"What is fair pay for hospitality workers?"

The author did not answer his own question.

In order to justify his assumption that there is a difference between the fair rate of pay and the market rate of pay, he needs to identify the principle by which the difference between the fair rate and the market rate could be ascertained. It is no use assuming, as he does, that the "legal" rate represents the fair rate as against the market rate. This only begs the question what principle the central planning officials used in determining what is fair. Why is their estimation necessarily fairer than that of the paying public, whose valuation of restaurants' services determines the value that the entrepreneurs set on the factors of production?

The argument over the fair rate of pay is essentially a re-run of the mediaeval debate in the church about usury. The idea was that there is a difference between the market rate of interest and the fair rate of interest. After 1200 years of scholars chasing their tail, they ended by concluding there is no rationally knowable difference between the market rate and the fair rate. The market rate is the agreed rate; the "legal" rate is the coerced rate. It is the agreed rate that is fair, not the coerced rate.

Why didn't the author simply work where his pay would be higher? If the answer is, because where he worked, of all places in the world, paid him more than anywhere else considering the value of the services he was able to offer, then he has no ground for complaining that his pay was unfair. Compelling the services of restaurants to be more expensive for everyone else is certainly not fairer.

Peter Hume is right. I cannot add to his helpful rerun of economic history (though some 55 years ago I did have to write an essay on 'the fair price of wheat'). Let me just say that of course the hospitality worker thinks he is paid too little. And of course the boss thinks she is paying too much. What else could one possibly expect? The marketplace, which is the end result of the thousands of relevant decisions made daily in that sector alone, is precisely where their disagreements reach a conclusion. Not that I expect anyone will be swayed by that argument, which is the primary point of entrenched difference between the main sides of politics today and people don’t easily change their minds.

Right, so both of the previous posters are advocating employers simply breaking the law and paying lower than award wages.
Amazing the double standards when it comes to economic rationalism - ignore the law and let the market dictate. Take what you can get and keep the workers down.
That ethos seems to have created a few problems in places like the USA where the economy has crashed due to greedy people in positions of privilege exploiting their positions.
Great, timely article... its one of the great contradictions of the 'lucky country' that we are all happy to drink our latte's while workers are kept in abject poverty...

Another one. I don't get paid enough for what I want to do, or, I don't get paid enough for the only job going, that I can do.

Tanel, assuming he is an Ozzie, is a primer example of what is wrong with our higher education system.

Someone studies a subject of choice, either because it's easy to pass, or of interest to them. The public pay a fortune for this study, & what do we get? A bloke who can't get a decent well paying job, because there's not much offering in that line. How can we get prospective students to do a bit of research on the prospects of employment after graduation?

Next we get this bloke, educated at our expense, wanting us to pay more for something, so his wages can be higher. For gods sake, go learn to drive a truck!

Tanel, the bird has come home to roost. You chose what to study. If that has not led to well paid employment, that's no one else's fault but your own. Get on with it, or go get some skills that are more valued by the community.

Meanwhile, just stop winging.

Hasbeen, in his usual ill informed style says 'go drive a truck', and what does a truckie get paid?

Peter Hume, in his usual style, blathers on as if he were a two bob philosopher.

The market rate is the legal rate, if this is to be a nation run according to the rule of law and not some halfbaked Ayn Rand-Margaret Thatcher style bear pit.

I note that the whingeing cafe owners made no comment about their high rents as being a possible source for reductions, as with the Hardly Normal and Dick Smith style of babblers when it comes to paying GST on imported junk that retailers have no idea how to sell to us.

I hope the author knows that he, and all other workers, need to keep a work diary of the actual hours they worked, and their pay slips, such as they may be, and they can then retrieve their unapid wages and penalties back six years, once they have left their thieves of bosses.

Here, as with many other areas, the trade unions have failed to unionise the industry, which has encouraged deciet and cheating.

If the Humes and Hasbeens want to eat out, they need to pay the cost and not expect their waiter to be subsidising their night out.

