tag:theconversation.com,2011:/es/topics/penalty-rates-3725/articlesPenalty rates – The Conversation2019-05-15T20:22:02Ztag:theconversation.com,2011:article/1171782019-05-15T20:22:02Z2019-05-15T20:22:02ZCutting penalty rates was supposed to create jobs. It hasn’t, and here’s why not<figure><img src="https://images.theconversation.com/files/274544/original/file-20190515-60545-supgif.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Using a variety of statistical analyses, the authors have found no evidence of more employment in hospitality and retail because of reduced penalty rates.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>After three years of submissions, hearings and deliberations, Australia’s workplace relations umpire, the Fair Work Commission, decided in 2017 to decrease the penalty rates paid to retail and hospitality workers on the safety-net award for working on Sundays and public holidays. </p>
<p>For years employer groups had argued that high penalty rates (up to double standard pay) were an unaffordable anachronism in the modern economy, and the commission essentially agreed. </p>
<p>In particular, it concluded the evidence was that cutting penalty rates (by between a quarter and a half) would lead to more trading hours and services on offer on Sundays and public holidays, “<a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/2017fwcfb3001.pdf">and an increase in overall hours worked</a>”. </p>
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Read more:
<a href="https://theconversation.com/labor-wants-to-restore-penalty-rates-within-100-days-but-what-about-the-independent-umpire-116154">Labor wants to restore penalty rates within 100 days. But what about the independent umpire?</a>
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<p>In other words, reducing penalty rates would create more jobs.</p>
<p>Two years on, with cuts to public holiday penalty rates fully implemented and Sundays partially implemented (being introduced over three to four years) how many extra jobs have been created?</p>
<p>Our research suggests basically none.</p>
<h2>What the data tells us</h2>
<p>The publicly available data from the Australian Bureau of Statistics doesn’t really help determine the effect of the penalty rate cut. The following graph shows ABS employment date covering the retail and hospitality sectors since 2015. </p>
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<p>The key dates are when penalty rate cuts occurred, on July 1, 2017 (full reduction in the public holiday rate and part reduction of the Sunday rate) and July 1, 2018 (further reduction of the Sunday rate). </p>
<p>There is no obvious increase in employment after those two dates, but this doesn’t really tell us the full story. Because the ABS doesn’t collect employment data for Sundays and public holidays specifically. Also the group affected (those on modern award pay and conditions) comprise about a third of employees in these sectors, and they are buried in the stats alongside those on enterprise agreements and individual contracts, whose wages were unaffected by the commission’s decision. </p>
<p>In short, one needs to collect some custom data to do a proper study. </p>
<p>Which is what my colleague Ray Markey at Macquarie University and I did.</p>
<p>In late 2018 we commissioned a survey using a third-party data collection agency. We surveyed more than 1,800 employees and 200 owner-managers in retail and hospitality. We collected data on Sunday, public holiday and weekly employment patterns for modern award employees, as well as those covered by enterprise agreements and individual contracts.</p>
<p>Using a variety of statistical analyses, we were unable to establish any evidence of a relative increase in the prevalence of Sunday, public holiday or weekly employment for modern award employees or employers. Nor could we establish a decrease to the number of hours that owner-managers worked Sunday and public holidays, something else the Fair Work Commission also predicted. </p>
<p>In fact, some of the analysis suggested the Sunday and public holiday employment outcomes were worse for those affected by the penalty cuts compared to those on enterprise agreements and individual contracts. </p>
<h2>Flawed evidence</h2>
<p>So, why the dud result?</p>
<p>The inescapable conclusion is that the evidence presented to the commission was flawed.</p>
<p>What came from employer groups, trade unions, the Productivity Commission, and expert witnesses (including myself) was indirect and tangential at best, and biased at worst. </p>
<p>No reliable statistical evidence of the effect of penalty rates on employment was presented, either by employers or unions, because no such data had ever been collected. </p>
<p>Of the 151 academic papers the commission referred to in its decision, not one contained sound empirical analysis of the employment impact of penalty rates. It was instead mostly inferred from minimum wage cases. </p>
<p>The evidence in support of penalty rate cuts consisted of employer intentions surveys. One such survey, by an employer group, indicated more than half of its members would employ extra staff if they could cut penalty rates. </p>
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Read more:
<a href="https://theconversation.com/are-sunday-penalty-rates-a-job-killer-a-real-world-experiment-refutes-employers-claim-59962">Are Sunday penalty rates a job killer? A real-world experiment refutes employers' claim</a>
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<p>One high-profile professor of economics often consulted by employers calculated that reducing penalty rates by 1% would increase employment by 3%. This relied on sources including an unpublished conference paper from 1971 using Danish consumer data and a US study from 1966. </p>
<p>Ultimately, the Fair Work Commission decision was swayed by the Productivity Commission and blind faith in high-school economics – that if the price of labour goes down, the quantity of labour demanded will go up. </p>
<p>But by how much? Don’t ask the Productivity Commission, which admitted it was “<a href="https://www.pc.gov.au/inquiries/completed/workplace-relations/report">difficult to quantify the precise effect</a>”.</p>
<h2>Increased minimum wage</h2>
<p>At least two factors may have undone the Fair Work Commission’s prediction.</p>
<p>First, some of the savings employers might have made from the penalty rate cuts were nullified by increases in base minimum wage rates. </p>
<p>For example, a retail worker on the <a href="http://awardviewer.fwo.gov.au/award/show/MA000004">General Retail Modern Award</a>paid A$50.55 an hour on a public holiday in 2016-17 would get only A$46.98 in 2017-18. But they would have gained 3.3% minimum wage increase. So a full-time employee would be earning A$793.60 a week compared with A$768.20 the previous year.</p>
<p>The Australian Chamber of Commerce and Industry has argued <a href="https://www.canberratimes.com.au/story/6079574/fewer-workers-get-sunday-shifts-following-penalty-rate-cut-research-shows/">it will take time</a> to see a positive employment impact due to the gradual, phased reduction in Sunday rate cuts. However, the public holiday penalty-rate cut was implemented in full in 2017 and there has been no significant change to public holiday employment.</p>
<h2>Yet low-wage growth across the economy</h2>
<p>Second, despite relatively generous increases in minimum wages, there has been record low income growth across the economy, while costs associated with housing, energy and food have risen at a rapid rate. </p>
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<p>The above graph shows the wage price index, which measures the annual percentage growth of wages across the economy (CPI for the labour market). </p>
<p>The retail and hospitality sectors depend upon discretionary household spending. It is likely the expected employment stimulus has been affected by a lack of demand and spending in these sectors. Less spare cash after paying important bills means less spending on extra goodies like restaurant meals, holidays, recreational goods – all the things that retail and hospitality rely on. </p>
<p>It doesn’t matter how much you try and reduce business costs via penalty rate cuts, if people aren’t spending money then employers are not going to put extra people on for Sundays and public holidays. </p>
<p>In fact, decreasing the Sunday and public holiday pay for a decent chunk of the labour force may be adding to this lack of consumer demand and confidence.</p><img src="https://counter.theconversation.com/content/117178/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Martin O'Brien and Ray Markey received funding from a Partnership Matching Grant from the Faculty of Business, University of Wollongong and ACTU, SDA and United Voice in order to fund the survey used in this research. The survey was conducted by independent data collector Research Now SSI. </span></em></p>Australia’s Fair Work Commission concluded that cutting penalty rates would create more jobs. Our research suggests it was wrong.Martin O'Brien, Lecturer in Economics, University of WollongongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1161542019-05-07T20:17:16Z2019-05-07T20:17:16ZLabor wants to restore penalty rates within 100 days. But what about the independent umpire?<p><em>This article is part of an election series on wages, industrial relations, Labor and the union movement ahead of the 2019 federal election. You can read other pieces in the series <a href="https://theconversation.com/living-wage-and-fair-go-feasible-and-necessarythe-living-wage-the-fair-go-and-why-both-are-in-everyones-interest-116153">here</a>, <a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">here</a> and <a href="https://theconversation.com/if-labor-wins-the-2019-federal-election-what-role-will-unions-play-116653">here</a>.</em></p>
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<p>Labor has promised to restore the penalty rates cut by the Fair Work Commission in its first 100 days.</p>
<p>From its point of view, as part of a broader attack on the Coalition’s record on industrial relations, wage stagnation, widespread wage theft and the growth of insecure work, it makes sense.</p>
<p>But it betrays a broader principle Labor holds dear - independence of the tribunal.</p>
<p>The Coalition is saying little about it – still spooked by the electoral poison wrought by its <a href="https://en.wikipedia.org/wiki/WorkChoices">WorkChoices</a> legislation more than a decade ago. </p>
<p>Throughout the campaign it’s been happy to fall back on claims about economic growth and tax cuts creating favourable conditions to lift wages generally.</p>
<p>So what did the Fair Work Commission decide about penalty rates back in 2017, and what has occurred since?</p>
<h2>The commission’s decision was limited</h2>
<p>The cuts to penalty rates are often discussed as if they applied across the board. They didn’t. The commission’s decision affected penalty rates in the federal awards applying to only six sectors: fast food, retail, hospitality, pharmacies, clubs and restaurants.</p>
<p>It determined that the penalty rates for working on public holidays in those awards would be reduced from July 1, 2017; and that the penalty rates for Sunday work in four of the awards would be phased down over four years. For example, full-time workers on the retail award had their Sunday rates cut from 200% of the normal rate to 195% in July 2017, then to 180% in July 2018, and were to have the cut to 165% in July this year, followed by a cut to 150% in July 2020.</p>
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<a href="https://theconversation.com/myths-about-penalty-rates-and-those-who-rely-on-them-49947">Myths about penalty rates and those who rely on them</a>
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<p>Extra payments for working irregular or unsocial hours are a longstanding feature of Australia’s industrial relations system. Traditionally, penalty rates have been included in awards with two objectives in mind: to compensate workers for having to work overtime or on weekends and public holidays, and to deter employers from requiring employees to work at these times.</p>
<p>However, in reaching its decision, the commission found that the deterrence objective was no longer relevant for public holiday or Sunday penalty rates. </p>
<h2>Sundays have become less sacred</h2>
<p>The finding followed a report of the the Productivity Commission that found that working on Sundays was far more common than it had been in industries such as hospitality, restaurants and retail. This reflected a broader shift to a “24/7 economy”.</p>
<p>In the Fair Work Commission’s word, the “disutility” endured by workers employed on Sundays was less than it was.</p>
<p>Labor and the union movement have strongly criticised the commission’s decision in the two years since it was handed down. Labor very quickly introduced a bill to override it and restore the penalty rates of the 700,000 affected workers. The government opposed it and a similar bill introduced by The Greens, enabling Labor and the unions to hammer the prime minister in the election campaign for “<a href="https://www.penaltyratesrecord.com/cook">voting eight times</a>” to cut penalty rates.</p>
<p>Labor has argued that over the recent ten-day Easter and Anzac Day break, the penalty rate cuts resulted in a loss of between <a href="https://www.billshorten.com.au/morrison_s_penalty_rate_cuts_leave_australian_workers_up_to_370_worse_off_over_easter_saturday_20_april_2019">$218 for a fast food worker and $369 for a pharmacy employee</a>.</p>
<p>The union/Labor-aligned McKell Institute says workers will be $2.87 billion worse off by the end of the scheduled reduction in penalty rate cuts <a href="https://mckellinstitute.org.au/app/uploads/McKell-Fork-in-the-Road-April-26-2019-.pdf">if the Coalition is re-elected</a>.</p>
<h2>But cutting penalty rates has created few jobs</h2>
<p>Business groups have long claimed that cutting penalty rates will boost employment levels, a position endorsed by both the Productivity Commission and Fair Work Commission. However, research published by the Australia Institute last year finds that the retail and hospitality industries were among <a href="http://www.tai.org.au/content/penalty-rates-and-employment-one-year-later">the lowest industries for job growth in the year after rates were cut</a>.</p>
<p>The Council of Small Business Organisations conceded two weeks ago that the cuts <a href="https://www.theaustralian.com.au/nation/politics/penalty-rate-cut-failed-to-create-one-new-job/news-story/4946a1915162c197a896063ae4009bb7">failed to create one new job</a>. Its chief executive, Peter Strong, said the impact had been minimal because it had coincided with above average increases in the minimum wage. </p>
<p>“There’s no extra jobs on a Sunday,” he was reported as saying. “There’s been no extra hours. Certainly, I don’t know anyone (who gave workers extra hours). It’s been just a waste of time.”</p>
<p>However, the Fair Work Commission is set up to be independent.</p>
<h2>Labor’s approach carries longer term risks</h2>
<p>A campaign spokesperson for the Liberal Party was quoted in the <a href="https://thenewdaily.com.au/news/election-2019/2019/04/22/penalty-rates-labor-liberal/">New Daily</a> last month saying: “‘Bill Shorten knows it is the independent Fair Work Commission that sets penalty rates, not the government. In fact, it was Bill Shorten … who set up the review into penalty rates. He even appointed the umpire.’” </p>
<p>The Coalition is gilding the lily. It has been no great defender of the industrial tribunal’s independence in the past. Under WorkChoices it sidelined the commission completely. Lately it has stacked the commission with employer representatives.</p>
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Read more:
<a href="https://theconversation.com/bill-shortens-promise-of-a-living-wage-is-both-realistic-and-necessary-but-its-not-enough-116153">Bill Shorten's promise of a living wage is both realistic and necessary. But it's not enough</a>
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<p>But it’s not a great idea to start overruling Fair Work Commission decisions that are unpopular. Yes, the penalty rate cuts are arbitrary, reducing the take-home pay of low-paid workers. But Australians have trusted the tribunal to make those judgment calls for more than 100 years. </p>
<p>If Labor wants to influence Fair Work Commission decisions, it should change the criteria used by the commission to review awards – it plans to do so as part of its promise to turn the minimum wage into a “living wage”.</p>
<p>Overturning decisions it doesn’t like will leave the Fair Work Commission wondering why it is bothering, and allow others to refuse to accept decisions they don’t like. And if Labor is elected and perseveres, it will also allow a less worker-friendly successor to overturn decisions it doesn’t like.</p>
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Read more:
<a href="https://theconversation.com/how-the-major-parties-stack-up-on-industrial-relations-policy-116256">How the major parties stack up on industrial relations policy</a>
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<img src="https://counter.theconversation.com/content/116154/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Forsyth has received research funding from organisations including the BCA, CFMEU, Fair Work Commission and Victorian Government. He is a Consultant with Corrs Chambers Westgarth. The views expressed in this article are his own. Anthony blogs on workplace issues at: <a href="https://labourlawdownunder.com.au/">https://labourlawdownunder.com.au/</a></span></em></p>Overruling the Fair Work Commission will give Labor what it wants, at the cost of diminishing the commission.Anthony Forsyth, Professor of Workplace Law, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1157952019-04-21T10:07:45Z2019-04-21T10:07:45ZView from The Hill: Malcolm Turnbull’s home truths on the NEG help Labor in the climate wars<p>An Easter weekend in an election campaign might be a bit of a challenge for a pair of leaders who were atheists. But fortunately for Scott Morrison and Bill Shorten, declared believers, it wasn’t a problem.</p>
<p>Both attended church services during the so-called campaign cease-fire that the main parties had proclaimed for two of the four days.</p>
<p>Morrison on Sunday was pictured in full voice with raised arm at his Horizon Pentacostal church in The Shire, where the media were invited in. On Friday he’d been at a Maronite Catholic service in Sydney.</p>
<p>Sunday morning saw Shorten at an Anglican service in Brisbane, his family including mother-in-law Quentin Bryce, former governor-general.</p>
<p>Neither leader was hiding his light under a bushel.</p>
<h2>Church, chocolate and penalty rates</h2>
<p>Sunday was an opportunity to wheel out the kids, chasing Easter eggs (Shorten) or on the Rock Star ride at Sydney’s Royal Easter Show (Morrison). This was campaigning when you’re not (exactly) campaigning.</p>
<p>The minor players weren’t into the pretend game. For them, the relative restraint on the part of the majors presented rare opportunity. Usually Centre Alliance senator Rex Patrick would have little chance of being the feature interview on the ABC’s Insiders.</p>
<p>But while Friday and Sunday were lay days for the major parties Saturday was not (and Monday won’t be either).</p>
<p>For Labor, Easter has meshed nicely with one of the key planks of its wages policy - restoration of penalty rate cuts by the Fair Work Commission. Even on Sunday, Shorten pointedly thanked “everyone who’s working this weekend”.</p>
<p>It was the start of Labor’s campaign focus turning from health to wages this week, when it will cast the election as a “referendum on wages”.</p>
<h2>Turnbull resurrects the NEG</h2>
<p>The weekend standout, however, was the intervention of Malcolm Turnbull, who launched <a href="https://twitter.com/TurnbullMalcolm/status/1119468310473560064">a series of pointed tweets</a> about the National Energy Guarantee (NEG).</p>
<p>Turnbull was set off by a reference from journalist David Speers to “Malcolm Turnbull’s NEG”.</p>
<p>“In fact the NEG had the support of the entire Cabinet, including and especially the current PM and Treasurer. It was approved by the Party Room on several occasions”, the former prime minister tweeted.</p>
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<p>“It had the support of the business community and energy sector in a way that no previous energy policy had. However a right wing minority in the Party Room refused to accept the majority position and threatened to cross the floor and defeat their own government”.</p>
<p>“That is the only reason it has been abandoned by the Government. The consequence is no integration of energy and climate policy, uncertainty continues to discourage investment with the consequence, as I have often warned, of both higher emissions and higher electricity prices.”</p>
<p>He wasn’t finished.</p>
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<p>“And before anyone suggests the previous tweet is some kind of revelation - all of the economic ministers, including myself, @ScottMorrisonMP, @JoshFrydenberg spent months arguing for the NEG on the basis that it would reduce electricity prices and enable us to lower our emissions.”</p>
<p>And then: </p>
<p>“I see the @australian has already described the tweets above as attacking the Coalition. That’s rubbish. I am simply stating the truth: the NEG was designed & demonstrated to reduce electricity prices. So dumping it means prices will be higher than if it had been retained. QED”</p>
<p>“The @australian claims I ‘dropped the NEG’. False. When it was clear a number of LNP MPs were going to cross the floor the Cabinet resolved to not present the Bill at that time but maintain the policy as @ScottMorrisonMP, @JoshFrydenberg& I confirmed on 20 August.”</p>
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<p>(Frydenberg, incidentally, has lost out every which way on the NEG. As energy minister he tried his hardest to get it up, only to see it fall over. Now he is subject to a big campaign against him in Kooyong on climate change, including from high-profile candidates and GetUp.)</p>
<p>Turnbull might justify the intervention as just reminding people of the history. But it is damaging for the government and an Easter gift for Labor – which is under pressure over how much its ambitious emissions reduction policy would cost the economy. It also feeds into Labor’s constant referencing of the coup against Turnbull.</p>
<p>Turnbull’s Easter tweets are a reminder</p>
<ul>
<li><p>the Coalition sacrificed a coherent policy on energy and climate for a hotchpotch with adverse consequences for prices;</p></li>
<li><p>it dumped that policy simply because of internal bloodymindedness, and</p></li>
<li><p>the now-PM and treasurer were backers of the NEG, which had wide support from business.</p></li>
</ul>
<p>Shorten has strengthened his commitment on the NEG, indicating on Saturday he’d pursue it in government even without bipartisan support.</p>
<p>“We’ll use some of the Turnbull, Morrison, Frydenberg architecture, and we will work with that structure,” he said.</p>
<p>Given the hole it has left in the government’s energy policy, pressing Morrison on the economic cost of walking away from the NEG is as legitimate as asking Shorten about the economic impact of his policy.</p>
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Read more:
