Jennie George’s Speech To The Australian Hotels Association

I particularly welcome the opportunity to speak at this meeting of employers in the hotel and hospitality industry because of the very important role which your industry plays, and will continue to play, in the Australian economy and labour market.

Projections prepared for the federal Government in 1995 showed an expectation that industry output in hospitality would average five per cent per year, compared to 3.5 per cent for the economy as a whole, and that hospitality industry employment growth would be almost twice that of the economy as a whole.

To look at the hospitality industry is to see reflected the major changes which have occurred in the structure of employment in this country:

While for many employees in the hospitality industry, their job is seen as providing an income supplement while studying or raising children, there has also been an increased focus on hospitality as a career, as can be seen by the growth in formal training both on and off the job.

The development of the hospitality industry has many benefits for Australia generally, as well as for those working within the industry, but we need to take care that the hospitality industry is not used as a Trojan horse to weaken or destroy the fundamental standards of our way of life.

I am sure that no-one here wants to see the bulk of the Australian workforce locked into part-time, low-paid jobs, with the development of an army of working poor, as in the United States or, increasingly, in Britain.

In that context, it was disappointing that the Industrial Relations Commission was not prepared to address the problem of growing wage inequality in its recent decision in the Living Wage Case. Clearly, the Commission was spooked by the Reserve Bank into ignoring evidence that the economy could have easily sustained an increase of $15 per week or more. Wage increases, it seems, are held solely responsible for inflation and unemployment, with fairness an inconsequential consideration.

For the hospitality industry, the rate of exchange for the Australian dollar, which affects the cost of our goods and services, are more significant for overseas tourism than domestic wage increases, and it is well understood that reductions in disposable income will most quickly be reflected in discretionary spending on accommodation and eating out.

The ACTU is concerned that the Howard Government’s commitment to labour market de-regulation will lead us inevitably to that point. There have already been hints from Mr Howard that, should he win the next election, there will be a “second wave” of industrial relations legislation, designed to further weaken the legislative system of protection for employees with little bargaining strength.

Under the current legislation there is significant scope for employers, particularly in the lower-unionised small business sector, to reduce terms and conditions of employment.

The introduction of Australian Workplace Agreements, allowing employers to present employees with standard form so-called agreements will, in some cases, lead to replacement of standard award conditions with inferior variations. The reality is that individual employees do not have the information, the confidence or the bargaining strength in these situations to do anything other than accept what is offered.

I know that there is a strong view from some employers in the hospitality industry that wages, and penalty rates in particular, are an unacceptable impost, particularly given the round-the-clock nature of the operation of the industry.

The union movement does not have an inflexible view in relation to issues related to hours of work, but we do have, as a fundamental principle, a commitment to ensuring that employees are not worse off.

As Mr Howard put it before the last election, no agreements should be allowed which would leave workers earning less than they would have earned doing the same work and working the same hours under an award.

This is fundamental, both in the interests of fairness and because we don’t want to see the growth of the hospitality industry based on a workforce paid less than other Australian employees.

Not only would this be inequitable, but it would not assist the development of professionalism or career structures in the industry.

Hospitality industry workers, mainly I guess because such a high proportion are employed on a casual basis, are less likely to receive benefits such as superannuation, holidays, sick leave or long service leave. The average wage for an adult full-time employee in the industry is $567.30, compared to $723 in the workforce generally.

I have heard it seriously suggested that tipping should replace proper wage setting in our hospitality industry, with it being argued that this would make employees more concerned about standards of service.

I think that it would be a very sad day indeed, if Australian employees were driven to rely for their livelihoods on acts of individual generosity from customers. In any event, freedom from a regime of compulsory tipping is one of our attractions for overseas tourists.

There are no barriers to employers negotiating for greater flexibility, particularly at the enterprise level, as long as the basic premise that employees must not be worse off is accepted.

The limitation in the Workplace Relations Act on the Industrial Relations Commission’s ability to set minimum or maximum hours for part-time employees is a real concern in that context. Much will depend on the nature of the safeguards inserted into awards to ensure some regularity in working hours, but the legislation will undoubtedly encourage employers to employ an even higher proportion of employees on a part-time basis, with a greater capacity to increase or reduce hours as needed.

Some of you might welcome this development, in the interests of achieving greater flexibility, at least for the employer. In many cases, such flexibility would be implemented taking into account the needs of employees, but there will not necessarily be a requirement for this to occur.

There is a great deal of evidence to suggest that flexibility in working hours creates enormous difficulties for employees with family responsibilities; mostly women, given the fact that they generally take primary responsibility for arrangements concerning children.

Reductions in hours means lower income; this is a problem for most employees in a low-paid industry, but when fixed child care costs are considered, it can be catastrophic. Childcare arrangements are rarely flexible; parents are required to pay for a certain number of hours and these are generally impossible to vary.

Changing hours of work are also a problem for employees with commitments such as study or another job, frequently necessary for economic survival where only part-time hours are available.

The relatively low level of enterprise agreements in the hospitality industry is regrettable; I’m not sure if that is because parties have been unable to reach agreement or because there is simply not sufficient interest. I am told by the Liquor, Hospitality and Miscellaneous Workers’ Union that it is keen to negotiate at the enterprise level.

I would certainly want to encourage employers and the union to enter into enterprise bargaining discussions and attempt to address issues of concern in that way. The ACTU is available to assist if the parties believe this might be useful.

