Penalty rate cuts to Sunday workers

 

This is a topic which has been brought up recently among the year 12 year level on the common room white board and on the Facebook page. That is that on the 23rd of February Fair Work Commissions cut Sunday penalty rates for part time and casual workers in hospitality, fast food and retail industries, which will come into effect as of 1 July 2017. I imagine that this would be a very important change to a lot of you who have part time and casual jobs in these industries. These changes where supported by Malcolm Turnbull who believes they are an “appropriate objective and [the liberal party] certainly welcome transition arrangements that mitigate as far as possible or offset the impact on the take-home pay packet”.

So what are the actual changes that are taking place on Sunday penalty rates? Well here they are from an ABC news article:

In hospitality:

The penalty rate for full-time and part-time employees will be cut from 175 to 150 per cent.

There’s no change to the Sunday rate for casuals which will stay at 175 per cent.

In fast food:

The Sunday penalty rate will be reduced for level one employees from 150 to 125 per cent for full-time and part-time employees and from 175 to 150 per cent for casuals.

There’s no change to Sunday penalty rates for level two and three employees in that award.

In retail:

The Sunday penalty rate for full-time and part-time employees will be taken down from 200 to 150 per cent.

The Sunday rate for casuals will be reduced from 200 to 175 per cent.

In pharmacy:

The rate for full-time and part-time employees for work between 7:00am and 9:00pm on Sundays will be reduced from 200 to 150 per cent. The Sunday rate for casuals will be reduced from 200 to 175 per cent.

So what do these changes mean for workers and small businesses?

Most obviously, the change in penalty rates will mean that part-time and casual workers who work on Sundays (mainly students, and people with families who are not the main source of the families income) will get less money from hours they work on Sundays, which in turn will mean they have less money to spend. It is also argued that this is not fair compensation for time that could have been used to spend with family, at sporting events and other social activities. On the flip side, these changes is welcomed by many small businesses who have complained that they have had to reduce their number of staff or even restrict operating hours to exclude Sundays due to the high cost of wages. This will mean that businesses can stay open on Sundays, providing more goods and services, as well as employ more staff on these days which allows for better quality of service. However, there is no guarantee that businesses will actually employ more staff on Sundays, which would mean that the changes could have no positive effect for these workers at all.

What is my view on the issue?

Well to be honest I’m not quite sure what side I take, I think there is a good chance this change could end up being good or bad (maybe you can try to convince me of one outcome with a good comment). However, one of my family members brought up something interesting that I hadn’t really thought about, that is that just because the Government is not regulating it as much, doesn’t mean that wages are guaranteed to stay low. If price of wages decreases then supply of labour is likely to contract which would force employers to increase the wages they offer in order to attract more workers (increased demand). This is to say that by decreasing government intervention we are leaving the price of wages more up to the powers of a free market.

Related image

image from The Age

 

Advertisements

16 Comments

  1. There’s a possibility that cuts won’t be too serious, because industry awards are used as a bare minimum to set wages and working conditions, and most businesses give precedence to enterprise bargaining agreements, which are negotiated between employers and employees with minimal governemnt intervention. I believe the cuts will be dependent on the individual profitability of businesses and their abilities to set higher wages, and not just the change in penalty rates.

    Liked by 3 people

    1. Thats true actually – Im pretty sure one of the tea stores (T2 I think) are refusing to change and are keeping the original rate. Maybe because nowadays businesses care about the wellbeing of employees as much as their profits. Though wages are one of the biggest (if not the biggest) expense in a business, so cuts would help them out significantly.

      Liked by 1 person

      1. These cuts often help the businesses, this is true. However, it is usually at the expense of the employees and can be the difference between 3 meals a day and 2. It is important to note that the people working these shifts do so because they have little chioce and are often in need of every dollar they can get. This legislation is aimed to further deepen the pockets of the very wealthy, while it has no regent for those who really need the money.

        Like

  2. I think its a positive change and if there is a chance it will benefit small businesses or improve unemployment rates, its worth a shot. As someone who receives Saturday and Sunday penalty rates, I don’t think the impact of a roughly 25% cut is that significant and its definitely not going to impact on my spending.

