Gerry Harvey Overestimates What People Get Paid

We've pointed out in the past that Myer CEO Bernie Brookes sometimes makes exaggerated claims when complaining about what people get paid when penalty rates apply. It seems Harvey Norman boss Gerry Harvey suffers from the same affliction.

Picture: Getty Images

Over the weekend, Harvey popped up on the ABC's Business Insiders program and made the following claim:

I know people like myself where we've got resorts or we're in the hospitality business and we just can't make money because you're paying someone minimum $42 per hour or something on a Sunday. You've got to open on a Sunday but at the end of the day you've just lost a lot of money by opening on the Sunday so it's very, very difficult to make money when you're paying unskilled people $42 per hour.

Two points to make here. Firstly, there are very few jobs that are completely "unskilled"; I would need considerable training to be an effective waiter, for example.

But the more important point: just who is earning this $42 figure? Blogger Matt Cowgill last year did a comprehensive analysis of similar claims by chef George Calombaris and concluded that they were wildly exaggerated. Award rates are not as high as is often claimed.

In the hospitality industry, the absolute maximum you had to pay under the award was $34.49 an hour, and that was for a fully-trained chef with all loadings included. For waiters — a more representative example of "hospitality workers" — the figure starts at $27.93.

It's to be expected that business owners will complain about what they have to pay people; we see the same phenomenon at work in IT when jobs are offshored. However, it doesn't help to exaggerate the scale of the problem. In percentage terms, there's a big difference between $27.93 and $42.


Comments

    Or you can read the quote where he says "On a Sunday" which usually means at least time-and-a-half. Suddenly your $27.93 looks like $41.895 which is exactly what he is saying.
    I'm not a fan of the guy (HN is a huge ripoff), but read what he said and think for two seconds before you post stuff like this.

      Err
      "the absolute maximum you had to pay under the award was $34.49 an hour, and that was for a fully-trained chef with all loadings included"
      Either I misread that bit, or you need to take some of your own advice!

        Huh? Either I misread your bit or you are comparing the rate of a waiter on an award rate with someone working at HN on a Sunday on time and a half which is what ReadTheQuote was referring to.

          I believe you did misread, as "all loadings included" includes Sunday loading.
          So to change the sentence a little, "the absolute maximum you had to pay under the award on a Sunday with time-and-a-half was $34.49 an hour, and that was for a fully-trained chef"

          I'm kinda surprised the article is comparing retail workers to waiters and chefs - neither of which I have seen serving customers at Harvey Normans.

            Yer - he does state: "I know people like myself where we’ve got resorts or we’re in the hospitality business " which means you can look at different awards.

            I've quoted Restaurants and Cafes in a below response as this is more in-line with what most of us now of rather than working in a resort...especially Melbourne - what resort?
            If he's running a "Resort" and bitching about Sunday wages and being unable to turn a dime then I have even less sympathy for him.

            It'd be my guess that QLD Awards are even worse - someone else can trawl the awards for the QLD awards as I have work to do!

      It could have been worded better here, but if you read the original article, the $35 includes Sunday loading.

      $42/hr is still ridiculous for someone working in hospitality, Sunday or not.

      Fair Work Australia Award:
      https://extranet.deewr.gov.au/ccmsv8/CiLiteKnowledgeDetailsFrameset.htm?KNOWLEDGE_REF=216411&TYPE=X&ID=9691007489568331888889912894&DOCUMENT_REF=382903&DOCUMENT_TITLE=Restaurant%20Industry%20Award%202010&DOCUMENT_CODE=MA000119

      Section 20.1
      Level 1: Food and Beverage Attendant (Waiter) = $16.85 hourly, Sunday at 150% = 25.575.

      Level 6: Grade 5 cook (tradesperson) = $20.80 hourly, Sunday at 150% = $31.20

      They happen to be the facts.
      Gerry Harvey is discreditted and should have to buy advertising space and apologise for this manipulation of the populations understanding of minimum and maximum wages.

      This shit disgusts me .... and it will only become worse if people believe him rather than check his facts.

      Im pretty sure that is in reference to sunday trading. What waiter earns $27+ Per hour? HA! Another person out of touch with reality! Im sure my $19.60 per hour is a far cry from $40+ dollars per hour!

    It just goes to show how much people like Gerry and Bernie are out of touch with the real world. They have no idea how to survive on minimum wage, maybe if they tried to live on a basic wage for a few months they might have a bit more sympathy for there lowest paid staff. Gerry and Bernie, you are both dead set Wankers!

    Last edited 17/09/13 8:01 am

      They might pay the employee that amount. But they also have to pay super as well on top plus other levies

      If surviving on minimum wage is so difficult then how about you get a job that pays more than minimum wage?

      Improve your skills, make sacrifices, work overtime. Complaining about not earning enough is simply a complaint against your own failings, not your employer for offering you a job you chose to take.