<a href="https://theconversation.com/video-michelle-grattan-on-the-starting-line-of-the-2019-election-campaign-115365">VIDEO: Michelle Grattan on the starting line of the 2019 election campaign</a>
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<img src="https://counter.theconversation.com/content/115795/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The major party’s Easter ceasefire allowed Malcolm Turnbull to resurrect the National Energy Guarantee.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/853172017-10-10T02:47:08Z2017-10-10T02:47:08ZSlashing penalty rates: a misguided response to problems of the past<figure><img src="https://images.theconversation.com/files/189458/original/file-20171009-25643-zm6ae3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>A Senate committee has <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/PenaltyRates/Report">finally handed down a report</a> on the Fair Work Commission’s <a href="https://www.fwc.gov.au/awards-and-agreements/modern-award-reviews/am2014305-penalty-rates-case">decision</a> to reduce Sunday penalty rates for workers in a range of service industries.</p>
<p>The report recommends that the government bring in legislation to overturn the decision, citing mixed evidence of the impact of the penalty rate cut, and the fact that “penalty rates are not a luxury”. </p>
<p>However, as I presented in evidence to both the Senate and the Commission, there needs to be more of a focus on the adverse effects of lower wages for the economy as a whole. While there has been much discussion about the implications of the decision for workers and employers, the broader context has been missing.</p>
<h2>Labour policy on the wrong track</h2>
<p>Wages policy discussion in Australia over the past 40 years has been dominated by the belief that we have a problem with excessive wages and restrictive working conditions. The objective of wages policy has been to push down the wage share of national income and remove restrictions on working conditions. But this view is not backed by the research.</p>
<p>In my evidence I pointed to several <a href="http://www.upjohn.org/publications/upjohn-institute-press/what-does-minimum-wage-do">studies</a> showing the impact of minimum wages, beginning in the 1990s, that overturned the older idea that cuts in minimum wages could yield substantial employment gains.</p>
<p>The policy consensus on the need to cut wages can be traced back to the 1970s, when there was an upsurge in the wage share of GDP with a substantial impact on profitability and employment. This led to the notion of a “real wage overhang” (the result of wages growing more slowly than productivity), which could only be resolved by a lengthy period of <a href="https://www.rba.gov.au/publications/rdp/1988/pdf/rdp8806.pdf">restraint</a>. </p>
<p>The real wage overhang was largely eliminated as a result of the 1980s <a href="https://theconversation.com/australian-politics-explainer-the-prices-and-incomes-accord-75622">Prices and Incomes Accord</a> between the Hawke-Keating Labor government and the Australian Council of Trade Unions. However, as in other areas of economic policy, the concerns of the 1980s have continued to dominate thinking on wages policy.</p>
<p>As recently as 2014, the government was warning of the danger of a “<a href="http://www.abc.net.au/news/2014-01-29/eric-abetz-warns-of-wages-breakout/5224382">wage explosion</a>”. This danger was non-existent and the real problem is the opposite - that the wage share is <a href="http://www.futurework.org.au/record_low_labour_compensation_as_share_gdp">too low</a>.</p>
<p>In the 1970s and 1980s, high inflation was a major problem and the policy response was to constrain wages growth as much as possible. In recent years, however, inflation has been too low, not too high. </p>
<h2>Weakening bargaining power</h2>
<p>Virtually all the changes that have been made to industrial legislation over the past 40 years have had the effect of weakening the unions, and thus reducing workers’ bargaining power. </p>
<p>Notable examples include <a href="http://www.abc.net.au/news/2017-03-21/have-the-right-to-strike-laws-gone-too-far/8370980">restrictions on the right to strike</a>, <a href="http://www.mondaq.com/australia/x/334700/Cartels+Monopolies/Secondary+boycott+actions+under+the+Competition+and+Consumer+Act+2010">bans on secondary boycotts</a>, and a presumption against “<a href="https://www.abcc.gov.au/news-and-media/industry-update/past-industry-updates/industry-update-december-2012/know-your-rights-pattern-bargaining">pattern bargaining</a>”. </p>
<p>Under LNP governments, these policies have been reinforced by the overt use of state power against unions, most notably by the Heydon Royal Commission and the Australian Building and Construction Commission under Commissioner Nigel Hadgkiss, who was recently <a href="http://www.abc.net.au/news/2017-09-13/abcc-nigel-hadgkiss-resigns-over-breach-labor-pressures-cash/8942558">forced to resign</a> after admitting to breaching the acts he was supposed to enforce. </p>
<p>The massive efforts to detect and punish trivial wrongdoing by unions (such as a <a href="http://www.safetyaction.com.au/latest-news/articles/2015/september/union-faces-51-000-fine-for-defying-long-sleeve-safety-policy/">fine of A$50,000</a> for encouraging workers to wear shorts to work) contrasts with the softly-softly approach response to massive levels of wages theft exposed in cases such as that of the convenience store chain 7-Eleven, where <a href="http://www.abc.net.au/news/2016-12-14/7-eleven-workers-speak-out-about-cash-back-scam/8113622">underpayments of more than A$100 million</a> resulted in no civil or criminal penalty.</p>
<p>We are finally seeing <a href="http://www.smh.com.au/business/workplace-relations/vulnerable-workers-bill-passed-with-some-compromise-20170904-gyaqy7.html">some response</a> to this with the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, but it remains to be seen if this act is enforced any more vigorously than previous ineffectual laws</p>
<p>The decision by the Fair Work Commission to reduce penalty rates continues the trend of labour market policy over the past four decades, which has driven the wage share of GDP to an all-time low. </p>
<p>It seems unlikely, however, that this policy is politically or economically sustainable as discontent with unfair and unequal income distribution increases. </p>
<p>Instead of continuing to pursue policies that the Fair Work Commission now admits will leave workers worse off - it’s time to promote fairer policies that are in workers best interests.</p>
<p>The decision by the Fair Work Commission to reduce penalty rates continues the trend of labour market policy over the last four decades. Policies of wage restraint and labour market “flexibility” such as cuts in penalty rates are a response to the problems of the past. </p>
<p>Given wages currently make up the lowest ever percentage of Australia’s GDP, we need a new approach. Cutting the incomes and entitlements of Australia’s lowest paid workers is the wrong way to go.</p><img src="https://counter.theconversation.com/content/85317/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Quiggin is Professor of Economics at UQ. He appeared before the Fair Work Commission review of penalty rates as an expert witness engaged by United Voice</span></em></p>A Senate committee has made the right decision by rejecting the Fair Work Commissions recommendations to slash penalty rates - here’s why.John Quiggin, Professor, School of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806742017-07-07T03:19:04Z2017-07-07T03:19:04ZVIDEO: Michelle Grattan on infighting in the Liberal Party<figure><img src="https://images.theconversation.com/files/177271/original/file-20170707-16068-6wec37.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
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<p>The University of Canberra’s Michelle Grattan and Frances Shannon discuss the week in politics, including the internal conflict within the Liberals over Tony Abbott’s sniping, whether the phased reduction to penalty rates will be an election issue, Prime Minister Malcolm Turnbull’s visit to Hamburg for the G20 summit, and the implications of North Korea testing its missiles.</p><img src="https://counter.theconversation.com/content/80674/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The University of Canberra’s Michelle Grattan and Frances Shannon discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraFrances Shannon, Deputy Vice-Chancellor, Research, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806312017-07-06T11:54:32Z2017-07-06T11:54:32ZGrattan on Friday: Everything’s going Bill Shorten’s way<figure><img src="https://images.theconversation.com/files/177095/original/file-20170706-11397-1jvh7vi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The fight over penalty rates is an issue made for Bill Shorten's skill set.</span> <span class="attribution"><span class="source">Paul Miller/AAP</span></span></figcaption></figure><p>Bill Shorten has been on holidays this week. Probably just as well. The “energizer bunny” would have felt the need to be out every day, as usual. His absence left more room for the fractured Liberals.</p>
<p>Shorten’s extraordinary political luck continues, as Tony Abbott rampages, to the despair or fury of frustrated colleagues. </p>
<p>But it is not just his opponents that have been raining political gifts on Labor. Last weekend saw the start of the phase-in of the Fair Work Commission’s decision to cut Sunday penalty rates for retail, hospitality, fast-food and pharmacy workers.</p>
<p>Admittedly this isn’t WorkChoices. But for Shorten it could become a pale version of it. Hundreds of thousands of employees stand to lose, very many of whom are low-income earners. And it’s not just those directly affected. Think of parents who have kids doing some Sunday shifts. And consider the potential for a scare campaign about other sectors.</p>
<p>Shorten has a clear-cut policy to sell. A Labor government would legislate to reverse the commission’s decision and prevent a repeat.</p>
<p>This is an issue made for Shorten’s skill set. As a former union leader, he’s effective at rallies and at home in workplace conversations. He can mesh his campaign with that of the union movement, which has plenty of feet on the ground. There can be photo opportunities at businesses that decide not to cut their employees’ rates.</p>
<p>The opposition will potentially lose support among those in small business who favour the rates cut. But Shorten can reckon that most of them would be voting Coalition anyway.</p>
<p>There is a social logic and an economic rationale for lowering Sunday penalty rates. You can say that these days Sunday is little different from Saturday, for which penalty rates have been less. The economic argument is that businesses will be inclined to put on extra workers, or in some cases open on Sundays, if rates are not as high.</p>
<p>But there is a disconnect between the economics and the politics. </p>
<p>What would make sense if setting rates from scratch is political poison when it is a matter of changing the status quo. It’s the same difficulty a government has when removing or reducing access to a benefit.</p>
<p>Also, even assuming there’ll be a gain in employment – which some dispute – it is unlikely to show up quickly, given the phase-in.</p>
<p>The pain will be felt before any gain. Anyway, that gain will be difficult to separate from other factors affecting employment. Those suffering a cut in wages will be able to identify its cause; people getting jobs that mightn’t have been there before won’t usually make a direct link.</p>
<p>The government knows penalty rates is dangerous ground for it. While it makes the economic case in a desultory way, it is more likely to emphasise that it was the umpire’s decision.</p>
<p>On both sides of politics there’s now a feeling the next election is Shorten’s to lose. But that in itself is a reason for a few Labor jitters. There could be nearly two years before the election; the favourite doesn’t always win the race; the sour mood in voterland carries its risks for both sides (though mostly for the government); Shorten lacks charisma and always lags behind Malcolm Turnbull as preferred prime minister.</p>
<p>Shorten is something of a prisoner of his success. With Labor in a sustained lead in two-party terms, he needs to maintain that advantage. If the Coalition hauled up to equal, the climate would quickly change, fuelled by the media, sections of which are feral.</p>
<p>While it’s extremely unlikely Shorten would be replaced before the election, any serious revival of the Coalition in the polls would trigger a rash of speculation about the ambitions of Anthony Albanese.</p>
<p>A taste of what Shorten can expect as the election draws closer came with Daily Telegraph’s Wednesday front page fake news story reporting a Shorten government’s first 100 days. Under the heading “NOW HERE’S YOUR BILL”, it read: “Workers laid off. Record tax rates. Rents hit new high.” </p>
<p>In the Shorten office they had a good laugh. They can take comfort in the fact the Tele’s clout in Sydney’s west isn’t what it used to be.</p>
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<p>Much of the political risk Shorten faces revolves around tax. Labor’s policy is to reimpose the deficit levy on higher-income earners (it expired on June 30). So if there were a change of government these people would face two extra taxes – that levy and the budget’s increase in the Medicare levy, proposed to kick in from 2019. They would have a marginal tax rate of 49.5%.</p>
<p>Labor opposes the government’s proposal for tax cuts for big companies but has yet to say what it would do about the already-legislated tax cuts for small and medium-sized businesses, phased in over coming years. While it will keep the cut for small businesses (up to A$2 million or perhaps $10 million turnover), the medium-sized businesses (up to $50 million turnover) are likely to take a hit.</p>
<p>If that turns out to be the decision (expected before the end of this year) it will cause Shorten grief with the business sector – more than his stand on penalty rates will. What to do about these legislated company tax cuts looms as one of the most important policy judgements Labor has to make in coming months.</p>
<p>Shorten’s opponents are still struggling to find the right negative with which to hit him.</p>
<p>There was an unfulfilled expectation he’d be much damaged by the trade union royal commission. Turnbull has tried to cast him as the friend of billionaires.</p>
<p>Recently, Shorten was hammered not just by the government but in the media for his nay-saying response to the budget, including opposing the Medicare levy hike for those on incomes under $87,000. While the Labor frontbench was divided over the levy stand, it did fit squarely into the wider Shorten narrative of protecting lower-income earners.</p>
<p>Labor also came under fire for its opposition to the government’s Gonski 2.0 package – its stance on this seemed to me much more dubious in policy terms than its attitude on the Medicare levy.</p>
<p>So far, the criticisms of its policy positions haven’t harmed the opposition in the polls.</p>
<p>One reason Labor is proving hard for the Coalition to dent is because of what the public are not saying about Shorten’s team. People aren’t saying it is divided and fighting internally. That stark contrast with the other side is a boon for an aspiring prime minister.</p><img src="https://counter.theconversation.com/content/80631/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For Bill Shorten, cuts to Sunday penalty rates could become a pale version of WorkChoices.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/791892017-06-09T04:10:36Z2017-06-09T04:10:36ZVIDEO: Michelle Grattan on national security<figure><img src="https://images.theconversation.com/files/173063/original/file-20170609-20829-1mhp8m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
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<p>The University of Canberra’s vice-chancellor and president, professor Deep Saini, and professorial fellow Michelle Grattan discuss the week in politics. Topics on the agenda include:</p>
<ul>
<li><p>Prime Minister Malcolm Turnbull’s desire to have state attorneys-general make parole decisions involving terror suspects;</p></li>
<li><p>the Fair Work Commission’s decision to phase down the Sunday penalty rate cuts from July to 2020;</p></li>
<li><p>Scott Morrison’s statement that the Australia economy is growing at the lowest rate since the crash in 2008; and </p></li>
<li><p>Chief Scientist Alan Finkel’s energy policy review.</p></li>
</ul><img src="https://counter.theconversation.com/content/79189/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The University of Canberra’s Deep Saini and Michelle Grattan discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraPaddy Nixon, Vice-Chancellor and President, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/750482017-05-24T20:15:23Z2017-05-24T20:15:23ZFactCheck: will 700,000 workers be ‘ripped off’ by penalty rate cuts, as Bill Shorten said?<blockquote>
<p>Malcolm Turnbull’s cuts to penalty rates will rip off 700,000 workers… <strong>– Labor leader Bill Shorten, in a Labor-produced <a href="http://thenewdaily.com.au/money/work/2017/03/17/malcolm-turnbull-backs-penalty-rate-cuts">recorded phone call to voters</a> released in March 2017.</strong></p>
</blockquote>
<p>The Fair Work Commission recently held a new round of <a href="http://www.skynews.com.au/news/politics/federal/2017/05/09/fair-work-hold-hearing-into-penalty-rate-cut.html">deliberations</a> on <a href="https://www.fwc.gov.au/awards-and-agreements/modern-award-reviews/am2014305-penalty-rates-case">how to implement</a> its recommendation that Sunday and public holiday penalty rates be reduced for workers on awards in the hospitality, fast-food and retail sectors.</p>
<p>The federal opposition has condemned the recommendation, with Labor leader Bill Shorten saying in a recorded phone call to voters earlier this year that “cuts to penalty rates will rip off 700,000 workers”. </p>
<p>Is that accurate?</p>
<h2>Checking the source</h2>
<p>When asked for a source to support the claim, Shorten’s office referred The Conversation to a spokesperson for Labor’s shadow minister for employment and workplace relations, Brendan O'Connor, who pointed to a February 2017 <a href="https://mckellinstitute.org.au/app/uploads/McKell-Institute-The-Impact-of-the-Fair-Work-Commission%E2%80%99s-Penalty-Rates-.pdf">report</a> by the <a href="https://mckellinstitute.org.au/">McKell Institute</a>. The spokesperson said:</p>
<blockquote>
<p>The McKell Institute’s independent figures combined with pharmacy retail workers show around 700,000 workers could face cuts to their penalty rates … The prime minister himself has used the figure 600,000.</p>
</blockquote>
<p>You can read the full response from O'Connor’s office <a href="http://theconversation.com/full-response-from-a-spokesperson-for-brendan-oconnor-76572">here</a>. </p>
<p>However, my calculations show that the real number of people likely to experience a pay cut, should the rate reduction proceed, is actually closer to 355,000 employees – about half the number suggested by Labor.</p>
<h2>‘Could’ vs ‘will’</h2>
<p>The first problem is the difference between the words “will” (what Shorten said in Labor’s <a href="http://thenewdaily.com.au/money/work/2017/03/17/malcolm-turnbull-backs-penalty-rate-cuts">“robo-call” to voters</a>) and “could” (the language used in Labor’s full response to The Conversation, as well as in the McKell Institute <a href="https://mckellinstitute.org.au/research/reports/the-impact-of-the-fwcs-february-23-sunday-penalty-rates-decision/">report</a>). </p>
<p>The McKell report said:</p>
<blockquote>
<p>Around 680,000 Australians are estimated to be working on awards that may be impacted by the proposed changes.</p>
</blockquote>
<p>Do you see the difference? The report is estimating how many people are on the awards affected. Labor has taken that a step further and said in its recorded phone call that this figure relates to how many people <em>will</em> experience a Sunday pay cut.</p>
<p>The McKell Institute report goes so far as to say “the proposed penalty rate changes will impact up to 681,000 workers”. But even “will impact” is not quite the same as saying penalty rate cuts “will rip off 700,000 workers”, as Shorten said.</p>
<p>The crucial point here is that not everyone who is on the award will necessarily work Sundays.</p>
<p>In <a href="http://theconversation.com/qanda-on-the-methodology-for-the-mckell-institutes-report-on-the-impact-of-penalty-rate-cuts-75466">response to questions</a> sent by The Conversation, the author of the McKell Institute report, Edward Cavanough, said:</p>
<blockquote>
<p>The point of the report was not to say “681,000 workers [work] every Sunday and will therefore lose x amount”. This point was really that there are 681,000 individuals currently on awards subject to the changes. Should any of these workers choose in the future to work a Sunday in their current job, they will be subject to a financial impediment … while on any given Sunday, only 250,000 to 400,000 of these workers will be working, a change in the award affects each worker currently on that award, and limits their ability to receive additional remuneration should they choose to work on Sundays. </p>
</blockquote>
<p>Now let’s take a closer look at how the McKell Institute arrived at its estimates.</p>
<h2>How did the McKell Institute calculate its estimate?</h2>
<p>When calculating how many people work in the affected industries (hospitality, retail, pharmacy and fast food), the McKell Institute report used data from the Workplace Gender Equality Agency and IbisWorld.</p>
<p>But the Workplace Gender Equality Agency only includes organisations with more than 100 employees, so its employment estimates don’t give the full picture. The McKell Institute estimate didn’t use official statistics like the Australian Bureau of Statistics (ABS) Labour Force Survey, which covers workers in organisations of any size. </p>
<p>In response to my <a href="http://theconversation.com/qanda-on-the-methodology-for-the-mckell-institutes-report-on-the-impact-of-penalty-rate-cuts-75466">questions about methodology</a>, report author Edward Cavanough said IbisWorld can be more up to date than ABS data, but said ABS data could also be used.</p>
<p>Regarding the McKell report’s calculation of how many employees are paid at award rates, Cavanough <a href="http://theconversation.com/qanda-on-the-methodology-for-the-mckell-institutes-report-on-the-impact-of-penalty-rate-cuts-75466">said</a> his estimates were based on discussions with employee representatives, and a search on previous enterprise bargaining agreement negotiations between the major hospitality union and industry groups. </p>
<p>But the ABS has better data than that on how many people are paid by award, which the McKell Institute didn’t use in its report. </p>
<h2>Using ABS data to estimate how many Australians would likely get a Sunday pay cut</h2>
<p>To estimate how many workers would likely face a Sunday penalty rate cut under the Fair Work Commission’s decision, we need to combine data sources and make some informed assumptions.</p>
<p>We need to know three things:</p>
<p><strong>1. How many people work in the hospitality, retail, pharmacy and fast-food industries?</strong></p>
