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The Forum > General Discussion > Don't be fooled by so called 'under employment' numbers.

Don't be fooled by so called 'under employment' numbers.

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While there has been an increase in this area known as 'under employment' the reality is there are plenty out there who only get a few hours per week, on the books, but in fact, work a full week with the balance being paid in cash.

Whether it be from the same employer (primarily small business) or a 'top up' whereby they have a registered paid job, then a second/third 'cash job', the reality is this recently new trend has been in reaction to the mountain of red tape small businesses have to deal with just to create a job.

Then there are those who work a full week for a small business, retail and hospitality, smaller builders, the list goes on, yet only have a small amount of hours recorded, with the rest being paid in cash, at normal rates so as to avoid the ridiculous weekend penalty rates, and lets face it, who can blame them.

We then have an emerging trend of small employers flat right refusing to employ someone on the books and will only pay cash, or not employ them at all. There are two reasons for this, one being the employer chasing the cheap worker, the other being the fact that there is too much involved in creating a job and, rather than be rewarded, employers get penalised. It's just too hard for many. They don't have book keepers and are not educated enough to do the admin required, or should I say, demanded.

So don't be fooled by under employment.
Posted by rehctub, Saturday, 21 January 2017 7:21:41 AM
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rechtub,

I have no doubt that it is hard for small business these days; governments seem to take a perverse delight in making life hard for the very people- the only people- who can provide jobs. But, all this 'off-the-books and cash payments stuff has to stop. Only when things are legal and above board can it be clearly shown what is going on, and how it can be stopped. The only business politicians are interested is their own (funny) business.
Posted by ttbn, Saturday, 21 January 2017 11:53:56 AM
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Your Mr Abbott had that all cured that is why you voted for him. He was going to slash red tape. Like i said he was and is a serial liar.
Posted by doog, Saturday, 21 January 2017 1:26:41 PM
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There you go doog, one side of the story again.

Mr Abbott had his hands tied by the senate and you know it.

ttbn, cash payments will never stop so long as it costs twice as much on a Sunday to make a coffee as it does on a week day. Thats just a reality.

Of cause the other side is this. If i want to employ someone for a trial, i first have to induct them. Then i have to have them fill out a tax form, a super choice form, i then have to have my book keeper enter all the data into the system only to find out they are not what im looking for. So its simply not worth it, and i have a book keeper, so how do you think those without fair.

Of cause the other crucial point is in the fact that I, like all other employers are expected to do all this work for the government for free. Sorry, but unless they come up with a better more simplified system, cash payments will remain and many so called under employed will be doing just fine, especially those who claim family benefits and the like.
Posted by rehctub, Saturday, 21 January 2017 2:05:16 PM
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Dear butch,

How are you faring with Superstream. I think it is brilliant for those who are okay with computers but some of the poor cockies who might have a part timer aboard it is going to be a struggle. I helped a couple of others set theirs up and can see it is going to cut down on the hassle quite a bit. Ten minutes a month instead of a good chunk of the morning.

I also think it will prevent those sharks who serially roll over companies leaving large Super debts from getting away with too much so cracking down on those withholding payments can only be a good thing.
Posted by SteeleRedux, Saturday, 21 January 2017 9:01:33 PM
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rehctub, what is the basis for your claim that this invalidates the underemployment numbers?
Posted by Aidan, Saturday, 21 January 2017 10:26:31 PM
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I think butch is making excuses for his own underhanded tactics. One gigantic problem can be fixed with a cashless economy. What happens then you pay people with cups of coffee, or chunks of bootleather stake.
Posted by doog, Sunday, 22 January 2017 5:56:18 AM
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Dear Doog,

«What happens then you pay people with cups of coffee, or chunks of bootleather stake.»

Fortunately the Australian dollar is not the only currency in the world - to suit people like me who refuse to carry electronic devices on their body.
Cheques too - personal and bank cheques, both Australian and otherwise, can also be circulated in the same way as cash, then ultimately there is silver and gold: you will not be able to thrust your disgusting electronics at me.
Posted by Yuyutsu, Sunday, 22 January 2017 7:36:34 AM
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Criminals that should go to jail.
Surprised to see you advocating for crooks flesher.
Bad form that is.
Posted by mikk, Sunday, 22 January 2017 9:23:09 AM
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A deceased friend who had his own pest control company never employed anyone, all of the people who did work for him were sub-contractors, all licenced pest controllers.
He worked this way because to have an actual employee was costly, particularly in terms of time spent doing paperwork for the Government.
Posted by Is Mise, Sunday, 22 January 2017 9:44:41 AM
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Dear Mikk,

«Criminals that should go to jail.»

