It’s not just the huge wage subsidy. The worker-employer relationship is going off-kilter.
The law sees employment as a contract between two parties, where one pays the other for their time and services. Though it might be healthier if people saw it the same way, we don’t.
For workers, employment is part of our identity and self-worth. When it comes to companies, there is a narrative that says they are rapacious and care about nothing but the bottom line. But companies don’t ‘care’ about anything at all. So that narrative is really about those in leadership positions. And, while it might be pleasing for some to think that all leaders are cold and calculating enough to view employment as a contract, in reality, most don’t. For example, leaders often feel hurt, remorseful or betrayed if staff choose to quit.
For all sorts of reasons, we hold back from talking about employment as a relationship that’s similar to a friendship or a marriage. And it’s true they are imperfect comparisons. But in a time when employment is being rigorously disrupted, it’s important we speak not only to the technicalities of being stood down or made redundant but also to the humans that affect and are affected by such decisions.
So we shouldn’t just be worried about the industrial relations (IR) shifts that come off the back of the current crisis. We should keep an eye on the cultural shifts. Because our response to COVID-19, in regards to employment, could change a lot of our lives.
Want to get across all the work changes caused by COVID-19? The Australian HR Institute is running a series of webinars on everything from data-driven engagement to the smart way to let people go. Free for AHRI members.
JobKeeper’s effects on employees
The first obvious change wrought by the current social distancing laws is the economic downturn. As with all economic downturns, hiring slows at the same time organisations let workers go. What makes this particular downturn different is the multi-billion dollar wage subsidy JobKeeper.
Individuals earn roughly $400 more a fortnight on JobKeeper over the JobSeeker payment, which is for those out of work, and employers get to keep employees they couldn’t afford otherwise.
The purpose of the scheme is to keep everyone with their employer, regardless of whether they’ve been stood down, so when the economy can be opened up it will come roaring back. While this idea makes all the sense, it’s also fraught.
Most Australians are not part of a union. So often the only weapon an employee has is their ability to quit. In the best of times, this is a double-edged sword. It can be effective, but it’s just as likely to hurt you. Right now, it’s a water pistol.
The job market means very few are going to be willing to quit their job unless their situation absolutely demands it. At the same time, the JobKeeper scheme means people are incentivised to stay with a company regardless of whether it’s otherwise the right move for their family, or whether they intend to stay in the long run.
JobKeeper also gives their employers new abilities under the Fair Work Act (the changes sunset in six months). They can’t unilaterally cut someone’s wage, but they can reduce hours down to the $1,500 a fortnight JobKeeper payment. They also have the ability to change an employees duties so long as it is safe and reasonable to do so. (You can read HRM’s breakdown of the scheme here.)
While you can see the benefits of these changes, there is a risk of them being abused. You can imagine a situation where a company cuts hours but doesn’t cut someone’s workload. They may not explicitly direct them to effectively work for reduced pay, but the implicit demand is there. And when there is so little standing between you and an economic abyss that demand can sound like a threat, regardless of whether that’s the employer’s intention.
It should be remembered that the industries most affected by the pandemic are also the industries which had the most systemic underpayment issues (hospitality, tourism, etc) prior to the outbreak of the virus. What’s more, regulatory oversight will be stretched beyond its limits during this crisis. At the same time, workers, who often already don’t understand their employment rights, are even less likely to understand what the recent changes have done to those rights.
In a crisis, it’s easier to make sweeping changes. Unscrupulous leaders take advantage of that just as much as honourable ones do. Anecdotally, I have heard from a more than a few HR professionals that some companies are using the cover provided by COVID-19 to get rid of employees they were hoping to get rid of anyway.
It’s also true that some leaders are refusing to put people on JobKeeper even if they technically could. This is happening to some employees who were let go within the scheme’s grace period. Their employers are refusing to hire them back.
Without knowing the specifics, it would be unfair to say if this is unacceptable. But employers should be aware the change in power dynamic is not without its risks for them. Being forced to stay in your job is not conducive to a good relationship with your employer.
JobKeeper’s effects on employers
This new system does tie employers’ hands in some ways. If a person’s efforts dropped to a level where their organisation would normally consider letting them go, would it dare? A new hire might be a dramatic improvement, but the current employee costs are heavily subsidised. Is a lot of work for tens of thousands of dollars worth more than some work that’s completely free?
