Wage theft must be criminalised to stop a "shameful" practice targeting vulnerable and low-skilled workers, a Senate committee has found.
In a report titled Systemic, Sustained and Shameful, the Labor-led committee found a "vicious cycle of underpayments" was having wide economic impacts and driving wages down across the board.
It found employers used a power imbalance to disadvantage their workers, with women and First Nations people more likely to suffer.
"There is a direct link between insecure work and underpayment, reflecting the power imbalance between employers and worker, and workers' fear of speaking out or seeking redress for fear of losing their jobs," the report says.
"Vulnerable workers are at higher risk of exploitation due to a range of factors including gender, age, disability, ethnic or cultural background and language barriers."
It found wage theft including withholding superannuation entitlements created a downward economic spiral and impacted people's retirements, with taxpayers having to pick up the bill in the form of increased pension payments.
But it found current penalties to be "out of line" with community expectations, with only civil penalties available for wage theft.
A number of witnesses also said avenues for redress do not meet the needs of workers, with options proving "intimidating, inaccessible, costly, complex, inefficient and ineffective".
Recommendations included changing the Fair Work Act to criminalise wage theft, making it illegal to advertise employment with pay less than the national minimum wage and implementing a small claims tribunal for an efficient process to pursue wage theft.
It also recommended both the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission ramp up efforts to prevent wage theft.
The report quoted an anonymous victim of unpaid superannuation, who said companies must face strong penalties to stop entitlements being stolen.
"If I were to steal money from (my employer), I would be in jail ... it needs to work both ways," she had told the committee.
A dissenting report by Coalition Senators Paul Scarr and Andrew Bragg notes more than 85 per cent of penalties levied in 2020-21 were against the CFMEU, adding government industrial reforms proposed in 2020 included criminal penalties for wage theft but were voted down by the opposition.
