Industry Characteristics
Nils Timo (Timo, 1992) observes that the Australian hotel industry is characterised by … gendered labour markets, a relatively young transient workforce, a culture of casualisation, seasonability, and the development of internal labour markets.” Not an ideal scenario for a burgeoning and crucial economic sector! The recent Australian Workplace Industrial Relations Survey (AWIRS) (Callus, 1991) confirms some, but not all, of these assumptions.
Gendered Labour Markets
On the issue of “gendered” labour markets, AWIRS found that some 56% of employees in the “recreation, personal services and others” category are female, comparable to the proportions indicated by the Australian Bureau of Statistics studies (Timo, 1992). However, this proportion may be misleading, as the category subsumes all such industries, and fails to isolate the hotel sector.
The Bureau of Tourism Research’s figure of 60% may be more realistic (BTR, 1990). A smaller, more recent, survey indicates that the representation of females in the hotel industry may be even greater than both studies suggest — 69.4% (Nankervis, 1991). This survey also indicates that such proportions vary with hotel classifications. Five-star hotels appear to employ equal proportions of male and female employees, whilst three- and four-star hotels seem imbalanced towards female employees. Both traditionally female occupations (eg housekeeping, guest relations) and the part-time, or casual, nature of “service” occupations presumably influence these statistics.
A Culture of Casualisation
Whilst the “gendered labour market” of the hotel industry may, or may not, be a crucial issue, it is important that the “culture of casualisation” is addressed by the Australian hotel industry in order to ensure future success. The conjunction of “casualisation” and the high proportions of female employees may represent discriminatory and exploitative practices which are inimical to such progress. The AWIRS study suggests that within the overall category of “recreation, personal services and other” around 54% of employees, the highest of all industries surveyed, are employed on a part-time basis, with some 68% of hotels employing more than half of their staff on these conditions (Callus, 1991). Another study, (Nankervis, 1991) taking a different perspective, suggests a relationship between gender and work status — whilst 57% of staff are employed on a full-time basis, 71% of these are male, often in managerial positions.
Recent revisions to the award which covers hotel employees, renamed in 1989 the Hotels, Resorts and Hospitality Industry Award implies the regularisation of casual employment “… employees who have worked a roster of at least fifteen hours per week for a period of not less than six months” (Bodi, A., et al, 1991) —but still fails to provide job security. No doubt justification for continued, irregular, employment of large numbers of “casuals” in the hospitality industry relates to the industry need for numerical flexibility, especially in resort locations, and overall industry seasonal fluctuations. It may not, however, provide either the optimal staffing scenario, nor an adequate justification for the high prevalence of female workers in this category.
Young, Transient Workforce
The recent AWIRS study, defining youth workers as those 20 years or younger, found that some 55% of surveyed organisations in the “recreation, personal and other, category employed no young workers (Callus, 1991). This figure is no doubt skewed due to the inclusion of non-hotel sector organisations. Few reliable statistics exist on the levels of youth employment in the hotel industry. However, another survey (Nankervis, 1991) suggests that there is a strong preference (75.4%) for the employment of employees with prior industry experience, which may support the AWIRS findings. This preference is highest, as might be expected, in four-star (90%), five-star resort (75%) and five-star capital city sectors (72.7%).
Transience may be indicated by comparatively high labour turnover rates, which are confirmed by both Bureau of Tourism Research (BTR, 1990) and AWIRS studies (Callus, 1991) — 45% annually3, especially in kitchen, housekeeping, front-of-house and bar occupations. Labour stability appears correspondingly low, with few employees overall staying more than five years (Callus, 1991). The preponderance of low-skilled occupations, “normal” seasonal fluctuations, and the apparent overall scarcity of value-added human resource activities (training, career paths, rewards systems), may contribute to these statistics, which severely challenge government and industry predictions about the contributions of this industry sector to national economic recovery.