<p>The ABS <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6306.0/">Survey of Employee Earnings and Hours</a>, conducted in May 2016, found the total number of employees working in the retail trade industry, including pharmacy workers, was about 1,065,800. The total number of employees working in the accommodation and food services industry, including hospitality and fast-food workers, was about 742,200.</p>
<p><strong>2. How many workers are paid by award?</strong></p>
<p>The workers who would be immediately affected by the proposed penalty rate cut are those whose pay is set by an “award”, and not by an enterprise bargaining agreement. Data from the same May 2016 <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6306.0/">Survey of Employee Earnings and Hours</a> show that 42.7% of employees in the accommodation and food services industry were paid by award, along with 34.5% of employees in retail trade. </p>
<p><strong>3. How many of those people work on Sundays?</strong></p>
<p>The Fair Work Commission decision specifically relates to cutting penalty rates on Sundays and public holidays. The ABS <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6333.0">Characteristics of Employment Survey</a> from August 2015 shows on which days of the week employees usually work, broken down by industry.</p>
<p>To calculate how many work on Sunday, I included those who usually work on this day, and those whose work days vary during the week and could include Sunday. Data aren’t available to say whether award-reliant employees work the same number of Sundays as others in their industry. For this calculation, I assumed they did.</p>
<p>There’s an important difference between my calculations and the calculations the McKell Institute made. The McKell Institute’s figure of around 680,000 relates to the number of people in affected industries that it estimates are paid by award and <em>could</em> work on Sunday (even if they do not right now).</p>
<p>I limited my estimate to people who, according to the most recent ABS data, <em>are</em> working or likely to be working on days that include Sunday. The fact that the Fair Work Commission plans to reduce the Sunday pay premium is unlikely to increase the appeal of Sunday work for those who aren’t already doing it. </p>
<h2>Crunching the numbers</h2>
<p>To estimate how many employees the penalty rates decision is likely to affect, I multiplied the total number of employees by the percentage of people paid by award, and then by the percentage who work in Sunday in each industry.</p>
<iframe src="https://datawrapper.dwcdn.net/ZugZ4/3/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="354"></iframe>
<p>By these calculations, some 355,000 employees – about 163,000 in retail trade and roughly 192,000 in accommodation and food services – would likely get a pay cut due to the Fair Work Commission’s penalty rates decision. </p>
<p>This is about half the number suggested by Labor’s claim that “Malcolm Turnbull’s cuts to penalty rates will rip off 700,000 workers”.</p>
<p>It’s true the prime minister has <a href="https://malcolmturnbull.com.au/media/interview-with-neil-mitchell-3aw7">used the figure 600,000</a> in at least one interview, but the official Australian government <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014-305-sub-ausgov-240317.pdf">submission</a> to the Fair Work Commission estimated that the number will be between 300,000 and 450,000.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=229&fit=crop&dpr=1 600w, https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=229&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=229&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=288&fit=crop&dpr=1 754w, https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=288&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/164778/original/image-20170411-31873-1r9im1j.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=288&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014-305-sub-ausgov-240317.pdf">Australian government submission to the Fair Work Commission.</a></span>
</figcaption>
</figure>
<p>The Fair Work Commission itself has <a href="http://parlinfo.aph.gov.au/parlInfo/download/committees/estimate/13746b70-2bbd-43ea-98c5-8491718706f0/toc_pdf/Education%20and%20Employment%20Legislation%20Committee_2017_03_02_4780.pdf;fileType=application/pdf">not made an estimate</a> of how many people face a cut.</p>
<h2>Verdict</h2>
<p>Bill Shorten’s claim that “cuts to penalty rates will rip off 700,000 workers” is an exaggeration.</p>
<p>It is based largely on a McKell Institute report, which estimated that around 680,000 Australians are working on awards affected by the proposed changes. Crucially, that estimate relates to the number of people in affected industries who are paid under an award but might not currently be doing any Sunday work.</p>
<p>My calculations – based on ABS data on who actually <em>is</em> or <em>is likely to be</em> working on Sundays under the award in affected industries – found that the figure is closer to 355,000 workers. <strong>– Joshua Healy</strong></p>
<hr>
<h2>Review</h2>
<p>This FactCheck provides better estimates of the number of workers that are likely to be directly affected by changes to Sunday penalty rates than those provided in the McKell Institute report.</p>
<p>The author has taken the time to understand the complexities of obtaining estimates of workers affected by the penalty rate cut and the limitations of the assumptions and data underlying the estimates provided by the McKell Institute. </p>
<p>However, the estimates provided by the author do still require a number of assumptions and the data sources are limited. </p>
<p>The first assumption in this FactCheck is that any person who states they work varied days each week is categorised as working on a Sunday. This assumption effectively doubles the new (but more realistic) estimates provided by the author to gain a figure of 355,000.</p>
<p>Removing this assumption and using only those that state they <em>do</em> work on a Sunday (according to the ABS data), the estimated number of workers affected is 169,000 – much, much fewer than Labor’s claim of 700,000.</p>
<p>Further, those who state they work on a Sunday can also select that they work varied days each week within the <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6333.0">Characteristics of Employment Survey</a>. This will mean some people will be double-counted in these estimates.</p>
<p>The second issue is that the estimates of people working on a Sunday are not confined to award wage workers only and are instead derived from all workers in each industry regardless of pay-setting arrangement. This is because the data used cannot provide this breakdown.</p>
<p>The <a href="http://melbourneinstitute.unimelb.edu.au/hilda">Household Income and Labour Dynamics in Australia Survey</a> is able to provide more accurate estimates of workers who meet all three conditions: </p>
<ol>
<li><p>working in retail or accommodation and food services; <em>and</em></p></li>
<li><p>working under an award; <em>and</em> </p></li>
<li><p>working on a Sunday</p></li>
</ol>
<p>Using the HILDA data, the total number of people that I have estimated to be directly impacted by the penalty rate cut is 217,270 – again, much, much fewer than Labor’s claim of 700,000.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=190&fit=crop&dpr=1 600w, https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=190&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=190&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=239&fit=crop&dpr=1 754w, https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=239&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/170077/original/file-20170519-12257-53m4s5.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=239&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The reviewer’s calculations from HILDA 2016 data of the number of workers that will attract a Sunday penalty rate cut.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>This constitutes 9.7% of workers in the retail trade sector and 13.8% of workers in the accommodation and food services sector. The majority of these workers (68%) are women. <strong>– Rebecca Cassells</strong></p>
<hr>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/162128/original/image-20170323-13486-72k52f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Conversation FactCheck is accredited by the International Fact-Checking Network.</span>
</figcaption>
</figure>
<p><em>The Conversation’s FactCheck unit is the first fact-checking team in Australia and one of the first worldwide to be accredited by the International Fact-Checking Network, an alliance of fact-checkers hosted at the Poynter Institute in the US. <a href="https://theconversation.com/the-conversations-factcheck-granted-accreditation-by-international-fact-checking-network-at-poynter-74363">Read more here</a>.</em></p>
<p><em>Have you seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at <a href="mailto:checkit@theconversation.edu.au">checkit@theconversation.edu.au</a>. Please include the statement you would like us to check, the date it was made, and a link if possible.</em></p><img src="https://counter.theconversation.com/content/75048/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joshua Healy is a researcher at the Centre for Workplace Leadership, which was established in 2013 with support from the Commonwealth Department of Employment and The University of Melbourne.
</span></em></p><p class="fine-print"><em><span>Rebecca Cassells is a Principal Research Fellow with the Bankwest Curtin Economics Centre. The Bankwest Curtin Economics Centre is an independent economic and social research organisation located within Curtin Business School at Curtin University. The Centre was established in 2012 with support from Bankwest (a division of Commonwealth Bank of Australia) and Curtin University. The views in this article are those of the authors and do not represent the views of Curtin University and/or Bankwest or any of their affiliates.</span></em></p>In a recorded phone call to voters, Labor leader Bill Shorten said that “cuts to penalty rates will rip off 700,000 workers”. Is that true?Josh Healy, Senior Research Fellow, Centre for Workplace Leadership, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/754662017-05-24T08:31:34Z2017-05-24T08:31:34ZFull response from the McKell Institute regarding its report on penalty rate cuts<p><strong>In relation to <a href="http://theconversation.com/factcheck-will-penalty-rate-cuts-rip-off-700-000-workers-as-bill-shorten-said-75048">this FactCheck</a> on how many workers are expected to be affected by proposed cuts to Sunday penalty rates, the author of the FactCheck, <a href="https://theconversation.com/profiles/joshua-healy-104950">Joshua Healy</a>, submitted the following questions for The Conversation to send to the McKell Institute.</strong></p>
<p><strong>The questions relate to the methodology for the McKell Institute’s <a href="https://mckellinstitute.org.au/app/uploads/McKell-Institute-The-Impact-of-the-Fair-Work-Commission%E2%80%99s-Penalty-Rates-.pdf">February 2017</a> report on the impact of the Fair Work Commission’s penalty rates decision.</strong></p>
<ul>
<li><p>Regarding how many people work in the industries affected by the Fair Work Commission decision: Retail Trade, and Accommodation and Food Services. The McKell report uses data from the Workplace Gender Equality Agency (WGEA) and IbisWorld. What’s the reasoning behind using these sources? In the case of the WGEA, their remit only includes organisations with 100-plus employees, so their employment estimates are not a full picture. Is there a reason why ABS stats were not used, such as those found in the ABS Labour Force Survey?</p></li>
<li><p>For each of the two industries, you need to know how many workers are paid according to award rates of pay, since these rates are being adjusted by the Fair Work Commission decision. For example, on page 14, the author states: “This report makes a conservative estimate that 75% of hospitality workers … are working under awards.” Can you explain how the author arrived at this this estimate? Is there a reason why the ABS’ Survey of Employee Earnings and Hours was not used instead?</p></li>
<li><p>Once you have an idea how many of each industry’s workers are paid by award rates, you then need to estimate how many of them are likely to be Sunday workers, since the Fair Work Commission decision involves changing Sunday penalty rates. Again, there are official statistics such as the ABS’ Characteristics of Employment Survey on this, but the McKell report doesn’t use them – is there any reason why? </p></li>
</ul>
<p><em>– Joshua Healy, Senior Research Fellow, Centre for Workplace Leadership, University of Melbourne</em></p>
<p><strong>The following is the response from Edward Cavanough, McKell Institute manager of policy.</strong></p>
<p>First, there are a couple of clarifications with the total figure:</p>
<p>This is the estimated number of all hospitality, fast food, and retail workers on awards that are subject to potential changes to their awards. </p>
<p>The point of the report was not to say “681,000 workers [work] every Sunday and will therefore lose x amount”. This point was really that there are 681,000 individuals currently on awards subject to the changes. Should any of these workers choose in the future to work a Sunday in their current job, they will be subject to a financial impediment.</p>
<p>I think this is important and justified, as it is clear that, while on any given Sunday, only 250,000 - 400,000 of these workers will be working, a change in the award affects each worker currently on that award, and limits their ability to receive additional remuneration should they choose to work on Sundays. </p>
<p>While the ALP have argued a $6,000 loss figure for some individuals, our report isn’t the source for that. We outline various hypothetical scenarios that would apply to certain individuals on the award, some of whom would be subject to losses up to $3,500 should the work every Sunday. Obviously, for workers who work only the occasional Sunday, the losses would be less.</p>
<p>In terms of the justification for the sources:</p>
<p>From recollection, the WGEA data was primarily used to determine the gender breakdown across industries. They have exceptional data in this regard. I understand your point with the WGEA not collecting much info unless the businesses employ 100-plus, but in terms of identifying the gender breakdown in each industry, it’s actually really valuable. This is how the 55/45 gender split was determined through this data.</p>
<p>IbisWorld has in my determination a really strong source of the number of total employees in an industry. I personally have used this a lot in the past, and find it can at times be more up to date than ABS data. Hence my natural inclination to use that source in this instance. That being said, the ABS data sets you have tabled below are obviously worthwhile and could also be used.</p>
<p>My estimates of the number of workers in each industry in enterprise bargaining agreements was done through a couple of sources: the first is ringing around and asking about publicly negotiated enterprise bargaining agreements under certain industries (with employee representatives).</p>
<p>You look at negotiations with the SDA (the Shop Distributive and Allied Employees Association, the union representing workers in retail, fast food and warehousing) for example, and there is a bunch of info around how many individuals they’ve signed up to their enterprise bargaining agreements. I’ve assumed the remainder are working as per the award. </p>
<p>With the hospitality figure, this is an estimate again based on a search on previous enterprise bargaining agreement negotiations between the major hospitality union and industry groups. Most hospitality venues are actually individually run, and it is clear through conversations that most hospitality workers work as per the award. Unfortunately, many also work below the award.</p>
<p>The estimate of 75% working as per the award was determined by calculating the percentage of hospitality businesses that were independently run and operated. Most of these types of businesses pay per the award and not as a part of enterprise bargaining agreements. </p>
<p>I think it should be acknowledged as well that my estimate arrived at on February 25 of around 681,000 workers on an affected award was effectively corroborated by the Australian Department of Employment on March 2, 2017. Their estimate is 685,000 for the same measurement (number of individuals on affected awards). (see <a href="http://www.theaustralian.com.au/national-affairs/industrial-relations/labors-claims-of-penalty-rates-cut-hit-too-high/news-story/866a586bbec4e4d988bd1da5ed93bc88">The Australian</a> that date).</p>
<p>While my estimate was marginally different, I am confident the methodology I’ve adopted was accurate and justified, and I think the Department of Employment’s own statistics also reflect that. <em>– Edward Cavanough, manager of policy at The McKell Institute</em></p>
<hr>
<p>Read the FactCheck <a href="http://theconversation.com/factcheck-will-penalty-rate-cuts-rip-off-700-000-workers-as-bill-shorten-said-75048">here</a>.</p><img src="https://counter.theconversation.com/content/75466/count.gif" alt="The Conversation" width="1" height="1" />
Q&A between the University of Melbourne’s Joshua Healy and The McKell Institute’s Edward Cavanough about methodologies for estimating the impact of the proposed Sunday penalty rate cuts.Sunanda Creagh, Senior EditorLucinda Beaman, FactCheck EditorLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/751882017-03-27T06:47:46Z2017-03-27T06:47:46ZThe government is belatedly backing the penalty rates cut it always wanted<p>It’s impossible for the government to substantially ease the hardship for workers from the Fair Work Commission’s decision to cut some penalty rates — as the <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014-305-sub-ausgov-240317.pdf">government’s submission </a>into its implementation illustrates. Nor can it shirk responsibility for it. </p>
<p>The question on which the Commission had asked for submissions was, in effect, whether the decision should be rolled out in two, three or four tranches. Most observers assumed each tranche would be a year. </p>
<p>The Commission hinted that the awards with the biggest drop in penalty rates (such as retail, where there will be a 50 percentage point drop for permanent workers) should have a longer transition. </p>
<p>The government’s submission on this threw the ball back into the Commission’s court. It declined to offer any solution. One likely reason is that there is no solution. There is no way to offset the hardship caused by the decision to cut Sunday penalty rates in a range of retail and hospitality awards. </p>
<p>Still, the insistence by the Commission that the government make a submission was probably not a call for the government to tell them what it really thinks, but a call on the government to take some of the responsibility itself for what is happening. </p>
<p>The Commission probably thought at the time that it alone was going to carry the responsibility. But now it’s the government who is wearing much of the blame.</p>
<h2>No way to ease the blow of the cuts</h2>
<p>The Commission, in calling for submissions, offered the explanation that a transition period might mitigate the hardship caused by its penalty rates decision. </p>
<p>But a cut is a cut, <a href="http://www.tai.org.au/sites/defualt/files/Transition%20to%20Nowhere%20-%20CFW.pdf">whether it’s phased in or not</a>. The likely increases in award rates over the next few years (in the order of 2-3% per year) could not offset the loss (of up to 25%) of wages for Sunday workers in nominal terms. They certainly could not do it in real terms (that is, after allowing for the effects of inflation) even over a longer period.</p>
<p>There was never any indication that the Commission was thinking about increasing base rates to offset the loss, and this is really what would be required to ease the blow. That said, there are also good reasons why it would not propose this anyway: it would either be too costly for employers, or of inadequate use to employees. </p>
<h2>Caught on the issue</h2>
<p>The other interesting thing about this, is that the government has been forced to make a submission on implementation. It had been conspicuous in its absence when parties were making a substantive submission to the case in the first place. In its original <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/2017fwcfb1001.pdf">decision</a>, the Commission had pointedly asked the Commonwealth to make a submission on implementation. </p>
<p>There is no particular reason why the government’s views on phasing in are any more valuable than its views on whether there should be a cut in the first place. Indeed an argument can be made in the opposite direction. </p>
<p>Its overall responsibility for the economy would seem to give it a role in deciding whether there should be a cut in the first place. That’s not so obvious when it comes to the question of how many tranches should be used to phase in the decision. </p>
<p>So the Commission could have been making a point of showing up the government for not having made a submission, as it should have made its views clear. But that seems unlikely. </p>
<p>The government’s views were very clearly known by all. There had been numerous occasions on which <a href="https://theconversation.com/what-do-new-disclosures-reveal-about-coalition-ir-policy-17689">government</a> representatives, from the <a href="http://www.abc.net.au/news/2015-10-06/prime-minister-indicates-lower-penalty-rates-if-workers-won-over/6830586">Prime Minister</a> to <a href="http://www.sbs.com.au/news/article/2015/12/23/show-courage-penalty-rates-lib-senator">backbenchers</a> made clear their views on penalty rates. Since then, after some time, and under pressure from his backbench, the Prime Minister has <a href="http://www.smh.com.au/federal-politics/political-news/malcolm-turnbull-says-the-government-supports-penalty-rate-cuts-20170316-gv04as.html">come out in support </a>of the decision.</p>
<h2>The independent appeal jurisdiction</h2>
<p>Indeed, it’s quite possible the Commission would have come up with a different decision if there was a different government in place, regardless of the fact that this government made no substantive submission. It’s true that employers would have still been putting pressure on the Commission to make a cut anyway. But it was this government that <a href="https://theconversation.com/the-pc-review-that-could-bring-the-government-unstuck-36756">commissioned the Productivity Commission report</a> on which the Commission relied quite heavily when making the decision to cut penalty rates (and without allowing for cross-examination of its authors). </p>
<p>The Commission was well aware that the current government was hanging the threat of reorganisation over it. It was actively considering in <a href="http://past.electionwatch.edu.au/sites/default/files/docs/LibsFairWorkLaws_0.pdf">its 2013 election policy</a> creating a new “independent appeal jurisdiction” above the Commission. This would greatly reduce its power.</p>