I put this emphasis on the benefits of enterprise bargaining because the alternative, a sterile and costly award stripping exercise, can only damage relationships at the workplace, as well as between employers and unions generally.

The ideological basis of the Government’ changes to our industrial relations system, reflected in the Workplace Relations Act, can be seen in Industrial Relations Minister Peter Reith’s recent exhortations to employers to make use of its provisions to weaken unions and reduce employment conditions.

I understand that the AHA is one of the employer organisations which has applied to the Commission for a comprehensive stripping back of its award.

I am not aware of the details of that application, and I’m not here to talk about it.

But I do want to urge on the AHA and its members an approach which is not focussed on attacking the award in the Commission. Experience tells us that the results, from either party’s point of view, are unlikely to justify the time and cost involved, not to mention the wasted opportunities for real change at the workplace, lost while everyone waits for the Commission to solve all their problems.

The recent application by the AHA for phasing in of the $10 arising from the Living Wage Case is an example of the weakness of such an approach, which sends all the wrong signals, while having no real chance of success. Material prepared by the Australian Centre for Industrial Relations Research and Teaching and tended during the Case showed that 27.8 per cent of employees in restaurants, hotels and clubs could be characterised as low-paid (that is, receiving less than $9 per hour) compared to 12.4 per cent of the workforce overall.

In his minority decision, Vice-President Ross came to the conclusion that “the bulk of low paid employment is concentrated in wholesale/retail trade and the hospitality sector”.

Is the AHA really suggesting that wages in the hospitality industry should fall even further behind the rest of the Australian workforce? Is that your message to employees? I think this is not the case, given the industry’s commitment over recent years to improving the training and skill development of employees.

It would seem that the relationship between the union and employers generally (with a number of significant exceptions) has deteriorated significantly over the last decade or so, and is reflected in a decline in unionisation levels in the industry.

The reasons for this are varied, and differ in nature and extent from state to state. The blame cannot be sheeted home entirely to either party. It should also be noted that the picture is not entirely one way, and that a number of significant employers continue to build positive and rewarding relationships with the union, reflected in enterprise agreements.

Nevertheless, I believe that it is in the interests of all parties to improve the relationship and recognise that a positive partnership between employers and the union will have benefits for the industry. The AHA, given its strong position and credibility with employers, can play an important role in building this partnership.

The hotel industry has faced strong challenges in recent years, in particular caused by the shift to off-licence consumption of alcohol, and the lessening of restrictive liquor licensing, allowing for much stronger competition from restaurants and clubs.

At the same time, the growing trend towards eating outside the home, the development of tourism, including overseas tourism, together with the introduction of poker machines and other forms of gambling, have created new opportunities.

My colleague, Bill Kelty, draws an analogy between the position of the pubs and that of the union movement. When you think about it, both are traditional working class institutions which have been greatly affected by changes to how we live. Once upon a time, young people left school, went to work, joined the union, and stopped off at the pub on the way home (men did, anyway).

Changes to educational and employment patterns, family and social life have been beneficial in many respects, but they have created challenges for your industry and for the union movement. We have both had to adapt to changing community demands.

I don’t want to take the analogy to absurd lengths, but I do want to make the point that none of us can remain prisoners of the past. We have a joint interest in the further growth of the industry on the basis of proper employment conditions and professional standards.

We have seen the industry develop more of a career focus for young people, rather than being seen as a short-term transitional occupation or an indication of failure. Since 1995, more than 5000 young people have taken up traineeships in the hospitality industry, combining work with on and off the job training, with the industry exceeding its target in each year.

I am told by the union that it is currently involved in negotiations which will place an additional 12,000 trainees in the industry.

More needs to be done to build perception of the industry as one in which employees can be proud to work, and which provides conditions of employment comparable to other occupations.

In this context, I am very concerned about the effect in the hospitality industry of the Government proposal in relation to opting out of superannuation. Put simply, the proposition is that an employee earning between $450 and $900 per month, will be able to choose to opt out of superannuation in favour of a cash payment, if the employer agrees.

Given the high proportion of part-time and casual employment in the hospitality industry, a large number of employees are likely to be eligible to opt out. Apart from the administrative problems for employers, which are considerable, the proposal reinforces the notion that hospitality industry employment is not long-term and that employees do not need to think about the future. It’s that perception we need to change, and I think we can work together to do it.

The development of superannuation has been very important for Australian employees; as you would know, only a handful of employees in the hospitality industry had access to superannuation prior to 1987, and this is not an achievement which we should allow to be destroyed.

I know this goes against the fashionable rhetoric, but I believe that the union movement has a continuing relevance to Australian employees and to the community generally.

I am the first to acknowledge that unions need to change in order to properly address the challenges of the structural transformation of the Australian economy.

The role of unions in the workplace is enhanced by the emphasis on enterprise agreements in the new legislation. I would like to reiterate my view that change benefiting employees as well as employers is achievable through the enterprise bargaining process and that you should all give it a go. I am sure that you will find the LHMU receptive, and, as I said earlier, the ACTU will be very happy to assist.

I wish you all the best for a successful Convention, and a future in which you continue to contribute to employment and economic growth for the benefit of the whole community.

Speech By Jennie George, ACTU President, To AHA National Convention, Gold Coast – 4 June 1997