    Liked by 3 people

    1. but then again, you don’t rely on penalty rates to pay your mortgage or support others. Although I do agree that the cut isn’t significant because the reason Sunday was expensive because it would’ve been hard with many at church. now that the societal norms have moved away from ‘holy Sundays’ I don’t think people need such an incentive to work on Sundays.

      Liked by 1 person

  3. In a way, introducing cuts to the penalty rates may serve as an incentive for more businesses to open on weekends and holidays; perhaps hire more staff. Such an outcome would certainly boost economical activity and thus increase our GDP. So, from an economical perspective, such an impacting decision by Malcolm Turnbull may have well been simply to stimulate the economy. Although, there are certainly drawbacks in living standards to the particular workers in these industries.

    Liked by 2 people

  4. I find it interesting how this has two effects on material living standards, one one side it theoreticall allows most members of society to improve living standards by having access to more businesses whom will be open on Sundays now, however it prodomonantely negatively effects the younger generation, which is the trade off in this situation, perhaps the government believes the overall opportunity cost is lower with these cuts, which would make sense in why they decided to implement them. My best guess is that they did some market research into costs and benefits of the cuts and found that society will be better off with them.

    Liked by 2 people

  5. Certainly one of the purposes of the rate cut is to create jobs, but what kind of jobs are they creating? We have a high underemployment rate (much higher than unemployment). Most likely people who will be hired to fill new Sunday shifts will be part-time or casuals. Should we be concerned about the increasing ‘casualisation’ of the workforce?
    Also, to Anusha’s point: http://www.sbs.com.au/news/article/2017/02/24/these-businesses-are-refusing-to-cut-penalty-rates-their-staff

    Like

  6. Great job. If i’m looking at this at a home owner point of view or a student with debts and bills to pay, I would say this would cause issues for me and prevent me from living as comfortably as I did before. However, looking at this from a self interest point of view, this does not effect me and I think this could help small businesses flourish as they have more ability to hire workers and at lower costs. There are definitely pros and cons to this topic but in the end I believe it comes down to the situation you are in as an individual.

    Liked by 1 person

  7. Most industries that being cut by the penalty rates are in competitive markets, such as retails and fast food. Those firms provide competitive goods and services, which contain more market power. This means in order to fulfilling market needs. Company should improve allocative efficiency. Cutting penalty rates could be one of the government intervention which encourage business open on weekends and stimulate consumer’s expenditures.

    Liked by 1 person

  8. Quite frankly I don’t care that the fair work commission has changed the rules, as it seems my union sold me down the river years ago. My rate on Sundays is and always has been below the new rate for retail, let alone the old rate. Certainly could be worse though, when i worked at McDonalds they put me on permanent part time, allocated me hours like a casual, and got me to open shop at 6am all for $7.78 an hour as a 15 year old. Given that, the possible reduction of my $18 an hour on Sundays really doesn’t seem so bad.

    Liked by 1 person

  9. I know a friend who works for a small business, and often on weekends his boss will decide to not open because it cost more to pay the wages and there’s just not as much business. This means that my friend instead of getting at least some money get nothing. In situations like this were small business are suffering, reducing Sunday rates mean that they can open and some people who would not be able to work can. It better to be underemployed then unemployed :))

    Liked by 1 person

  10. On one hand the cuts don’t seem to big, but they supposedly add to thousands of dollars each year for workers, which will most affect the people who only work sundays for the money. But also now employers can hire more workers on sunday, meaning more people can share in on the nice penalty rates. Well, I am not sure if its worth it overall.

    Liked by 1 person

  11. As someone who is not currently working, I for one welcome this change as as with more stores open on Sunday’s, other consumers such as myself would have have somewhere to go on Sunday’s and would therefore increase living standards of the consumers even if it ias at the cost of some unhappy part timers

    Liked by 1 person

  12. Even if penalty rates are cut, it doesn’t mean that the owners will necessarily invest the money into expanding their business or lowering their prices – they could just pocket the money if they wanted to. It’s also impossible to tell if a business isn’t open on Sunday just because they have to pay higher wages – there could be a variety of alternative reasons such as the owner not wanting to work on Sunday, or not enough customers out shopping on Sunday

    Liked by 1 person

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s