Well and good - the most common criminals are those who impose their laws on us under threat of violence, followed by secondary criminals who benefit from the proceeds of their crimes.

Not obeying them is a virtue and if instead of paying one's taxes to government (which would partially use it for locking away innocent people like us), one gives that money directly to charities that help the really-poor who are in need, then they make our world better.
Posted by Yuyutsu, Sunday, 22 January 2017 10:24:14 AM
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BUTCH, if nothing else you are persistent, every couple of weeks on the forum you raise this topic about small business and cash in hand payments.

Lets recall some of the last discussion;

I pointed out that according to 'PayScale' the average small business operators income was $63,000 p/a in Australia. You said you would not get out of bed for that sort of money. According to you, you should make a wage of $63,000 plus an amount equal to what you pay each of your employees.

When it was pointed out that many of these cash in hand employers, not only were they breaking the law, in many cases they were also under paying workers, and ripping off their entitlements, supa, penalty rates etc etc, something you advocated as necessary.

When I suggested since you were giving employers the right to break the law, and steal from their employees, I asked were you okay with employees stealing from their employer. You went mute on that subject.

You were ably assisted in you argument by sidekick IS MISE, who believes Australia's industrial relations, pay and conditions should be based on the INDIAN MODEL, where the official minimum wage has recently been raised to $3.11 Australian per day. No doubt India has its share of cash in hand payers as well, it has 100 million beggars, for Australia that would be about 3 million if we adopt the IA MISE INDIAN MODEL.
Posted by Paul1405, Sunday, 22 January 2017 7:29:09 PM
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Steel, super stream is a great idea, however one flaw is that if you get the total figure wrong by just one cent, the funds are returned. I think a better system wold be to either credit your account for over payments, or send a bill for unders. But in any case its a huge step forward.

Aiden, try living in the real world for a change!

Doog, each one of my staff love coming to work because they are well respected and well looked after. That in itself tells me im a good employer. In any case im not in the business of pleasing the likes of you.

Mikk, im not advocating anything, merely providing reasons as to why this occurs.

Is Mis, there is a catch as for one to employ a contractor as opossed to staff, that contractor can't generate more than 80% of their income from one scourse.

Paul, there are thousands of small businesses in Oz, so if the average is $63K (i recall you said $68K) then there are some making millions, and others not even making a living, at least on the books anyway.

Again, i don't support underpayments, nor do i participate. Get it!

As for your India comment, comparing us with them, all i can say is Oh dear! you have such a great imagination.

Like it or not folks, business people are in it to make money, and so long as laws strip them of their potential incomes, they will break the laws.

Off topic, but the latest tactic from the gov is to strip wealthy seniors of their life long earned entitlements. This will see to it that inheritance becomes a thing of the past, meaning more people will be relying on welfare in generations to come. All governments do is piss into a fan, constantly.
Posted by rehctub, Sunday, 22 January 2017 7:54:17 PM
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"As for your India comment, comparing us with them, all i can say is Oh dear! you have such a great imagination."

I said it was put forward by your sidekick IS MISE, I don't know what Model you favor, possibly the BANGLADESH MODEL where the official minimum rate is $68 a month. Again I am sure there are under payers in Bangladesh.

Sorry about that typo, but what's $5,000 when your doing it so tough.

Is your chop Shop squeezed in between a 7/Eleven and a 'Bakers Delight' store? It is not whether you do the right thing, which you claim you do, but you try and justify small business lawbreakers. You seem to have a double standard.
Posted by Paul1405, Sunday, 22 January 2017 8:17:27 PM
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Paul, as i have said i don't support underpayment of wages, i am simply pointing out why it is happening and the fact that i fully understand why.

You see hospitality for some reason has been plagued with double time on Sundays, meaning the labour component of a coffee on Sundays is double that of any normal week day.

