many don’t give pay details.

The study showed how middlemen operate in this shadowy sector of the labour market. Some workers get as little as $4 an hour once various parasites have taken their share. These aren’t rare examples. At the end of last year there were 750,000 overseas workers in Australia, mostly on student, working holiday and 457 visas. That figure has more than doubled since 2000.

A large proportion of that number are victims of the shonky practices coming to light thanks to the efforts of Four Corners, trade unions, well-placed whistle-blowers and brave employees. The hapless workers are being used as a battering ram against current pay rates, including penalty rates.

The Turnbull government is not “resetting” its industrial relations policy in the sense of taking a more moderate stance. Turnbull and Resource Minister Josh Frydenberg are increasing the frequency of the attacks on penalty rates and the minimum wage, backing the axe-wielding recommendations of the government’s Productivity Commission. They want the employers to know they are not “timid” about industrial relations “reform”, i.e. attacking the living standards of workers in Australia to increase profits.

We say fight back

The producers of the Four Corners program have been inundated with, mostly anonymous, tip-offs about other employers engaging in practices similar to those of 7-Eleven. Mountain Bread in Melbourne has been found to be grossly underpaying production line workers. National burger chain Grill’d has managed to pay flat hourly rates of $9.50 for juniors and $17.70 to adults under agreements involving mandated traineeships. The latest revelations have revived memories of the super exploitation of migrant workers at Baiada poultry processing plants. Workers see injustice. Turnbull and the bosses see lots of downward pressure on pay rates, penalties and workplace conditions.

Unions are promising a determined grassroots campaign, along the lines of the Your Rights at Work campaign deployed in the lead-up to the 2007 federal election, to defeat the latest attacks. It is in the interests of all workers to get behind such a campaign and, additionally, to ensure that it stays independently committed to the fightback on trade union, workplace and other democratic rights.

Next article – Editorial – Profiting from abuse and misery

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