That would make them bludgers.

[Deleted for abuse.]

For someone who has had "4-years hospitality work experience in Melbourne", the experience clearly didn't tell him much about work.

A centrally-planned wage structure is never going to please everybody, since it has been arrived at through a series of generalizations, assumptions and compromises on both sides. To imagine that it will not be the direct cause of both sides to complain "we're hard done by" is to ignore reality.

Here we have a worker, complaining that he is badly paid, and that many restaurant owners are flouting the law. We also have a restaurant owner saying that keeping within the those laws is causing him grave management problems, in balancing service in his establishments with the need to make a profit.

The consistent thread is therefore that the law does not work as it is intended. We now need one more contribution, that analyses the law's failures to both sides, and proposes a better solution.

But as we know, actually thinking through a problem and coming up with an answer is far too hard. And anyway, someone else should do it.

By the way, this is not a good look:

"Business owners get hit with these costs, but it is not fair to pass these costs on to workers"

Better by far, I suppose, for the business owner to go out of business entirely, than to pass on the costs of doing business to those involved. Unemployment is clearly being proposed as an attractive option, so long as your principles of fairness are maintained.

[Deleted for abuse.]

[Deleted.]

[Deleted.]

I have no problem in paying a premium for eating out on a public holiday, Sunday etc, becasue it is my choice to do so. I could easily, and more cheaply, eat at home.

If you want people to serve you, then must pay them for providing that service and you must value that service. If an employer wants staff to work unsociable hours then they should pay penalty rates. If they want loyal and motivated staff then they should employ them as permanent not casual. Expecting good quality staff at cut-price rates is just plain dumb. The employee will not really value the employer in such circumstances - because they will not feel valued.

If we let the industry we'll get the situation, as in the good ol' USA where people can work full-time and still qualify for welfare becasue the wages are so low - in effect the government subsidising particular sectors (which is hardly free market).

"Posted by Phil Matimein, Monday, 16 January 2012 12:05:23 PM"

I am guessing you (and "Blue Cross" with his vitriol) have never owned or run a successful business ?

One of the biggest income earners for the country is Tourism. I guess we can send them over to your place to have you cook them a meal ?

If you have a successful business, do you think you could have achieved success without the employees.
Success in tourism is the quality and efficientcy of the frontline staff, without them the customer does not return.
www.theage.com.au/opinion/politics/biting-the-hand-that-feeds-you 20120115-1q1be.html

*If an employer wants staff to work unsociable hours then they should pay penalty rates.*

Surely Phil, that should be up to the employer and employee to
decide. Not everyone insists on working office hours.

What if employees and employers are quite happy with a 150% rate
for public holidays? Why enforce 250%? At that rate, with today's
low margins and competitive business environment, a great many
businesses would be running at a loss.

Employees have a choice. Take on a different job, learn a different
skill. What is this hoohah that employees should be mollycoddled
and employers should face open competition?

Running a small business is commonly far more stressfull and difficult
then taken on a job.

Speaking as a former small business operator, one can say good reliable staff are the very life blood of a successful business. Simply screwing your own employees; to add a cent or two to the bottom line is arguably self defeating, with staff taking little interest in you or how well your business prospers?
It's the same mentality that sees the answer to any business downturn as imposed higher margins; and then a lot of frustrated head scratching, as the customer base drifts away; to a more competently run opposition, who understands that volume is the answer, not higher margins!
That said, I waited tables as a very young man; and gave my customers the very best service I was able. When offered mere coinage as a tip I simply turned my back in disdain; loudly proclaiming, I was already being adequately rewarded for my services.
Almost inevitably the evening ended as I helped mine host and his or her escort with his/her overcoat etc, with a large denomination note being proffered, which I invariably accepted with a, oh your much too kind sir/madam, thank you!
I can honestly say I made more in tips than I ever took home in wages. Something to think about for those employed in the hospitality industry?