<p>Although such a Bill would have had to get through the Senate, the behaviour of which is quite unpredictable, it would have been a major gamble by the Commission to go against the known will of the government and dare them to establish a new jurisdiction. The high-profile <a href="http://www.afr.com/news/policy/industrial-relations/top-industrial-judge-resigns-in-disgust-over-biased-system-20170117-gttfgx">announcement of the resignation</a> of Vice President Graeme Watson would have added ammunition to this fear. </p>
<p>The Commission is an institution. The principal concern of most institutions is with survival. If that is a priority, it is be better to take a hit on one issue than to invite a permanent reduction of the institution’s powers.</p>
<p>Although the Commission’s decision was a very long one, in the end the evidence that the Commission acknowledged, claiming beneficial employment effects from the penalty rates cut, was not persuasive. The Commission would not estimate its magnitude. </p>
<h2>As time goes by</h2>
<p>As it is, things have moved on in the blame game. The government is carrying a lot of the blame anyway due to the tactics of the ALP and the unions. The argument that the penalty rate cut was just an independent decision of an independent arbitrator has worn thin.</p>
<p>There is no easy way for penalty rates to be cut for Sunday workers in retail and hospitality, without it directly becoming a cut in nominal wages, and real wages. To be precise, it cannot be done, as shown by the government’s own submission on phasing-in.</p>
<p>Nor is there a way out for the government from this decision. It may not have made a submission earlier arguing for the cuts, but everyone knew what it wanted, and it created the conditions to ensure that was the decision the Commission came to. Now it is belatedly backing what it always wanted.</p><img src="https://counter.theconversation.com/content/75188/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, in Australia and overseas, employers and unions. Research discussed in an earlier article for The Conversation was commissioned by the Shop, Distributive and Allied Employees Association and submitted to the Fair Work Commission during the review.</span></em></p>The insistence by the Fair Work Commission that the government make a submission on penalty rates was not about their position, but a call on the government to take some of the responsibility itself.David Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/750522017-03-23T01:56:36Z2017-03-23T01:56:36ZPolitics podcast: Michaelia Cash on union misconduct<p>The government this week introduced a bill that aims to put a stop to secret agreements between employers and unions without the knowledge of union members. The next hurdle will be the Senate, although it’s possible Labor may support the legislation. </p>
<p>Employment Minister Michaelia Cash says she is always in discussion with the Senate crossbenchers about the implementation of the recommendations from the Heydon royal commission.</p>
<p>“And certainly, I’m always willing to sit down with [Shadow Employment Minister] Brendan O'Connor or Richard Di Natale to discuss the legislation.”</p>
<p>Beyond these new measures, Cash suggests the government wants to legislate more recommendations from the royal commission into trade unions. </p>
<p>“There are about 50 to 55 left and we are finalising that package as we speak. We are absolutely committed to adopting the Heydon recommendations.</p>
<p>"There are further recommendations in relation to what employers and unions should be disclosing in the course of enterprise agreements. There are some recommendations which go to, for example, choice of superannuation fund in enterprise agreements. There are some recommendations which go towards further transparency. Again, we’re happy to adopt them all.”</p>
<p>Following a ruling by the Fair Work Commission to cut Sunday penalty rates in industries such as hospitality, retail and fast food, some businesses have been reluctant to show strong support for the changes. Cash would like to see more businesses take up the cause.</p>
<p>“I believe that if you accept a decision and you embrace the positive benefits and you want to bring people with you, then yes, you should be out there selling that message.</p>
<p>"These guys are scared. They are scared that the unions will come and get them.”</p><img src="https://counter.theconversation.com/content/75052/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The government this week introduced a bill that aims to put a stop to secret agreements between employers and unions without the knowledge of union members.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/736942017-03-02T23:19:37Z2017-03-02T23:19:37ZExplainer: where to from here on penalty rates?<figure><img src="https://images.theconversation.com/files/159060/original/image-20170302-5525-17qi8c9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Canberra barista makes coffee. Many low-paid workers will be affected by the Fair Work Commission's decision on penalty rates.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>In its long-awaited decision, the Fair Work Commission on February 23 <a href="http://www.fwc.gov.au/documents/sites/awardsmodernfouryr/2017fwcfb1001.pdf">reduced</a> Sunday and public holiday penalty rates for over 700,000 workers covered in four awards for hospitality, fast food, retail and pharmacies, as part of the Modern Awards Review. The decision has inspired heated debate, both for and against. And the matter is far from resolved. </p>
<p>The Labor Party and the ACTU are firmly opposed. The Coalition government is so far moving cautiously, knowing that the issue may well play a significant role in the next federal election. The prime minister yesterday refused to say clearly if the government supported the decision or not, while Liberal Senator Eric Abetz <a href="http://www.smh.com.au/federal-politics/political-news/protect-existing-rates-former-ir-minister-eric-abetz-intervenes-on-landmark-penalty-rates-decision-20170301-gunypa.html">has argued for</a> a grandfathering of current employees’ wages so that only new employees would be affected. </p>
<h2>Background to the decision</h2>
<p>Employers had argued that Sunday penalty rates should be reduced to the level of Saturday rates because:</p>
<ul>
<li>we now live in a 24/7 society where Sundays are no longer special days, and</li>
<li>a reduction would enable employers to open for longer hours on Sundays and employ more workers. </li>
</ul>
<p>The Productivity Commission <a href="http://www.pc.gov.au/inquiries/completed/workplace-relations/report">broadly supported</a> employer arguments. Nevertheless, the <a href="https://theconversation.com/myths-about-penalty-rates-and-those-who-rely-on-them-49947">evidence for these arguments</a> is weak.</p>
<p>The employment generation case is based predominantly on economic theory rather than empirical data. The Productivity Commission implicitly recognised this when it recommended that the onus of proof be reversed, so that unions should be required to demonstrate that wage reductions would not generate employment growth. </p>
<p>There is also <a href="theconversation.com/myths-about-penalty-rates-and-those-who-rely-on-them-49947">substantial evidence</a> that weekend workers have difficulty in making up for lost time at weekends with family and friends during the week.</p>
<h2>The decision</h2>
<p>The Fair Work Commission, which the Rudd government established in 2009, only partially accepted employer arguments. It acknowledged the difficulty of quantifying employment impacts, but was particularly swayed by the evidence of small-business witnesses that a cut in penalties would allow them to offer employees more work.</p>
<p>However, it reached slightly different conclusions for different sectors (see below). It also argued that while the “disutility” for Sunday work had declined, it remained greater than for Saturdays.</p>
<p>So the commission’s decision was nuanced and complex. The new rates vary between sectors and according to employment status.</p>
<p>Acknowledging the hardship that predominantly low-income workers on Sunday penalty rates would face, the commission envisages that, while public holiday rates will be effective from July 1 2017, reductions to Sunday rates will be phased in over two to five years. It has called for submissions from the parties in this regard. Casual workers have also not suffered as severely as others. </p>
<p>For restaurants and clubs, the commission did not reduce rates because it considers that employers presented insufficient evidence supporting their arguments – it requires further evidence. It also stated that the changes decided “provide no warrant for the variation of penalty rates in other modern awards”.</p>
<h2>Who is affected?</h2>
<p>The following summarises how the main groups of workers are affected:</p>
<ul>
<li>hospitality – full-time and part-time workers had rates reduced from 175% to 150%, but casuals were not reduced</li>
<li>fast food – rates reduced from 150% to 125% for level 1 employees (commonly aged 14-20), but for casuals it was 175% to 150%</li>
<li>retail – rates reduced from 200% to 150%, but for casuals only from 200% to 175% </li>
<li>pharmacy sector – rates cut from 200% to 150%, and 200% to 175% for casuals</li>
<li>restaurants and clubs – no cuts but there may be in the future.</li>
</ul>
<h2>Why does Labor oppose it?</h2>
<p>The sheer inequity of the decision has aroused extensive opposition. Estimates of the loss in income for workers on penalty rates range <a href="http://mckellinstitute.org.au/wp-content/uploads/2017/02/McKell-Institute-The-Impact-of-the-FWCs-Penalty-Rates-Decision.pdf">from $3,500</a> to $6,000 (by ACTU president Ged Kearney) every year. This is very substantial for workers who are largely at the lowest-paid end of the labour market spectrum. Many rely on penalty rates, especially on Sundays, to meet household expenses.</p>
<p>The Productivity Commission also acknowledged that these workers are unlikely to receive sufficient additional hours to make up for the loss of pay.</p>
<p>In addition, this is a highly gendered issue, since the sectors affected are dominated by female employees. The economic gender gap may widen as a result.</p>
<p>It is unusual historically for the Fair Work Commission or <a href="https://www.fwc.gov.au/about-us/history">its predecessors</a> to reduce wages across the board for whole classes of workers or sectors. The most notable previous instance was in 1931, in the exceptional circumstances of the Great Depression. </p>
<p>But the current decision has occurred in a relatively buoyant economy at a time when a shift is already occurring from wages to profits. The day before the commission’s decision, the Australian Bureau of Statistics (ABS) <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/6345.0/">released figures</a> showing that private sector wages growth was 1.8%, the lowest since it began collecting data in 1997. At the same time, company profits soared by 26.2% for 2016. </p>
<p>In the retail sector, <a href="http://www.ausstats.abs.gov.au/ausstats/meisubs.nsf/0/733935FC80304566CA2580D1000BB5FD/$File/56760_dec%202016.pdf">gross operating profits</a> 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 <a href="http://www.afr.com/news/government-to-test-senate-support-for-company-tax-cuts-20170129-gu1460">enjoy a tax reduction</a> if the government has its way.</p>
<h2>What are the options for contesting the decision?</h2>
<p>The ACTU <a href="https://www.workplaceexpress.com.au/">intends to apply</a> in the commission for “take-home pay orders”, which might protect existing workers from reductions or mitigate them. However, the commission has already indicated that it did not favour any general “red circling” or grandfathering that would preserve current Sunday penalty rates for all existing employees.</p>
<p>Unions will also exert pressure on employers to pay over award rates. Some large employers, such as Coles and Woolworths, already do this through enterprise agreements, although these <a href="https://www.workplaceexpress.com.au/">provide lower penalty rates</a> for some part-time workers.</p>
<p>In addition, a small number of employers have indicated that they will not apply the cuts to their employees, notably <a href="http://www.sbs.com.au/news/article/2017/02/24/these-businesses-are-refusing-to-cut-penalty-rates-their-staff">cosmetics retailer Lush</a> and some <a href="https://www.facebook.com/AustralianUnions/">small cafes</a>. However, many workers in retail and hospitality are entirely award-reliant, which means they will be paid according to the commission’s ruling.</p>
<p>Enforcement is a further issue that has not arisen in the debates so far. Quite illegally, many employers, particularly in hospitality and retail, do not actually pay prescribed penalty rates, and the Fair Work Ombudsman catches only some of these. The <a href="http://www.smh.com.au/interactive/2015/7-eleven-revealed/">7-Eleven case</a> was a stark reminder of this.</p>
<h2>What happens from here?</h2>
<p>Penalty rates could hurt the government in the next election. So far it has treaded warily on the issue. Prime Minister Malcolm Turnbull has said <a href="http://www.abc.net.au/news/2017-03-02/fair-work-commission-malcolm-turnbull-penalty-rates/8317556">the government respects the ruling of the commission</a>, but stressed that it had the power to implement the changes gradually to soften the blow for workers.</p>
<p>We can expect a strong ACTU campaign focusing on key marginal seats leading up to the next federal election. The Labor Party <a href="http://www.abc.net.au/news/2017-02-23/labor-vows-to-stop-fair-work-commission-penalty-rates-cut/8296716">has indicated</a> that it will reverse the decision if it is returned to government at the election. Labor has successfully wedged the government on the issue, after the government prevented tabling of a private member’s bill to protect penalty rates.</p>
<p>The government claims that all parties should abide by the umpire’s decision and that parliament should not intervene. However, it has <a href="http://mckellinstitute.org.au/wp-content/uploads/2017/02/McKell-Institute-The-Impact-of-the-FWCs-Penalty-Rates-Decision.pdf">previously supported</a> penalty rate reductions. It has also intervened against umpire’s decisions it did not support: <a href="https://theconversation.com/whats-the-victorian-governments-dispute-with-the-cfa-about-and-how-will-it-affect-the-election-61631">special legislation</a> covering Victorian firefighters and <a href="https://theconversation.com/controversial-history-of-road-safety-tribunal-shows-minimum-pay-was-doomed-from-the-start-57815">abolition of</a> the Road Safety Remuneration Tribunal are two examples.</p>
<p>In the longer term, we can also expect employers to come back for further reductions now that they have their foot in the door. Penalty rate reduction, and even abolition, has been an ongoing employer claim for over 20 years.</p><img src="https://counter.theconversation.com/content/73694/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ray Markey is a member of the National Tertiary Education Union.</span></em></p>The government has a major headache on its hands with the proposed cuts to penalty rates, which could haunt it all the way to the next election.Ray Markey, Professorial Fellow and former Director of the Centre for Workforce Futures, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/739232017-03-02T11:41:05Z2017-03-02T11:41:05ZGrattan on Friday: The art of walking, forwards and backwards, and some thoughts on Brandis<p>Malcolm Turnbull will overfly Western Australia twice next week, when he makes a brief dash to Indonesia to attend a conference of Indian Ocean Rim leaders.</p>
<p>He has no plans to drop into Perth. <a href="https://thewest.com.au/politics/state-election-2017/second-visit-from-pm-off-libs-agenda-ng-b88395150z">It is reported</a> the local Liberals weren’t much impressed with his one brief sortie into the state campaign.</p>
<p>Is that Tony Abbott smiling through clenched teeth? Remembering how the Western Australian Liberals were cool about his visiting ahead of the 2015 Canning byelection? Turnbull terminated Abbott’s leadership just before those voters got to the polls.</p>
<p>Not that Turnbull’s leadership is under any short-term threat. But he has entered that unfortunate zone when the media read significance into the incidental.</p>
<p>Such as the photo of Peter Dutton, who is suddenly fashionable on the succession ladder, striding out for a morning walk with Finance Minister Mathias Cormann.</p>
<p>The accompanying Courier Mail report said that “key conservative powerbroker Mathias Cormann and Liberal leadership aspirant Peter Dutton have been meeting for secret talks most mornings this week”.</p>
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<p>The two were just trying to slim down, Dutton said; Cormann – who called out Abbott in strong language last week–- was decidedly snippy. “Secret talks? Is this a joke? Only in Canberra will some interpret a longstanding early morning (public) exercise routine as a conspiracy.”</p>
<p>Indeed. But in their pally perambulations the pair may lament the government’s bad situation.</p>
<p>Not least, how strips have been torn off it over the decision of the Fair Work Commission to cut Sunday penalty rates in the hospitality, retail, fast food and pharmacy industries.</p>
<p>So much so that Thursday saw Turnbull doing a quick step backwards, as he struggled desperately to neutralise the political damage.</p>
<p>It had become obvious that the government could not protect itself simply by trying to fit up Bill Shorten with the decision, or saying the umpire should be obeyed.</p>
<p>So Turnbull began talking about the “transitional arrangements” to be canvassed at a commission hearing later this month. It asked the government to make a submission, and one is being prepared.</p>
<p>Turnbull said: “We’re very supportive of the commission managing this transition in a way that ensures that take-home pay is, as far as possible, maintained”, while stressing that how the commission protected workers was a matter for it.</p>
<p>Employment Minister Michaelia Cash said: “Nobody in Australia wants to see anybody’s take home pay go backwards”.</p>
<p>If this was where it was going to end up, the government should have started there. It misjudged how deeply this decision, albeit made by the “umpire”, could harm it. Its obsession with Shorten had clouded its view.</p>
<p>Meanwhile Dutton tried to shore up the government’s jobs credentials by announcing a crackdown on the fast-food industry importing foreign workers on 457 visas. “Australian workers, particularly young Australians, must be given priority,” he said. Given that only several hundred workers had come in, the hype seemed a bit of politicking.</p>
<p>“Jobs and growth” has been the Turnbull mantra but this week’s good news on growth – 1.1% in the December quarter – hardly registered politically, drowned out by other issues.</p>
<p>While the penalty rates debate raged in the House of Representatives all week, senators were taken up with estimates hearings. At one of these, Attorney-General George Brandis’s role in the fracas between the federal and WA governments over litigation relating to the <a href="https://theconversation.com/new-inquiry-into-conduct-of-george-brandis-69566">liquidation of the Bell Group</a> was back in the spotlight. This followed a claim Brandis had been involved in the matter earlier than he’d said.</p>
<p>The Bell affair is subject of a Senate investigation – the second Senate inquiry in which Brandis has featured since the election – reporting on March 21.</p>
<p><a href="https://www.thesaturdaypaper.com.au/news/politics/2017/01/28/exclusive-brandis-bound-london-porter-take-attorney-general/14855220004168">Speculation has had it</a> that Brandis will be out of the parliament in coming months, sent as high commissioner to London, paving the way for a reshuffle that could install Christian Porter as attorney-general.</p>
<p>Despite the constant talk it is understood Brandis has not been approached, nor has Alexander Downer, whose London term is up in May, been told anything. It’s not clear that Brandis wants the job.</p>
<p>Whatever the status of the speculation, it would be a very bad idea for Turnbull to despatch Brandis to London.</p>
<p>Let’s deal with the supposed advantages. They are said to be that it would remove an accident-prone minister; that Cormann, close to Turnbull and an excellent negotiator with the crossbench, could be elevated to Senate leader; and that Turnbull could freshen his team.</p>
<p>The first point must be conceded. As for the second, the crossbenchers already deal extensively with Cormann, who is deputy Senate leader. On the reshuffle: if Porter were switched from social services, a complex and sensitive job, to attorney-general, he would be of less value to the government in political terms.</p>
<p>The risks and downsides of giving Brandis the high commission post are obvious.</p>
<p>It would bring Turnbull a storm of criticism. London is a job to which former politicians are, quite reasonably, often sent. But the public’s current mood is deeply cynical, and Brandis is a damaged figure. Labor would have yet another field day.</p>
<p>Brandis is from Queensland, which is vital to the Coalition federally and has an approaching state election with One Nation rampant. Losing Brandis would take a Queenslander out of the cabinet, and the replacement isn’t obvious.</p>
<p>The outer ministry contains no one from Queensland. So to elevate another Queenslander into cabinet, Turnbull would have to reach down into the ranks of the assistant ministers – James McGrath (a mate of Turnbull), Jane Prentice, Karen Andrews, and Keith Pitt (a National, ruling him out).</p>
<p>It would be a big jump for any of the three Liberals. But not to fill Brandis’s cabinet spot with a Queenslander would be seen as a downgrading for the state.</p>
<p>Brandis to London would only harm Turnbull. Anyway, it would be a poor fit – in the post-Brexit era the next high commissioner should have economic and trade skills. Turnbull would do best to leave Brandis where he is for the time being and hold off on a reshuffle while the government tries to get steady on its feet. If it can.</p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Malcolm Turnbull will overfly Western Australia twice next week, when he makes a brief dash to Indonesia to attend a conference of Indian Ocean Rim leaders.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/737092017-02-27T12:30:47Z2017-02-27T12:30:47ZPolitically, the government seems on a hiding to nothing in the penalty rates battle<p>On some days it’s best not to venture out. For Malcolm Turnbull, Monday was such a day. There was no way a visit to Bottles of Australia in the Canberra suburb of Hume was going to end well.</p>
<p>Turnbull was there to talk energy policy. But each of only four questions he took bounced off the day’s <a href="https://theconversation.com/coalition-trails-45-55-and-turnbulls-ratings-sink-in-newspoll-73666">shocker Newspoll</a>, with its 55-45% Labor lead. The first asked bluntly: “How much worse do the polls have to get before you’re replaced as leader?”</p>
<p>Turnbull put the blame squarely on Tony Abbott for the result. “We saw an outburst on Thursday and it had its desired impact on the Newspoll. It was exactly as predicted and as calculated.” This didn’t quite explain why three weeks ago the poll was 54-46% in Labor’s favour, or why there’s now an established pattern of the Coalition trailing.</p>
<p>The media copped a spray too (though “fake news” wasn’t invoked).</p>
