Gottliebsen: Pay shake-up looms for retailers

ROBERT GOTTLIEBSEN
September 5, 2017
The Australian

Australia’s large retailers, including fast food outlets, are all turning towards Coles to establish a pattern for their wage settlements.

And the clear message they are getting from Coles is that enterprise bargaining has become too hard.

In the first half of 2018 it will almost certainly be “back to” award wages at Coles. Given most retailers will then follow Coles, enterprise bargaining is set to decline rapidly and be replaced by national awards. 

We may even see a return to the 1960s when great orators such as Bob Hawke (ACTU) and George Polites (employers) argued national wage setting cases in public before the Arbitration Commission. 

And my guess is that the 21st century ACTU orators will base their case partly on the basis that profit share has moved out of line with wages share. Accordingly we may see award wages rise at a faster clip than in recent decades.

Most (but not all) of Australia’s large retailers have each signed an enterprise agreement with their workforce and the retail union that provides that Monday to Friday staff receive a 10 to 12 per cent premium over the award but Saturday staff either receive no shift allowance or an allowance well under what the Saturday award provides. Sunday staff receive a shift allowance wage of around 150 per cent when the award says it should be 200 per cent. 

The payments and awards in fast food outlets are different but the principle is the same. With demand swinging towards the weekend these agreements have been of enormous value to large retailers and fast food chains. But a condition of the union signing off has been widespread union membership, which has made The Shop, Distributive and Allied Employees’ Association (SDA) union one of the richest in the land and a major contributor to the ALP.

Given that no worker should be worse off under enterprise agreements (and clearly Sunday and some night workers are worse off) the agreements have been challenged and those challenges have been winning despite SDA union support for the agreement. The cases are continuing and Coles currently operates on its 2011 enterprise agreement because later agreements are no longer valid. This agreement is also being challenged. . 

And when the Fair Work Commission declared it would take retail award shift allowances down to roughly the level of these agreements Opposition leader Bill Shorten took a stand, demanding the official award shift allowances continue despite the union reduction deals that he had been part of before he went into parliament. Given what the opinion polls predict for the next election that was the final blow to retail enterprise bargaining.

The retail industry expects that Coles will now put all of its supermarket positions under the award next year. That will mean a sizeable increase in salary for Saturday, Sunday and some night workers. But, subject to any grandfathering, Monday to Friday workers will receive a pay cut. The word in the industry is that Coles will grandfather current Monday to Friday

employees and they will not receive a pay cut. But any new Monday to Friday employees will receive the award and therefore lower pay. Current employees will be frozen at the higher current pay levels until the award catches up.

There will be a cost to Coles but it’s a cost that will diminish rapidly given staff turnovers and award wage increases. Most other major retailers will quickly fall into line and 300,000 workers will go from enterprise agreements to awards. The number will balloon if fast food outlets follow.

Aldi is an exception. The discount retailer would not agree to an unionised staff so Aldi is not part of the agreements but it also restricts its opening hours. But David Jones, Myer, Bunnings Woolworths, Kmart etc all have a similar agreements to Coles. It was just by chance that Coles was the test case.

Once the 400,000-odd staff in all major retailers and fast food outlets go on the award — where they will be joining smaller enterprises— there will be great pressure for awards to spread around the workforce in place of enterprise agreements. That may lessen worker flexibility.

As Coles found, any enterprise deal that has some workers worse off can be challenged.

Meanwhile the armies of people who work on these agreements will be retrenched unless they become skilled at implementing the award.

A lot more workers are likely to see less need to belong to The Shop, Distributive and Allied Employees’ Association and pay union fees.

As readers will know this is a subject I have covered from the start. Here are a few previous commentaries for readers who want background:

* Many misinterpreted penalty rate cuts

* Unravelling the Coles and Woolworths penalty rate mess

* The coming shake-up of Australian supermarkets