Goods, Services Could Cost More After Gig Economy Reform: Workplace Minister Admits

Goods, Services Could Cost More After Gig Economy Reform: Workplace Minister Admits
Employment and Workplace Minister Tony Burke speaks during the jobs and skills summit at Parliament House in Canberra, Australia, on Sept. 1, 2022. (Martin Ollman/Getty Images)

Workplace Relations Minister Tony Burke has admitted that setting minimum pay rates for gig economy workers—like Uber drivers—will result in higher costs for customers.

“Well, underpaying people is cheaper. Yeah, it is. Slavery is probably cheaper; too,” he told the National Press Club on Aug. 31.

“We are talking about some of the lowest paid people in Australia and if that means there is a tiny bit extra that you pay when your pizza arrives at your door, and they’re more likely to be safe on the roads getting there, then I reckon that’s a pretty small price to pay,” Mr. Burke said.

Under Labor’s proposed law changes for the gig economy, workers would be eligible for minimum wage rates and be protected against “unfair deactivation.”

The amendments would also empower the Fair Work Commission to set employee-like terms and conditions for gig workers, and for the body to step in and resolve disputes.

Business leaders have been quick to warn against the proposed reforms, saying it would only cause uncertainty for the business environment and inflate costs for consumers—already struggling with the ongoing cost of living crisis.

“There is nothing in the federal government’s latest workplace relations proposals that would create a single job, add to job security, drive sustainable wage growth, raise productivity, encourage a person to start a business, encourage an employer to grow their business or would simplify our complex workplace relations system,” Australian Industry Group (AIG) CEO Innes Willox said.

Labor’s reforms would also introduce a “Same Job, Same Pay” rule wherein labour-hire contractors could receive the same pay as direct hires doing the same job at the same place.

Mr. Willox and Business Council of Australia (BCA) CEO Jennifer Westacott said the move would only discourage the expansion of businesses and limit employment opportunities for people.

“Indeed, given the labour market constraints flowing from shortages of both skilled and unskilled labour that are operating as a brake on our economy, it would be bordering on reckless for a government to implement a measure that makes it harder for businesses to secure the labour they need,” Mr. Willox said.

Mr. Willox noted that this would also significantly disrupt the economy and put the viability of many small and medium-sized enterprises at risk because they could not afford to pay the rates major employers often provide.

“These changes will create confusion and extra costs for consumers, make it harder to hire casual workers, and create uncertainty for employing anybody,” Ms. Westacott, meanwhile, said. “Any government that’s serious about the cost of living would not do this.”

Push to Convert Casuals to Full Time

The Labor Party also wants to require employers to convert casual employees who have been employed for 12 months and have worked a regular pattern of schedule over the last six months into permanent staff.

“The big risk is that any changes will create so much uncertainty and risk for employers that they will be forced to curtail their use of casual employees or refrain from offering them regular work going forward. Nobody wants that—apart from the union movement,” Mr. Willox said.

Ms. Westacott said that businesses need a setup that would promote development and not send the economy backward.

“We need a system that drives productivity, not stifles it because that will stifle wage growth. The case has not been made for this radical shake-up.”

She added that her group wants the government to show any modelling and risk assessment it took for the proposed reforms, which would be introduced to Parliament on Sept. 4.

“We agree with the minister and want a serious policy debate. But a serious policy debate will produce the evidence, it will explain how widespread the loopholes are, then it will be clear and unambiguous how these ideas will solve the problem,” the BCA head said.

“The Senate should take its time with this and do this properly, engage small business and regional communities, and undertake its own modelling and risk assessment.”

Decision Comes As Businesses Struggle

In June, the Australian Bureau of Statistics (ABS) reported that a total of 15 percent or 386,392 businesses exited Australia in 2022-23.

The ABS also said that the number of non-employing businesses grew by 2.3 percent, with a net movement of 35,509 surviving businesses from employing to non-employing.

National Retail Association CEO Greg Griffith said that the figures reflect the difficult market conditions Australian businesses are currently facing amid lower consumer spending as the cost of living increases.

“It shines a light on how difficult it is out there in the retail sector, particularly for the smaller retail businesses,” Mr. Griffith told ABC, noting that small retail businesses are about 51 percent of Australia’s gross domestic product.

“So the exiting of some of those smaller retail businesses shows it’s pretty tough out there.”