Penalty rates for retail, hospitality and fast food workers have been cut in a decision announced today by the Fair Work Commission. Nearly half a million workers in these sectors will see their wages reduced by up to $6,000 a year, hitting some of Australia’s lowest paid workers. Most of the pay cuts will be introduced in July, with others to be gradually implemented.
For the retail sector, Sunday wages will be reduced from 200 percent of the standard rate to 150 percent for full-time and part-time staff. For full and part-time hospitality workers, Sunday penalty rates will be reduced from 175 percent to 150 percent. For fast-food employees working full or part-time in the level one class, the rate will go from 150 percent to 125 percent.
Casual workers in fast-food and retail will also see rates cut, though casual workers in hospitality will remain unaffected. The rate cuts will also apply to public holidays.
Lower Sunday and public holiday penalty rates will lead to increased services and trading hours, spur employment growth and enable more people to get off welfare, according to the Fair Work Commission.
National Union of Students (NUS) Welfare Officer Jill Molloy was disappointed by the decision, saying that it would be of immense detriment to student welfare.
Molloy pointed out that students often work in the affected sectors on Sundays, due to weekday study commitments. She added further that penalty rates are critical for many students to make ends meet and that the cuts would place them under significant financial duress. Molloy believes the rate cuts were motivated by the ongoing efforts of business lobby groups.
The ‘Say NO to Education and Welfare Cuts’ rally scheduled for 22 March is now expected to include a protest against the penalty rate cuts, according to NUS ACT State Branch President Nick Douros.
The penalty rates decision appears to be a significant turning point in Australian industrial relations. Whereas many other advanced economies long ago jettisoned penalty rates, or variants of them, they have proven resilient in Australia.
The Fair Work Commission, which manages penalty rates as an independent umpire, was initially established by the Gillard Government in the context of increasing politicisation of penalty rates. This places the Labor Party in a difficult position of having to decide whether to back the independent umpire it established, or to contravene its ruling and head to the next election with a policy to legislate penalty rates.