Interesting view, but no idea of how the real world works.

This industry has to be casualized for many reasons. Rain, floods, power outages, sporting events, the list goes on.

Many of these venues take bookings and, if the numbers are Dow, how on earth can they be expected to hire a full crew.

Coffee.
The real price for coffee should be around the $7.00 mark, considering it was about $2.70 in 1985.

GST.
This kills this industry, as, like many other businesses, who can quote a price, then add GST, this industry can't. Why? Because it would make governments look bad.

A typical rest today has rent and expenses, about 20%, food cost, 28%, wages about 35% and GST 11%.

Add these up and that leaves about 6%, and that's assuming they have zero waste.

Now when you add an additional 35 to 50% for wages, as penalty rates, the end result is no business.

This is an industry that if fed by reality TV shows, as everyone wants to have their own rest/cafe.

They take all day to prepare a meal for 5, yet, they have to be able to prepare meals for 100, in about a three hour window.

There is a solution to all this, and that's to allow a surcharge on weekends and holidays, but in QLD at least, that is illegal.

Of cause the government just says to have a second or even a third menu, yeh right, at $5,000. Pop.

The solution to the high penalty rates in the award system is simple. Keep importing Chinese and Indians to replace Australians in this industry.

The Chinese and Indians will continue to import their workers from China and India, and God knows what they are paying them. Two sets of accounting books are easy to keep. That Chinese and Indian workers are being underpaid and exploited can easily be deduced by the number of incidents involving Chinese and Indian workers, where immigration officials have found blatently illegal practices.

How about the Chinese construction worker who was seriously injured at work in Sydney, and was sent to hospital in an ambulance? His Kongsi henchmen simply marched into the hospital, dragged him out of bed, marched him to the airport, and put him on Cathay Pacific flight while he was still in his hospital pyjamas. Problem solved. Who needs workers comp. insurance? No wonder the Chinese do so well in business in Australia.

Or the Indian workers, imported from India, found to be working 7 days a week, and living in shipping containers, on one Indian building site in Parramatta?

No wonder both Liberals and Labor support immigration. The Liberal Party gets to destroy the award system, and the Labor Party gets to import its future voters. The only victim is the Australian worker, and who cares about them?

Lego, the Australian worker has made that rod for their own backs.

Few can deny that our lifestyles today are far more extravagant than they were 40 years ago.

We all have mobile phones, most have plasmas, several in fact, computers, the list goes on.

Well, these all generate costs that were simply no existent 30 to 40 years ago and, as these contribute to our cost of living, wages have been increased to meet at least some of these costs.

You see, businesses expect a return on their investment, and rightly so.

Assuming you were offered a new job, which meant that you needed to pay say $80 per week for parking and use an additional $50 per week in fuel. That's an extra $130 out of your pocket.

Now would you take that new job, if it were identical, but only paid you the extra $130 per week, involved the extra travel etc.

Well of cause not, so why should a business do the same.

Is it unreasonable that if a business pays an extra $500 per week in wages, that the owner should at least get extra for themselves.

Well, this is the problem.

Most people forget the one basic rule, wages come from profits, nothing else!

No extra profits, no extra wages.

Now how is that unfair?

The fact of the matter is, we want a 7 day lifestyle, but don't want to pay for it.

The result will be the closure of many cafe/rests if the laws don't change.

The average punter assumes that just because a cafe is open, it makes money.

The reality is that most have a lease and may loose their homes if they walk.

As long as the hospitality & retail industries are not quality of qualification based we can't expect customers to fork out fairly. I grew up in a place where being a shop assistant or a waiter had to attend trade college for 4 years. The end result was great service rather than just getting the customer to pick up some crappy pizza when a buzzer flashes in front of you or just lumping all kinds of food together in one bag. Again, as with so many other issues it is a mentality thing.

Indi, one the hardest trends to hit this industry, here in QLD at least, was the introduction of the pokies.