Salary Levels/Union Involvement
Hotel employees have traditionally been perceived as among the lowest paid of all Australian workers, partly due to their transience, low skills levels (and historic lack of skills accreditation), and lack of union support. These perceptions are confirmed by several studies — the AWIRS findings (Callus, 1991) and a more recent survey (Nankervis, 1991) — which indicate that less than 30% five-star city hotels, 45% resorts, 40% four-star and 22% three-star hotels pay more than the award rates. In contrast, many hotels pay their managerial staff, often male, substantial salary supplements, especially in five-star sectors.
Presumably, some hotels will increase employee wages as the result of new enterprise agreements and award restructuring activities, based upon the abolition of penalty rates and productivity initiatives. Already, a major Australian hotel chain has successfully negotiated an enterprise agreement with its employees, involving the substitution of penalty rates for higher hourly rates and increased job flexibilities (Smith, 1992). More are likely to follow. As a highly labour-intensive industry, the hospitality sector will fail to thrive if the only solution to its problems focuses on salary disincentives and corresponding job flexibilities.
Union participation is also unusually low in the Australian hotel industry — AWIRS estimates the level of unionised workplaces in the “recreation, personal and other services” category as 67%, the lowest, alongside “wholesale and retail trade” and “finance, property and business services”; a comparable survey suggests that 73.9% respondents in the hotel industry have less than half of their employees covered by relevant unions (Nankervis, 1991).
Such low levels undoubtedly reflect casualisation, gender imbalances, transient workforces and the historically weak positions of relevant industry unions. They also provide substantial opportunities for astute hotel managers and their human resource specialists to negotiate creative enterprise agreements, covering job flexibilities, performance-based rewards systems and career management programmes.
Labour Costs and Overall Industry Costs
As a highly labour intensive industry, the hotel sector is naturally becoming concerned to identify the actual relationships between labour costs and institutional profitability and competitiveness. The opportunities for increasing labour flexibility, and thus potentially reducing these costs as a proportion of overall operating costs, as well as the increasing use of minor technologies to substitute for labour (eg greater use of computerised front office systems, self-service automated telephone and mini-bar operations), are predicated on industrial relations and operations changes. The AWIRS study suggests that half of their respondents in the “recreation, personal and other services” category estimate that between 21-40% of their overall operating costs directly relate to labour costs (CaEus, 1991).
A more focused study (Tourism Task Force, 1992) found that “… the Australian hotel industry has one of the highest labour cost components when expressed as a percentage of revenue and an amount per available room.” Using international comparisons, the study also found (see Table 1, Figures 1 & 2) that Australian hotels have both “… the highest percentage pay-roll cost and the second lowest employee per room (next to Europe) statistic … “ (TTF, 1992). Accordingly, the Tourism Task Force concludes that the Australian hotel industry “… ranks last in terms of hotel Gross Operating Profit (GOP) as a percentage of revenue and GOP per available room” (see Table 2).
Labour costs include direct wages, overtime, penalty rates, holiday and long service leave, training, meals, pay-roll tax and workers’ compensation premiums. Significant components of labour costs are actual wages, penalty rates, holiday pay and pay-roll taxes.
Australian hotels thus appear to employ less staff overall than their European, United Kingdom and Asian competitors, but provide them with greater salary and benefits systems. Ironically, however, the salary levels of employees in this industry are amongst the lowest of all Australian employees. Not surprisingly then, any modification of labour costs must concentrate on the “peripherals” (penalty rates, holiday pay and leave loadings), the arena for negotiation in recent award restructuring initiatives.
However, concentration on labour cost modification alone as an impetus for industry growth and international competitiveness is insufficient, especially as the principal “product” of at least the four- and five-star hotel segment is quality service, which necessarily requires ongoing high levels of staffing. Of perhaps more value is a comprehensive industry strategy reviewing all aspects of human resource management practices, and devising unique and long-term solutions to ensure continuing productivity, profitability, and thence competitiveness.
Industry Characteristics
Nils Timo (Timo, 1992) observes that the Australian hotel industry is characterised by … gendered labour markets, a relatively young transient workforce, a culture of casualisation, seasonability, and the development of internal labour markets.” Not an ideal scenario for a burgeoning and crucial economic sector! The recent Australian Workplace Industrial Relations Survey (AWIRS) (Callus, 1991) confirms some, but not all, of these assumptions.
Gendered Labour Markets
On the issue of “gendered” labour markets, AWIRS found that some 56% of employees in the “recreation, personal services and others” category are female, comparable to the proportions indicated by the Australian Bureau of Statistics studies (Timo, 1992). However, this proportion may be misleading, as the category subsumes all such industries, and fails to isolate the hotel sector.
The Bureau of Tourism Research’s figure of 60% may be more realistic (BTR, 1990). A smaller, more recent, survey indicates that the representation of females in the hotel industry may be even greater than both studies suggest — 69.4% (Nankervis, 1991). This survey also indicates that such proportions vary with hotel classifications. Five-star hotels appear to employ equal proportions of male and female employees, whilst three- and four-star hotels seem imbalanced towards female employees. Both traditionally female occupations (eg housekeeping, guest relations) and the part-time, or casual, nature of “service” occupations presumably influence these statistics.
A Culture of Casualisation
Whilst the “gendered labour market” of the hotel industry may, or may not, be a crucial issue, it is important that the “culture of casualisation” is addressed by the Australian hotel industry in order to ensure future success. The conjunction of “casualisation” and the high proportions of female employees may represent discriminatory and exploitative practices which are inimical to such progress. The AWIRS study suggests that within the overall category of “recreation, personal services and other” around 54% of employees, the highest of all industries surveyed, are employed on a part-time basis, with some 68% of hotels employing more than half of their staff on these conditions (Callus, 1991). Another study, (Nankervis, 1991) taking a different perspective, suggests a relationship between gender and work status — whilst 57% of staff are employed on a full-time basis, 71% of these are male, often in managerial positions.
Recent revisions to the award which covers hotel employees, renamed in 1989 the Hotels, Resorts and Hospitality Industry Award implies the regularisation of casual employment “… employees who have worked a roster of at least fifteen hours per week for a period of not less than six months” (Bodi, A., et al, 1991) —but still fails to provide job security. No doubt justification for continued, irregular, employment of large numbers of “casuals” in the hospitality industry relates to the industry need for numerical flexibility, especially in resort locations, and overall industry seasonal fluctuations. It may not, however, provide either the optimal staffing scenario, nor an adequate justification for the high prevalence of female workers in this category.
Young, Transient Workforce
The recent AWIRS study, defining youth workers as those 20 years or younger, found that some 55% of surveyed organisations in the “recreation, personal and other, category employed no young workers (Callus, 1991). This figure is no doubt skewed due to the inclusion of non-hotel sector organisations. Few reliable statistics exist on the levels of youth employment in the hotel industry. However, another survey (Nankervis, 1991) suggests that there is a strong preference (75.4%) for the employment of employees with prior industry experience, which may support the AWIRS findings. This preference is highest, as might be expected, in four-star (90%), five-star resort (75%) and five-star capital city sectors (72.7%).
Transience may be indicated by comparatively high labour turnover rates, which are confirmed by both Bureau of Tourism Research (BTR, 1990) and AWIRS studies (Callus, 1991) — 45% annually3, especially in kitchen, housekeeping, front-of-house and bar occupations. Labour stability appears correspondingly low, with few employees overall staying more than five years (Callus, 1991). The preponderance of low-skilled occupations, “normal” seasonal fluctuations, and the apparent overall scarcity of value-added human resource activities (training, career paths, rewards systems), may contribute to these statistics, which severely challenge government and industry predictions about the contributions of this industry sector to national economic recovery.
Salary Levels/Union Involvement
Hotel employees have traditionally been perceived as among the lowest paid of all Australian workers, partly due to their transience, low skills levels (and historic lack of skills accreditation), and lack of union support. These perceptions are confirmed by several studies — the AWIRS findings (Callus, 1991) and a more recent survey (Nankervis, 1991) — which indicate that less than 30% five-star city hotels, 45% resorts, 40% four-star and 22% three-star hotels pay more than the award rates. In contrast, many hotels pay their managerial staff, often male, substantial salary supplements, especially in five-star sectors.
Presumably, some hotels will increase employee wages as the result of new enterprise agreements and award restructuring activities, based upon the abolition of penalty rates and productivity initiatives. Already, a major Australian hotel chain has successfully negotiated an enterprise agreement with its employees, involving the substitution of penalty rates for higher hourly rates and increased job flexibilities (Smith, 1992). More are likely to follow. As a highly labour-intensive industry, the hospitality sector will fail to thrive if the only solution to its problems focuses on salary disincentives and corresponding job flexibilities.
Union participation is also unusually low in the Australian hotel industry — AWIRS estimates the level of unionised workplaces in the “recreation, personal and other services” category as 67%, the lowest, alongside “wholesale and retail trade” and “finance, property and business services”; a comparable survey suggests that 73.9% respondents in the hotel industry have less than half of their employees covered by relevant unions (Nankervis, 1991).
Such low levels undoubtedly reflect casualisation, gender imbalances, transient workforces and the historically weak positions of relevant industry unions. They also provide substantial opportunities for astute hotel managers and their human resource specialists to negotiate creative enterprise agreements, covering job flexibilities, performance-based rewards systems and career management programmes.
Labour Costs and Overall Industry Costs
As a highly labour intensive industry, the hotel sector is naturally becoming concerned to identify the actual relationships between labour costs and institutional profitability and competitiveness. The opportunities for increasing labour flexibility, and thus potentially reducing these costs as a proportion of overall operating costs, as well as the increasing use of minor technologies to substitute for labour (eg greater use of computerised front office systems, self-service automated telephone and mini-bar operations), are predicated on industrial relations and operations changes. The AWIRS study suggests that half of their respondents in the “recreation, personal and other services” category estimate that between 21-40% of their overall operating costs directly relate to labour costs (CaEus, 1991).
A more focused study (Tourism Task Force, 1992) found that “… the Australian hotel industry has one of the highest labour cost components when expressed as a percentage of revenue and an amount per available room.” Using international comparisons, the study also found (see Table 1, Figures 1 & 2) that Australian hotels have both “… the highest percentage pay-roll cost and the second lowest employee per room (next to Europe) statistic … “ (TTF, 1992). Accordingly, the Tourism Task Force concludes that the Australian hotel industry “… ranks last in terms of hotel Gross Operating Profit (GOP) as a percentage of revenue and GOP per available room” (see Table 2).
Labour costs include direct wages, overtime, penalty rates, holiday and long service leave, training, meals, pay-roll tax and workers’ compensation premiums. Significant components of labour costs are actual wages, penalty rates, holiday pay and pay-roll taxes.
Australian hotels thus appear to employ less staff overall than their European, United Kingdom and Asian competitors, but provide them with greater salary and benefits systems. Ironically, however, the salary levels of employees in this industry are amongst the lowest of all Australian employees. Not surprisingly then, any modification of labour costs must concentrate on the “peripherals” (penalty rates, holiday pay and leave loadings), the arena for negotiation in recent award restructuring initiatives.
However, concentration on labour cost modification alone as an impetus for industry growth and international competitiveness is insufficient, especially as the principal “product” of at least the four- and five-star hotel segment is quality service, which necessarily requires ongoing high levels of staffing. Of perhaps more value is a comprehensive industry strategy reviewing all aspects of human resource management practices, and devising unique and long-term solutions to ensure continuing productivity, profitability, and thence competitiveness.
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