Right: cafe workers are among the lowest-paid in Australia. Should they lose the extra money earned by working Sundays to "save jobs"?
Arguments against reducing Sunday penalty rates
1. The workers affected are already lowly paid It has been argued that these cuts are inappropriate because they are being inflicted on workers who are already working for a low rate of remuneration. Australian Council of Trade Unions president Ged Kearney, the president of the Australian Council of Trade Unions, has stated, This is a bad day for working Australians. Kennedy further claimed, struggling workers won't be able to survive on a 25 or 30 per cent pay cut. We are talking about people who do not earn a fortune. Kennedy continued, More than a million workers will face a pay cut of more than 20 per cent, or $6000 per year. Imagine what that means to someone when they have to pay car registration, they have to pay rent, when they are trying like crazy to get a mortgage. Luke Hilakari, the secretary of the Victorian Trades Hall Council secretary has warned the decision would push working families into severe hardship. Hilakari has stated, There will be thousands and thousands of families sitting around the dinner table tonight, working out how to make ends meet. Are they going to have to take a second job, or a third job? Are they going to have to do extra shifts? This is going to be the greatest cut to working people's wages since the Great Depression. A similar point has been made by Adam Bandt, the Greens workplace relations spokesperson, who has stated, This is a body blow to the hundreds of thousands of people who depend on penalty rates to make ends meet. Critics have stressed that these cuts are being imposed on an already vulnerable group. Dr Stephen Clibborn from the University of Sydney business school has noted that the underpayment of wages and penalty rates is already prevalent in the retail and hospitality industries. It has been noted that a reduction in penalty rates will most adversely affect young workers who are already a significantly disadvantaged group. The Life Patterns study conducted by the University of Melbournes Youth Research Centre has found that work-life balance and cost of living pressures are already creating a stressful transition to adulthood for young Australians. Shirley Jackson, PhD candidate in Political Economy at the University of Melbourne has noted, We [Australia] occupy an unusual position in the global economy as one of only a handful of countries to have lower legal minimum wages for young people Unfortunately for Australias young workers, our country has the lowest youth wage compared to minimum wage, in the world. Critics of the reduction to Sunday penalty rates note that this will simply worsen the financial disadvantage suffered by young workers. It has also been noted that a reduction in penalty rates would disproportionately affect women. The Labor opposition in its submission to the Fair Work Commission noted that with women representing more than half the workforce in retail and hospitality any measures which reduce the take home pay of workers in these sectors can only widen the gender pay gap across the Australian community. 2. Reducing penalty rates will primarily increase profits and not result in increased employment Opponents of a reduction in penalty rates have claimed that the primary motivation of employer groups seeking a cutback in penalty rates is to increase profits. Citigroup late last year conducted financial analysis which found big retailers including Myer and JB Hi-Fi were likely to deliver any savings from penalty rate cuts to shareholders. Victorian Trades Hall Council's secretary Mr Hilakari has stated, This money is just going to be pocketed. It has also been noted that some of the supposed increase in employment that may appear to occur will not be real in that it will simply be the same employees working longer hours in order to earn what they had been before their penalty rate was cut. There may be some increase in service; however, there will not be a genuine increase in employment. Working longer hours for the same pay does not represent a genuine increase in employment. Australian Council of Trade Unions president Ged Kearney said the idea that cutting penalty rates would create jobs is a complete furphy. Kearney stated, People whose pay is going to be cut will simply have to work more hours to make up that take-home pay. As Fatima Measham noted in an opinion piece published in Eureka Street on March 1, 2017, In its own report, the Fair Work Commission points out that employment effects are overstated, citing studies and submissions that do not support the conceptual model that lower wage costs lead to lower prices, lifting consumer and labour demand. Other critics note that the belief that lower penalty rates would lead to the creation of more jobs ignores the value of demand. According to this argument, even if some employers were to put on more staff at the lower rates that does not mean that these jobs would be sustainable. Sustainable job creation relies on there being customers to purchase the good or service. Many critics argue that there is not sufficient surplus demand capacity in the Australian retail or hospitality market to make it likely that more enduring jobs would be created. The Sydney Morning Heralds economics editor, Ross Gittins, has stated, I don't believe there is much scope for us to be consuming a lot more than we are already certainly not over the medium term. 3. Sunday employment still restricts workers social opportunities It has been claimed that Sunday work still impacts on the social, recreational and family time of workers. It has further been claimed that these restrictions are particularly acute for those with families who are denied the opportunity to spend significant time with their children outside school hours. Evidence shows weekend work is significantly associated with work-family conflict for fathers. Data from a major national survey showed that working Sundays in particular is linked to higher work-life