Funny, that: no jobs boom after penalty rates cuts

It’s a year since the first stage of penalty rates cuts in several retail and hospitality industries. The result is fewer full time jobs and lower wages for workers. 

When the wage cuts were being debated in the lead-up to the Fair Work Commission’s ruling last year, industry groups argued as one: penalty rates strangle businesses and are a barrier to bosses hiring new workers. Cutting them would be good for the working class because it would mean more jobs and therefore lower unemployment.

The Restaurant and Catering Association, for example, predicted that lower penalty rates would increase the Sunday and public holiday workforce by 40,000. And the Australian Retailers Association chief executive said that retail workers “will get more employment from their employers, that is a certainty”.

Now, the evidence is in. The Australia Institute Centre for Future Work, using figures from the Bureau of Statistics, has found that job creation in the retail and hospitality industries was among the lowest in the country.

“The hospitality sector ranks 14th out of the 19 [industry] sectors”, write Jim Stanford and Troy Henderson, the institute’s lead researchers. “The retail sector performed even worse, with virtually no net job creation; retail ranked 17th out of the 19 sectors (better only than the transportation and other service categories, both of which shed labour over the last year).”

In full time employment, both industries went backward in the year since the first phase of the cuts. 

“In fact, the retail sector lost full time work at a faster rate than any other industry in Australia: shedding 50,000 full time jobs in the year”, Stanford and Henderson note. “There are now fewer full time workers in Australia’s retail sector than there were in 2004 (when Australia’s population was one-fifth lower than at present, and total real consumer spending was one-third lower).” 

The hospitality sector shed 2,000 full time jobs, ranking fourth last out of 19 sectors.

Also, average working hours have declined and underemployment has grown in retail and hospitality over the last year.

In most areas, the cuts are being phased in over three or four years. Sunday penalty rates are being cut by up to 50 percent and holiday rates by up to 25 percent.

The institute’s findings were released as the second phase of the cuts came into effect on 1 July.