Notwithstanding the fact that SB owners have lobbied for change, and this has fallen on deaf ears, owners of small businesses have had to matter into their own hands which is why cash is often paid.

While I understand you wanting workers to be paid double on Sundays, you have no sympathy for the owner who not only takes the risk, but gets paid less for their troubles.

As I say, you either get used to it, loose jobs, or fix the wage system because you cant have it all.
Posted by rehctub, Monday, 23 January 2017 7:52:22 AM
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rehctub, I take that to mean you've got no evidence at all, for in the real world there's a huge amount of real underemployment.
Posted by Aidan, Monday, 23 January 2017 12:17:31 PM
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Ok now your employees love coming to work, because of the benefits involved. and everybody else is doing it tough. So the way to fix the problem is to cut wages, so how low do you go, or is the floor price negotiable. Slave labor is illegal. The FWA sets the wage limits as that is what is required for that aged person to survive. But your idea is to scrap that and not to be worried about consequences.

Maybe there is tooo many coffee shops in existence. Real wages are down, and coffee has to take the back seat. How can an economy grow if people can't afford to bye the products available. This will always be the case with a liberal govt; They are not interested in coffee shops, you support the wrong type of govt, to get anywhere.
Abbott couldn't afford what GMH wanted to stay in AU. But there is money for Alcoa. Abbott gave 15 million to a chocolate factory. So our hospitals can fix more obese persons. It's a matter of where your priorities stand.
Posted by doog, Monday, 23 January 2017 2:48:58 PM
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Dear Doog,

«The FWA sets the wage limits as that is what is required for that aged person to survive.»

OK, so people want to survive, but what have employers to do with it?

Forcing a particular group of people (in this case "employers") to ensure that everyone is able to survive, is no different than doing the same with different arbitrary groups, say "those who were born on a Tuesday".

So-called "employers" and so-called "employees" are simply people who happened to make a contract between them: one supplies money the other supplies labour - it's no different than the sale of a car or a piece of furniture. If I buy a car from you, that doesn't make me responsible to ensure that you will use the money wisely and not go hungry the week after.

In order to stop slavery, a truly worthwhile cause, the link between survivability and labour must be severed. This can be achieved by a universal and unconditional minimal income - specifically not conditioned on one's work or willingness to work.
Posted by Yuyutsu, Monday, 23 January 2017 5:41:46 PM
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Yuyutsu, you seem to oppose the social cohesion that binds us together, believing we should all act independently for our own good.
What you say is anarchism, which I do not agree with, but see as a legitimate ism all the same.
People like Butch, simply want to avoid their part of social responsibility as there is a cost to them involved, they are not anarchists, just selfish members of society. Butch chooses to take part in society as an employer and therefore must accept those thing we as a society impose on employers.
Interesting that you mention "money", which is nothing more than a tool, a means of exchange, to quantify the cost of interaction between members of society, employees perform certain tasks for the benefit of the employer, and in turn the employer rewards them with money, which in turn can be used to benefit the employee through his interaction with other members of society. If there is no social interaction then there is no need for money, and if there is total interaction like pure communism there is also no need for money.
Posted by Paul1405, Tuesday, 24 January 2017 4:52:29 AM
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Dear Paul,

Am I an anarchist? I am undecided.

Etymologically the Greek "Anarkhya" means "without chief, leader or ruler". While I hold the reservation that any person or group-of-people ought to never impose their will over others without their consent, I do not oppose, and at times even support, such leadership that is willingly accepted by all involved.

Merriam Webster defines "anarchist" as:

1. A person who rebels against any authority, established order, or ruling power.

2. A person who believes in, advocates, or promotes anarchism or anarchy; especially one who uses violent means to overthrow the established order.

The word "any" in definition (1) excludes me, so is the word "violent" in definition (2).

I do not oppose social cohesion as such - only when that seeming cohesion is achieved by violent means. I view it positively when people freely elect to join a given society - and once they do, they must share the corresponding duties, not just the privileges.

Regarding money, I believe that an ideal society should have none (but wouldn't be communist either), yet this is not achievable in the foreseeable future, mainly due to the overwhelmingly huge number of humans on this planet, thus for now we have to live with it.

