Employer groups and the Coalition have slammed Labor’s pledge to restore penalty rates for retail and hospitality workers, claiming it will deter small businesses from hiring additional staff, thereby costing jobs. From The Australian:
Bill Shorten’s pledge to overturn penalty rate cuts for retail and hospitality workers will generate uncertainty, harm job creation and deter “mum-and-dad” operators from extending opening hours, small business chiefs say…
“Small businesses are looking forward to offering new job opportunities as penalty rates are reduced, but the prospect of the reductions being reversed puts those new jobs at risk,” [ACCI chief James Pearson] said. “Uncertainty is the enemy of doing business and hiring staff. The opposition’s plan to overturn the penalty rates reductions risks leaving small businesses not knowing where they stand”…
Employment Minister Michaelia Cash… [claimed] “Mr Shorten is demonstrating contempt and a complete lack of understanding for small business operators… He has declared war on hardworking small businesses who want to create more jobs for Australians”…
Australian Small Business and Family Enterprise Ombudsman Kate Carnell… warned that Mr Shorten’s pledge amounted to an attack on small business owners because they did not have the industrial clout to negotiate deals with unions for lower penalties. “If small business has no confidence that the reductions over the next thee or fours years will actually happen because a change of government would reverse them, you wouldn’t change your hours”…
The assertion that cutting penalty rates would have a material impact on employment needs to be taken with a huge pinch of salt. When it initially made its decision, the Fair Work Commission (FWC) noted there may only be “modest” employment impacts from cutting penalty rates:
“Any potential positive employment effects from a reduction in penalty rates are likely to be reduced due to substitution and other effects… On the basis of the evidence before us, we have concluded that reducing penalty rates may have a modest positive effect on employment…”
Moreover, FWC noted that it is “improbable that … existing workers’ hours on Sundays would rise sufficiently to offset the income effects of penalty rate reductions”.
Thus, the evidence that cutting penalty rates will necessarily boost employment is weak.
Second, it is worth pointing-out that workers in Accommodation & Food Services and Retail Trade already suffer from the highest underemployment in the nation:
Third, wages growth in Accommodation & Food Services has been the lowest of all sectors over the past 12 years, whereas retail trade has also experienced some of the lowest wages growth:
And this comes on top of record low earnings growth across the broader economy:
In contrast to the growth in corporate profits:
Thus, the decision to cut penalty rates will adversely affect workers in sectors already containing Australia’s most vulnerable and lowly paid workers, and will fatten corporate profits even further.
Employer groups and the Coalition will need to mount a better case if they want to win the hearts and minds of voters.