<p>Whenever Turnbull begins by saying “with great respect”, there’s a lecture coming.</p>
<p>“If I may, with great respect to all of you in the media, you are very readily distracted by personalities in politics. You are much more entertained by conflict and personalities than you are by jobs.</p>
<p>"You don’t seem to have a great deal of interest in the cane growers or the cattle producers or the bottle makers or the Datacentre owners or the butchers who need the support of the government to ensure that they have the export markets to reach out to and the affordable energy that they need to keep their businesses going.</p>
<p>"Now, you can focus on the personalities if you wish, that’s up to you. I’m focused on jobs, I’m focused on economic growth, I’m focused on ensuring that hard-working Australian families can get ahead, and on that note we must return to parliament.”</p>
<p>Which he did, where he focused heavily on one personality, his opposite number Bill Shorten, who made Labor’s Question Time attack not about the poll – which needed no added fat to sizzle – but about last week’s <a href="https://theconversation.com/sunday-penalty-rates-cut-opens-new-fight-between-government-and-opposition-73515">Fair Work Commission decision</a> to cut Sunday penalty rates in the hospitality, retail, fast-food and pharmacy industries.</p>
<p>Politically, the government seems on a hiding to nothing here. It is caught in that crossover where a general economic reform comes at a high price for some individuals and families.</p>
<p>It’s a story repeated over the years although with changes such as the GST and the carbon scheme (both government policies rather than decisions by independent bodies), there was compensation to protect the most vulnerable.</p>
<p>With this penalty rate cut, there will be no cushioning, except in whatever phase-in arrangements the commission decides. And those left worse off will be substantially lower income earners.</p>
<p>People standing to lose think of their own situation. The government looks at the fallout from the commission’s decision primarily in terms of the collateral political damage it will suffer and how to manage that.</p>
<p>Whenever it tries to neutralise some issue, it puts Shorten in its sights, seeing him (without much evidence these days) as a weak point. If ministers were banned from saying “Shorten” for a week, they’d be struck nearly dumb.</p>
<p>The government says Shorten started it all in 2013 by including penalty rates in the review of awards; last year he promised to abide by the umpire’s decision, which he’s now trying to overturn.</p>
<p>It seems impervious to the likelihood that the hundreds of thousands of people facing shrinking pay packets don’t want another round of the blame game, which they’re sick of even in circumstances when they’re not so personally affected.</p>
<p>Amid his attacks on Shorten, Turnbull on Monday did passingly try to advance a positive economic argument for this decision that the government dodges endorsing.</p>
<p>“All of us understand how hard this will hit people who work on weekends, particularly those whose work is solely on weekends. They will get less for their Sunday work,” he said during a morning skirmish in parliament.</p>
<p>“But the trade-off has been – and this is the judgement of the Fair Work Commission – that as a consequence, there will be more hours worked, there will be more jobs in hospitality, more jobs in retail and so that overall, workers will benefit.”</p>
<p>The “jobs” case – the only positive argument it has, leaving aside accepting the umpire’s ruling – fits squarely with Coalition philosophy. But the government has put it only feebly in the last several days.</p>
<p>Maybe it fears it won’t persuade. Even if the case is acknowledged, in political terms the losers and the pain are easier to identify than the winners and the gain.</p>
<p>George Christensen, the Liberal National Party backbencher who has an acute electoral nose and an opinion on everything, declines to take a definite stand on the penalty rates cut.</p>
<p>“I can understand both sides of the argument,” he tells The Conversation. “I have made my views clear to both the prime minister and the deputy prime minister [in texts].”</p>
<p>Christensen’s caution came in the wake of <a href="http://www.abc.net.au/news/2017-02-27/lnp-and-one-nation-tie-in-polls-in-qld-seat-of-dawson/8304818">just-published polling</a>, commissioned by the Australia Institute and done last week by ReachTEL, showing that the LNP and One Nation were level pegging in his Queensland regional seat of Dawson, each on 30% primary vote.</p>
<p>A union robocall campaign was launched on Monday night in his electorate; he appeared on the ABC’s Lateline attacking Shorten.</p>
<p>Even the equally outspoken Pauline Hanson is wanting to dodge the bullets from Thursday’s decision. “I had nothing to do with it,” she said in a video, responding to feedback. “I can understand small businesses are doing it hard. But believe me I had nothing to do with the Fair Work Commission. I had no input into cutting wages back.”</p>
<p>Among the politicians the penalty rate cut is, at least in the public arena, an orphan child.</p>
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On some days it’s best not to venture out. For Malcolm Turnbull, Monday was such a day. There was no way a visit to Bottles of Australia in the Canberra suburb of Hume was going to end well. Turnbull was…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/735992017-02-24T03:01:50Z2017-02-24T03:01:50ZVIDEO: Michelle Grattan and Deep Saini on Tony Abbott’s latest throw of the grenade<figure>
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<p>Tony Abbott gave another jab at Malcolm Turnbull’s leadership this week in a speech and in an interview on Sky. Michelle Grattan tells University of Canberra vice-chancellor Deep Saini that Abbott’s intervention will be badly received by a number of his colleagues.</p>
<p>“I think that he really has lost a lot of support by running this negative commentary on the government over some months now. But nevertheless in the public mind the message is: the Liberals are divided and that is bad for Malcolm Turnbull.”</p>
<p>The Fair Work Commission’s decision to cut Sunday and public holiday penalty rates for workers in certain industries forebodes a new battle between Labor and the Coalition.</p>
<p>“Certainly Bill Shorten has taken up this issue very strongly and said that Labor will fight the decision. If it can’t get any change it will – when in government – legislate to essentially clip the wings of the Fair Work Commission,” Grattan says.</p>
<p>“Now, the commission is an independent body. It’s the industrial umpire and so the government can say: ‘well, it’s not us. It was the umpire’. Of course this decision appeals to the base of the conservative parties but I think it presents a real problem for Malcolm Turnbull because people will lose money.”</p><img src="https://counter.theconversation.com/content/73599/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tony Abbott gave another jab at Malcolm Turnbull’s leadership this week in a speech and in an interview on Sky.Michelle Grattan, Professorial Fellow, University of CanberraPaddy Nixon, Vice-Chancellor and President, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/735392017-02-23T11:28:07Z2017-02-23T11:28:07ZGrattan on Friday: Penalty rates – Shorten’s own goal becomes Turnbull’s political problem<p>The latest reflection on just how appalling things are in federal politics came this week from former Treasury head Ken Henry, who’s now chairman of NAB.</p>
<p>“Our politicians have dug themselves into deep trenches from which they fire insults designed merely to cause political embarrassment. Populism supplies the munitions,” Henry told a conference in Canberra. “The country that Australians want cannot even be imagined from these trenches,” he said.</p>
<p>A senior player in reforms under Hawke-Keating Labor and the Howard government, Henry contrasted the current dysfunction “to earlier periods of policy success – where politics was adversarial, every bit as partisan – but when the tribal tensions within parties were generally well-managed and the political contest appeared to energise policy, not kill it”.</p>
<p>Henry may be slightly romanticising the past, as often happens when people look back to that period of policy-rich achievement. There were more than a few unedifying times in the fights of those years. But his general point is right.</p>
<p>He and his fellow heavyweights in the banking industry have just had a close-up view of the Coalition’s ugly tribalism with <a href="https://theconversation.com/morrisons-tanty-over-bankers-hiring-anna-bligh-was-arrogant-and-absurd-73276">Treasurer Scott Morrison’s tantrum</a> over former Labor premier Anna Bligh’s appointment to the Australian Bankers Association. It was short-sighted, counter-productive behaviour.</p>
<p>The fact that some in the Coalition saw Bligh’s appointment as the banks writing off the government was revealing. Given the volatility of politics, the bankers would hardly be predicting the next election’s outcome now – the interpretation suggests more about the mindset of alarm in Liberal circles.</p>
<p>When governments are flagging there is always talk of a “reset”. We’ve been hearing it this year, just as we did in the Gillard days.</p>
<p>But looking to a “reset” is more often than not to be staring at a mirage. It’s true that in 2001 the Howard government had a spectacular “reset”. It changed some decisions and crafted a canny budget, but the biggest factors in cementing its turnaround were Tampa’s arrival and September 11.</p>
<p>Some Coalition MPs believe Malcolm Turnbull’s burst of aggression – over Bill-and-the-billionaires and Labor and renewables – will give the government its “reset”. It’s doubtful. People don’t like abuse. And in the energy debate, <a href="https://theconversation.com/government-losing-the-argument-on-energy-according-to-poll-73378">this week’s Essential poll</a> suggested the government is struggling.</p>
<p>So, looking ahead, there are no quick fixes, or answers based in a superficial change of style. The government faces the toughest slog, as it contemplates a budget that’s difficult to put together and the challenge of delivering an energy policy.</p>
<p>There will be pressure to spend in the budget to gain credibility on health, which cost the Coalition votes last July. Stories are already appearing about ending the freeze on the Medicare rebate. But where will offsetting cuts be found?</p>
<p>And, given the Senate gridlock on savings, can the government produce a budget that doesn’t alienate voters but keeps the ratings agencies at bay and Australia’s AAA rating intact?</p>
<p>As for energy security, the government’s “clean coal” frolic is genuinely hard to understand – beyond fears about regional seats and pressure from the Nationals – given that the word from the sector is that investors won’t go there. Eventually hyper rhetoric will have to give way to concrete measures that can fly.</p>
<p>High electricity prices are a politically sensitive cost-of-living issue and the government is trying to pin the blame for them, and for blackouts, on Labor’s commitment to renewables.</p>
<p>But suddenly there is a new cost-of-living issue, with the <a href="https://theconversation.com/sunday-penalty-rates-cut-opens-new-fight-between-government-and-opposition-73515">Fair Work Commission decision</a> on Thursday to cut Sunday and public holiday penalty rates for those working under the hospitality, fast-food, retail and pharmacy awards.</p>
<p>This is not the government’s decision – the commission is independent and the government didn’t even put a submission to its inquiry.</p>
<p>And, in an ironic twist, Bill Shorten when workplace relations minister paved the way for this decision, with amendments requiring the review of industrial awards to cover the area of “additional remuneration” for employees working on weekends, public holidays, shifts and the like.</p>
<p>The Gillard government thought it was writing protection of penalty rates into the award system. Julia Gillard, addressing an Australian Council of Trade Unions summit, said: “We will make it clear in law that there needs to be additional renumeration for employees who work shift work, unsocial, irregular, unpredictable hours or on weekends and public holidays.”</p>
<p>Labor says it never envisaged the commission would reduce rates. Let alone when the bench members are overwhelmingly ALP appointees.</p>
<p>Although it did not make it, the decision is in line with general government thinking for industrial relations reform. But the government finds itself caught between its base, that will applaud the cut, and many voters whose hip pockets will be hit.</p>
<p>It argues the decision will boost employment, as the commission says. However, the job increases – which neither the commission nor employers can quantify – are likely to be longer in coming and less visible than the pay losses.</p>
<p>Shorten has potential to make hay with the decision, helped by the unions. Those facing smaller pay packets are unlikely to be diverted by the government highlighting his role in getting the review of penalties rolling.</p>
<p>Labor says it will intervene when the commission on March 24 considers transition arrangements; it also is looking to some parliamentary initiative. If (as seems likely) these paths come to dead ends, it is promising legislation if it wins the next election to clip the wings of the commission.</p>
<p>The government faces a dilemma as to whether it intervenes to put a view on how long the transition should be.</p>
<p>There is a parallel here with the problem the government is facing with its omnibus bill which reforms child care while shaving family tax benefits. In each case, people stand to lose something.</p>
<p>The big difference is that with the penalty rates the government isn’t the body making the decision and can say the judgement of the independent umpire should prevail. But if Labor can make the Coalition wear some of the odium for low-paid workers losing dollars, this will be another burden for Turnbull.</p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The latest reflection on just how appalling things are in federal politics came this week from former Treasury head Ken Henry.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/599622016-08-17T20:28:14Z2016-08-17T20:28:14ZAre Sunday penalty rates a job killer? A real-world experiment refutes employers’ claim<p>Two big claims underpin attempts to cut penalty rates for Sunday workers in the retail and hospitality sectors: that they are no longer needed or relevant, and that they cost jobs.</p>
<p>These claims are at the centre of a <a href="https://www.fwc.gov.au/awards-and-agreements/modern-award-reviews/am2014305-penalty-rates-case">review by the Fair Work Commission</a> of awards in those industries. The review began in late 2014. Employers have <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjqvc_R1MTOAhVEm5QKHR57AbEQFggbMAA&url=http%3A%2F%2Fwww.theaustralian.com.au%2Fnational-affairs%2Findustrial-relations%2Flabor-intensifies-calls-for-malcolm-turnbull-to-intervene-in-sunday-penalty-rates-decision%2Fnews-story%2Ffcaeed3eef3a249af962193830ebf851&usg=AFQjCNGD0AAyIBzDxhGJQ3Z-Bmfx8iu17A">applied to have those penalty rates cut</a>.</p>
<p>Penalty rates were the <a href="http://www.abc.net.au/news/2016-06-17/election:-malcolm-turnbull-rules-out-change-to-penalty-rates/7522284">subject of debate</a> before and <a href="http://www.news.com.au/finance/work/bill-shorten-wants-to-work-with-malcolm-turnbull-to-preserve-penalty-rates/news-story/5c38e368a8ed7cb93e9af4a388302e03">during the 2016 election</a> campaign. Unions claimed the <a href="http://www.theaustralian.com.au/federal-election-2016/election-2016-union-claims-1m-penalties-campaign-won-key-seats/news-story/da952cbbb0a60b6d50f5472c4f63cfb3">seats they targeted</a> over this issue <a href="http://www.afr.com/news/actu-claims-union-campaign-more-successful-than-2007-20160707-gq0wrp">swung more heavily against the government</a>.</p>
<p>The commission, <a href="https://www.workplaceexpress.com.au/topics.php?stream=15-11">speculation goes</a>, will make its decision on the review next month.</p>
<h2>No longer needed or relevant?</h2>
<p>Employer groups contended the higher wage for Sunday workers is no longer justified in a “24/7 economy” where young employees especially see no difference in working on Sundays. Prime Minister Malcolm Turnbull referred to penalty rates as an <a href="http://www.smh.com.au/federal-politics/political-news/malcolm-turnbull-lower-penalty-rates-inevitable-with-seven-day-economy-20151005-gk1yr5.html#ixzz3uU1OOMrZ">accident of history</a>.</p>
<p>But evidence shows weekend work is <a href="http://jos.sagepub.com/content/44/1/5.short">significantly associated</a> with work-family conflict for fathers. Data from a <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwii_6KQ57bOAhUBrJQKHTycAm4QFggdMAA&url=http%3A%2F%2Fw3.unisa.edu.au%2Fhawkeinstitute%2Fcwl%2Fdocuments%2FAWALI2012-National.pdf&usg=AFQjCNEQT6qUQoFXPU_kZEXilOwBRHlu2Q&sig2=paQhjU40d6W7yUkPemIcsg">major national survey</a> showed that working Sundays in particular is linked to <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjxz_ah57bOAhVBmZQKHS6DC1AQFggbMAA&url=http%3A%2F%2Fwww.unisa.edu.au%2Fdocuments%2Feass%2Fcwl%2Fpublications%2Fawali_2014_national_report_final.pdf&usg=AFQjCNHbD4smSTD3hVh4r6GqZk_HZKzCbQ&sig2=_HE1X48-dP9j17nACMCw9g&bvm=bv.129389765,d.dGo">higher work-life interference</a>.</p>
<p>Other <a href="http://onlinelibrary.wiley.com/doi/10.1111/jomf.12127/full">recent Australian studies</a> showed Sunday remained a day for <a href="http://www.tandfonline.com/doi/abs/10.1080/10301763.2005.10722031">family and civic activities</a>, more so than Saturday or any weekday.</p>
<p>Penalty rates are certainly an important component of workers’ incomes in the industry. <a href="http://www.unisa.edu.au/PageFiles/34117/PenaltyRatesReport_Oct2014%20Final_R1.pdf">More than half</a> (57%) of retail industry employees receive penalty rates. Of these, almost one-third (32%) report relying on them to meet normal household expenses.</p>
<h2>What about the job impacts?</h2>
<p>But set aside, for the moment, whether penalty rates are still relevant. Do they kill jobs?</p>
<p>Employers argued that existing Sunday penalty rates lead to shorter opening hours, fewer jobs and a less desirable mix of employee experience.</p>
<p>The difficulty in validating such claims is in disentangling employment effects from economic conditions or general workforce changes. It isn’t easy, for example, to establish whether any jobs lost are due to higher penalty rates, an economic downturn, or something else.</p>
<p>Our research, however, takes advantage of a rare “natural experiment” to estimate the effect of higher Sunday penalty rates. The experiment could be done because the commission’s earlier award-modernisation process had standardised state-based industry award rates.</p>
<p>In particular, Sunday penalty rates for New South Wales retail award employees rose from 150% (or “time and a half”) to 200% (or “double time”) between 2010 and 2014. Over the same five years, rates remained unchanged (at 200%) for comparable Victorian workers.</p>
<p>By comparing the two states, and using Victoria as a “counterfactual”, we could estimate the separate effect of raising Sunday penalty rates in NSW.</p>
<p>The research relied on <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyCatalogue/35006594EB1126B2CA257132000F9189?OpenDocument">publicly available data</a> and on widely accepted econometric methods and checks. It looked at common underlying employment trends in the two states and controlled for state-specific factors including labour market conditions, youth employment rates and industry demand.</p>
<p>Our research led to an <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014305-expert6-sda-040915.pdf">initial report</a> and then some <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014305-ws-yu-sda-181215.pdf">updated estimates</a>.</p>
<p>It found higher Sunday penalty rates in NSW did not have a consistent or systematic effect on retail employment as measured by the Australian Bureau of Statistics. While there was a large and significant negative effect in the first year — a drop of more than 7% in the number of employees and total hours – the total effects over the five years were a mix of positive and negative but <a href="http://www.measuringu.com/blog/statistically-significant.php">statistically insignificant</a>.</p>
<p>Most importantly, the cumulative effect on jobs over the five years was not significantly different from zero. That is, between them the five increases in Sunday penalty rates in NSW retailing did not significantly affect job levels in that industry. If there was an effect, it was too small to show up.</p>
<p>A different, <a href="https://www.melbourneinstitute.com/hilda/">longitudinal dataset</a> showed no change in the number of people in NSW working on Sundays. There was, however, weakly significant evidence of a drop in the number of total hours worked in NSW retail.</p>
<p>Together the results suggest that in an industry dominated by casual and part-time workers, what adjustment in employment does occur happens through changing hours and not the number of employees in jobs.</p>
<p>Finally, on the mix of available employees, do penalty rates really mean that employers can roster only inexperienced, casual employees on Sundays?</p>
<p>National data show that permanent workers are more likely to say they would <em>not</em> continue to work unsocial hours <a href="https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjcpIzAgrjOAhUI6GMKHbPzDvoQFggbMAA&url=http%3A%2F%2Fwww.unisa.edu.au%2Fglobal%2Feass%2Fhri%2Fcwl%2Fpublications%2Fpenaltyratesreport_oct2014%2520final_r1.pdf&usg=AFQjCNGwIUkHlhYJMxSNB9Tx-HmMbdZF8w&sig2=BxCl6llJdEMwnTduOFZTDQ&bvm=bv.129389765,bs.1,d.cGc">without penalty rates</a>.</p>
<p>So, labour-supply effects mean that reducing penalty rates would probably mean even less experienced workers on Sundays. And that’s what it looks like when you walk into a New Zealand supermarket – without penalty rates – on a Sunday.</p>
<h2>What does it mean?</h2>
<p>The implications are stark.</p>
<p>If changes in Sunday penalty rates have no significant effect on the number of jobs, then cutting them would do two things.</p>
<p>It would reduce compensation for workers employed at unsociable hours – when that compensation is, for many, very important for meeting normal household expenses. And it would constitute a transfer of income from employees to employers, likely without an offsetting increase in jobs.</p>
