A Class of Their Own: Exploitation, Exclusion and Working Students

Posted by on July 31, 2018 in Focus

A Class of Their Own: Exploitation, Exclusion and Working Students

Arthur Rorris 


The Fairfax Media expose, The Great Student Swindle by Anna Patty in December 2016 exposed gross exploitation. It was a wake up call to our movement and communities about the treatment of the young workers and children who work part time through their school years and later through University and TAFE. The systematic wage theft that was documented and has occurred in other cases such as 7/11, Caltex and Dominos, is different to the garden variety underpayment and cash in hand employment.

What we are seeing is the proliferation and normalisation of wage theft and exploitation business models. Such illegal practices range from crude and brazen cash in hand employment that make no attempt to meet minimum pay and conditions, the continuing use of pre Workchoices ‘zombie’ agreements through to sophisticated scams which seek to milk the Vocational Education and Training system, suppress wages and then bill the tax payers for the privilege.

To understand and appreciate this phenomenon, it is essential to consider the context and the significance of demography and geography. This is a story about young workers and the community that they live in. It is no accident that these workers were targeted in such scams and exploitative practices. Nor is it an accident that these students became conscious of their exploitation, organised themselves and spoke out. Both are conscious acts and are critical to this story.

The traditional narrative of young worker exploitation revolves around the use and abuse of junior pay rates, casualisation, unpaid trials and inappropriate classifications. Early school leavers who do not go on to further study are presumed most at risk. However, our evidence suggests that young workers, particularly in the hospitality industries, are just as likely to be university students desperately seeking work to meet rising accommodation and living costs and day to day expenses.

The University of Wollongong, for example, has over 23,000 enrolled students, many of whom reside in a city of 210,000. That’s more than 10 per cent of the population and a big slice of the labour market.

This, however, is not just a Wollongong story. It is a systemic failure of monumental proportions which, as has been revealed in several other cases, is being played out across the whole of Australia.

Ashleigh's List

In 2016, Ashleigh Mounser, at the time an enrolled student at the University of Wollongong, worked in a Wollongong cafe and found that the cappuccino economy was not all it was cracked up to be. When you are competing with thousands of other students for part time work in a regional town your chances of landing a job are not great and if you do happen to land a job your bargaining power over pay and conditions is not strong.

She was paid $10 an hour for months on end and with little time for her studies. She posted her story, her pay and conditions on an online University chat room and asked her peers whether they had similar experiences such as ridiculously low wages, cash in hand employment, unpaid trials and general experiences of what we know as wage theft.

The response was overwhelming in the sheer numbers of responses and in the details of exploitation on every level imaginable. Ashleigh went on to compile a list of employers in the city and the first-hand accounts and contact details of their employees, their hourly rates of pay and cash in hand payments. It reads like a Yellow Pages of Exploitation. She and twelve young working students gave their personal and confronting accounts of work and exploitation in the steel city that formed part of Fairfax media story The Great Student Swindle. 

Wage Theft in Numbers

Of the 60 employers included in the original list (the list is now much greater) the vast majority were based in the Wollongong CBD. Almost all were bars, restaurants and clubs in the hospitality industry, including several chains. The ages of the respondents ranged from 18 to 32 and almost all reported an hourly rate less than the minimum wage with only one reporting the payment of penalty rates.

The exploitation model of choice is cash in hand payments. At least 50 businesses on the list have been either reported or strongly suspected as paying cash in hand (no payslips/group certificates being a key indicator).

Average hourly rate of pay (in the period 2014-2016) were $12.50 per hour (range $7.50 - $20.00).The most common rates were $10/hr (15 cases) and $15/hr (14 cases). Such ‘standard’ rates do not appear to be a random occurrence and seem to be employer-driven. If not collusion, it is the working of the market in favour of businesses. Put simply, for so many employers this is a business model which up until now has had very few risks attached to it.

The Workers’ Cash Rate

The $15/hour rate was regarded by many of the workers as the minimum that they would expect to receive in these circumstances. In a sense this seems to be an underground standard that exists side by side with the award. Without drawing too long a bow here, the evidence suggests a level of collective consciousness, communication and in a sense, bargaining, on the part of the students.

Ashleigh's List was their way of presenting a demand for a better deal. Their decision to take part in the Fairfax investigation, to work with the South Coast Labour Council and go public in the expose, The Great Student Swindle, was a very conscious and significant action which provided the leverage to recoup stolen wages. In this respect it has already been successful with almost $30,000 being paid back to workers in the first 4 cases settled with the assistance of the SCLC. A postscript to the original expose is that the Fair Work Ombudsman a year or so after publication of the Fairfax story raided over 80 businesses in the Wollongong CBD. We understand that this was largely based on intelligence gathered from Ashleigh’s List. 

Universities, Colleges as Exploitation Hubs

One of the most significant, and in some respects counter-intuitive, observation is that exploitation of young people in Wollongong (and probably elsewhere) is centred among university students in Law and Commerce. The levels of exploitation and wage theft that have been revealed would be expected to be more prevalent in a cohort of early school leavers and young workers who have not progressed to tertiary and further study. There are a number of possible explanations.

Critically, school leavers are excluded from the labour market with high youth unemployment and over 20% of 15-19 year olds disengaged from work and study. This social exclusion has persisted for decades in the Illawarra with a downturn in the region’s steel, mining and heavy industry base. It is not so much a question of employers having an aversion to exploiting these school leavers. It is more a question of not needing to employ them in the first place except where they want to get subsidised Traineeship/Apprenticeship programs.

Tertiary students are a transient class affecting the labour market in cities with universities. The massive expansion in student numbers has impacted the labour market everywhere and especially in regional areas and cities. In 30 years, student numbers at the University of Wollongong have increased from 6,000 to over 23,000. Ironically, almost exactly the reverse trend occurred in the steel industry.

