Wage theft “rampant” across Australia

Australian workers are being underpaid nearly $850 million a year, a new analysis by the McKell Institute has revealed.

The McKell Institute analysed Fair Work Ombudsman business audit campaigns dating back to 2009, finding an average of five wage victims per business who ended up being repaid $610.83 each.

Over 40 per cent of the businesses audited fell afoul of the Fair Work Act, while more than a quarter recorded breaches of monetary obligations such as award rates and agreements.

Extrapolated across Australia, this equates to 269,728 businesses collectively ripping off more than 1.3 million workers, or roughly 11.5 per cent of the country’s workforce, a collective $847.25 million annually.

Ed Cavanough, CEO of the McKell Institute, said estimates were at the lower end, because the analysis did not account for cases where workers were underpaid against appropriate award rates or the incorrect payment of penalty rates.

“The analysis puts a conservative figure on the cost of wage theft that is rampant across Australia, equivalent to a 0.01 per cent loss in GDP.

“The total amount of actual wage theft is likely much higher. This is an extraordinary amount of money being stolen, and it’s unacceptable. Being unaware is not an excuse. The onus is on employers to understand their obligations to their employees.”

The economic cost of this wage theft has been calculated to be $330 million, with the McKell Institute’s findings based on an International Monetary Fund analysis of economic multipliers that found every $1 increase in Australian workers’ pay results in a 39c boost to the economy. 

“It shows why we need strong laws to criminalise wage theft, like the protections being pursued through the federal government’s workplace reforms.”

Looking across the country, NSW accounts for nearly a third of lost wages – $306 million across more than 500,000 workers. In Melbourne, over 28,500 workers missed out on nearly $17.5 million, and Brisbane lost $12 million in wage theft.

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