Be Careful What You Wish For

Last week the Fair Work Commission ruled in favour of putting a floor of $25.41 per hour in the award for pickers in the horticulture sector.
The move effectively abolishes piece rates where workers are paid based on how much they pick rather than an hourly rate.

The Commission found that a “significant” proportion of pickers earned less than the national minimum wage.
The totality of the evidence presents a picture of significant underpayment of pieceworkers in the horticulture industry when compared to the minimum award hourly rate.

AWU national secretary Daniel Walton said it was one of the most significant industrial decisions of modern times.
National Farmers Federation CEO Tony Mahar said “the risk of putting a minimum hourly wage floor price on piecework rates is that growers will see productivity and the pool of suitable workers drop in the midst of an already chronic labour shortage brought about by Covid border closures. Employment is the number one expense for many growers, at as much as 66% of their operating costs, and any significant increase to that could see businesses fail.”

One problem with a minimum wage is that over time they tend to become a maximum wage. Rewarding poor performers tend to demotivate high performers and eventually, everyone turns up and produces the minimum they can get away with.
Employers that have to pay more for their worst pickers will now have fewer funds available for their productive pickers that made well above $25.41. This will result in the productive workers looking for other opportunities.

It is also likely that some of the workers who have been receiving less than the minimum wage were happy to do so.
Maybe this was a better option for them than sitting at home doing nothing.
If they weren’t happy they could always go and work somewhere where there is a minimum wage.

It will be particularly interesting to observe the impact of this change.

 

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