<p>The most likely outcome, then, would be retail workers working longer hours for lower earnings, with little or no improvement in the number of jobs.</p><img src="https://counter.theconversation.com/content/59962/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Serena Yu was previously employed at the Workplace Research Centre at the University of Sydney, where she received occasional external funding. The research discussed here was conducted during this previous tenure, and was commissioned by the Shop, Distributive and Allied Employees Association and submitted to the Fair Work Commission during the review.</span></em></p><p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, in Australia and overseas, employers and unions. The research discussed here was commissioned by the Shop, Distributive and Allied Employees Association and submitted to the Fair Work Commission during the review.</span></em></p>Are penalty rates no longer relevant in the retail industry — and do they cost jobs? Recent research compared two neighbouring states where one raised rates to the other’s level to find the answer.Serena Yu, Senior Research Fellow, University of Technology SydneyDavid Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/597382016-05-31T19:49:48Z2016-05-31T19:49:48ZThe penalty rates time-bomb is ticking<p>A <a href="http://www.abc.net.au/am/content/2016/s4470275.htm?site=eyre">looming decision on weekend penalty rates</a> presents problems for both major parties in the lead-up to Australia’s federal election. The Fair Work Commission seems likely to hand down its decision in the controversial case soon after the federal election. </p>
<p>Nobody knows what the commission’s decision on penalty rates in the retail and hospitality industries will be. There seem to be more tea-leaf readers predicting it will cut Sunday penalty rates to match Saturday rates than who think it will make no changes. </p>
<p>If so, employer organisations would be happy, but many retail employees will be worse off. Pressure would grow for cuts to penalty rates elsewhere.</p>
<p>The commission president’s request for submissions on whether some employees should be given a <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/am2014305-dirs-290416.pdf">right to refuse to work on Sundays</a>, perhaps as a trade-off, has added to the confidence of the former group of tea-leaf readers. </p>
<h2>The Coalition dilemma</h2>
<p>For the Coalition, the debate is a reminder of the disastrous political consequences of over-reach in industrial relations. A decade ago, it introduced the WorkChoices legislation, frequently touted as <a href="http://www.australianreview.net/digest/2008/02/spies-butcher_wilson.html">costing the Howard government the 2007 election</a>. The main way in which it had affected workers’ pay was through allowing employers to <a href="http://www98.griffith.edu.au/dspace/bitstream/handle/10072/29660/59864_1.pdf?sequence=1">reduce penalty rates, overtime pay and shift allowances</a> below the award safety net.</p>
<p>Voters <a href="http://www.essentialvision.com.au/penalty-rates-3">overwhelmingly support</a> the retention of penalty rates. It doesn’t follow that this alone would change their votes, but the “Your Rights at Work” campaign <a href="http://www98.griffith.edu.au/dspace/bitstream/handle/10072/37764/66954_1.pdf?sequence=1">showed the potential salience</a> of the issue.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/124391/original/image-20160529-10041-1vopwa8.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The ‘Your Rights at Work’ campaign showed the potential impact of employment issues.</span>
<span class="attribution"><span class="source">David Peetz</span></span>
</figcaption>
</figure>
<p>Prime Minister Malcolm Turnbull has described the reduction of penalty rates as <a href="http://www.smh.com.au/federal-politics/political-news/malcolm-turnbull-lower-penalty-rates-inevitable-with-seven-day-economy-20151005-gk1yr5.html">inevitable</a>. While his predecessor, Tony Abbott, was renowned for an extremely conservative social philosophy, he was one of the few ministers at the time of WorkChoices <a href="http://www.theaustralian.com.au/business/business-spectator/the-dubious-virtues-of-abbotts-revolution-/news-story/5741eb0d22bafbbdac5feb7802e3f990">reported to be hesitant</a> about its direction. While Turnbull was not in the cabinet then, there is little evidence of his being less enthusiastic than Abbott about lowering pay or conditions.</p>
<p>The <a href="http://www.sbs.com.au/news/article/2015/12/23/show-courage-penalty-rates-lib-senator">enthusiasm of Coalition members</a> has <a href="https://theconversation.com/what-do-new-disclosures-reveal-about-coalition-ir-policy-17689">not waned</a>. But it must be done without cutting pay below the safety net. And it must be done in a way that enables the government to avoid blame. </p>
<p>That is why so much Coalition hope rests with the Fair Work Commission in this case. It’s partly why it asked the Productivity Commission to <a href="https://ministers.employment.gov.au/abetz/productivity-commission-review-workplace-relations-framework">review the workplace relations framework</a>. The Productivity Commission’s <a href="http://elr.sagepub.com/content/27/2/164.full">recommendations to cut penalty rates</a> attracted more attention than any other aspect of its report, though some parts proposed <a href="https://theconversation.com/workplace-reforms-would-hit-workers-outside-unions-hardest-45772">more radical changes</a>. Employers submitted the report to the Fair Work Commission case without the authors being cross-examined. </p>
<p>When the government commissioned the report, it anticipated it could promise <a href="https://theconversation.com/the-pc-review-that-could-bring-the-government-unstuck-36756">major changes to employment relations</a> at the 2016 election. The Productivity Commission would provide <a href="http://elr.sagepub.com/content/27/2/164.full">critical “third-party endorsement”</a> for radical change.</p>
<p>But the polls went south for the government, and now it faces a choice: announce a radical policy and risk voters’ wrath; or announce a mild policy, frustrate employers and hope voters have forgotten that the mild policy it presented in 2004 morphed into WorkChoices after that election. </p>
<p>The issue is so politically sensitive for the government that it declined to make a submission to the penalty rates case. Yet it cannot stay silent until the election. </p>
<p>There is, however, another pathway to satisfying corporate demands. In response to the <a href="https://theconversation.com/why-franchises-care-more-about-their-coffee-than-their-people-46948">7-Eleven scandal</a>, the Coalition recently announced <a href="https://www.liberal.org.au/latest-news/2016/05/19/protecting-vulnerable-workers-australia">increased powers for the Fair Work Ombudsman</a> to compel answers to questions. Lacking detail, this hasn’t attracted much attention yet. However, unless the government guarantees otherwise, those increased powers could also be used against workers.</p>
<p>This is not a mere theoretical possibility. Recently, the ombudsman launched <a href="http://www.smh.com.au/business/workplace-relations/fairfax-journalists-to-be-investigated-by-fwo-20160504-gom6ak.html">investigations into journalists</a> who walked off the job after Fairfax announced more redundancies. </p>
<p>One danger of using “union corruption” as the rationale for increasing the powers of the Australian Building and Corruption Commission was that it could be used to justify eventually extending the use of coercive powers <a href="https://theconversation.com/bringing-back-building-watchdog-helps-a-political-agenda-but-not-concerns-about-union-corruption-54051">to all industries</a>. Increasing the ombudsman’s coercive powers could be another way of doing that. </p>
<h2>The Labor dilemma</h2>
<p>The Labor Party, on the other hand, <a href="https://www.fwc.gov.au/documents/sites/awardsmodernfouryr/AM2014305-sub-FOS-210316.pdf">made a submission</a> to the Fair Work Commission case. The main purpose might have been to embarrass the government by consolidating the many instances of Coalition support for cutting penalty rates. Labor did, however, argue against cuts to penalty rates. </p>
<p>That was the easy part. Labor is <a href="https://theconversation.com/labor-struggles-with-the-sticky-paper-of-penalty-rates-59487">under pressure</a> from unions to promise something more concrete – in particular, legislation to protect penalty rates, as <a href="http://www.sbs.com.au/news/article/2016/05/16/greens-want-weekend-penalty-rates-law">the Greens propose</a>. </p>
<p>Labor hesitates to commit to legislative action. This is partly because it does not want to appear to be undermining the <a href="http://www.sbs.com.au/news/article/2016/05/17/umpire-will-protect-penalty-rates-shorten">“independent umpire”</a>, which legislation would do. Yet Labor’s own Fair Work Act created a set of legislative obligations, the <a href="https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/fact-sheets/minimum-workplace-entitlements/introduction-to-the-national-employment-standards">National Employment Standards</a>, on matters that had been the sole prerogative of the Fair Work Commission. </p>
<p>Still, setting a precedent for legislative determination of penalty rates could also be used by the Coalition to opposite effect.</p>
<p>More valid would be concern about what legislation would do. Different awards set different penalty rates. This means that a single legislated formula for penalty rates would leave some workers better off and some worse off than at present. </p>
<p>The creation of national “modern awards”, which replaced a variety of inconsistent state awards, did precisely that. Both <a href="http://www.fullyloaded.com.au/industry-news/0909/nsw-award-rates-slashed-on-balance-drivers-worse-off/">unions</a> and <a href="http://www.pc.gov.au/inquiries/completed/retail-industry/submissions/sub129.pdf">employers</a> screamed they were worse off, cherry-picking different effects. </p>
<p>It’s a complexity Labor would like to avoid. </p>
<p>If legislation were to avoid greater rigidity than the current system, it would need to allow enterprise agreements to override legislated penalty rates if employees were better off overall, which the National Employment Standards do not allow.</p>
<p>Alternatively, legislation could entrench existing penalty rates (either by directly referring to modern awards, or by a detailed legislative schedule). But such legislation could not be passed before the commission brought down its decision in the current case.</p>
<p>So, legislation may need to lock in penalty rates that existed before the current case. That would undermine the idea of regular reviews of modern awards and the “flexibility” that allowed, which would worry a number of Labor policymakers.</p>
<p>Another approach would be to highlight Sunday penalty rates in the Objects of the Act (as part of the current mention of weekend rates). But that would still be no guarantee current levels would be maintained, and would not affect the current case.</p>
<p>So legislation is feasible, but it’s not easy. </p>
<p>In the meantime, Labor has committed to <a href="https://www.laborherald.com.au/people-families/only-labor-will-protect-penalty-rates-system-for-workers/">intervening in the case</a> after the election, to support penalty rates. </p>
<p>Here it follows a precedent set by the Whitlam government. Then, Labor <a href="https://pmtranscripts.dpmc.gov.au/release/transcript-2734">intervened</a> in the 1972 equal pay case immediately it was elected, after submissions had closed. Days later, the commission issued <a href="https://www.fwc.gov.au/waltzing-matilda-and-the-sunshine-harvester-factory/documents/equal-pay-case-1972">one of its most famous decisions</a>, endorsing a broader interpretation of equal pay. </p>
<p>Since then, the Commonwealth’s reopening of the case has been lauded as critical in its success. Whether this was really so is impossible to know. But it showed the possibilities, and the symbolic value, of such actions.</p>
<h2>Who’s in the hottest seat?</h2>
<p>The lack of employer outrage at the increased powers of the Fair Work Ombudsman to investigate corporations at the top of franchise chains might mean they have been given a nod and a wink that all will be OK. </p>
<p>But voters want more. As the election draws closer, the government must play its hand on penalty rates and its response to the Productivity Commission <a href="https://ministers.employment.gov.au/abetz/productivity-commission-review-workplace-relations-framework">review that it requested</a>.</p>
<p>Labor has already played its hand. In some ways it is a bet each way. But the delegation of part of industrial relations policymaking to third parties holds more risks for the government than for Labor.</p>
<hr>
<p><em>This article has been amended to clarify the reference to highlighting Sunday penalty rates in the Objects of the Fair Work Act.</em></p><img src="https://counter.theconversation.com/content/59738/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Peetz receives funding from the Australian Research Council and, as a university employee, has undertaken research over many years with occasional financial support from governments from both sides of politics, in Australia and overseas, employers and unions. In the Fair Work Commission case on penalty rates in the retail industry, mentioned in this article, he was co-author of a joint expert evidence report commissioned by one of the unions on the demographic composition of Sunday retail workers.</span></em></p>Cutting penalty rates can be a vote-changer and the looming Fair Work Commission decision is tricky for both sides of politics. So what cards do the parties hold and how might they play them?David Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/595852016-05-19T04:52:18Z2016-05-19T04:52:18ZHow reducing penalty rates will affect workers’ health<figure><img src="https://images.theconversation.com/files/122946/original/image-20160518-9476-tifwzm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">There are reasons why people get paid more to work out of hours beyond the working week being a social construct.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/downloading_tips.mhtml?code=&id=293816501&size=huge&image_format=jpg&method=download&super_url=http%3A%2F%2Fdownload.shutterstock.com%2Fgatekeeper%2FW3siZSI6MTQ2MzU2NjYwNCwiYyI6Il9waG90b19zZXNzaW9uX2lkIiwiZGMiOiJpZGxfMjkzODE2NTAxIiwiayI6InBob3RvLzI5MzgxNjUwMS9odWdlLmpwZyIsIm0iOiIxIiwiZCI6InNodXR0ZXJzdG9jay1tZWRpYSJ9LCJUbDd3U0E1enM4cG5vT3dvTjkwNzdJWnN1Q2MiXQ%2Fshutterstock_293816501.jpg&racksite_id=ny&chosen_subscription=163&license=standard&src=jX3M9uIOccMyV00UQpNZfg-1-18">from www.shutterstock.com.au</a></span></figcaption></figure><p>Despite only being two weeks into an eight-week election campaign, <a href="http://www.theaustralian.com.au/federal-election-2016/federal-election-2016-double-hit-for-bill-shorten-on-penalty-rates/news-story/23dfecf51d7d56a5b9aa0e6746be9a3b">penalty rates</a> have already become a <a href="http://www.smh.com.au/federal-politics/federal-election-2016/election-2016-brendan-oconnor-refuses-to-guarantee-penalty-rates-in-trainwreck-interview-20160516-govx1s.html">significant issue</a>, with Labor so far refusing to guarantee it will <a href="http://www.9news.com.au/national/2016/05/17/11/15/unions-demand-shorten-promise-to-protect-penalty-rates-via-legislation">keep</a> Sunday penalty rates for hospitality and retail workers.</p>
<p>Penalty rates are often cast as a roadblock to <a href="http://ipa.org.au/publications/1969/penalty-rates-killing-restaurants-trade">business</a> or <a href="http://www.couriermail.com.au/goqld/goqld-lower-penalty-rates-could-bring-jobs-boom/news-story/c83951e722379476fe7b2af9b8739d30">employment</a> but <a href="http://jir.sagepub.com/content/28/4/564.full.pdf">public health researchers</a> see penalty rates as a deterrent against employing workers in ways that risk workers’ health.</p>
<h2>Why penalty rates exist</h2>
<p>If penalty rates are stopping bosses from employing people on Saturdays and Sundays, at night or for very long or unusual shifts, it’s worth reminding ourselves that was exactly what they were supposed to do. With unusual work patterns now becoming <a href="http://oai.lib.monash.edu.au/vital/access/manager/Repository/monash:6759">more common</a>, penalty rates are needed now more than ever.</p>
<p>Let’s take the example of Saturday and Sunday work. What’s the difference between mowing the lawn and getting paid nought, or making coffees and getting paid time and a half? How does the body magically know “this is Sunday” let alone “this is work”? </p>
<p>A reasonable person could claim it is not possible for the body to tell the difference, and thus different consequences in terms of health are “just in one’s mind”. That reasonable person would be both right and wrong.</p>
<p>The way we conceptualise work is closely related to the impact it has on us. If we regard cleaning bathrooms as a noble art, or brain surgery as a meaningless drudge, then to some degree the damaging impact of cleaning would be found in surgery instead. </p>
<p>Additionally, the degree to which humans feel control over their work hours (as opposed to the “real” levels of control they have over their work hours) is a <a href="http://eds.b.ebscohost.com/eds/detail/detail?sid=4f89a0c5-658f-49a6-8b2f-2ed1ee424adf%40sessionmgr106&vid=0&hid=114&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d#AN=22224954&db=a9h">key predictor of health outcomes</a>. An easy experiment: take a few friends in a car on a long and winding road, every so often changing drivers, and note who starts to feel car sick. It’s <a href="http://www.tandfonline.com/doi/abs/10.1080/00140139108964831">rarely the driver</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/122957/original/image-20160518-9484-13kk8vt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Our bodies can tell the difference between work and leisure.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/downloading_tips.mhtml?code=&id=365674241&size=huge&image_format=jpg&method=download&super_url=http%3A%2F%2Fdownload.shutterstock.com%2Fgatekeeper%2FW3siZSI6MTQ2MzU3MjA4MCwiYyI6Il9waG90b19zZXNzaW9uX2lkIiwiZGMiOiJpZGxfMzY1Njc0MjQxIiwiayI6InBob3RvLzM2NTY3NDI0MS9odWdlLmpwZyIsIm0iOiIxIiwiZCI6InNodXR0ZXJzdG9jay1tZWRpYSJ9LCJoYnROWFZSZ1BkNnRYSThPdE0wRFFxcXRjbkkiXQ%2Fshutterstock_365674241.jpg&racksite_id=ny&chosen_subscription=163&license=standard&src=BK1cSQDNcIF7Y_Wdtyfl-w-1-4">from www.shutterstock.com</a></span>
</figcaption>
</figure>
<p>Let’s bring this to the work arena. A large and well-conducted <a href="http://eds.b.ebscohost.com/eds/detail/detail?sid=4f89a0c5-658f-49a6-8b2f-2ed1ee424adf%40sessionmgr106&vid=0&hid=114&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d#AN=22224954&db=a9h">Hungarian study</a> was able to predict heart disease by simply asking “how much can you influence what happens in your work group”. Of the work variables in this study “sense of control” was the single most powerful predictor of <a href="http://eds.b.ebscohost.com/eds/detail/detail?sid=4f89a0c5-658f-49a6-8b2f-2ed1ee424adf%40sessionmgr106&vid=0&hid=114&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d#AN=22224954&db=a9h">ischaemic heart disease</a> in women, and not far behind for men.</p>
<p>So what is “in your head” is important, and what we find consistently is that blue collar workers not only are more likely to work hours they can’t control, but they feel less in control of other aspects of their work and life. It’s a perfect storm for serious long-term consequences such as heart disease. The greater wealth and education of white collar workers also buffers them from the damage that work does: you can buy back time (for example time spent washing the car or looking after the children) if you have the money.</p>
<h2>Humans aren’t designed to work all the time</h2>
<p>However it’s not all in the mind. There is something about the “working week” and “working day” that is not purely a social or cultural creation forged by unions, businesses and the church. We can observe circaseptal (seven day) rhythms and day-night rhythms at a cellular level, not just in humans, <a href="http://onlinelibrary.wiley.com/doi/10.1196/annals.1342.006/full">but also small animals</a> who can’t read a clock or calendar.</p>
<p>There is enough evidence now for the World Health Organisation to state that tinkering with circadian clocks is “<a href="http://www.msvfa.org/publications/Carcinogenicityofshift-workpaintingandfire-fighting.pdf">probably carcinogenic</a>”, but there are other ways working time factors pose risks to your health. When time we would normally spend on self-care or even essentials like eating is lost, we buy it back in unhealthy ways – skipping exercise and buying fast food, for example.</p>
<p>Ironically, overwork or unusual hours – even working on weekends – <a href="http://ro.uow.edu.au/cgi/viewcontent.cgi?article=4596&context=hbspapers">makes us fat</a>. The human body is not designed for constant work. In fact, the eight hour day and the five day week very roughly mark the boundaries at which humans can safely work. The risk of an occupational injury on a ten hour day for example, exceeds that of an <a href="https://www.researchgate.net/profile/Simon_Folkard/publication/7209546_Modeling_the_impact_of_the_components_of_long_work_hours_on_injuries_and_accidents/links/0912f50accc870ea25000000.pdf">eight hour day by 41%,</a> while even higher increases in risk have been observed on the sixth and <a href="http://data.tc.gc.ca/archive/eng/innovation/tdc-publication-tp14620-e01-529.htm">seventh day of consecutive work</a>.</p>
<p>As a society, we’re working more Saturdays, more Sundays, more nights, and more unusual shifts than ever before, and one way or another, we’re paying penalties. Either businesses pay them in cash, individual workers pay with health, or society pays through health care. </p>
<p>One of the grandest experiments in working time took place in Soviet Russia, where weekends were, for a short while, eliminated, so the economic speed bump of the weekend was altogether removed. To quote from a <a href="https://books.google.com.au/books?id=Cd5ZjRsNj4sC&printsec=frontcover&dq=The+seven+day+circle:+The+history+and+meaning+of+the+week&hl=en&sa=X&redir_esc=y#v=onepage&q=The%20seven%20day%20circle%3A%20The%20history%20and%20meaning%20of%20the%20week&f=false">history of the period</a>, even after only a few months of this grand experiment:</p>
<blockquote>
<p>Even official organs were already reporting slower work and worse service and attributing these to the continuous production week.</p>
</blockquote>
<p>For researchers in the obscure field of working time, no surprises there.</p><img src="https://counter.theconversation.com/content/59585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Olav Muurlink regularly acts as an expert witness in working time cases. He has received funding from employee groups including United Voice as well as government sources including the Australian Research Council and the British and New Zealand governments. He is a member of the Working Time Society based in Switzerland, an industry and academic group focused on promoting research related to working time and health.</span></em></p>Penalty rates are often cast as a roadblock to business or employment but, research sees penalty rates as a deterrent against employing workers in ways that risk workers’ health.Olav Muurlink, Senior Lecturer, organisational behaviour, management, CQUniversity AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/594872016-05-16T12:12:48Z2016-05-16T12:12:48ZLabor struggles with the sticky paper of penalty rates<p>Normally it is the Coalition that is on the defensive over industrial relations at election time, with Labor claiming workers’ rights are under threat from the conservatives. But currently Labor finds itself on the back foot, having to defend itself against the allegation it is not guaranteeing it would protect the existing, tiered penalty rates system.</p>
<p>The issue has been building for some time, but on Monday it tied the opposition in knots.</p>