interference. In the Australian Work and Life Index 2012 it was noted that For around one quarter of all workers, work often or almost always interferes with activities outside work and time with family and friends. A further 29 percent of workers say that work sometimes interferes with these other life domains. A substantial proportion of workers - around 18 per cent - also report that work frequently interferes with their community connections. Supporters of Sunday penalty rates argue that Sunday is still substantially a day set aside by most in the community for non-work-related activities and that those whose employment require them to work on Sunday should receive a significant financial compensation. Critics have argued that a decline in church attendance over the last five decades does not mean that Sundays are no longer valued by Australians. In an opinion piece published in The Guardian on February 26, 2017, Greg Jericho stated, You dont need to be a regular church goer to know that Sunday is different from Saturday just look at the Sunday papers; the television programming; the scheduling of football games. Ask yourself when you would most expect to have your kids playing junior sport Saturday morning or Sunday? Ask yourself when you would be more likely to have a sleep in or a special family lunch. Anyone think Mothers Day should be shifted to a Saturday? 4. The hospitality industry and many other small businesses are experiencing rapid growth and do not require cost reductions It has been claimed that the reduction in wages that will result from the cut to Sunday penalty rates is unnecessary as the private sector is experiencing a period of growth. It has further been argued that the wage reduction will exacerbate an imbalance between profits and wages, further disadvantaging those who sell their labour. Ray Markey, Professorial Fellow and former Director of the Centre for Workforce Futures, Macquarie University, has stated, The current decision [by the FWC to reduce Sunday penalty rates] has occurred in a relatively buoyant economy at a time when a shift is already occurring from wages to profits. The day before the commissions decision, the Australian Bureau of Statistics (ABS) released figures showing that private sector wages growth was 1.8%, the lowest since it began collecting data in 1997. At the same time, company profits soared by 26.2% for 2016. It has further been claimed that many Australian small businesses, especially in the hospitality area, are doing very well and do not require the cost cut that a reduction in Sunday penalty rates would provide. Professor Markey has noted, In the retail sector, gross operating profits for unincorporated businesses mainly the small businesses the decision was designed to benefit - grew by 11.5% for the December quarter alone. Most of the businesses affected will also enjoy a tax reduction if the government has its way. Australias leading independent eftpos provider, Tyro, has similarly stated, In December alone, Australias 62,000 small and medium sized hospitality businesses, employing up to 200 staff each, saw sales increase a staggering 10 per cent to $8 billion. Growth is also being experienced by small and medium sized retailers. Tyro has further stated, In December alone, small and medium sized retailers processed about $23.5 billion in sales, a 3% increase on the same period the previous year. 5. Reducing penalty rates will harm the economy It has been suggested that reducing penalty rates will have a deleterious effect on the Australian economy, reducing income tax revenue and increasing the benefits the federal government will be called on to pay the underemployed. Richard Denniss, chief economist at the Australia Institute think tank, has estimated that cuts to Sunday penalty rates for low-paid workers could strip $650 million from the federal government's budget. Dr Dennisss figures suggest that if 285,000 people lost an average of $2744 a year and were all in the 21 per cent tax bracket, the reduction in income tax revenue would be $164.2 million a year or $656.8 million over the next four years. Further, he has suggested, if 460,000 people lost an average of $2744 a year and half were in the 21 per cent tax bracket and half were in the 34.5 per cent tax bracket, then the reduction in income tax would be $350.2 million a year $1.4 billion over the forward estimates. Dr Denniss has also suggested that cutting the wages of low-paid workers would lead to a significant increase in welfare spending. He finds that if 20 per cent of those affected by the penalty rate cuts were in receipt of welfare payments then the increase in welfare spending would be between $78.2 million and $126.2 million a year. State government payroll tax revenue could also decline, as could GST revenue from declining consumer spending. In its submission to the Fair Work Commission, the Labor opposition also claimed that a reduction in penalty rates would harm the economy. The submission stated, There is clear and well-founded evidence that reducing the take-home pay of low paid Australian workers will have a negative impact on domestic consumption. At the same time, it is highly unlikely that the benefits claimed by individual businesses will be seen across the aggregate economy. The Labor submission further argued, Penalty rates support demand in an economy in transition and are consistent with helping to deliver better productivity performance and increasing competitiveness of the national economy. It pointed out that it was important to avoid taking any action that might reduce demand in an economy that is already under strain. It stated that real national disposable income per capita has fallen by 3.2% since September 2013, and wages growth is the slowest since the 1990s. The submission concluded, Reducing the take-home wages of low-paid Australians runs completely counter to the objective of supporting demand in an environment where domestic consumption has taken on a more central role in underpinning growth. |
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