After years of scandals, wage theft remains a key part of the way Australia does business

We haven’t heard a whole lot from BHP about how terrible Labor’s industrial relations reforms are — specifically its “same work, same pay” crackdown on the abuse of contractors — since it was forced to reveal one of Australia’s biggest wage theft scandals last week: the underpayment of nearly 30,000 workers, to the tune of more than $400 million. They don’t do anything by halves at “the Big Australian”.

BHP’s theft from its workers is second only to the one admitted to by Woolworths — the Fresh Food People are now looking at more than $750 million in compensation.

BHP graciously “self-reported” its theft to the Fair Work Ombudsman (FWO), whose website maintains a regular, sometimes daily, drip of examples of employers, usually small fry and often hospitality industry, whom it has busted for stealing from workers. But the phenomenon persists at all levels. A week ago, FWO chief counsel Rachel Volzke ripped into universities, which she said have engaged in “entrenched non-compliance” and systematically underpaid staff.

Then there’s the Reserve Bank, which not long ago had to apologise for underpaying staff, making a mockery (if it needed it) of governor Philip Lowe’s lecture to workers to just work a few more hours to meet higher mortgage payments.

This has been going on for years — it was back in 2015 that the ABC and Fairfax shone a light on 7-Eleven’s outrageous wage theft. Ever since, a steady stream of major employers, including the ABC itself, have either been outed or fessed up that they’ve ripped off their staff. At a time characterised by low wages growth, it was scandalous. Given freefalling real wages, it’s now, well, criminal.

The FWO has consistently shown that it’s migrant workers and younger workers who are at the sharp end of wage theft. The Grattan Institute showed the shocking extent of exploitation of recent arrivals in a report two weeks ago by Brendan Coates, Trent Wiltshire and Tyler Reysenbach. They found that 5-16% of employed, recently arrived migrants were paid below minimum wage. And not by small amounts either: 1.5-8% of recent migrants are underpaid by more than $3 an hour.

Tens of thousands of migrant workers are being underpaid, on top of the persistent level of underpayment of Australian or long-term resident workers, of whom 3-9% are paid below minimum. And as the authors note, despite a ramping up of FWO enforcement activities, bad-faith employers appear undeterred.

The Grattan report offered a dozen recommendations for changes to migration law and migration agencies to curb this systemic abuse, in addition to other legislative changes and a dramatic beefing up and refocusing of the FWO. But the best part of the report is the way in which the authors explore the mindset that seems to enable the persistence of systemic wage theft across employers large and small, private and public.

Compared to other corporate abuses like breaches of competition law or tax evasion, we simply don’t take wage theft seriously as a regulatory issue. The report points out:

The ATO and the ACCC can both require a person to give evidence. By contrast, the Fair Work Ombudsman must apply to the Administrative Appeals Tribunal to issue a notice to give evidence. The Ombudsman has limited powers to issue fines … By contrast, the ACCC can fine businesses for breaches of the Australian Consumer Law, and the ATO can fine taxpayers for making an untrue claim on their tax return (and paying less tax as a result) … The size of penalties the Ombudsman can issue is also much smaller than for other regulators.

The disparity in regulatory tools, enforcement powers and penalties pointed out by the Grattan team sends a clear signal: we simply don’t see wage theft, which in the case of Woolies and BHP can dwarf tax evasion in financial cost, as serious as other corporate crimes.

Labor this week announced reforms to address the systematic exploitation of migrant workers, including criminalising coercion of visa holders, banning wage thieves from hiring temporary visa holders, expanding penalties and strengthening compliance tools. The Australian Border Force will also gain additional funding. Employer groups have already attacked proposals to criminalise wage theft, insisting that, hey, it’s all very complicated and criminalisation is “unduly punitive”. (Criminalisation does indeed tend to be “punitive”, so fair point.)

It’s a good start, but the entire regulatory mindset around wage theft needs to be shifted to the point where employers regard stealing from their own workers as not an embarrassment but a humiliation, and a crime for which there are real consequences, including serious penalties.

Nothing else will shift what is an entrenched feature of how we do business here, and not just in corporations.