<p>The independent Fair Work Commission (FWC) is looking at penalty rates. Separately, the Productivity Commission has recommended that Sunday rates in industries such as hospitality and retail should be the same as Saturday rates. Labor some months ago made a submission opposing such a change.</p>
<p>The FWC will not give its findings until after the election, which leaves the matter in limbo land for the campaign.</p>
<p>Last month 3AW’s Neil Mitchell asked Bill Shorten whether he would accept the findings of the FWC review. Shorten gave a succinct “yes”. Pressed on whether he’d do so even if the finding was to reduce Sunday rates, Shorten replied “I said I’d accept the independent tribunal”.</p>
<p>Within Labor at the time, there was some concern at Shorten’s unequivocal stand on something so core to its base, including the unions.</p>
<p>The Greens, who are aggressively targeting Labor on many fronts, saw an opportunity. They have pledged to put forward a legislative amendment – which would only be a private member’s bill – to enshrine penalty rates including that Sunday rates are higher than Saturday rates.</p>
<p>Labor was hammered on the subject on Monday with opposition industry spokesman Kim Carr grilled on the ABC, and Mitchell returning to the topic to excoriate Brendan O'Connor in an interview in which the shadow workplace relations minister could find nowhere to hide from a fierce interrogation.</p>
<p>The issue was top of mind at Shorten’s news conference, when he tried to sound as if he was guaranteeing no change in penalty rates if Labor was elected without actually being able to do so.</p>
<p>“Labor is the party of penalty rates,” Shorten declared.</p>
<p>He’d read the evidence to the review and had “absolute confidence … that we will win the argument in the independent umpire to protect the penalty rates system of Australia. The case to get rid of penalty rates simply doesn’t stack up.”</p>
<p>It should be noted that the issue is not getting rid of penalty rates, which would be a very drastic course, but restructuring, in particular to conflate Saturday and Sunday.</p>
<p>Shorten went on to say a Labor government would further intervene in the review before the FWC produced its decision “to strengthen, only as a government submission can, the case to defend our penalty rates”.</p>
<p>He argued that the idea of the Greens – “from their sideshow position” – for legislation would be “loading the gun” a Coalition government could later use to dismantle the system.</p>
<p>The bottom line is that Shorten can’t both promise to abide by the FWC decision and guarantee to preserve the penalty rate system as it is.</p>
<p>The FWC may accept the Labor line, or something relatively close to it. But the Productivity Commission has also put a strong case. There can only be expectations, not certainties, in this situation.</p>
<p>Labor is caught between two imperatives, both of which it regards as important. One is protecting low-wage earners, especially casual workers, many of whom rely on penalty rates. The other is preserving the independence of the FWC, which it sees as vital to workers in the long term.</p>
<p>While Labor is opposed to legislation to guarantee penalty rates, the former ALP government did legislate to ensure that when awards were reviewed the FWC took into account the need to provide additional remuneration to those working weekends and the like. It may be that a Labor government could strengthen this provision if it felt the need.</p>
<p>Labor sources acknowledge the penalty rates debate has become messy for the opposition. But they argue Labor has a couple of factors going for it.</p>
<p>First, as many as 61 Coalition members and candidates are on the record wanting penalty rates cut or abolished, which leaves opportunity for the sort of tactic the Liberals have used against Labor candidates on asylum seekers. MPs and candidates pressed to spell out their individual stands could be unhelpful to the Coalition, which has used the convenient cover of the FWC review to keep the issue cool.</p>
<p>Second, Labor reckons that in any discussion of the parties’ respective positions on protecting penalty rates, it will look better, even with its somewhat untidy position, than its Coalition opponent.</p>
<iframe src="https://www.podbean.com/media/player/2dj4i-5f571a?from=yiiadmin" data-link="https://www.podbean.com/media/player/2dj4i-5f571a?from=yiiadmin" height="100" width="100%" frameborder="0" scrolling="no" data-name="pb-iframe-player"></iframe><img src="https://counter.theconversation.com/content/59487/count.gif" alt="The Conversation" width="1" height="1" />
Normally it is the Coalition that is on the defensive over industrial relations at election time, with Labor claiming workers’ rights are under threat from the conservatives. But currently Labor finds…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/499472015-11-15T19:17:08Z2015-11-15T19:17:08ZMyths about penalty rates and those who rely on them<p>In the current review of Modern Awards before the Fair Work Commission, employers are challenging the level of penalty rates. At the same time, the <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft">Productivity Commission says</a> excessive penalty rates for Sundays reduce hours worked, mean unemployment is higher than it needs to be, and reduce options for businesses and consumers. It wants Sunday penalty rates in some sectors to be set at the Saturday rate.</p>
<p>A penalty rate for Sunday work was first implemented in Australia for working “unsocial” hours in 1919. The 1947 “Weekend Penalty Rates Case” expanded penalty rates to Saturdays, while Sundays were set at a rate of double time. Later decisions specified that workers would need to be compensated for the loss of opportunity for family life and social time resulting from weekend work. </p>
<p>More than 60 years on, employers argue the world has changed. It has, but many of the arguments employers make are not supported by the evidence.</p>
<p><strong>Myth 1: Given extended trading hours, it’s no longer abnormal for people to work weekends.</strong></p>
<p>Most employees still do not work unsocial hours. According to the <a href="http://www.unisa.edu.au/Research/Centre-for-Work-Life/Our-research/Current-Research/Australian-Work-And-Life-Index/">Australian Work and Life Index</a>, 38% of workers work unsocial hours; only 32.2% of workers work weekends and 18.9% of workers work evenings after 9pm regularly. These figures include the <a href="http://www.unisa.edu.au/Global/EASS/HRI/CWL/publications/PenaltyRatesReport_Oct2014%20Final_R1.pdf">13.1% of workers</a> who work both evenings and weekends regularly. </p>
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<p><strong>Myth 2: It’s only young single people that work weekends.</strong></p>
<p>While being single with no children is more common than other family types among these workers, they are not a majority: there are also many couples both with and without children, and sole parents. </p>
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<p>Women are also more likely than men to work weekends. <a href="https://www.melbourneinstitute.com/hilda/">HILDA</a> data indicates that only 22% of male and 21% of female weekend workers were dependent students; in other words, 78% of all weekend workers were not dependent and pay their own bills.</p>
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<p><strong>Myth 3: The disadvantages of working weekends are only bad for those who work very long hours.</strong></p>
<p>Employers argue that the adverse effects associated with working weekends are only relevant to those who work very long hours, and that the days and times themselves are no longer relevant, either because people no longer engage in the activities which previous decisions attempted to protect, or because these activities can be made up on other days and at other times. </p>
<p>But those who work on weekends do so at the <a href="https://e-publications.une.edu.au/vital/access/manager/Repository/une:3033">sacrifice of time with friends and family</a>, time which <a href="http://jir.sagepub.com/content/early/2014/12/10/0022185614560068">cannot be simply made up</a> through time spent at other times during the week. This is particularly acute on Sundays, which remain a time for spending time with family. In spite of claims to the contrary, the differentiation between Saturdays and Sundays remains relevant in modern Australian society. </p>
<p>In general, the recompense of penalty rates is the key reason for willingly working weekends; with far fewer doing so to meet their own flexibility needs. However, the experience of the Work Choices era, and the importance and power of employer expectation, does suggest that many employees would not, in the absence of penalty rates, be able to avoid weekend work due to fear of losing their jobs, and indeed employees being forced to work weekends for no extra pay seems the most likely consequence of removing penalty rates.</p>
<p><strong>Myth 4: Those who work in industries that pay penalty rates are not low paid.</strong></p>
<p>Many workers on penalty rates <a href="http://www.actu.org.au/our-work/submissions/reply-submission-to-applications-concerning-penalty-rates-in-the-2012-modern-award-review">are among the low paid</a>. According to the Australian Work and Life Index, 37.8% of workers who work weekends only and receive penalty rates rely on these to meet household expenses. This <a href="http://www.unisa.edu.au/Global/EASS/HRI/CWL/publications/PenaltyRatesReport_Oct2014%20Final_R1.pdf">increases to 48.8%</a> for those working both evenings and weekends, and 52.2% for Sundays only. </p>
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<p><strong>Myth 5: Reducing or eliminating penalty rates would increase employment.</strong></p>
<p>The empirical evidence for increased employment as a result of reducing penalty rates is non-existent. <a href="http://press.anu.edu.au/wp-content/uploads/2014/11/Paying-the-Penalty-The-High-Price-of-Penalty-Rates-in-Australian-Restaurants.pdf">Employer arguments</a> have been based essentially on economic theory, which is merely hypothesis in the absence of empirical confirmation. What may be relevant in terms of the impact of wages on employment is that none of the available empirical evidence suggests minimum wages have a significant effect on net employment, a point reiterated by the <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft">Productivity Commission</a>. </p>
<p>While some studies do suggest a substitution effect, this would be a matter of balancing one set of employed workers against another – older workers versus youth. In the absence of minima the wages of those who are employed would be lower. However, a number of studies suggest no effect at all, and some suggest a positive effect.</p>
<p>Given the evidence, it is difficult to see any benefits likely to accrue from the abolition or reduction of penalty rates for employees, employment levels or greater availability of services to the public.</p><img src="https://counter.theconversation.com/content/49947/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ray Markey is an expert witness for the ACTU in the Modern Awards Review by the fair Work Commission.</span></em></p>Myths abound about the impact penalty rates have on employment and services.Ray Markey, Director of the Centre for Workforce Futures, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/459512015-08-16T20:25:06Z2015-08-16T20:25:06ZFactCheck Q&A: are a lot of cafes and restaurants closing because of Sunday penalty rates?<figure><img src="https://images.theconversation.com/files/91997/original/image-20150817-5088-1fz669n.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Assistant Treasurer Josh Frydenberg said there is feedback from cafes and restaurants that Sunday penalty rates are prohibitively expensive.</span> <span class="attribution"><span class="source">Q&A</span></span></figcaption></figure><p><strong>The Conversation is fact-checking claims made on Q&A, broadcast Mondays on the ABC at 9:35pm. Thank you to everyone who sent us quotes for checking. Viewers can request statements to be FactChecked via <a href="http://www.twitter.com/conversationEDU">Twitter</a> using hashtags #FactCheck and #QandA, on <a href="http://www.facebook.com/conversationEDU">Facebook</a> or by <a href="mailto:checkit@theconversation.edu.au">email</a>.</strong></p>
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<figcaption><span class="caption">Q&A, Monday Aug 10, 2015.</span></figcaption>
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<blockquote>
<p>Now, what the Productivity Commission has said is when it comes to Sunday penalty rates, they are being prohibitive, about at 200% sometimes of the base wage and the feedback from businesses is that they’re not opening because of those prohibitive costs… We’ve got a particular problem that a lot of cafes, restaurants are closing because of the high prohibitive costs on a Sunday. – Assistant Treasurer Josh Frydenberg, <a href="https://twitter.com/QandA/status/630715466567127040">speaking</a> on ABC TV’s <a href="http://www.abc.net.au/tv/qanda/txt/s4273040.htm">Q&A</a>, Monday August 10, 2015.</p>
</blockquote>
<p>Economists find it <a href="https://theconversation.com/viewpoints-should-penalty-rates-be-abolished-22819">difficult</a> to agree on the subject of exactly how penalty rates affect employment and business. There is a dearth of empirical evidence on the subject because constructing an experiment to test the exact role of penalty rates in employment or business viability would be near impossible. </p>
<p>Anecdotal evidence from some businesses in the hospitality and retail sectors supports Mr Frydenberg’s claim that they’re not opening on Sundays because of penalty rates, but the direct evidence is far from conclusive.</p>
<h2>Do penalty rates reduce employment?</h2>
<p>It is true that penalty rates can reach <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">200%</a> for certain awards. Sunday premium rates depend on a number of factors, including the occupation grade of the employee, and whether or not they are employed on a casual or permanent basis.</p>
<p>Direct evidence on the employment effects of penalty rates, and whether any such effects are driven more by demand or supply of weekend work, is really very limited. Some <a href="https://www.fwc.gov.au/documents/documents/awardmod/Review/MA000119/Prof%20Lewis%20-%20expert%20report.pdf">researchers</a> have concluded penalty rates reduce demand for labour; other experts are <a href="http://www.smh.com.au/business/dont-be-sure-lower-penalties-mean-more-jobs-20150806-giti4j.html">unconvinced</a>.</p>
<p>On supply side, the employment effects of Sunday penalty rates are quite complex. For those who value weekend time for lifestyle, family or religious reasons, the incentive to work on a Sunday will diminish if penalty rates are reduced. However, many workers have limited options to substitute from weekend to weekday work in the absence of a Sunday wage premium. Some employees may <a href="https://www.qtic.com.au/news/modern-face-weekend-work-%E2%80%93-report-fair-work-commission-penalty-rates">actively seek weekend</a> work for a variety of reasons.</p>
<p>Employment effects are likely to be stronger on the demand side, with penalty rates unarguably imposing additional wage costs on employers. Savings from lower penalty rates offer businesses the choice to employ more workers at the same costs, or the same number of workers at lower costs. </p>
<p>Whether employment would increase following a reduction in penalty rates, and by how much, depends on the balance of positive responses to lower wage costs among businesses, and the negative reactions of workers to lower remuneration. There is some potential for a market-determined wage premium to emerge in the absence of penalty rates to ensure that working on a Sunday remains attractive. </p>
<h2>Do penalty rates cause restaurants to close?</h2>
<p>Are we seeing higher rates of closure in the restaurant sector? And more pertinently, can these closures be attributed to the penalty rate system above other factors? </p>
<p>Of those businesses trading in June 2010 in the food and beverage services sector, <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/8165.0">ABS data</a> show that 70.3% survived to June 2012, and 51.7% to June 2014 - the latter survival rate being 10 percentage points below the average for all industries. So yes, there are higher rates of closure in the restaurant sector.</p>
<p>However, this may reflect the greater “churn” among businesses in the hospitality and retail sectors more than the effects of penalty rates. Overall business counts have remained relatively strong over the last period. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/91857/original/image-20150814-498-1b68ghv.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Survival rates of businesses operating in June 2010.</span>
<span class="attribution"><span class="source">ABS Cat No 8165.0: Counts of Australian Businesses, including Entries and Exits, June 2010 to June 2014</span></span>
</figcaption>
</figure>
<p>It’s harder to find direct evidence to support the claim that penalty rates are the dominant cause of extensive restaurant business closures – if by “closing” we mean going out of business altogether, as opposed to simply closing on Sundays. </p>
<p>It appears Mr Frydenberg meant that latter – that restaurants and cafes were closing on Sundays, as opposed to closing down altogether. His spokesman said by email that: </p>
<blockquote>
<p>The Assistant Treasurer’s statement was primarily based on the findings of the Productivity Commission’s <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">Draft Report</a> in relation to the impact of Sunday penalty rates and the level of Sunday business activity; not the registration of businesses generally.</p>
</blockquote>
<p>According to ABS figures, wages contribute more to the overall <a href="https://business.curtin.edu.au/local/docs/BCEC-The-Costs-of-Doing-Business-in-WA.pdf">costs of doing business</a> in the hospitality and retail sectors – averaging 43% of total retail business costs and 37% for accommodation and food services - compared with the overall industry average (28%). </p>
<p>A higher proportion of those wage costs are incurred at weekends and evenings, these being the periods of greatest demand for restaurant services. This does mean that penalty rates are likely to impose a greater cost burden on restaurants, cafes, bars and retail outlets relative to businesses in other sectors.</p>
<p>Penalty rates are likely to be more damaging during downturns in the business cycle, with lower consumer demand putting greater pressure on businesses in the hospitality sector who already work to tight profit margins.</p>
<p>In an <a href="https://theconversation.com/drafts/46075/edit">email</a> to The Conversation, a spokesman for Mr Frydenberg said that the Productivity Commission’s <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">Draft Report</a> makes several references to Sunday rates hampering business activity – notably on pages 483, 522, 250, 25 and 519. </p>
<p>He pointed to a statement from the Chamber of Commerce and Industry Queensland’s submission, which said:</p>
<blockquote>
<p>44% of (surveyed Queensland) businesses noted that they have decreased or substantially decreased the number of full time staff. Taken together, the results suggest that rising labour cost loadings are affecting business decisions about staffing hours and negatively impacting employment. </p>
</blockquote>
<p>Mr Frydenberg’s spokesman cited evidence from a 2015 survey of 1000 <a href="https://cdn.theconversation.com/static_files/files/29/Appendix_1.pdf?1519863931">restaurant and cafe operators</a> conducted by Jetty Research on behalf of the <a href="http://rca.asn.au/rca/">Restaurant and Catering Industry Association</a>, which found that:</p>
<blockquote>
<p>of those surveyed that didn’t open on Sundays and/or public holidays, 70% said that “this was because of penalty rates or an inability to trade profitably.”</p>
</blockquote>
<p>However, this finding is based on <a href="https://cdn.theconversation.com/static_files/files/29/Appendix_1.pdf?1519863931">responses</a> from only 10% of the survey. Of the 90% of respondents in the same survey who stayed open on Sundays and/or public holidays, around half (51%) reported that they did so because of “increased profitability”, with one quarter (24%) reporting that Sunday opening made them less profitable. Of all respondents, 52% said they would employ more staff if penalty rates were reduced, and 42% said they would open additional hours.</p>
<p>The full response from Mr Frydenberg’s spokesman can be found <a href="https://theconversation.com/response-from-assistant-treasurer-josh-frydenberg-46075">here</a>.</p>
<h2>Verdict</h2>
<p>It is true that there is feedback from some restaurants and cafes that they are closing due to the high cost of Sunday penalty rates. However, even when you look at the restaurant and cafe industry’s own <a href="https://cdn.theconversation.com/static_files/files/29/Appendix_1.pdf?1519863931">survey</a>, only 10% of businesses surveyed closed on a Sunday. Of the 90% that remained open on a Sunday, more than half did so because they made a profit. Less than a quarter said penalty rates were reducing their profits. The evidence that restaurants and cafes are closing on Sundays because of prohibitively high costs is, at best, ambiguous. </p>
<p>Direct evidence of the employment and business impact of penalty rates is hard to come by. It is not possible to say for sure that penalty rates, above all other factors, are forcing restaurants and cafes to close their doors on a Sunday.</p>
<h2>Review</h2>
<p>The author of this FactCheck correctly notes that the evidence of the impact of penalty rates on employment and business operations in the food and beverages industry is limited in Australia.</p>
<p>There is some <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">anecdotal</a> and qualitative <a href="http://press.anu.edu.au/wp-content/uploads/2014/11/Paying-the-Penalty-The-High-Price-of-Penalty-Rates-in-Australian-Restaurants.pdf">evidence</a> that shows for particular businesses, higher penalty rates have reduced employment. Some quantitative studies show that increasing labour costs are likely to lead to a reduction in the demand for labour but there is limited recent evidence on the direct effects of penalty rates on the demand and supply of labour over the weekend. Standard economic theory predicts that an increase in the wage will lead to a reduction in the demand for labour but the effects on the supply of labour are less clear. </p>
<p>The relationship between the survival of businesses in the food and beverage industry and pay rates is a subject on which more evidence is required. – <strong>Anne Daly</strong></p>
<hr>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/45951/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Duncan is the Director of the Bankwest Curtin Economics Centre. The Bankwest Curtin Economics Centre is an independent economic and social research organisation located within Curtin Business School at Curtin University. The Centre was established in 2012 with support from Bankwest (a division of Commonwealth Bank of Australia) and Curtin University. The views in this article are those of the authors and do not represent the views of Curtin University and/or Bankwest or any of their affiliates.