When money is created by a legitimate society that does no impose itself on anyone, that society has every right to impose its terms-and-conditions over the use of its money, which might include taxes, penalty-rates and what-not. Those who do not wish to belong to that society should then simply refrain from using its money. The problem in Australia is, that certain laws prevent for all practical purposes the use of other currencies. The state would still, for example, expect its tax in Australian dollars even when none of the parties to an exchange ever had them.
Posted by Yuyutsu, Tuesday, 24 January 2017 10:30:09 AM
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Aidan, it is well known within the circles that many small businesses pay some hours on the books, and some cash and in the likes of hospitality, this is the only way many small businesses survive. Lets face it, if the business fails due to costs, then the staff loose their jobs as well.

Paul, the worst effected sectors are the likes of hospitality.

In her wisdom, Julia Gillard decided to make Sunday rates for retail time and a half, yet for hosp, double time. Why?

Hospitality is the worst effected because they buy goods, transform them into saleable products and in doing so incur high wages as a percentage of sales. Generally around 35% compared to 15-20% for say butchers.

For the employer to make the same money on a Sunday, they would need to impose around a 25% surcharge, which the consumer simply wont pay, so the alternative is they pay the staff regular hourly rates in cash.

Time and a half they can wear with a 10-15% SC which most consumers will pay, but not 25%.

The simple fact is that business people do what they have to do to survive and if governments change wages in an unreasonable and unjustifiable way, which is what JG did, and future governments refuse to remove the imposts, they take matters into their own hands, but at least the workers still have jobs, for now at least.
Posted by rehctub, Tuesday, 24 January 2017 5:32:44 PM
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Butch, we have discussed this small business topic, Sunday trading and penalty rates numerous times before. You pretend that the only determining factor as regards to "cost of production " is the cost of wages and how it impacts on trading on Sundays. Why do businesses large and small vigorously trade on Sundays, after all it was them who agitated to get Sunday trading in the first place.
The reality is there is certain advantages to be had by trading 7 days a week, as opposed to 5 or 6. If you have done your sums, and your expectation that there will be an increase in sales by trading on a Sunday is met, then profits with actually increase. Some costs like rent, and other fixed costs, do not increase regardless of opening hours. You can amortize those costs over more "cups of coffee" (increased sales). In the case of hospitality Sunday is generally one of the better trading days, as opposed to Monday and Tuesday. The major reason for cash payment by small business is not that they can not afford to pay, but rather it is an opportunity for a cash grab at the expense of their employees. often part time, non unionized children and young adults. Taking one look at the '7/Eleven' and 'Bakers Delight' cases, and you will realize that!

Can you explain why so many small hospitality businesses operate 'Cash Only'? Could it have anything to do with tax avoidance, like pocketing the GST etc, which is estimated to run to $7 billion a year in Australia. Small Business does rather well in Oz, with an average income of $68,000 p/a, and you said yourself you would not get out of bed for that kind of dosh.
BTW the principles behind both '7/Eleven' and 'Bakers Delight' are multi-millionaires, not exactly on the bread line are they, or are they in your opinion.
Posted by Paul1405, Wednesday, 25 January 2017 5:14:55 AM
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Paul, Sunday trading (QLD at least) was lobbied for by the big supermarkets, not small businesses and prior to Sunday trading, small businesses, especially hospitality paid time and a half on Sundays.

Julia Gillard, when employment minister, or IR min, decided to take hundreds of awards and roll them into a few. The result being that hosp was hit with double time on Sundays and, given the labour component is high in the sector, that was a double whammy. Time and a half was workable, but double time is a killer
The other change is in the Sunday staff, as there has been a huge increase in junior staff, which are often less experienced, which is why its a lottery at time when ordering a coffee.

Do the math Paul, the labour content of a $100 sale at the supermarket is around $10.5 on a Sunday, 7% at time and a half, in hospitality that is more like $70, 35% at double time. If they offer full table service its even higher These are facts.

As for cash only businesses, sadly most are foreign owners and there is no guessing why they do this. I like to go in, order my stuff, then walk out because they have no eftpos. They also represent a rather small minority simply because they are missing out on too much business.

