Economic forces when ignored for too long behave like volcanic lava, erupting in the most unexpected places.
This week’s eruption was in South Australia, where Australia’s biggest union, the Shop Distributive and Allied Employees (SDA), has done a deal with the chamber of commerce and industry, Business SA, to allow small retailers employing a workforce of around 40,000 people to pay lower penalty rates on weekends.
The deal reportedly cuts Sunday rates from double time to time-and-a-half, removes all loadings for Saturdays and weekday evenings, and cuts public holiday pay from double-time-and-a-half to straight double time.
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Importantly, any business making this move must also increase standard hourly rates. Business SA noted: “As [under The Fair Work Act] employees must be better off than the Modern Retail Industry Award the wage costs have been spread more evenly across the whole week as a result of the reduction of penalty rates.”
The economic force driving the decision is unemployment. South Australia has the highest rate in the nation, with the last ABS data suggesting that disheartened youngsters are giving up looking for work altogether. The retail sector that the SDA covers is a prime employer of young workers.
So the economic pressure to create more work hours, particularly by getting small retailers to re-open their doors on Sundays, is forcing its way to the surface and straight through the thick crust of federal politics where IR reforms is in stalemate.
On economic grounds, both major parties should be considering such reforms, but can’t. If the Coalition tried it Labor would scream ‘WorkChoices’, and if Labor had tried it (or sought to do so in any future goverment) it would face stiff opposition from other unions.
It’s worth remembering that Labor stands accused by the Coalition of making too many concessions to the unions when it drafted the Fair Work Act to replace WorkChoices in 2008. Unions would not easily surrender any ground to amend those laws.
And many unions will hate to see the SDA making reforms itself, even if it does boost employment.
The deal requires both a small business owner and employees to agree to replace existing penalty structures, and will be most attractive to younger workers who actually want to see the boss create new shifts on a Sunday.
At the same time, a weekday worker who has kids will probably not want a Sunday shift, and therefore would prefer the status quo.
So which group should get priority? The sad truth is that economists have been warning that the status quo cannot hold – and yes, there does need to be a rebalancing of job creation and pay and conditions.
If that sounds like right-wing dogma, it’s worth revisiting February 2014, when Paul Howes was still secretary of the Australian Workers Union.
Howes’ role put him in daily contact with parts of the economy where jobs were about to go into structural decline – mainly the resources sector – and other sectors, such as advanced manufacturing, that with productivity gains could help prevent skyrocketing unemployment.
Armed with that knowledge, Howes declared in a speech that the massive transition the economy was going through required nothing less than a 1980s-style accord between workers and employers – the great achievement of the reforming Hawke government.
Howes called for a ‘grand compact’, very similar to the deal just announced by the SDA, to get employment going again.
At the time, this commentator noted: “Howes’ call for a ‘grand compact’, though vague at present, is the right call. Business leaders and unionists alike must shake off the habitual tendency to draw battle-lines and recognise the crisis bearing down upon Australia.”
Well the jobs crisis, especially in the younger age groups, has only intensified since then.
Oh, and what happened to Howes after that speech? He copped a storm of abuse from other unionists and the left of politics and departed for a new career at KPMG.
In early 2014 the SDA was one of the more vociferous critics of the ‘grand compact’ idea. How ironic that they are now the union leading that charge.