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Further implications
By definition, two speed economies are economies whose industries experience unevenly distributed rates of growth. There is a subtle variation of this occurring within Australian service industries. A dramatic increase in wage inequality is occurring between those working in different sectors of the Australian economy, in part prompted by a growing reluctance in many service industries to pass a share of increasing profits on to employees via wage increases.
Australias retail and hospitality sector is experiencing a period of relative growth. This is especially true in the small to medium sized business sector, a category of enterprise about to be given a further fillip by the tax reductions just allowed it by the Turnbull government.
Workers in Australias retail and hospitality sector are, however, among the lowest paid in the country.
As Paul Cleary noted in a comment published in The Australian on August 20, 2016, Profound structural changes in the Australian labour force have ushered in a new class of low-wage work.
In the creation of this class of work, Cleary has further noted, Employers use a myriad of means to reduce labour costs. Whether it is hiring more juniors, casuals, part-timers, trainees or migrants on short-term visas, the drive to remain competitive through cheaper and more flexible labour hire can be seen throughout the economy. Industries that rely on low-skilled jobs, such as retail and hospitality, are prime examples of this trend.
A July 2016 survey of economic trends showed a 0.1 point drop in the unemployment rate to 5.7 per cent largely because of a surge in part-time employment at the expense of full-time jobs. In this survey, 32 per cent of all workers were employed part-time, or almost one in three.
This trend toward a casualisation of the Australian labour market is occurring at the same time as there has been a dramatic slowing of wages growth for those in this type of employment. Wages growth in the retail sector was 0.1% in the June 2016 quarter. The retail sector is Australias largest employer with 1.2 million workers and has the lowest rate of wages growth.
The persistent push to lower pay rates has seen employers in large retail and fast food outlets already swap increased base pay rates for the removal of weekend penalty rates. No such enterprise bargaining agreement is meant to result in employees being paid below the award rate, however, a number of these arrangements have been challenged for violating this rule. A pay deal between Coles and the retail union was vetoed this year by the fair Work Commission because some employees faced sharp cuts in earnings.
In August 2016, Fairfax media revealed that the union representing hundreds of thousands of retail and fast food workers, the Shop, Distributive and Allied Employees Association (SDA), had cut deals with some of the countrys biggest retail and fast-food chains that left more than 250,000 workers being paid below their award rate.
There is a fundamental contradiction at the heart of one of the arguments posed in favour of reducing penalty rates. The claim is that Australia now has a 24/7 economy in which the supposed importance of Sunday as a day of rest has disappeared. According to this argument, Australians now expect to shop and dine whenever they wish, including on a Sunday. However, this argument is predicated on there being two classes of Australian worker those for whom Sundays remain a day of rest (at least to the extent that they do not have to go to work) and those for whom it is not a rest day because they are employed serving those who are shopping and eating away from home on this day.
It is also the case, as the above discussion indicates, that those who work in retail and hospitality (including working on Sundays) are earning among the lowest wages of any Australian workers, almost certainly lower than many of those who work from Monday to Friday and who then shop and recreate over the weekend. The average worker in accommodation and food services earns $524 a week and those in the retail trade earn just $687 compared with $1,163 for all Australian workers.
These two classes of worker, the lowly paid retail and hospitality worker, and those they serve, would be of less concern if the people working in the lower paid jobs were only passing through or supplementing their income. Thus, students might be expected to accept low wages for a time because once educated and trained they will enter better paid occupations. However, this is not the case.
Australia now has entrenched under-employment. Among those in casual or part-time work, earning low wages, are many (including some with tertiary training) who want full-time employment and cannot find it. The number of people who are underemployed has increased from about 176,000 in the late 1970s to 1.1 million, according to Australian Bureau of Statistics (ABS) figures released in March 2017.
Professor John Buchanan, Chair of the Discipline of Business Analytics at the University of Sydney Business School, has stated, Under-employment is not just cyclical, it is structural, which means employers are building jobs which are dependent on part-time work and often people can't get enough hours. The implication of this is that there are many Australians who are permanently trapped in part-time or casual employment and even when working more than one job may never be able to earn enough to live comfortably.
In this context, the reduction of Sunday penalty rates is important as it may push many workers into more extreme poverty. It is concerning that Australia is developing a class of working poor as exists in the United States. The reduction of Sunday penalty rates is a further step in that direction.