The Penalty Rates Decision: What will it Mean For You?

Is todays Fair Work Commission Penalty Rates Decision proof that the race to the bottom on wages has just begun?

A look at the changes to penalty rates and who will be affected.

The tables below, taken from the FWC Summary of decision, show penalty rates currently and the new rates proposed.

The Awards affected are in the retail and hospitality industries, which as can be seen in the ABS graph below, contain some of the lowest paid workers in the country.

We heard today also that wages growth in the past year has hit another all time low. According to the ABS, average weekly earnings for Australians grew by just 1.6% in the 12 months to November last year. In Wednesday’s wage price index, average weekly earnings for private sector workers grew by just 1.2%, well below the inflation rate of 1.5%.

The tables below give a  conservative look at some of the losses likely to occur to retail and hospitality workers.

Loss to Sunday Penalty Rates:

Loss to Public Holiday Penalty Rates:

An example of how things might play out:

Billy works in retail. He’s just experienced the slowest wage growth in his working life, below the rise of inflation in fact. The Australian Government feels the need to reduce his pay by a further 20% so that business has the ability to employ more workers (a prominent reason given by the business lobby groups advocating the reduction to penalty rates). The trouble is this was certainly not surplus income for Billy. Now, left with a deficit of 20% to the household budget Billy needs to find more hours to make ends meet. “Wow! What a coincidence” says Billy’s boss. “Billy you are looking for more hours and the business plans to open more now that penalty rates are gone.  Being the great boss I am you can work the extra hours”.

What a happy story! Everybody wins!  Business is opening more, the statistics on under employment look better for the government as everyone is working more hours…. but… hang on a minute…. Billy’s income is identical to what it was before penalty rates were reduced and with all the extra hours Billy is doing the business doesn’t need to hire anyone else…

Billy is down, he’s been doing heaps of hours but doesn’t have one red cent extra to spend. Billy’s boss is a bit down too. The extra hours the business is opening hasn’t brought any added revenue, what with unemployment figures unchanged and wages stagnating, no one is spending. “Oh well we gave it a go opening the extra hours” Billy’s boss says “but I’m afraid we’re going to have to cut back…”

Coming soon…

 

Although the penalty rate changes are currently only aimed at retail and hospitality workers, with a Government willing to allow the wages of hundreds of thousands of Australia’s lowest paid workers to be stripped from the Award safety net, it is surely only a matter of time before all industry awards are under attack!