        That is assuming everyone enjoys the same privileges/abilities/situations as everyone else

        Good theory, but not everyone can do as you suggest, I have depression, my wife is the main money earner in our house hold, I work 16 hours a week part time in a retail environment, I do 16 hours a week because any more than that triggers my depression, but I have made life easier for the wife, I do all the housework, house maintenance, shopping, etc so she can concentrate on her career and when she's not at work she can relax. I'm not complaining about having a basic job, I quite enjoy it, but because I choose to not learn or train more I should sit back and accept lower wages just because it suits Jerry and Burnie? I think not! I may not be performing rocket surgery, but I still have to manage a store, supervise staff, serve customers, ensure license compliance (its a bottle shop) all late at night. Again I'm not complaining, I really do enjoy the job, but I'll be stuffed doing it for $10 an hour like these guys want. Everyone's situation is different, not everyone can be a scientist.

          being a rocket surgeon... i can say ... its a fun job but it doesn't pay much to do anal surgeries with rockets these days. maybe i need a wife who can work and i can look after my kids. im planning to have kids soon.. after i get married, thats after i find a woman.

          Sorry but.. working more than 16 hours a week 'triggers' your depression? Depression is a clinical imbalance in the brain.. It seems unlikely that one activity can 'trigger' such an imbalance after a fixed period of time..

          I mean I hate working too.. But i'm not about to claim that my depression is caused by my job. It's caused by my brains chemistry.

          Seems like a cop out to me. Try finding a job you like perhaps...

          Last edited 17/09/13 10:56 pm

            In fact my depression is triggered by the fact that when I spend long periods of time out in public I start to have panic attacks and Anxiety, which then brings on a depressive episode, I can do more hours, but why should I when the risk is so high, we are traveling along quite nicely, the house is clean and tidy, we are well ahead on our mortgage, bills are paid and we have a decent chunk of coin sitting in our offset account as savings, the Wife is happy because she comes home and doesn't have to lift a finger, I cook, clean and do all the work around the house. I would like to do more hours, but every time I do I start to get anxious and panic and sure enough a depressive episode kicks in, its not triggered by doing a minute more than 16 hours I take the odd extra shift and bump up to 22 hours when we are short staffed, but we have found that around 16 hours is a safe threshold. Up until 4 years ago I had been working fulltime and massive amounts of antidepressants to try to cope with everything, we have started a new life in Tasmania, we changed all aspects of our lives but we couldn't be happier. So you still think it's a cop out?

              Ahh, now anxiety I can definitely understand :)
              Sorry to hear bud, all the best!

    the only time i make $42 an hour is on a public holiday with casual loading...

    In his defence, he could possibly be saying it costs $42 per hour for an unskilled employee. But this kind of person would have to work in an office where there a exclusive employee based overheads that you wouldn't have in the hospitality industry.

    Maybe if he bothered investing in his staff and building their skills, for example, teaching his sale people to sell a customer what they need, as opposed to whatever the salesperson is going to make the most commission on, or just the basics like how to properly greet people in the store (stop letching over to people like a creep). Just a basic skills like these would probably improve his profits on sunday trade.

    The $42 per hour might be the cost to the business, not what the employee actually receives. For example, where I work, the pay is about $34 per hour for a normal rate but when you factor in overtime, holiday pay, sick pay, super, redundancy, workcover, income protection, site allowance and travel allownace then the cost per hour to the business is over $70 per hour over the year.

      Except if you're a casual you don't get overtime, holiday pay, sick pay, super, redundancy, workcover, income protection, site allowance and travel allownace

        Not true. You will get Super (9%) if you work more than a week for the one employer (any employer that doesn't risks massive fines and has been lying to you). You will be covered by workcover at all times (1%-5% depending on role). You employer will almost always be charged payroll tax (5%ish)

    They may not be being paid $42 directly, but it is said that whatever your employee's salary is, your actual cost for that person is double, due to superannuation, sick leave, annual leave, etc. I think that might be the point of view he's coming from.

    Gerry doesn't seem to hold his wealth-generating humans with much respect...maybe he should be on-call for a year and see how he likes it - on a flat-rate.

    If you're making a loss, why do you "have to" open on a Sunday?
    If you're in a Westfield, they probably require it contractually, but you don't "have to" be in a Westfield.

      I know people like myself where we’ve got resorts

      "Sorry sir, this resort is closed on Sundays."

    A few other things to point out.
    1. It's ok for Gerry to have made $millions off the hard work of others,but i'm not allowed to make any money by being an employee ?
    2. Those of us who work unsocial hrs/weekends are generally doing this so we can make ends meet,i'm 52 was retrenched 18 months ago and have only just been able to get work again on a casual basis @ $18/hr,no penalty rates/sick pay/holiday pay.
    3.If a business is losing money by operating on a weekend,then maybe the management should be looking at their business model or even stay closed over a weekend,if so few customers are going there ?
    4.I'm sure Gerry would like to pay a lot less to staff who do work unsocial hours/weekends,but that applies to normal working hours as well,it seems Gerry would like us to be paid $1/hour and be working 7 days a week with 2 hours off on Sunday to attend church,just like it was in Victorian England.This would apply to every one else apart from Gerry.
    5. Where can i get this "job" that pays $42/hr and i don't need to have any training or be skilled in any way to do it ?

      summarised my thoughts exactly

      the wages are high but its in line with the cost of living

      if he wants 100% markups on goods
      we need the wages to be able to afford that

      if he cant afford to open on sunday, he needs to rethink his business model.
      Democracy, free market, survival of the fittest. Either align with all, or move to north korea

    I think he's just upset that JB Hi-fi have more market share than he does for some reason. Oh and now they moved into White Goods his buisness is even doing worse.

