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How much should you tip in Australia?

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What do economists suggest? Nicolas Ayrault, a labor economist at the University of Melbourne, says economic models surprisingly have very little to teach about tipping.

“Economics can’t tell us the ideal or optimal amount to tip or in which sectors we should tip the most,” says Ayrault. “However, if we look at tips as a way to raise wages in low-wage jobs, it makes sense to prioritize low-wage sectors such as hospitality and retail.”

Where should we tip – and how much?

According to the payment platform Celery, Australians tip, and Tasmania is the most generous of all states and territories. The average tip is $16.06, with any variation likely based on the hospitality and customer service culture of some states. It may come as a surprise to some, when was the last time you tipped…never.

Musson recommends breaking it down into service and experience. Where 10 percent works on the lunch bill, the standard $5 is enough to call. If your taxi driver opens the car door for you, maybe tip him a fiver, or even $10 if it’s been a longer ride that requires you to drag your luggage into the trunk. Food delivery workers riding their bikes in the pouring rain may want a few extra dollars, and if you have an amazing massage, consider adding $5 to $10 to the bill.

If you consistently don’t tip, Zeller’s chief development officer Joshua McNicol insists that you’re not breaking any rules simply because “there are no rules about tipping.”

While Zeller’s data shows that the typical tipping amount is 7 per cent across Australia, it’s still entirely based on service standards, which are highly subjective.

McNicol says Australians have historically tipped more in higher-end restaurants, but smaller, less expensive places are starting to see an increase – something that people on lower wages may benefit more from. The collective fight against COVID-19 is probably the reason for this. “The little offering sign is a way we can show support … for the employees and industries that have been hit the hardest over the last few years,” McNicol says.

He says tipping has also become more common thanks to discreet tipping methods such as QR code ordering apps and money transfer systems. The “death of cash” is gradually removing the “awkward situations and undue pressure” associated with meeting waiters in person, giving customers the preference of a private agency.

Technology does not eliminate awkwardness completely. If the establishment doesn’t use ordering apps with built-in tipping options, you still have to put up with a waiter watching you hit “tip” or “no tip” on an EFTPOS machine.

What should I do if my friends want to tip and I don’t?

The advice is unanimous: leave whatever amount you’re comfortable with (even if it’s nothing), regardless of your friend’s choice. Everyone’s financial situation is different, which means that tipping alone cannot be considered a one-size-fits-all.

Both in terms of etiquette and economics, tipping in Australia is a personal choice that will not decide the fate of the worker; therefore, there is no need to start an argument, advises Musan.

MacNicol says that with digital payment methods, tipping in group settings has been transformed. Split accounts and automatic tips calculated at the end of a transaction allow you to pay any amount without having to announce it to the world.

Economist Heraud would beg to differ on this point, arguing that the sensitivity of cash actually makes tipping more seamless, eliminating the potentially awkward moments of handing over a digital card reader and punching in a number. Cash can be given directly to the waiters at your discretion.

So, when it comes to group tips, leave as much or as little as you like and choose the payment method that you feel is less public.

Is there a downside to tipping?

When you leave an extra $10 for the waiters, you want to know that the money will go into their pockets and not the restaurant’s millionaire CEO. Amalgamated Workers Union executive director Dario Mujkic says that at best, tips are distributed evenly, but at worst, they are absorbed by the restaurant or company.

When in doubt, Musson recommends sending cash directly to your server along with a simple but meaningful “thank you so much for looking after us.”

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At Uber, 100 per cent of every tip goes to the designated driver, says Emma Foley, head of Uber ANZ drivers. Some other companies may also guarantee this, but others (notably bars and restaurants that use ordering apps like Mr Yum and me&u, which usually don’t identify waiters) may not.

Australia’s over-reliance on tips could also set a precedent that will reduce the number of cases of employee pay rises, Mujkic says.

“The more hospitality workers have to rely on tips, the more likely they are to be harassed by customers and have their wages stolen by a bad boss. Hospitality workers deserve decent pay and more job security, not just tips,” says Mujkic.

“We should never move to an American-style system where tips replace wages.”

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