There’s also a devil at work in the details of JobKeeper. Companies that don’t see a large enough revenue drop won’t get the subsidy so will often have to make tough choices about wage cuts and redundancies. There are also other kinks that couldn’t be ironed out in the rush to get companies relief.
As the Sydney Morning Herald reported, Woolworths owned Australian Leisure and Hospitality Group, which stood down 8000 workers, won’t be eligible because it was restructured to sit under Endeavour, which also operates the thriving liquor businesses Dan Murphy’s and BWS.
The ineligibility of some workers might hurt companies as well. Someone who has worked with them for eleven months, who might be a better worker than someone who has worked for thirteen, might have to be let go.
A less tangible risk for employers is what will happen to their reputation. Not everyone understands JobKeeper, and many are inclined to just think of it as a cure-all. Explaining to workers that they are not eligible – either because of their own status or the company’s – can be difficult.
The major change in this era, that is completely unlike other economic downturns, is the massive shift to remote work.
In the industries where it has happened, many (including HRM) have predicted work will never fully return from this era. Workplace flexibility for all will likely become a new normal. This is a hopeful prediction. But for those who think the greater availability of remote work has been a long time coming, perhaps they should be regretting the manner in which it finally did.
Viewed in its most negative light, this isn’t workplace flexibility we’re all experiencing, this is the inevitable drudgeries of work being toxically mixed with the inevitable drudgeries of isolation.
People aren’t working from home because it’s convenient. They are doing so because they have to, and for many, it is decidedly inconvenient. Parents are obviously struggling with tough decisions about childcare and schools, and are constantly being interrupted from work by their children. But they aren’t the only affected group – everyone is feeling it.
Most people can’t leave home except for essential reasons. Everything we’re doing, we’re doing at home. For some, work is a welcome change from the rest of their routine. For others, it’s torture.
Viewed in its most negative light, this isn’t workplace flexibility we’re all experiencing, this is the inevitable drudgeries of work being toxically mixed with the inevitable drudgeries of isolation. It would be fair to say some people have had their experience of remote work poisoned. Traumatised, they might insist future employers have an office they can commute to.
Think of the normal conflict that happens on any given working day. Whether it’s professional or personal disagreements, they are now taking place in a way that is very difficult for organisations to track. How would a company know if a manager and their team member had a furious disagreement that was harming their ability to work together? They can’t see the tension. All they might see is reduced output.
Given all this, and focusing on the worker-employer relationship, isn’t it possible forced isolation could fundamentally damage it? After the crisis is over, people may well associate their current organisation with a horrible period in their lives and want to move on.
Employers too might come to hate it. Some have predicted that many will seek to reduce office rental costs by insisting more staff work from home. But it will be interesting to what future research will say.
What if it turns out that productivity, creativity, collaboration and engagement were all harmed in the last two months? If that’s the case, far from being freed from office rent, organisations may happily keep paying it in order to restrict access to workplace flexibility.
The purpose of employment
In a recent media release, the Australian Resources and Energy Group AMMA revealed that a survey of over 100 companies in its industry showed broad dissatisfaction with the flexibility of Australia’s IR system in this time of crisis.
For example, it says that “70 per cent of respondents have changed or intend to change operational rosters to minimise labour movement, but half of all respondents (51 per cent) reported barriers or impediments to doing so”.
While welcoming the new government measures, such as JobKeeper, AMMA chief executive Steve Knott AM had this to say: “The reality is Australia’s outdated industrial relations system of complex awards, restrictive enterprise agreements, lengthy consultation requirements and so-called Fair Work Commission ‘assistance’ won’t save a single job, but will unnecessarily cost many.”
Now while it’s obvious what AMMA’s agenda is, the point he makes about saving jobs comes from a perspective which is widespread in this moment. Everybody is focused on the existence of jobs and not the quality of those jobs. But our IR system is designed to think of both, and it is wise for all of us to do the same.
Research shows that while resignations decrease during downturns, they rise when economic growth returns. According to a PwC report, resignations of high potential employees in the US increased from 2.4 per cent in 2011 to 4.4 per cent in 2013 as the recession ended.
Given everything discussed above, it’s doubtful that this particular crisis will not follow that trend. Indeed, if we don’t tread carefully, it could be far worse once a vaccine is found.
Because employment really isn’t just a contract. It’s a relationship.