As for 7/11, this is a scam run by scammers and the majority of owners were foreigners hiring foreigners as well. I have never supported this and you know it. Although I do believe the bakers delight case was more of a wrong award case rather than outright cheating. But I could be wrong
Posted by rehctub, Wednesday, 25 January 2017 7:05:52 AM
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Butch, I actually believe you are an honest businessman and do the right thing. I also suspect in hospitality, Sunday, despite double time payments, is one of the most profitable days of the week. On the coffee front here in my locality we have a proliferation of such establishments, many are chain type operations 'Coffee Club', 'Gloria Jeans', is the market saturated with sellers at $3,50-$4 a cup, I would think so. Maybe coffee shops are like video stores before them, too many jumping into too good a thing. Interesting that the coffee shop nearest me is run by a young bloke, being about 25 and a young girl about 16, they seem to be there 7 days a week. I thought he was the 'owner' seems someone else is the owner and only drops by to collect the takings. Judging by the number of empty 2l milk bottles stored in crates in the back lane, they sell some coffee a day.
The top paying job in a coffee shop is the Barista (the coffee maker) the rate at 'Gloria Jeans' ranges from $9.94 to $20.41 an hour, I suspect they don't employ a lot at $21.41,
According to the web site 'Cafe Coach' the break down for a $3.50 cup of coffee is; coffee, milk, cup = 60 cents, labour = 20 cents, giving a margin of $2,70 to pay the fixed costs including rent, equipment, shop fixtures and fitting etc, and make a profit.

The cash only operators, are doing so to exploit the system, finding it more profitable to fly under the radar, no tax, underpayments to their staff, cash payments to suppliers. good if you can get away with it, and most do.

One of the big issues for workers who take cash payment for work performed, is they are not covered by workers compensation should they be injured on the job. Also, the employers often benefit by having their wages bill heavily subsidized by the taxpayer through social security payments, the 'Car Wash' I have mentioned before is a good example
Posted by Paul1405, Wednesday, 25 January 2017 8:38:22 AM
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rehctub,
Assuming you are correct, you still haven't got any evidence whatsoever that any of those people are falsely claiming to be underemployed.
Posted by Aidan, Wednesday, 25 January 2017 1:29:21 PM
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Aidan, we also have no evidence that many claiming welfare are unfit for work due to drug use, but we all know it happens.

I am in business and I know it happens and that's proof enough for me.
Posted by rehctub, Wednesday, 25 January 2017 3:30:38 PM
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So underemployment is not a problem?

The official unemployment rate plus the payment rate remain reasonably steady, yet the overall cost to the budget is increasing.

This alone suggests that the real unemployment rate is much higher than the official rate plus the amount of benefits being claimed by "the working poor" is also increasing. People may be technically underemployed if they don't earn enough to keep themselves above the poverty line and can't get enough work so the taxpayer keeps them afloat.

Add that to the fact that homelessness and poverty levels are also increasing and it's easy to see that all is not so rosy for an increasing number of people.

To suggest that underemployment is some sort of hoax is just another typical attempt at being an apologist for a failing and inept government.
Posted by rache, Wednesday, 25 January 2017 5:13:23 PM
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Rache, i am not suggesting under employment is not a problem, i am simply suggesting some so called 'under employed' have second/third cash paing jobs. They are on the books as under employed, which i would suggest relates to hours, rather than dollars, then they have alternative income that they don't disclose. So in effect they are well paid, yet sill receive their tax payer provided benefits.

As for understaning the real unemployment numbers, this has gone on for many years and i unlikely to change. Many sin gle parents are unemployed, yet not counted as such.
Posted by rehctub, Thursday, 26 January 2017 6:47:15 PM
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Good to have a civil discussion with you Paul, I am not the enemy, rather the messenger.

So by your own admission, the staff gets paid an extra 20c (gross) on Sunday, yet the owner is paid 20c less. Doesn't make sense in any fair minded arrangement.

I would also suggest the guru who came up with the 20cents, simply took the time it takes to make a coffee and divided it into the hourly rate.

The trouble is many so called gurus have never set foot outside their office, because if they did they would realise that in order to make a coffee, one first needs to order the ingredients, unload same and store when they arrive, that's after checking the order, turn the ingredients into the coffee, clean the machine, service the machine, wash the cups, restock the ingredients,the list goes on, all while being paid.

The real labour cost of that $3.50 coffee is more like one dollar, because after all, 32 cents is Gst. In fact, some hospitality venues are struggling to get their labour costs below 40% and that leaves very little for the owner.

Surely if an owner, having taken the risk, and having paid three grand a week in wages, is entitled to make three grand for themselves, otherwise why be in business. One might as well choose red or black at the casino and get even money.

At the end of the day wages and conditions are about fairness, and for one party to be paid double on a Sunday, (staff) while the other pay that extra (boss)out of their pockets is simply unfair. But unions don't care about fair, they just set their mark, giving no consideration for the needs of the business and just expect the boss to find the money.

As for a barristor working for $21 per hour, I suggest very few 'good ones' work for that, but then most good ones run their own show.
Posted by rehctub, Friday, 27 January 2017 4:28:21 PM
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Hi Butch, we always have a civil discussion, you are one of my favorite Discussors in the Forum Family, we have been discussing the issues for years. You lob a powder puff of an argument at me, and I retaliate by lobbing a hand grenade back at you, just as it should be,

Now, you assume wrongly that trading over time is uniform, sell as much coffee on a Sunday as you do on a Monday, wrong, wrong wrong. Even with increased labor costs it may be possible that increased sales on a Sunday results in the small business making a larger profit than average. You didn't allow for the benefit of amortizing (spreading) of fixed costs over more cups. Granted, the employees do receive an extra financial benefit by working Sundays, but like in any business, if the business goes gang busters, eg the International Coffee Drinkers Association is in town and record sales are made, it is the owner who mostly benefits financially not the employees. So it works both ways.
Posted by Paul1405, Saturday, 28 January 2017 6:26:30 AM
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Powder puff you say Paul. What's 'powder puff' about a question about one party, having taken all the risk, being stripped of profits, while the other party gains?

Where is the fairness in that I ask?

Why should one party win, at the expense of the other, especially given the other carries the risk?
Posted by rehctub, Monday, 30 January 2017 6:43:39 AM
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Butch, read my argument and as I said there are benefits for the small business by trading 7 days a week. The employees also take a risk, should the business go broke and they lose their jobs. Could result in an extended period of unemployment.

The powder puff was just a light-hearted witticism, on my part, your arguments have some credence at times, but this one does contain some basic errors, as I have pointed out.
Posted by Paul1405, Monday, 30 January 2017 9:46:19 AM
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Butch, do you also view annual leave, sick pay, long service leave, public holidays, superannuation and other benefits employees receive as unfair imposts on employers? If so do you believe they to should be done away with?

Do you favor payment at piece rates? In our example, employees could be paid according to how many cups of coffee they sell. Even an incentive scheme, 5 cents per cup for the first 1000 cups, 10 cents next 1000 and so on. That would get them motivated to sell more cups. Even a quota system where an employee is set a daily target, say 3,000 cups, should he fail to reach target, that could be add to the next days target. In our example if the employer set the target at 3,000 cups and the slack employee only sold 2500, in a 16 hour day, the next day the first 1500 cups would be paid at 5 cents a cup, a marvelous incentive. could even set a gold target of say 5000 cups for the day, then a $10 bonus is paid. the possibilities are endless.

Of course junior staff would be paid at the junior rate of 1 or 2 cents a cup.
Posted by Paul1405, Monday, 30 January 2017 8:11:38 PM
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Paul, i don't have a problem with most benefits, although with regards to super I would prefer it be paid in their weekly wage, then they can invest it themselves.

I say this because employers already perform enough unpaid duties for the government, but of cause the government knows most will spend it.

Parental leave is unfair in my view, along with having to hold a position open on the 'off chance' the worker wants to return. Domestic violence is also on the agenda which I also disagree with.

As for 'piece work', there is no fairer way and although it may not work in many sectors, it is perfectly suited to the likes of fruit picking, beef boning, chicken boning, fish filleting. Anything that involves volumes that can be assessed as productivity.

Interesting to note that one third of small businesses are dipping into their personal savings to stay afloat. Where is that heading Paul?
Posted by rehctub, Tuesday, 31 January 2017 7:37:19 AM
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