Pubs and clubs all of a sudden used a portion of the pokie revenue to subsidize cheap meals, which meant that to compete, outsiders had to come up with their own ways to minimize costs.

Rent, power etc was fixed and forever increasing, wages also, so the only thing left that could be trimmed was staff numbers/quality and food costs.

The worst rests for profit are quality seafood, with steak houses close by.

The large number of Itailian style rests has not happens by luck, more it has been a case of have to.

A gourmet pizza costs around $3.50 to make, a plate of risotto, less than $3.00 and pasta about the same.

Even Chinneese rests are suffering a bit now due mainly to the cost of fresh veg.

Of cause, if you choose to dine in a rest with entres at $23, and man ins at $48, you generally get great service.
the choice is yours.

rehctub,
I don't have any issue with your statement. I was in Cairns recently & went to several places where reasonable $10 to $15 good quality food was served. I observed that mainly middle-aged patrons were tourists. I realised that most of them ate their meal & left. I spoke with two couples afterwards & found that they, like I would have stayed to have a few relaxing drinks were it not for the idiotic head-banger band starting to make a noise which to which the sound of an engine would have been preferable. that management did itself a huge disfavour by having these three morons bagging & rattling away at their instruments. that happened in every establishment I visited. No wonder they don't make enough money.

Well indi, I hate to disagree, but it's the young one who these venues are targeting, because they are the ones who spend like there is no tomorrow.

Drinks is where the money is, not food.

Firstly, food requires cooks, kitchen hands, dish washers, waiters, and floor staff, whereas drinks require a bar person and perhaps a cellorman if required.

A $9 meal usually nets about 50 cents, whereas a $9 drink nets about $6 to $7.

No need to do the math.

It amazes me how BYO places survive, or more importantly, why they don't have a licence.

Now back to the noisy joints, how many young ones were ordering a meal or dining?

how many young ones were ordering a meal or dining?
rehctub,
that's the weird thing, there weren't many young ones so to speak. I was amazed at the failure of the management not to be able to read the mood & offer accordingly.
Same goes for the many junk shops. Every shop is selling the same junk, no wonder the money doesn't flow. Why would a chinese tourist want to spend $30 on a souvenir from Cairns when it was produced in China for a couple of bucks ? The Pier which was heralded as the shopping place in Cairns became a ghost house after just two years. They keep building new shopping centres which only serves to send another one broke. No-one wins & the taxpayer is constantly footing the bill.
Another killer in the hospitality industry is that insane ruling of drinking & dining times. You can't get a meal anywhere after 2 o'clock in the afternoon & before 6 in the evening. Those stupid licensing laws need to be gotten rid of if we want to improve our hospitality industry.
You have to provide hospitality if you want to participate in that industry.

Indi, with all due respect, Cains is a basket case at present.

As for the venue reading the people, I am with you to some degree.

My wife and I often comment on a band when they are playing what we consider great tunes, only to change to something nobody there at the time likes, resulting in the dance floor being instantly vacated.

Another time I was at a surf club watching my beloved broncos flogging Newcastle then, with about ten minutes left the band started to play and drowned out the footy, which by the way was being watched by about 100 or so people, most of which vacated when management refused to delay the band for ten minutes.

At the end of the day, I don't think most people understand just how hard this industry is.

Now as for shopping centers, yes, I fully agree.

Unfortunately, shopping centers are only governed by land use, nothing else.

Common sense would suggest that population, or at least, catchment numbers would be the critical trigger.

It's a dog eat dog world in retail.

Sadly though, many of those empty shops come with a broken family, loss of assets and even loss of lives in some cases, as it just become too hard for many.

rehctub,
obviously Federal & State Governments are not in tune with daily life in the country, why else won't they reduce red tape & insane fees & licensing ?
I for one would employ a cleaner or someone to do other tasks which I can't neither afford nor do but if I could pay someone out of a percentage of my Tax were it reduced. The same goes for millions of citizens & these millions could employ hundreds of thousands.