7-11: Exploitation and wage slavery

Bill F.

The on-going scandal over the under-payment and intimidation of 7-11 convenience store workers has highlighted the ruthless greed at the heart of the capitalist system.

A joint investigation by Fairfax Media and Four Corners showed that the 7-11 head office had evidence that nearly 70% of its 620 stores across Australia had been under-paying workers, falsifying records and rosters, and making illegal tax-free cash-in-hand payments.

In panic at the public revelations of its complicity in wage and tax fraud, the company has set up its own internal investigation headed by Professor Allan Fels, a long-time critic of the 7-11 franchise model. Its purpose is to deflect attention from its own greed.

7-11 in Australia, along with the Starbucks chain, is owned by Russell Withers, his sister Beverley and their families. Wealth is estimated at around $1.5 billion.

Franchise rorts
The franchise model for 7-11 convenience stores requires many of them to be open continuously, 24 hours, 7 days a week. As well as selling milk, bread, newspapers and overpriced groceries, many outlets also sell Mobil petrol.

Franchisees have to pay many tens of thousands of dollars to join the chain and manage an outlet. The franchisee then receives just 43% of the profits while 7-11 head office takes 57%. After paying off interest on the franchise fee loan, plus the wages of the workers, some franchisees can barely scrape by and many leave the business.

This actually suits the 7-11 bosses because they can sign up another sucker with a hefty franchise fee. In fact 68 franchisees have left over the last twelve months, raking in a total of $9.5 million for 7-11 from its “churning” of outlets. They even have a target figure of 79 ‘churnings” per year!

The most obvious way the struggling franchisee can keep going is to rip off the workers. Officially, minimum hourly award wages are $24.69 an hour, with $28.49 for Saturday and $37.98 for Sunday, but few workers receive this.

Many of the workers are impoverished young people on refugee or study visas which officially limit them to only 40 hours work per fortnight. Some 4000 students work in 7-11 stores. Franchisees take advantage of this by demanding them to work many hours in excess of the legal restriction and then threaten to expose them to authorities (Border Farce?) for breaching conditions. This would result in deportation and destroy their hopes of building a better life or completing their studies.

The wages paid are also manipulated by unscrupulous franchisees, often with the full knowledge of the 7-11 bosses, so that many workers receive between $10-12 per hour, half the normal rate, while the franchisee pockets the rest. The payslips are falsified, both hours worked and wages paid, with false names covering the actual spread of hours.           

When this rip-off was exposed by the Fairfax Media-Four Corners team, another rort quickly emerged. Workers might have received the correct award pay rate in their bank accounts, but then were pressured into secretly handing back a good part of it in cash.

This whole nasty business model is based on intimidation, taking advantage of vulnerable young workers unsure of their rights, often isolated and desperate to survive in a new country. While the threat of deportation is held over them, other measures taken include taking passports and drivers licences to prevent workers leaving. They are truly wage slaves.

Nothing fair about capitalism
Officially, the Fair Work Ombudsman (FWO) is supposed to monitor and enforce labour laws and conditions. In practice much more money and resources is spent in hounding and obstructing honest unionists than calling the bosses to account.

FWO raided twenty 7-11 outlets last year and found 60% were under-paying workers. Only a couple were taken to court, the remainder had their wrist slapped by agreeing to repay thousands of dollars in stolen wages and completing an online ‘education’ course on the Fair Work website!

That’s class justice for you. Just see what you get if you shop-lift a bag of chips, let alone steal $100 from the till!

7-11 is only one of any number of franchise chains, restaurants, cafés and small businesses that illegally exploit young workers, whether on visas or not. There have been calls for a government amnesty for visa workers who come forward to expose these and similar rorts and harassment.  

Speaking of the union…
The other body who should be responsible for the welfare of 7-11 workers is the Shop, Distributive and Allied Employees’ Association (SDA). This right-wing dominated union is notorious for its lazy and passive representation of workers, and for doing deals with the management of big companies to sign up the workforce into the union and then sell them out in negotiations. It is more interested in delivering a large block of votes to the Labor Party right faction than fighting for workers’ rights and conditions.

The union’s response to the 7-11 scandal was to set up a hotline for workers to call in. This was after SDA national secretary Gerard Dwyer had already said workers were not coming forward because of fear that they could breach their visa conditions. Perhaps if the SDA had actually shown some interest in the plight of these workers and had actually gone out and spoken with them, informed them of their rights and done some basic organising, the union would have some credibility in the eyes of the working class.

What it shows is that the capitalist system will grind down and savagely exploit workers who are isolated and weak, that legal protections for workers are half-hearted and ignored until someone kicks up a fuss, and that the concept of “fair work” is only window-dressing for exploitation.

We should remember that Karl Marx’s great work Capital showed that human labour creates new wealth in the form of ‘surplus value’ which arises in the course of production and is realised at the point of sale. Even if workers are paid the ‘correct’ and ‘legal’ wages, this is only a reflection of the necessary cost of upkeep for the workers and their families’ and not a true reflection of the additional wealth their labour has created. Capitalism and its social democrat apologists foster the myth of a “fair day’s work for a fair day’s pay”, but never live up to it.