The new push against penalty rates

Retailers, hospitality bosses and the Liberal government want to drive down the living standards of hundreds of thousands of workers.

In May, the Fair Work Commission cut Sunday penalty rates for tens of thousands of casual workers in restaurants and cafes. Sunday loading was reduced from 75 to 50 percent for some casual workers, robbing them of an estimated $112 million each year.

Now the campaign is on to reduce Sunday penalty rates for all hospitality, entertainment and retail workers.

We’re told that penalty rates are stopping bosses from hiring people; that penalty rates are bad for business. The argument doesn’t add up.

Shopping Centre Council of Australia figures show that between 2009 and 2014, the highest customer growth to shopping centres was on Sundays.

The National Retail Association noted, in its March submission to the Productivity Commission’s inquiry into Australia’s workplace relations framework, that cafes, restaurants and takeaway food services have experienced “a positive, long term trend in sales growth” with “a 10-year average growth rate of 5.9 percent”.

The Australian Retailers Association boasted in early October that year on year retail trade growth was 4.6 percent, which is well above the rate of wages growth and well above the growth rate of the economy as a whole. ARA is the peak representative body for the industry. Its members employ more than 1.2 million people.

Russell Zimmerman, the association’s executive director, said in a media release, “Department stores, which have been experiencing yearly growth of around one to two percent for the past 12 months, have seen a 6.9 percent rise. This will be music to the department store chain’s ears”.

BusinessDay contributing editor Michael Pascoe, in a 6 October article, gave the game away. Despite arguing that Sunday is “not so special” and that penalty rates are “patently absurd”, Pascoe wrote:

“A consistent pattern arises when talking to employers: they would like their employees to be cheaper but need everyone else’s employees to continue to be well paid so that they can afford to buy their stuff.”

One of the ARA’s stated goals is “saving money for its 5,000 independent and national retail members throughout Australia”.

We all know the easiest way to do that.

An estimated 4.6 million workers are entitled to Sunday penalty rates. Those penalties often are crucial to people being able to survive financially. Take Jane Grundy, a home care worker who was a witness to the Productivity Commission inquiry last month. According to the Sydney Morning Herald, her Sunday earnings make up almost one third of her $584.81 weekly wage.

If the bosses get away with reducing the rates in retail, entertainment and hospitality, they will move to reduce or eliminate them in other industries.

Turnbull has hinted that one way of selling reductions in Sunday loadings would be to engage in trade-offs, such as increasing the base rate of pay. “If you want to get the support of workers and unions … then you inevitably would have to persuade them that in net terms they’d be better off”, he told Mitchell.

Any such moves should be resisted.

The Shop, Distributive and Allied Employees’ Association earlier this year signed a trade-off with Business South Australia to scrap retail industry Saturday and night time penalty rates and reduce Sunday and public holiday loadings.

The “constructive approach” of the union was lauded by business, the government and even the ALP. Federal Labor MP Matt Thistlethwaite called it a “win-win”. It left only permanent full time staff who didn’t work weekends better off. Night and weekend workers lost out big time.

That’s the point. It is about reducing wages to increase profits. And once they have been reduced, the bosses will make the same arguments about wages being an impediment to hiring, a drag on productivity and every other nonsense to justify reducing them or preventing them from rising in the future – just like the bosses in the US who say that $10 an hour is too much and the demand for a $15 per hour legislated minimum wage is basically economic terrorism.

The gap between the minimum wage and the average wage currently is the widest on record. Reducing penalty rates would increase that gap and push more workers into poverty and insecurity.

There would not be more jobs, just more shit-paying jobs.