Although this article originates from Queensland the points of discussion have extreme relevance and ramifications for producers in all other states including Victoria.
Is there anyone out there concerned about what the end results of the dedicated taskforce investigations might bring?
It must be worrying for the growers because to a greater degree and in the majority of cases the grower is honest and ethical but in all cases are seen to be responsible and liable for the actions of others – the unscrupulous labour hire contractor. The grower enters into Labour Hire Contractor Agreements in good faith with the Labour Hire Contractors. The grower believes that the contractor will do the right thing, just as the grower does when he signs the Major Retailers (Coles, Aldi, Woolworths) Ethical Standards and Sourcing Agreement, so that he can supply the Supermarkets. The grower believes that if the contractor signs the Labour Hire Agreement he will act in an ethical manner and pay workers according to the relevant Award. If the Contractor unfairly treats his/her staff or under pays them, is the grower at fault? Coles, Aldi and Woolworths seem protected by their Agreements.
The problem seems to be that the grower pays the Labour Hire Contractor an agreed Award rate or fee to pick or process various crops and products. The contractor then arranges for his workers to complete the task. He may utilise 15 -20 people to do a job that 10 workers could complete and achieve the Award rate. With 15 – 20 workers doing the job each person will net much less in their wages than they should have under the Award but possibly completing the job in a shorter time frame. This would earn more money for the contractor. On the other hand if Piece Rates are used and calculated incorrectly and the targets set too high, some workers may not achieve the required production targets and consequently earn well under the Award rate.
A full investigation should involve identifying and analysing the contractor workers actual workflow, production targets and worker numbers, compared to quantities processed, as well as analyse the hours worked by each team member. This would involve a thorough investigation, an extended time period, possibly a huge disruption to businesses, and a huge expense. Will the Government do that or impose strict new regulations, leaving the obligation firmly on the grower’s shoulders, again.
The majority of Growers pay the labour hire contractor what they believe to be the correct award rates based on the contractor’s agreement to accept the task, and sign the Labour Hire Agreement. Now, if the contractor doesn’t pay the required tax, superannuation and work cover and takes whatever fee or cut off the top of the invoice amount for his/her efforts, do you think the worker would be paid correctly? And the Labour Hire Contractor or his/her Boss keeps the GST as part of his entitlement. The lost GST that the contractor keeps must run into the millions of dollars and the State Governments are missing out. Is this fair and reasonable?
For a grower to mitigate this potential risk to the business, his legal obligation and compliance requirements is to provide the full details of the Labour Hire Contractor to the relevant authorities so they can conduct the necessary enquiries and investigations to clarify the legitimacy of the Contractors and their business activities.
Will the Taskforce find it very difficult to identify and locate the unscrupulous contractors and therefore be unable to charge, convict and fine them or stamp out their presence?
If this is the end result, will the Taskforce recommend the implementation of strict additional regulations across the industry to combat the unscrupulous behaviour, further binding business owners in red tape?
Bundaberg Fruit and Vegetable Growers Executive Officer, Peter Hockings said about unscrupulous labour hire contractors:
"When the heat is turned on we find that these business owners, they are a phoenix company, within 24 hours they've got a new ABN, new director, new company name, business as usual”.
He too is concerned about the potential of new stricter and additional regulations being imposed on the sector after the Taskforce completes the investigation.
Another concern is that if the Taskforce is successful in its endeavours, apprehending the culprits, charging, fining or jailing them, what happens with all the legitimate staff left holding the bag with no employer/contractor?
What happens when an investigation is done on a particular grower(s) or region, and the Labour Hire Contractor(s) is found to be unscrupulous and a lot of his workers are illegal? They would be detained leaving the poor old grower out in the cold with no staff to pick and process his products. All of which has dramatic implications throughout the entire supply chain. In the end the consumer will lose out. Prices go up due to undersupply and other jobs are lost.
If the investigations are not conducted in a well planned manner that includes strategies to assist growers to transition from the old contractors to new compliant labour hire contractors, the initiative will create numerous issues throughout the supply chain.
Possibly a suitable strategy might be to ensure that the Taskforce and Field Operatives have alternative options available. They must be established, reliable, compliant, alternative options to provide to the grower to assist him if he finds himself unknowingly utilising an unscrupulous contractor and/or illegal workers. He may lose an integral part of his entire workforce over a 24 hour period with no options or alterative labour to process our food. This could cease operations further up the chain.
A consequence of all of this is that within the supply chain there are hundreds of suppliers and varying pay rates. The ones paying the incorrect wages fly under the radar and get away with their unscrupulous behaviour. Some growers – who knows what percentage- are paying $14.00 to $18.00 per hour, to unscrupulous labour hire contractors, or the equivalent on Piece Rates. The Award rate per hour including all statutory add-ons and GST should be around $30.00, a difference of $12.00 to $18.00 per hour.
Unscrupulous growers are knowingly paying the incorrect Award rate. If a grower is paying $21.09 per hour to the Labour Hire Contractor then it is blatantly obvious that the workers are not going to receive the Award rate. Under the Horticulture Award 2010 the Casual hourly Pay Rate is $21.09 per hour PLUS Superannuation; Workcover; Payroll Tax; and GST; Plusthe fee for the Labour Hire Contractor.
