Would Australians work harder if they got tips instead of wages?

We’ve all been there. Sitting at a restaurant, waiting.

Waiting …

“Could we get some menus, thanks”, you ask.

“Sure, I’ll be right with you”, is the reply from the waiter.

They are the words you got anyway. But you also got a little something extra with that reply. You had to read between the lines. Maybe it was in the tone, maybe it was in the body language. But something about their reply also said, “Why the fuck couldn’t you eat somewhere else?”

It was subtle, but it was there.

You got your menus. (Eventually.)

You got to order meals. (When your waiter was in the mood.)

And you got your food (after a while).

Technically, you were given everything that could have been expected.

But you also got the impression that you were an imposition, causing the waiter to exert effort and taking up time that they could have been using for other things, such as reading the paper or chatting up the waitress. No need to pay for that feeling of guilt though. It was complimentary, like the bread.


I am certainly not suggesting this happens all the time. Also, I’d hate to try and put a percentage on how often it happens, because its just impossible to tell. But I am saying the percentage is higher than zero and I suspect most of us have experienced it at some point.


But from the waiter’s perspective, why would they try any harder?

Its not like they’re going to get paid any more for providing good service. Their wage is fixed (and for a lot of them its fixed at the minimum).

Its not like they even really want the job (because for most its just a casual job on the way to something better, such as a ‘real’ career). So, you not returning, due to bad service, doesn’t concern them.

And many people are not going to complain to the mananger, because its not as if the waiter has been openly hostile. Everything they have done to make you feel uncomfortable and hesitant to ask for anything from them has all occurred beneath the surface, out of the eyes of management and its even hard to pinpoint yourself. It would be hard for even the waiter to identify because its not deliberate on their part, but a result of just not being bothered. As such, its free from specific identification and criticism.

So there is no real reason for a service-employee to try and ensure any level of service beyond the barest of minimums. Given this incentive structure, we shouldn’t be annoyed when we get bad service. Really, we should be amazed if we receive any level of service, whenever we eat out.

(Of course, one could argue that, even without these lack of incentives, people will still do their job properly because that’s what they are “supposed” to do and they will also take pride in a job well done. But if human beings really operated like that, I suspect communist states would have had a better run and McDonalds wouldn’t have to give police officers discounted food, just so they would patrol the area.)


Some countries think they have this issue sorted, by lowering service-employee fixed wage rates and having the customer make up the wage via tips.

Read any public forum that discusses tipping in the USA and this will be the first thing anyone says. Tips ensure that the service-employees deliver high levels of service, because if they don’t they will not get paid. Further, the argument goes, it gives the service-employee the incentive to put forth really high levels of service with the hope of extra-ordinary tips as a motivator.

But, it seems, that under such conditions tips just become expected.  (After all, tips, in such circumstances, are needed for the service-employee to live). In this situation, customers often tip regardless because they are so petrified of what would happen if they don’t. If a service-employee is going to get a tip anyway, then the situation becomes very much like the one I described in Australia. No incentive and a reasonable chance of the service-employee exhibiting no effort.

So in the end, I’m not sure that lowering Australian service-employees fixed wages and having customers tip on service-quality would have any positive effect on service levels, or if it would even encourage service-employees to pretend they don’t hate you, just because you chose to eat where they work.

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12 Responses to Would Australians work harder if they got tips instead of wages?

  1. Kim says:

    Wait a second, are you saying that people who don’t give a shit about their jobs don’t respond to any form of payment system? That is a revelation. I declare that you have passed your PhD, you can call yourself a doctor and you can wear a fancy hat. Sometimes.

    I think the real question here is how often do academics receive bad service as opposed to the great unwashed? Or is it? Or is it about the status of my personal hygiene? No wait, that’s a very different blog. Just as an aside I washed today, quite thoroughly.

    I don’t think tips promise a certain level of service as the expected tip in the USA is generally a set percentage isn’t it? Like 10 to 15%. So if you know you’re going to get your 10 to 15% why try deliver a 16 to 23% better service?

    In fact if I was a waiter, one that didn’t hit on the waitresses of course, I would prefer to work in Australia. Because receiving a tip can arrive in your sky rocket when you least expect it. It doesn’t require extraordinary service either. Smile, tend a table, bring some water and menus within a reasonable time and people may leave you some extra cash id est a tip (look at me go, I’m using latin in unabbreviated form!)

