Processing

Are JobKeeper payments creating an unlevel playing field in the cattle market?

Jon Condon, July 31, 2020

SUGGESTIONS have been raised this week that Government JobKeeper payments being received by some processing industry personnel are helping to distort competition for livestock – in what is already an incredibly competitive slaughter cattle supply environment this year.

The general reduction in cattle slaughter across Australia this year, after heavy herd reduction due to drought, may have made the government’s year-on-year 30pc reduction in turnover target to qualify for JobKeeper more reachable for some processors. For the largest processors in the country with annual turnover above $1 billion, however, the reduction in turnover to directly qualify for JobKeeper must reach 50pc, according to Government rules.

Photo George Black: 200 butchers in the boning room makes for very fast processing.

Beef Central has seen a list of large and mid-sized processors whose staff are currently receiving support under the JobKeeper package. But equally, there are other large operators not receiving JobKeeper support.

While some companies may not directly qualify, a number of large and mid-sized processors rely on third-party labour hire firms for their labour supply, and it is those firms that have received JobKeeper support, Beef Central was told.

Beef Central raised the matter with the Australian Meat Industry Employee Union’s Queensland branch secretary, Matt Journeaux.

He said he was aware of some processing plants that were currently operating under Government COVID JobKeeper grants – either directly, or through third-party labour hire firm arrangements.

He supports the view that processors whose staff are receiving JobKeeper (either through direct payment, or via third party labour providers, who he says are passing the savings on) were at a considerable advantage over other competitors, when buying slaughter cattle in the saleyards or out of the paddock.

A few simple sums support this. Recent studies suggest it currently costs Australian processors around $300 to process a beast, or about $1/kg on a typical 300kg carcase. Earlier studies by AMPC indicate about 70pc of that cost is wages-related. That suggests a processor receiving the $750/employee JobKeeper weekly payment could well be 40-50c/kg better off than a competitor in terms of their overheads, when seeking to buy cattle.

Mr Journeaux said the AMIEU was concerned, if saleyards competition was being distorted by COVID JobKeeper payments.

“There’s plenty of industry chatter about this at the moment, and we think the concern is legitimate,” he said.

“Australia is already paying the highest prices in the world for cattle, and together with an Aussie dollar currently worth around US72c, it doesn’t make it any easier when we are trying to compete in a global beef market. It’s a difficult time.”

Asked if JobKeeper was distorting competition for cattle, he felt it was. “Unfortunately, when a labour hire firm supplying staff to a processor becomes eligible for JobKeeper, it affects the broader market.”

He said one large processor not receiving JobKeeper was currently only killing three days each week, due to being unable to compete on a ‘level playing field’ for cattle.

“That means my members are losing a day’s pay each week at that plant, which is not easy in these difficult times. Obviously those workers are concerned about their future, and what is going on.”

Asked if he had a solution, Mr Journeaux said JobKeeper should be more flexible, applied to site-specific situations.

“In our view, those people at that plant that is currently operating only three days each week, because their employer does not qualify for JobKeeper, should be receiving some form of compensation from the government,” he said.

“There needs to be some form of adjustment to the programs terms to reflect situations like this, to re-level the playing field,” he said

Is there a workplace risk ‘stigma’ emerging over the processing industry?

Also surfacing recently have been suggestions that Australian meat processors are battling to attract new labourers, given workplace health and safety ‘stigma’ attached to recent clusters of COVID-19 cases in Victorian meat plants.

Retention of existing staff and rates of absenteeism among existing staff had been surprisingly low during the COVID period, a Food Agility CRC webinar was told earlier this week. But it is in attracting new workers where concerns are currently raised.

One large processor told Beef Central his company was concerned it may have to cancel some shifts at regional facilities in coming weeks – not for cattle supply reasons, but because of the growing challenge of raising enough staff to complete a shift.

There are two theories about what’s causing that.

The first is simply that some prospective labourers are now avoiding work opportunities in the processing industry, following the heavy publicity that has surfaced since Victorian meat plants started closing six or eight weeks ago due to COVID.

The second is that JobSeeker payments are in fact causing the problem.

A large beef processor in Queensland told Beef Central this morning that the big drop-off in job applicants had started well before the spate of plant closures in Victoria due to COVID-related sickness.

“It’s got nothing to do with people no longer wanting to work in the industry, due to perceived health risks,” he said.

“Rather, it’s about the impact of the government’s JobSeeker grants. An entry-level worker at our plant makes $814/week, and pays tax on that. In comparison, the Government’s JobSeeker payment is $750/week, tax free, and they can get rental assistance on top. It is dis-incentivising people to work in the industry.”

He said the processing sector had been unfairly portrayed as a high-risk source of COVID.

“There are about 100,000 people working in various forms of meat processing across Australia. Just 370 have contracted the virus, in Victoria. By comparison, more than 900 residents and workers in Victoria’s aged care industry have contracted COVID,” he said.

The AMIEU’s Queensland branch secretary Matt Journeaux said processors had done themselves a dis-service for a long time by relying so heavily on overseas workers to fill their labour shortages.

“Obviously with COVID those overseas workers are not coming into the country.”

Rates of pay in processing were also an issue, he claimed.

“Somebody filling shelves at Coles or Woolworths can earn more than a labourer in meat processing,” he said.

“Processing can be quite a confronting industry – it’s not the most pleasant environment to work in. For somebody to come off the street to work there, it needs an adequate incentive, otherwise they simply stack shelves at Coles. Pay a little more, and they’re more inclined to hang around.”

Processing had not been incentivised for quite some time, because the use of migrant labour had held wages back, Mr Journeaux said.

Painting a positive picture

Processing sectors around the world are now beginning to promote the strong measures being taken to control the spread of the disease in the workplace.

This Youtube video devised and developed by the Brazilian meat processing industry body, ABEC, has attracted wide praise for re-assuring potential workers about the control measures in place.

https://youtu.be/07ZVsJVkDHQ

Mr Journeaux said most Australian processors had done a fantastic job in managing COVID risk in their factories – practising social distancing, adding sanitisation measures, temperature checks among staff, identifying and removing at-risk staff, and countless other measures.

“But the nature of meat processing, once you are on the floor, makes it very hard to maintain social distancing. It’s not an environment conducive to this,” he said.

“Having said that, the Australian processing industry is very different from those seen overseas. I don’t think we will see the same levels of transmission that has been seen in US processing, for example.”

“But Australian meat processors are multi-billion dollar companies. They could do their own TV ads promoting their risk management measures if they wanted to – building a positive image of the industry as a place to work.”

 

 

 

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