</span></em></p><p class="fine-print"><em><span>Anne Daly does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Assistant Treasurer Josh Frydenberg told the Q&A audience last week that a lot of cafes and restaurants are closing because of Sunday penalty rates. Is that supported by the evidence?Alan Duncan, Director, Bankwest Curtin Economics Centre and Bankwest Research Chair in Economic Policy, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/457722015-08-13T03:48:10Z2015-08-13T03:48:10ZWorkplace reforms would hit workers outside unions hardest<figure><img src="https://images.theconversation.com/files/91398/original/image-20150811-11068-1hlcp99.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The great majority of Sunday workers who would lose penalty rates under proposed IR reforms, are non-unionists.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/raeallen/14566770943/in/photolist-ocdvva-7MMSrV-5USXiX-iXABv1-5w9RWq-b1rkpa-8r6U3o-2Srfjo-qbVnGC-xaAPBz-diqBu1-d4R9Ms-7cvCB9-7cvCBG-q7tgLP-6yzMsw-ea8Yfc-7RyaDg-8eVmCe-rBuXiC-cDqoJY-5USWR2-arpnPY-xq9UG-invrW4-7ZCQcS-e7PHaN-muJREV-o3EU68-6yvEUB-6yvEU6-muJR6t-jVpbMZ-muJRq6-dTwsUp-8uhHKR-5UXktA-Fe9mV-x7JtSS-dFTL2y-748zZN-Fe91F-m2fLRn-b11gB-8A5og-6ZhxDR-ffJkf6-2SPqb-oarkGR-6ZmypS">Flickr/Rae Allen</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Would non-union employees be the biggest losers from the <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft.pdf">proposals by the Productivity Commission</a> for changes to the workplace relations framework?</p>
<p>So far, the main focus of publicity from last week’s report has been on the commission’s recommendation to cut Sunday penalty rates in retail and hospitality. </p>
<p>There, the great majority of workers who would lose wages – with wage cuts of 17- 37.5%, as estimated by the commission, for Sunday work – are non-unionists.</p>
<p>They have weak bargaining power – notwithstanding the commission’s statement that “employers in such industries are not likely to have the same level of bargaining power over their employees as in many other industries”, a comment that contrasts with the Fair Work Ombudsman’s view that parts of this sector have “<a href="http://www.fairwork.gov.au/ArticleDocuments/710/fair-work-ombudsman-annual-report-2013-14.docx.aspx">high non-compliance risk and are employers of vulnerable workers</a>”.</p>
<h2>Penalty rates</h2>
<p>The Productivity Commission espouses the view that “businesses would not be the beneficiaries of deregulated penalty rates” - at odds with the long “<a href="http://www.nswbusinesschamber.com.au/Too-Big-To-Ignore-Penalty-Rates">campaign</a>” waged by <a href="http://www.dailymail.co.uk/news/article-3023232/Small-businesses-restaurants-forced-close-Easter-long-weekend-t-afford-pay-inflated-penalty-rates-allow-teenagers-earn-50-HOUR.html">business bodies</a> to cut <a href="http://www.smh.com.au/business/employers-step-up-efforts-to-get-rid-of-penalty-rates-20150102-12gylv.html">penalty rates</a> there (<a href="http://www.canberratimes.com.au/comment/antipenalty-rates-campaign-backfires-20150406-1mfblu">not just on Sundays</a>). Amongst consumers, considered by the commission as the beneficiaries, <a href="http://www.essentialvision.com.au/penalty-rates-3">81% oppose</a> the removal of penalty rates. </p>
<p>Explicitly omitted from the commission’s agenda to cut penalty rates are essential services such as nursing, policy and fire services, and even continuous production manufacturing. Workers in most of these areas are <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/ProductsbyCatalogue/99E5614783415356CA25713E000F92B1?OpenDocument">more highly unionised</a>, and would put up much <a href="http://workinglife.org.au/2014/12/01/we-are-union-hear-us-roar/">more visible resistance</a> if their penalty rates were challenged. </p>
<p>Some observers <a href="https://www.themonthly.com.au/blog/tim-lyons/2015/05/2015/1438744398/there-may-be-non-economic-considerations">plausibly wonder</a> if that is the reason they have been excluded – but have no doubt that a precedent set in retail and hospitality would eventually set the tone for the rest of the workforce. </p>
<p>The commission argues that community attitudes on penalty rates for Sundays have changed, but presents no attitudinal evidence on this. It argues that Sundays are no worse for workers than Saturdays, though the authors of the survey evidence it cites <a href="https://www.wgea.gov.au/sites/default/files/AWALI_2014_national_report_final.pdf">concluded:</a>
“Those who work on Saturday <em>and particularly Sunday</em> (my emphasis) have worse work life interference - an issue that is relevant to the current debate about penalty rates in Australia.” </p>
<p>The PC noted that “the worst social disabilities arise from evening work” and that evening rates are much lower than weekend rates, but it made no recommendation to increase evening rates. </p>
<p>The Productivity Commission concedes that many workers would stop working Sundays. Many of my own students (mostly non-unionists) have told me that without penalty rates they wouldn’t work at such times.</p>
<h2>Non-union workers</h2>
<p>Would other aspects of the report also disproportionately affect non-union workers?<br>
The proposal to introduce non-negotiated <a href="http://theconversation.com/change-penalty-rates-reform-work-agreements-urges-productivity-commission-experts-respond-45647">“enterprise contracts”</a>, a combination of pre-WorkChoices Australian Workplace Agreements and WorkChoices-style “employer greenfield agreements”, would most clearly affect non-union workers. The proposal that employees be <a href="http://www.afr.com/news/policy/industrial-relations/business-pleased-with-workplace-blueprint-but-pm-wary-20150804-gir5io">unable to recover underpayments</a> through such contracts would especially disadvantage them.</p>
<p>Likewise non-unionists would be most affected if the period of notice for cancelling an unsatisfactory “individual flexibility agreement” is multiplied by up to eight times, given the <a href="https://theconversation.com/individual-contracts-come-back-but-dont-mention-the-workchoices-31097">difficulties of enforcement</a> here. </p>
<p>Changing unfair dismissal laws to ignore breaches of proper procedure would have their biggest impact in non-union firms, which are <a href="http://wall.oise.utoronto.ca/resources/Verma.UnionImpactOnHRM.JLR2005.pdf">less likely to have formal systems and procedures</a> anyway.</p>
<p>That said, it is not as if the commission’s recommendations would favour unions. Many of its recommendations, in areas such as industrial action, would reduce the bargaining power of unions, which the commission has <a href="http://www.pc.gov.au/news-media/speeches/competition-quo-vadis/competition-quo-vadis.pdf">long</a> <a href="http://www.pc.gov.au/news-media/speeches/productivity-policies/productivity-policies.pdf">distrusted</a>.</p>
<h2>Some surprises</h2>
<p>And yet, many of the recommendations are not what the government would have ordered.</p>
<p>This is because of the type of institution that the Productivity Commission is: a market liberal body that mostly searches for the closest approximation to market solutions to any problem it is asked to address. </p>
<p>In some ways the workplace policies of the John Howard-led Coalition government, which provided the key ministers for this one, were not so much market liberalism as <a href="http://www.e-elgar.com/shop/eep/preview/book/isbn/9780857938053/">“Stalinist neo-liberalism”</a>. </p>
<p>While in certain aspects it sought to expose employees to unconstrained market forces, that government also sought to intervene in the employment relationship in great detail, prompting <a href="http://www.abc.net.au/lateline/content/2006/s1602129.htm">criticism from the conservative HR Nicholls Society</a> that its policies were “the old Soviet system of command and control, where every economic decision has to go back to some central authority”.</p>
<h2>Secret ballots</h2>
<p>Detailed prescriptions on the procedures to be followed in applications for secret ballots and “legal” industrial action, dating from then, are an example.</p>
<p>A market (and democratic) solution would require unions hold secret ballots before undertaking industrial action, but would leave the rest to the parties (unions) to work out. Yet 2005 legislation imposed <a href="http://www.austlii.edu.au/au/legis/cth/repealed_act/wra1996220/s449.html">26 pages</a> <a href="http://www.austlii.edu.au/au/legis/cth/repealed_act/wra1996220/s493.html">of</a> procedural requirements designed to provide detailed notice to employers of any action and numerous opportunities for employer interventions to pre-empt it. </p>
<p>Labor, under pressure from employer organisations, left these mostly unchanged in the Fair Work Act.</p>
<p>The Productivity Commission report questions the complexity of secret ballot procedures. It also recommends the bar be lowered for identifying “sham contracting” arrangements by employers and improved protections for migrant workers.</p>
<p>The report also questions prohibitions on “pattern bargaining” when it may lead to “low transaction cost agreements that parties genuinely consent to”.</p>
<p>It recommends that Parliament abandon the Bill that seeks to involve the Fair Work Commission (FWC) in assessing the “excessiveness” of union claims, as “undermining the decentralised and enterprise-oriented focus underpinning the WR framework”. That Bill also mandates “productivity clauses” in enterprise agreements that are “likely to have perverse effects”.</p>
<h2>Little evidence of gains</h2>
<p>Indeed, the PC can find no evidence that there would be productivity gains from major changes to the industrial relations system, or even from reducing the level of industrial conflict. </p>
<p>It finds “little evidence that unfair dismissal laws are a major obstacle to hiring”, that “Australia has one of the more light-handed suites of arrangements” for protecting employees from unfair dismissal, that strikes are low, the system is largely working, and even (unusually for the PC) that “without regulation, employees are likely to have much less bargaining power than employers, with adverse outcomes for their wages and conditions.”</p>
<p>It also favours implementing some of the remaining recommendations of the <a href="https://employment.gov.au/fair-work-act-review">2012 McCallum review</a> into the Fair Work Act. </p>
<h2>Political antennae</h2>
<p>So, the commission’s report is not as purist as many were expecting. Its political antennae are more attuned than many believed, and it seems well aware that the government no longer wishes to see radical proposals for change. (However, the report reads inconsistently, as if some passages were written by more market-liberal authors than others.)</p>
<p>Still, the government will likely repudiate much, or even most, of the report: some, because recommendations are too politically dangerous (such as “enterprise contracts”); some, because it is not interventionist enough (for example on secret ballots). </p>
<p>If the government announced the commission’s recommendations were to be fully implemented, it would be the government that had the most to lose.</p>
<p>But on weekend rates, the government will be pleased. Here, recommendations are consistent with its aims but targeted at the FWC, not the government. It will say “this is a matter for the FWC”, and watch <a href="http://www.theguardian.com/business/2015/aug/06/penalty-rates-tony-abbott-backs-hospitality-employers-push-for-cuts">with satisfaction</a> as the FWC and the parties deal with what the Productivity Commission has said in this government-instigated report. </p>
<p>It will hope that this much is implemented, and that this sets the scene for bigger changes after the 2016 election. </p>
<p>That way the greatest immediate cost would be borne, not by the government, but by mostly non-union employees.</p><img src="https://counter.theconversation.com/content/45772/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As a university employee, David Peetz has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions. His most recent major consultancy was for the New Zealand government. At present he is involved in several Australian Research Council-funded and approved projects which included contributions from an employer body, two unions and a superannuation fund. The projects do not concern the subject matter of this article. He is a research associate of the T J Ryan Foundation in Brisbane and the New Zealand Work Research Institute in Auckland, a co-researcher of the Inter-University Centre for Research on Globalisation and Work (CRIMT) based in Quebec, and a Fellow of the Academy of the Social Sciences in Australia. Many of his students, however, receive penalty rates in their paid employment, but they haven't offered him any money to provide the opinions here.</span></em></p>The Productivity Commission’s proposed industrial relations reform goes after unions, but will generally affect the non-unionised workforce most.David Peetz, Professor of Employment Relations, Griffith UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/456522015-08-04T19:36:56Z2015-08-04T19:36:56ZEnterprise contracts echo ‘take it or leave it’ world of WorkChoices<p>The Productivity Commission’s newly released draft report into <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">Australia’s workplace relations framework</a> must be treated with great caution. </p>
<p>Prima facie, it appears supportive of “the Australian way” to developing and enforcing labour standards. </p>
<blockquote>
<p>Contrary to perceptions, Australia’s labour market performance and flexibility is relatively good by global standards, and many of the concerns that pervaded historical arrangements have now abated. Strike activity is low, wages are responsive to economic downturns and there are multiple forms of employment arrangements that offer employees and employers flexible options for working.</p>
</blockquote>
<p>Closer reading reveals, however, it is committed to deepening the further erosion of Australia’s distinctive approach to achieving fairness as well as productivity at work. </p>
<p>This corrosive dynamic commenced under the Keating government in 1991. It was turbo-charged in 2006 when the Howard-era WorkChoices redefined the terms around which the debate on workplace relations reform has been couched.</p>
<p>The report makes some sensible suggestions. Prime amongst these are its proposals for a more realistic (that is, tolerant) approach to pattern bargaining and controls on non-union bargaining agents (who it suggests should gain 5% employee support to gain recognition).</p>
<p>The core recommendations, however, concern three fundamental matters.</p>
<p>First is the erosion of the independence of Australia’s labour standards setting authority.</p>
<p>The Productivity Commission report claims “several major deficiencies” must be addressed, criticising the FairWork Commission for being overly-legalistic in the way it determines awards and claiming the appointment process for FWC members leads to inconsistencies in its decisions.</p>
<p>In place of tenure, Fair Work Commissioners are to have five year contracts, be subject to performance management and be appointed by the relevant Federal minister alone. Labour standards are to be set be people with research and analytical expertise alone. </p>
<p>Those with practical experience of the operation of labour standards are to be excluded from shaping them in any way. Any notion of a quasi-judicial process to determine labour standards would be completely eradicated if these recommendations are implemented. It would mark the complete severance with Australia’s distinctive - and well respected – regime of labour standards determination.</p>
<p>The second concern is the further fragmentation of bargaining with employer driven “collective contracts”.</p>
<p>The report asserts there is “a gap in contract arrangements between individual arrangements (broadly defined) and enterprise agreements” (page 37, 57). It proposes this “gap” be filled by employer-determined collective “enterprise contracts”. There are strong echoes here of “take it or leave it” collective Australian Workplace Awards (AWAs) of WorkChoices. </p>
<p>The Commission appears to be totally unaware of decades of industrial sociology and industrial psychology on workplace dynamics. Social space of work is governed as much, if not more, by trust as well as contractual relations. Improving “trust relations”, not creating yet another form of contract is needed to fill this alleged “gap”. </p>
<p>Introducing the notion of “contract” in this context only has relevance if one is endeavouring to weaken the coherence and effectiveness of a labour standards regime.</p>
<p>The final one is further erosion of union bargaining power.</p>
<p>The final swag of recommendations have a very strong WorkChoices flavour of tilting bargaining power towards employers. The proposal that strike action can be terminated if it does “significant economic harm to the employer alone” betrays either naivety or bias of the highest order. That is the primary reason why strikes are undertaken.</p>
<p>In short, while the Commission advocates “repairing not replacing” our current system, the effects of its proposed changes would profoundly shift power in it. This would be achieved by weakening the independent standing of the Fair Work Commission as a body comprised of thoughtful practitioners and a major erosion of unions’ ability to act effectively in the labour market.</p><img src="https://counter.theconversation.com/content/45652/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span> John Buchanan is Director of the Workplace Research Centre. This is a self-financing research unit based in the University of Sydney Business School. The Centre is funded by end users of the research it produces. Clients are based in the government, non-government and private sectors. Between 2011 - 2013 he lead two large scale projects worth just over $2m for the Fair Work Commission that examined the reach of award across the private sector and the impact of minimum wage decisions on the incentive to bargain. These projects were awarded to the Centre after an open tender process.</span></em></p>Echoes of WorkChoices? The Coalition is keen to avoid any whiff of the failed policy, but some of the Productivity Commission’s recommendations have a strong flavour of it.John Buchanan, Director, Workplace Research Centre, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/456472015-08-04T04:21:57Z2015-08-04T04:21:57ZChange penalty rates, reform work agreements, urges Productivity Commission: experts respond<figure><img src="https://images.theconversation.com/files/90712/original/image-20150804-15137-19ljvdl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cafe workers are among many that stand to lose Sunday penalty rates.</span> <span class="attribution"><span class="source">Felipe Neves/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Hospitality, entertainment, retail, restaurant and cafe workers will have their Sunday penalty rates cut, while minimum wage workers can expect modest pay rises, if draft workplace reform recommendations from the Productivity Commission are accepted by the Coalition government.</p>
<p>Despite criticism from business lobby groups, the Commission has described the current system of minimum wage setting as “justified”, saying the view that existing levels are “highly prejudicial to employment is not well founded”.</p>
<p>But it says significant minimum wage increases pose a risk for employment, especially against a weakening labour market. It also says the Fair Work Commission should be allowed to make temporary variations in awards “in exceptional circumstances after an annual wage review has been completed”.</p>
<hr>
<p><a href="https://theconversation.com/sundays-are-similar-to-saturdays-for-workers-productivity-commission-45643">Michelle Grattan</a>: <em>“Nevertheless, whatever reforms the government proposes for its next term will face tough counter-attack from Labor and the unions”.</em></p>
<hr>
<p>The Commission recommends that Sunday penalty rates be removed for hospitality, retail and entertainment workers, aligning them with Saturday rates. The Commission believes lower regulated Sunday rates would increase opening hours and encourage higher staffing ratios and job opportunities.</p>
<p>Rebutting business complaints that the system needs comprehensive reform, the Commission found Australia’s labour market was performing relatively well against global standards. </p>
<p>But among other major recommendations on reforming Australia’s enterprise agreement system, the Productivity Commission has suggested the creation of an enterprise contract, a new type of enterprise agreement allowing business to negotiate individual flexibility arrangements without the need for an employee ballot. The report said the Australian Government should also replace the better off overall test for approval of enterprise agreements with a new “no-disadvantage” test.</p>
<p>The report suggests employees could only receive compensation for unfair dismissal if it was found they had been dismissed “without reasonable evidence of persistent underperformance or serious misconduct”. It also recommends the emphasis on reinstatement as the primary goal of the unfair dismissal provisions, be removed from the 2009 Fair Work Act.</p>
<p>Among recommendations that will anger unions, the Productivity Commission has said the Fair Work Commission should only grant a protected action ballot order to employees if enterprise bargaining has commenced, and suggests the Fair Work Commission be allowed suspend or terminate industrial action causing, “or threatening to cause, significant economic harm to the employer or the employees… rather than both parties (as is currently the case)”.</p>
<p>It also suggests increasing the maximum penalty for unlawful industrial action to reflect “the high costs that such actions can inflict on employers and the community”. </p>
<p>The report also addresses the potential exploitation of migrant workers by employers, suggesting penalties for underpaying staff be boosted. </p>
<hr>
<h2>Enterprise Contracts</h2>
<p><strong>David Peetz, Professor of Employment Relations at Griffith University:</strong></p>
<p>The Productivity Commission says its recommendation of an “enterprise contract” will “go a long way in allowing enterprises to negotiate with individuals without union representation if that is their wish”.</p>
<p>Unfortunately for the Productivity Commission, it would not be an “agreement”, because the Commission recommends employers be able to establish an enterprise contract “without having to negotiate” with anyone. Indeed it could be offered “to all prospective employees as a condition of employment”. </p>
<p>The EC would not be subject to the existing “better off overall test” that currently applies to enterprise agreements and individual flexibility arrangements. Instead, it would be tested against a weaker “no disadvantage” test.</p>
<p>It therefore has the key features of two previously abandoned instruments. One is “employer greenfield agreements” (EGAs), which only existed under WorkChoices. These enabled an employer to agree with itself the conditions that would apply to new employees – but only in a new establishment, whereas ECs would apply in any establishment of any size. These greenfield agreements led to frequent cuts in penalty rates and other conditions.</p>
<p>The second is Australian Workplace Agreements (AWAs), which even when they were subject to a no-disadvantage test (before WorkChoices), were shown to lead to lower pay and conditions (and/or to be used for union avoidance), and which under WorkChoices could be offered as a condition of employment. AWAs were a major factor in the defeat of the Howard government.</p>
<p>It is hard to believe that the Productivity Commission really expects that the government would agree to this recommendation, as it would form an easy basis for another political mobilisation by unions against any reform package. More likely, it would end up a sacrificial lamb, dumped by the government to protest it is only after moderate reforms.</p>
<hr>
<h2>Minimum wage</h2>
<p><strong>Rob Bray, Research Fellow at Australian National University:</strong></p>
<p>The Productivity Commission is quite cautious in its discussion, in many ways reflecting the extent to which submissions did not argue too strongly for change, and the considerable weakness of the available data. It supports the maintenance of a national minimum wage, recognising a need to “address bargaining power imbalances”, but makes <a href="http://www.pc.gov.au/inquiries/current/workplace-relations/draft/workplace-relations-draft-overview.pdf">some recommendations</a> for change in the setting of this. These are a mixed bag. </p>
<p>Responding to special pleading from the rural sector and an employer organisation, it suggests that there should be capacity to vary awards in “exceptional circumstances” (without really saying why this mechanism, rather than say drought relief is appropriate). The Productivity Commission also suggests that the Fair Work Commission “systematically considers the risks of unexpected variations in economic circumstances” – a rather challenging concept, and one that tends to ignore the extent to which changes in wages tend to be retrospective; that is, justified on the basis of what has happened.</p>
<p>While discussing the interaction with the tax and transfer system the Productivity Commission comes to no conclusion, doesn’t come to grip with family payments, and simply issues another “Information Request” for further input from participants. Tucked away in the discussion of the minimum wage is a call for a comprehensive review into apprenticeships and traineeships, and another information request about the structure of junior wages.</p>
<p>Looking at the report overall one can only get the impression that while the Productivity Commission may have taken its first wobbling step in considering these issues it has a long way to go. Given the timing it may be sensible for it to consider what it can and cannot feasibly cover in the time available to it.</p>
<hr><img src="https://counter.theconversation.com/content/45647/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>As a university employee, David Peetz has undertaken research over many years with occasional financial support from governments from both sides of politics, employers and unions. His most recent major consultancy was for the New Zealand government. At present he is involved in several Australian Research Council-funded and approved projects which included contributions from the employer body Universities Australia, the superannuation fund Unisuper, the National Tertiary Education Union and the Construction, Forestry, Mining and Energy Union. The projects do not concern the subject matter of this article. He is a research associate of the T J Ryan Foundation in Brisbane and the New Zealand Work Research Institute in Auckland, a co-researcher of the Inter-University Centre for Research on Globalisation and Work (CRIMT) based in Quebec, and a Fellow of the Academy of the Social Sciences in Australia.</span></em></p><p class="fine-print"><em><span>Rob Bray received funding from the HC Coombs Policy Forum in 2013 which supported his initial research on the Australian Minimum Wage.</span></em></p>Sunday penalty rates will go under Productivity Commission recommendations, but overall our workplace system was basically operating well, it found.David Peetz, Professor of Employment Relations, Griffith UniversityRob Bray, Research Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.