Paying wages in cash is getting way out of hand
What kind of responsibility do we have to do the right thing? It’s easy to say that doing something which is against the rules but doesn’t hurt anyone is OK.
Take paying for public transport. Many people feel that grabbing a free ride doesn’t hurt, but if too many people ride for free, then the whole system risks breaking down.
Wealthy people and companies say they are doing nothing illegal by using overseas tax havens and other measures to avoid paying tax.
Technically they’re right, but if the average worker put as much time and effort into reducing their tax bill as these companies do, then our governments would collapse overnight.
Last week the ACTU released research showing an alarming number of employers are paying their employees cash-in-hand, a practice that while not necessarily breaking the law, is closely associated with failing to pay tax, and neglecting or failing to pay workers’ their legal entitlements.
Of the 1000 people surveyed, 13 per cent reported they had worked “cash-in-hand” at some point in the last three years, with 5 per cent currently working cash-in-hand.
Only 1 per cent said that they were working cash-in-hand but their employer was taking out taxes before paying them. The figure soared for younger workers, with 24 per cent of workers aged 18-29 working cash-in-hand at some point in the last three years.
While workers receiving cash-in-hand payments may be avoiding income tax, they are also missing out on things like superannuation (48 per cent didn’t get it), annual leave (56 per cent), penalty rates (57 per cent) or sick leave (52 per cent). Many are paid below the minimum wage and many would not have the protection of the workers’ compensation system if they were injured on the job.
The real winners are the unscrupulous employers, who avoid paying tax to the government and entitlements to their workers.
The amount of cash-in-hand work is one of the dirty secrets of the Australian economy and, from what unions are hearing, its use is growing.
At a time when employer groups are launching a campaign aimed at cutting penalty rates, we see evidence that almost half of young people in cash-in-hand work are not being paid their superannuation.
The number of employers using cash-in-hand payments is disturbing and so is the lack of interest from employer groups in dealing with this problem. The head of the Australian Chamber of Commerce and Industry, Peter Anderson, said on radio this week that he agreed cash-in-hand work was a problem, but didn’t have any suggestions on how to fix it.
I have a simple way to reduce the problem – allow unions access to businesses to ensure that bosses are paying their workers properly, and let us work with the tax office and regulators to expose and reduce this issue.
Most businesses are honest, and do their best to comply with tax and employment laws. They are the ones that are hurt by cash-in-hand, because their competitors use it to gain an unfair advantage.
The usual employer complaint is that the “red tape” or “inflexible laws” means it is impossible for business, small business in particular, to employ staff, so they are forced to go round the system.
I don’t see paying tax, paying the minimum wage, and paying employees superannuation, as “red tape”. I see these as basic responsibilities of any business, big or small.
Most businesses treat their staff well and would not dream of refusing to pay their superannuation.
It is a major concern that young people are disproportionately being paid cash-in-hand, and backs up other ACTU research that has found young people are more likely to be stuck in insecure forms of work like casual or contract work.
The definition of “young” in the survey was between 18 and 29 years of age. So this is not a problem that only effects school or university students, it is hitting people who have been in the workforce for a decade and have families to support and mortgages to pay.
Too many young people are shifting through a series of temporary jobs, with no career path and no development in their skills. They face a difficult future because this kind of work limits their ability to own a house or to raise children with any sense of security.
Young workers are increasingly doing jobs that have irregular and inconvenient hours, have limited entitlements and have no job security. Cash-in-hand work is just part of this trend.
I don’t feel strongly about this just because of the entitlements that young cash-in-hand workers are losing. I worry about what lessons are we teaching these young people, when they are told that the only way they’ll be hired is if they accept cash-in-hand work.
We’re teaching them that rules are made to be broken, that it’s okay to rort the system as long as you get away with it, and that it’s okay to rip people off.
And that’s avoiding our responsibility to the next generation.
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