    My eyes well with tears when I think of poor Gerry's trials and tribulations. Those mean customers forcing him to open on a Sunday, and those mean employees expecting to be paid award wage for the privilege of working in his stores! Can we set up a charity to support this man of the people?

    Myers and Harvey normal are simply middle men re-selling goods for a profit, if they can't afford to be open on a Sunday and paying people the wages they are legal entitled to they shouldn't open for business.

      exactly. I am so sick of glorified salesmen being held up as ideal innovators/entrepreneurs

    Just came back from a trip to the US. Minimum pay is $7.50 per hour (most people do get paid a couple more dollars than that per hour). Yes, the get tips (roughly 10-15%) - but not always. They also pay less tax - 1% - 10.30% in California. Also very few get any loadings. While other's may have experienced different - I experienced great service and good quality food, etc throughout the trip. While none of us want to earn less money - one does have to wonder how much longer our country can support wages like those above.

      You've also got to look at the fact that prices for almost everything is cheaper compared to Australia. Rent, electricity, internet, transport, food is all cheaper in the USA compared to Australia. In order for Australia to offer lower wages, we would need lower cost electricity, lower rents, lower transport costs, lower food bills, lower internet bills. It all adds up in the end.

        But does the cost of wages contribute to those higher costs in electricity, rent, transport, etc? I agree they would all need to drop - how. Rarely do things go down - mostly up! I don't have solutions - it's extremely complicated - just a discussion point I suppose.

      that's why hospitality workers in the US have to rely on tips to survive

    For decades in Australia we had a limited choice for retailers, you had bricks and mortars stores and nothing else, now Jerry and Bernie are being dragged kicking and screaming into the Digital age, and they don't like it, just about all retail is a stack em high and sell em low business, but these guys are still running old business models trying to generate large margins with massive returns for shareholders (and themselves) and it simply won't work in today's retail climate.
    I understand that as Captains of the respective companies they have to maximize profit while minimizing costs, but this constant bashing at the remuneration drum towards some of there lowest paid staff is simply not working.
    Companies like The Good Guys and JB HiFi have made very successful and profitable businesses by moving fast and embracing the stack em high and sell em low philosophy all while still maintaining decent staffing levels and making healthy profits, maybe Jerry needs to take a look at them. And Ihate to say this Bernie, but the "Are you being served?" Era of Departments stores has been and gone, maybe its time to downsize so you can react faster, listen to what your customers are telling you and get a mail order business that actually works and is less staff intensive. Just my 2 cents.

    Well, its these large numbers of low income workers who do most of the purchasing in Australia.
    Business owners are living in la-la land if they don't realise that cutting everyone's pay will hurt their business' sales.
    I honestly wonder how CEO and and senior managers can claim that they are talented enough to run their businesses if they are endlessly whining in the media about how difficult it is to run a business / make money. Anyone on over $100k per year has no reason to complain, they just need to re-balance their lifestyle and priorities.

    You’ve got to open on a Sunday...

    No you don't, Gerry. The whole point of the Australian version of the system to create the efficient allocation of resources is that if you can't operate profitably on a Sunday - either by improving efficiency or by spreading out the Sunday losses against the Mon-Sat profits - you should close up shop and move over for someone who can. I think it's called "capitalism".

    If the productivity of your highest cost labour (be it the imaginary $42, or the actual $36) isn't where you'd like it, that's probably a management problem more than a labour one (to get that figure, they need to be qualified and have several years of experience, so they would usually know how to be productive).

    Obviously if nearly everyone does that, there's a problem, but since the latest indications are there's no risk of that (Tourism Australia's State of the Industry 2012 report showed an overall increase in spending of 8% last year), you should go back to yelling at empty chairs and let someone who isn't completely mental have a crack at things.

    If a 15 year old gets paid $10.50/hour, 1.5x that on a sunday is only $15.75/hour, which is under the minimum wage (for an adult) anyway.

    Funnily enough, I don't shop at Harvey Norman because Gerry Harvey is a greedy pig of a man (and I'd never buy tech products there anyway). Comments like this simply reinforce what I think of the guy and why I'm even less likely to ever step foot in one of his stores.

    Gerry Harvey is right about unskilled workers in the sense that he is in fact one of the most unskilled people in retail quit whinging Gerry with your outdated business model try working with customers instead of berating them and charge a good price for items then maybe people will come back I mean you whinge about the baby bonus but were more than happy to take the money for the widescreen TVs everyone was buying from.Go back to the racetrack with that blowhard John Singleton and get loaded again I'm not surprised you're whining about money you blow it all on booze and gambling.

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