    Your statement But if human beings really operated like that, I suspect communist states would have had a better run doesn’t make sense to me. I think commy states go downhill as people don’t get a chance to try a bit harder, work independently, build their own business etc etc. Wow, that was a lazy riposte.

    I think the above five paragraphs, if you can call them that, will do for now.

  2. Tracey says:

    I think it’s interesting that we feel the need to have that better service. Sure it’s a pain if you’re in a rush or so hungry that you are tempted to grab a snack from across the road while you wait, but how many meals with friends are on such a tight time line? Do we want to be able to pretend that the person providing a service to us wants to be providing that service? Does it make people feel good to know they can punish the person who does not play this game (i.e. not leave a tip so they cannot pay their electricity bill)?

    Not that my ‘bring on the hate’ response answers any of your questions.

    • tippingoz says:

      I’m not suggesting that service-employees (or the rest of us that for that matter) should be made to become any more like prostitutes than we already all are. But this is an issue of concern to many people, including customers, employees and business-owners. For me though, I’m happy to leave aside what ‘should be’ in this post and am more concerned about trying to figure out ‘what is’ (or what would be).

      • Kim says:

        The only service-employees that are more like prostitutes…are prostitutes. I don’t see why providing a good service as a waiter, waitress or whatever means you are a prostitute.

        For me though, I’m happy to leave aside what ‘should be’ in this post and am more concerned about trying to figure out ‘what is’ (or what would be).
        How am I supposed to respond to this sentence? What the ding dong devil are you on about?

      • tippingoz says:


        In a broad sense we’re all prostitutes. Take all of us who either have, or have had, a job. We’ve done/said things, acted in certain accommodating ways not because we wanted to, but because we we were getting paid. We don’t call it ‘prostitution’ though, we call it ‘professionalism’. This possibly applies to those in the service industry more than many other jobs because of their direct contact with customers. But the principle applies to us all. Its a broad definition, I know. And its a little off topic, so I’ll leave it there.

        As for your second point – I was just getting at that the focus of this post was on whether tips (instead of wages) would influence service-employees to provide better service, not whether that would be an overall better situation.

  3. Tracey says:

    I forgot to add,
    is it thought that CEO bonus systems (or any other corporate bonus) make CEOs work harder?

    • Gus says:

      I think executive remuneration structures are very effective at providing incentives to work harder.

      Their bonuses are normally linked to a very narrow set of results that are clearly defined (for them, not always made clear to the shareholders), and I would think that this is a great incentive for them to work hard – at achieving these very specific goals.

      Whether they are working hard at the ‘right’ thing is another debate.

  4. Gus says:

    “So there is no real reason for a service-employee to try and ensure any level of service beyond the barest of minimums. Given this incentive structure, we shouldn’t be annoyed when we get bad service. Really, we should be amazed if we receive any level of service, whenever we eat out.”

    Really? Everytime I go to McDonalds, I’m not surprised that they give me food. In a timely manner. And in most cases it’s exactly as I order. It’s actually not a surprise at all, which is one of the reasons that I prefer McDonalds over various chinese delicacies.

    Example one – Small coffee shop. Run as a family business. You may even be served by the owner. If he cares about his business, chances are he cares about service. Because without it, we’ll all go to starbucks, or whatever he has next door. His motivation for service in this case is twofold – it provides him with a chance of future income (the fact you might come back again) and provides him with some satisfaction. I think you’ll find that in the made up survey in my head, most small business owners are passionate about their business and take pride in their work. You being happy makes him happy. Further, if his staff served you, there is everychance that they are part of his “family” – his staff are part of the business and treat it like theirs as much as he does. Consequences of poor service impact the owners cash flow, create disappointment etc etc.

    Example 2 – a large restaurant that is part of a company owned chain. I’m thinking something along the lines of a particular stakehouse (ok, it may be franchised, but you get the idea). I will kinda accept here that service is poorer than most places. Your original question was asking if Australians would work harder if they got tips instead. As there is no significant consequences for poor service in this case – it is a large restaurant, easy to hide, serving lots of people, many, many staff – apathy may well be the order of the day. In places like this, tips may well encourage better service. Until, as you probably rightly point out, it becomes expected, in which case the impact is no longer there as the incentive is gone.