Working students are concentrated in sectors that they, as consumers, have helped to grow. The Wollongong labour force in accommodation and food services is over 6,750. The massive and rapid growth in the hospitality and related sectors has resulted in the establishment of hundreds of new enterprises. These businesses were established in the toxic industrial environments spawned from successive waves of industrial relations legislative changes including WorkChoices and current laws. These were the ultimate ‘greenfield sites’. These bosses were encouraged to throw out the old rule books and be aggressive and innovative in their efforts to cut labour costs.

A necessary condition for this to occur, particularly in a union town, was to be able operate in secrecy and to use the new laws and the agencies of the State to ensure that the risk of intervention from unions or the workers themselves was minimised. The ACTU leadership seem correct in saying that Governments have not only run protection rackets for businesses engaged in wage theft but have encouraged development of these business models in the first place.

The financial pressures on students are well known. They are driven by rising prices of their day to day expenses and accommodation coupled with a woefully inadequate level of Government student support.  Around four out of five ‘full-time’ students are working. This includes overseas fee paying students. The desperation of many students forces them to accept almost any offer of a paying job either on or under the table.

In this type of labour market and in these particular circumstances it is not too difficult to see why a restaurant owner might prefer to employ an articulate, well presented law student for $10 per hour cash in hand, knowing full well that their tenure will only last 1 or 2 years at the most. It is all too convenient to do this rather than taking on a school leaver who lives in the area and may be interested in longer term employment and whose parents might come knocking on their door and disrupt their business model.

Finally, many of the students have made it clear that they are fully aware they are being “ripped off” and that cash in hand employment is not a good or legal model. The students repeatedly make the point that employers present them with conditions of employment arrangements that are not-negotiable.

Exclusion leads to Exploitation

The situation must be heeded by all. There is a large and growing section of the labour market, a class of Transient Workers, who are skilled, culturally suited to and readily exploitable by this section of the hospitality industry. They are unhappy with, but generally conscious of, their exploitation at the hands of their employers.

It raises alarming questions about the integrity of the existing industrial relations system, not to mention the implications for superannuation, workers compensation and taxation. The students feel that there is simply no alternative given their situation. In the context of the relatively short period of employment they expect to have in these businesses, these are sacrifices they are prepared to make. The employers who engage them are also acutely aware of this, given their reactions to the students that have challenged them about their rights.

If exclusion is the cancer, inclusive organisation is the answer. The young workers featured in these case studies have been excluded on many levels. This includes from work, from the protections of the law and the regulated industrial relations system. Perhaps unintentionally, they have been excluded from the union movement as well. They have organised themselves in the shadows of the established union structures.

The union movement now has a choice. Either tear down the walls and change our structures that were established for different conditions, and let the next generation of workers in. Or wait a few years and have this discussion again without the resources, density or momentum for change that is building across the country right now.

Unions should work with students

All full time students at any level of study should be offered free, complimentary associate membership of the union movement through a national umbrella program. This should be educationally focused and allow young workers to access information about basic workplace rights, pay and conditions as well as providing information about unions and campaigns. It would also encourage young members to speak up and report cases of exploitation. There should be special efforts to identify and support working international students. They need to be included and organised, not ostracised.

Working students that sign up to the young worker program should be given an individual member number that should ultimately remain with them throughout their working lives and across different jobs, breaks in employment and further study. If we want 'unionists for life' then we need to make it as easy as possible for members to stay with the union movement and give our unions an ability to track the membership and understand changes in work patterns and the labour market.

Establish a Working Student Alliance at campuses across the country. Ideally, the alliance would promote the associate membership program outlined above and be supported by existing campus trade unions and where possible student unions. These organisations could also organise their own actions on the ground in relation to uncovering exploitation and provide an opportunity for students to collectively organise and take action on the ground themselves. The aim is to encourage collective consciousness and action from the very beginning – before they begin their careers full-time.

We should also start a program of workplace rights awareness for the parents of children under the age of 18 who are working increasingly long hours in chains and other workplaces. Whilst the case studies in this paper involve students over the age of 18, there is no doubt that exploitation occurs before the 18th birthday as well. This program could be piloted in regions by regional /State TLC's and a team of officials and delegates rostered to P&C or P&T meetings, answering parents’ questions and handing out a take home reference flier courtesy of the union movement.

An independent inquiry needs to be established to investigate and expose exploitation, wage theft and the various business models that are used for this purpose. Ideally, it would have hearings around the country and would be chaired by an eminent IR figure.

A reprise

Let's not forget that neither Ashleigh nor any of the working students were, at that time, union members. They were not working off a script, an organising model or as part of a union campaign. If there was ever an organic example of collectivism and consciousness this is it. The second thing to note is the similarity with what a union campaign might attempt to do and that is to map a community and an industry, to organise and act collectively.

The fundamental difference is that Ashleigh did the organising of exploited young workers so much more effectively than union leaders and organisers have been able to do for decades. The motivation and capacity to compile 60 case studies of young workers and wage theft, complete with mobile numbers of affected workers, years of service, rates of pay, names and addresses of the employers and details of exploitation, is impressive. Imagine what might be possible if the Ashleighs of this world had serious union resources and an organising space in the union movement.

* Arthur Rorris is the Secretary of the South Coast Labour Council. This is an edited version of a presentation to the ACTU NexGen 2017 Conference.

The presentation was based on research in 2016 by Ashleigh Mounser who is currently a student at the Australian Film, Television and Radio School in Sydney and an MEAA member. The analysis and conclusions are entirely the responsibility of Arthur Rorris.

The Great Student Swindle was published in the Sydney Morning Herald, 9 December 2016

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