Zero-pay Statistics a Misguided Effort

By Mark Wooden

The Australian,
31 May 2007, p. 10

There are almost no Australian employees who work unpaid hours, maintains Mark Wooden.

In the wake of the latest data offering from the Australian Bureau of Statistics, media attention has focused on the reported statistic that there were around 1.7 million Australian employees (or 21 per cent of all employees) in November last year reported regularly working extra hours or overtime each week for no pay.

But can this really be right? Are there really this many Australians who go to work each day knowing full well that they are not going to be paid for some of the hours they will work?

The answer is no. With the exception of a few, most of whom are working in the family business or farm. Australian employees are remunerated for every hour they work.

Some Australian employees receive overtime pay in addition to their base pay, which is based on hours worked above some agreed norm (like 38 or 40 per week). Most Australians do not. Instead, what they typically receive is a weekly, fortnightly or annual salary, with working hours largely unspecified. And it is true that some of these people work extremely long hours, and as a result the pay rate for these hours may be very low, but it is not zero.

The types of workers that the ABS survey identifies as working unpaid extra hours would include, for example, managers, doctors, lawyers, and even politicians. The Prime Minister, who we expect to be on the job 24/7, would definitely be included here. These are mostly workers who are paid fat annual salaries, not low-paid workers, and they are definitely not unpaid.

Ultimately, the attempt by the ABS to distinguish between paid overtime hours and so-called unpaid hours is misguided. The data tell us nothing. If we are interested in knowing how hourly pay has been changing, we should simply focus on their other data collections on both weekly earnings and weekly hours.

For the record, in recent years real average weekly earnings for full-time adult workers have been rising: by 4.7 per cent a year between August 2001 and August 2006, which compares with an average inflation rate of 3 per cent. In contrast, average weekly hours of work among the full-time employed fell over this period, albeit by less than half an hour. For the average worker at least, pay per hour has clearly been rising.

If, on the other hand, we are concerned about the number of Australians working excessive hours each week, then we should turn to the ABS labour force data on hours usually worked each week. As already noted, average weekly hours of work among full-time workers have changed little over the last five years. However, the proportion working 50 hours or more per week has fallen from 18.7 per cent in 2001 to 17.3 per cent in 2006. Perhaps the message about the need to ensure an appropriate work-life balance is starting to sink in, or perhaps rising real incomes and a stronger labour market mean fewer Australians now feel the need to have to put in the long hours every week.

In a nutshell, there are almost no Australian employees who work unpaid hours. We are all paid for every hour, it is just that some of us are apparently prepared to work for what might seem quite low hourly rates.

There are of course many Australians who really do work for zero pay. These mainly come in two varieties. The volunteer, typically found putting out fires, patrolling our surf beaches or helping the disadvantaged; and the carer, still found in the majority of Australian households. But don't worry, many of them also hold down a full-time paid job.

Mark Wooden is Professorial Research Fellow and Acting Director of the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne