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Aust workers underpaid $1.35b every year

A "perfect storm" of union decline and complex industrial relations rules is dudding workers out of an estimated $1.35 billion in underpaid wages annually.

New analysis from leading professional services firm PwC has drawn on Fair Work Ombudsman data to find 13 per cent of the workforce are affected by entitlement underpayments.

That rises to 21 per cent in the most at-risk industries.

According to the estimates, workers in construction are underpaid $320 million annually, with health services ($220 million), hospitality ($190 million) and retail ($180 million) the other leading sectors.

The analysis comes amid a rash of wage-theft scandals revealing hundreds of millions in unpaid entitlements.

While unions blame unscrupulous bosses and employers point to complex awards, PwC chief economist Jeremy Thorpe says there's more to the story.

"It is not as simple as a partisan he-said, she-said. I think there's a perfect storm," Mr Thorpe told AAP on Wednesday.

Mr Thorpe said businesses have under-invested in understanding payroll while operating within complex awards.

"The decline of unions is part of the story here as well," he said.

Wage theft must not be tolerated, although businesses generally wanted to do the right thing, he said.

"We don't really know how much of this is deliberate versus just long-term problems that have bubbled up now."

Mr Thorpe said legislative reform would be relatively slow, with the "quick win" lying with employers ensuring all workers get paid properly.

That should be a priority for every company board and manager, he said.

The PwC analysis nominates industrial relations risks as one of the top-five "blind spot" issues for Australian businesses.

Mr Thorpe said the industries with the most underpayment problems often had high levels of contractors, including casual or part-time workers, and multiple awards.

He pointed to other power imbalances like visa workers or lower levels of education as other contributing factors.

Attorney-General Christian Porter, who is drafting laws to criminalise wage theft, said corporate Australia was "beyond hopeless" on underpayments.

"I don't accept that our response has been anything other than absolutely clear that this is totally unacceptable and there is going to be new standards that apply to it," he told the National Press Club on Wednesday.

He also flagged harsher civil penalties for businesses that underpay workers.

© AAP 2019

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