Money Work Penalty rate battle could strip another $14 billion from workers: report

Penalty rate battle could strip another $14 billion from workers: report

Workers will earn more overall on July 1, but are likely to suffer cuts in 2018 and 2019. Photo: Getty
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A new report has claimed that $14 billion worth of wages hang in the balance in the ongoing penalty rates fight between business groups and workers.

Dr Jim Stanford, director of the Australia Institute’s Centre for Future Work, analysed data from the Australian Bureau of Statistics and found 27.6 per cent of workers, on average, worked at least one day of the weekend.

He said these workers stand to lose a total of $14 billion a year, about 2.5 per cent of the annual income of Australian workers, if all penalty rates were abolished, as some fear will happen.

“If you cut wage income by a significant amount like that you’d see an impact in consumer spending,” Dr Stanford told The New Daily.

Law firm Maurice Blackburn has provided legal advice to the Australian Council of Trade Unions (ACTU), claiming the Fair Work Commission’s decision to slash penalty rates in certain sectors has created a precedent that could be applied nationally.

Weekend work largely tracked at the same level over the past two decades, but fell during the boom years of the mid-2000s, which Dr Stanford interpreted as evidence that workers don’t actually want to work on weekends. They are forced to by economic conditions, he said.

The current weakness of Australia’s job market provides businesses the room to push for penalty rates to be removed or scaled back in many more industries, Dr Stanford said.

“Right now people are so desperate for work that employers know full well they could attract all the workers they need on Sundays without paying an extra penny.”

This February the Fair Work Commission recommended changes to penalty rates for retail and hospitality workers – changes which the Australian Council of Trade Unions predict will cost workers thousands.

ACTU President Ged Kearney said the Fair Work decision amounted to a pay cut for workers, with nothing in return.

“Penalty rates are an important part of people’s take-home pay, but they’re also an important part of the Australian economy.”

She said the $14 billion pointed to in the report was integral to local economies.

“The decision affects the lowest paid people in our economy, they live on the margins, they barely get by on that income. I dare anyone to try and survive on $38,000 a year,” Ms Kearney told The New Daily.

“That $14 billion will come out of the pockets of people who spend that money and instead go to the very concentrated pockets of people somewhere else.”

But Aaron Lane from the Institute of Public Affairs said February’s decision was “a move in the right direction to make weekend work more secure and attainable”.

“The evidence was that reducing weekend penalty rates would have a positive effect on employment,” Mr Lane told The New Daily.

He said the suggestion penalty rates might disappear was overblown, adding that the report assumed cutting penalty rates could only have a negative impact.

“It would be easier for individuals to find work on weekends, it will be easier to employ staff and create economic value for the employer and also the customers as well.”

Australian workers are in desperate need of cost-of-living relief, as last week’s consumer price index revealed inflation was climbing faster than wage growth, which is stagnant.

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