    3. Larger restaurant, smaller company, more direct decision making – However, there is another incentive for at least meeting a basic minimum level of service. Money, and the fact that ongoing employment means you get ongoing wages. Without doing any research, I would assume that there are hundreds of thousands of minimum to low waged jobs that are all basically the same. Fast food alone would be a large portion of this, but walk along lygon street and see if you can tell me how much differentiation there is across the tasks performed and the wages offered. Conceptually, it would be trivial to leave one job and find a similar job elsewhere. But who would bother?

    Personally, I would hate not having a job, or even if I had one, looking for another. This is where the management and culture of a company has an impact on the service levels customers receive. In a company that has a level of assertiveness and direct decision making, a waiter that continues to offer poor service will simply not be employed much longer. Especially as there are plenty of people willing to take their place. Increased casualisation of the workforce may make this easier in some areas.

    Staff that may be personally satisfied with being “average” or “below average” employees may not be so thrilled with having to find a job after having been fired from the last three.

    Larger companies that form more of a beauracracy will find it harder to drop poor staff sooner. But why would any company want to offer service, and want to keep the staff that offer the service levels they want them to? Money – whether it is the individual owner or a large company, the owner(s) want money in the bank, and that means keeping customers at least realitively happy. Monopolies may not have the same motivation.

    While I don’t think I have helped answer your original question, I think you’ll agree that if you are amazed when you get served at a restaurant, you are consistently eating at the wrong places.

  5. Katie says:

    I am an Australian who currently started working in a restaurant in Canada, where tipping is customary. Living and working over here has given me a new perspective on tipping, which I have never been a huge fan of, mainly because why should I pay someone extra for doing their job? I don’t tip sales associates for finding me my size jeans or the book that I’m after so why should I tip someone for taking my order and bringing me my food? Having experienced the lower wages and lower prices of food however I find I don’t mind quite as much. I do believe that many tipping countries have it wrong since, as you say, tipping has become expected. People are afraid of the bad looks they’ll get if they don’t tip well. I’ve taken to tipping according to service to make a stand. If the service if acceptable, pleasant and just how it should be then I tip the 15%. If it is slightly below par I’ll tip 10%. If it’s abysmal I won’t tip. And if it’s outstanding I’ll tip 20%. In a country where tipping is customary, I am ok with this.

    Would this work in Australia and encourage people to work harder? I don’t think so. From my perspective Australians have a higher work ethic than Canadians at the very least. I was shocked when I started working as a manager here and people didn’t care, would barely do the work required, showed up late and quit at a moments notice. The service industry is slightly better and often the service is better at restaurants however do you really think the Australian government would lower wages and tell people to start tipping? After so long of being a non-tipping culture people won’t suddenly turn around a start tipping. I’d rather the Australian way of paying our workers higher in the first place without the expectation of tips. That way when the service is outstanding I can leave a little extra knowing that the server will be grateful rather than expectant of the tip.

    • tippingoz says:

      That’s really interesting. Its a bit surprising that it seems tips almost provide a disincentive, given that you say some service-providers barely do the work required. Something worth thinking about. Thanks for your comments

  6. Lola says:

    OK so i have read through this and done some thinking and I can give you what i have done and people i know who work in the business have done in the past.

    Tips are great and you get paid so little that all you base your pay on is tips. But here is the thing. You find the people who are going to tip and tip well and that is who you end up giving attention to. Where as those you feel wont or are not going to give big tips you just give what you have to, to get them to leave. I hate the idea of tipping in America when you go to a bar even if the bartender is rude or slow or whatever you are expected to tip and if you dont next time you go to the bar to get a drink you wont get one or it will be so weak and you will get even worse service. People here in America work harder if they know are going to be given a bigger and better tip. Not that they earned it or whatever and then you have people who refuse to tip. They can order everything for everyone and leave you nothing. I hated working as a barmaid and server because of it. I would rather know I am making 9 dollars and hour and making money then 2 or 3 dollars and hour and hope people show up and its not a dead night with noone there and you get a few good tables. Its all a gamble.

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