It is obvious that payment equivalent to $21.09 per hour to the Labour Hire Contractor is no where near the ethical Award rate. Therefore we have an uneven playing field in the market place. How can the honest and ethical growers compete with their direct competition paying up to half the legal award rate? These unscrupulous growers and contractors operate up the road from the honest growers and contractors. They are often competing for the same business opportunities, grow the same products and have supply contracts with the same major retailers. In the end the unscrupulous grower has a much lower cost of production.
HOW CAN THE HONEST GROWERS COMPETE OR SURVIVE?
A well calculated and closely thought out solution is needed.
We have part of the Solution Fully Compliant Government Approved Australian Employer
Federal Government and Australian Workers Union (AWU) approved Fully supported by The Government and people of Vanuatu & Pacific Nations
It is interesting to note that this report outlines the Supermarkets stance on this issue. Appearing before a Senate inquiry into Australia’s temporary work visas and exploitation of foreign workers, Woolworths indicated that it was not up to them to enforce the law. Woolworths Head of Trade Relations Ian Dunn advised the committee “we would certainly agree that we have a moral responsibility to ensure that suppliers to us first of all understand the conditions on which we’re willing to accept supply and trade with them and then, secondly, to ensure that they are aware that they need to live up to those standards.”
Is this the way our large Australian Corporations support social policy, corporate responsibility and community development? What happened to the triple bottom line results and social conscience? The onus seems to rest on the grower and no assistance is being provided to resolve the issue.
Is the current situation somewhat clouded by the fact that the unfortunate growers are caught up in a web where the supermarkets are pushing prices down and further reducing the farmers margins. Farm costs and labour costs are ever increasing. They face major restrictions to business development, sustainability and profitability because they do not have control over their labour force. External, sometimes unscrupulous, contractors hold them to ransom. There are not enough suitably trained, experienced, committed, reliable, and productive seasonal workers to go round.
Australian workers do not want to do the production roles that are needed to get our food from paddock to plate and therefore growers need other alternatives. The majority of horticultural producers are in regional areas drawing from a very small population base to fill large numbers of seasonal roles and competing for talent from a myriad of companies needing casual labour. For the past ten years the growers have not had any options other than employ Asian labour via contractors, otherwise our nation will go hungry.
In the Wellington Shire Council area (Gippsland Vic), where Covino Farms is located at Longford, the company has a population base of 14,000 people to source up to 300 seasonal workers per annum, from the nearest major town of Sale. In the East Gippsland Shire Council area the major city of Bairnsdale has a population of 12,000. From this population base, companies, such as OneHarvest/VEGCO; Patties Foods, several major horticulture and agricultural producers and others, source their labour force. Again at times having to utilise external contractors who they believe are legitimately running their own business.
Backpacker or 417 Working Holiday Visa holders are the only other option available. Backpackers are only in Australia for a short period and in the majority of cases do not come back the following season. Growers are continually retraining and intensively supervising the workforce, adding to operational costs and smaller margins. Backpackers are often less motivated and passionate about the job role than growers need them to be to ensure quality product is delivered to the consumer on time. In some areas such as Bairnsdale and Sale/Longford the availability of backpacker accommodation is nonexistent and therefore very limited numbers of potential workers available. In regional areas suitable accommodation is just not available for the required number of workers. Estimations suggest that up to 3000 seasonal workers are needed in just Gippsland to get our food on the table.
Other Visas such as the 457 Visa requires higher level skills to be eligible for the Visa and they would not aspire to doing the semi-skilled/unskilled roles. There is also a lengthy, expensive process to sponsor, engage and secure the required skilled worker.
How could the major retailers help growers and their suppliers? Could they get involved and lobby government collaboratively with their supply chain members and industry to obtain assistance for growers with these workforce challenges. Could the majors review their pricing structure to ensure growers remain profitable and sustainable and are not pushed into using cheap labour to survive. Maybe we, the consumer, is not paying enough for our guaranteed quality fresh produce. Can the food production sector continue to absorb reductions in revenue (Coles- “Prices are Down Down Down”) when labour cost and availability is putting so much pressure on the producers bottom line.
WILL WE HAVE A FOOD PROCESSING AND MANUFACTURING INDUSTRY IN AUSTRALIA IN FUTURE?
WILL WE BE EATING ALL OF OUR FOOD FROM OVERSEAS?
The major issue is the availability of legal foreign seasonal workforce supplied by a reliable approved labour hire contractor that ensures workers are paid as per the Horticulture Award 2010 and treated as we would be expected to be treated. Strategies also need to be developed and implemented to rectify the lack of accommodation for seasonal workers for the horticulture industry.
The Connect Group - Seasonal Workers Australia, a Federal Government Australian Approved Employer of foreign nationals from ten Pacific Island nations and Timor-Leste, CAN supply the workers you need.
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WE HAVE THE SOLUTION – The Pacific Seasonal Worker Program (SWP)
We can provide compliant, experienced, trained, productive and passionate seasonal workers that return year after year, helping the grower sleep better at night and continue to deliver fresh quality food to the nation.
We could work with the major retailers and growers to implement a sustainable workforce strategy for the sector to alleviate all the current unscrupulous behaviour and mitigate the risks currently being experience by the Horticulture Industry.
CONTACT US ON (03) 9792 1949 TO SEE HOW WE CAN HELP YOU
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