The weekend penalty rate deal between union and government in South Australia announced this week does not appear to be as good as pitched in my view. At its heart, the deal shifts labour costs from penalty rates to the base, thereby not reducing the cost of labour to a business. Further, the deal is voluntary and that is problematic.
At a small business round table with retailers and Minister for Employment Eric Abetz – before he was minister – I was part of a conversation about weekend penalty rates. While employers in the room were keen to achieve a lower operating cost on weekends, the risk of a change which was voluntary was clear as it could make competing for employees more difficult.
Speaking for my own business, an hourly cost of $40.00 on a Sunday is not justified in my view. There is no difficulty in finding people to work on a Sunday – because of the pay. I sense that cutting this to, say, $28.00 an hour would not alter availability of employees. That saving would add $9,984 to the bottom line of the business over a year. All of this would be reinvested in a mixture of marketing, stock and more hours. This reinvestment would improve the business which would require hiring more people.
While I am no economist it seems simple to me. If the government wants to address unemployment, addressing the out of date weekend penalty rate structure is one of several options to consider.
The bigger picture here is overdue economic reform. The issue of penalty rates needs to be considered along with taxation (all of it – personal and business), government services and other economic levers available to government to stimulate the economy and reflect equity for all Australians. In other words, as part of a complete package of economic reform which deals with all participants in the economy and not one or two sectors. Unless this is done, selling any real penalty rate change would be impossible.
Yes Mark you are right. From what I read it is a ‘smoke and mirror’ ruse by a body who thinks that cutting a certain penalty rate (from one hand) and adding the ‘saving’ to another will keep everyone happy. They really ‘just don’t get it’ do they?
Labor costs have little effect on unemployment. Take a look around the developed world and you’ll see a range of minimum and average wages that are as equally diverse as the unemployment rate.
I agree re complete tax reform. Australia’s low tax base and increasing economic inequality is a problem that no one wants to address.
This deal was in fact stitched up before the previous election in SA, as long as labour got to power, then they would ‘look like’ renegotiating ‘down’ with business leaders, after that but first upping the hourly rate, before bringing it down.
So the union exclaims that they’ve given the base rate an increase in the end, for workers. Then given relief on penalty rates for business. The union, in the end, looks like a saviour, for the clueless.
All by design people. Some union people have big mouths…
This deal is all smoke and mirrors. Two issues:
1. An 8% increase in base pay for the full week on all employees costs more than the 50% reduction on a Sunday and the abolition of Thursday and Saturday afternoon penalties.
2. You have to enter into an enterprise agreement which gives your employees the entitlement to every second weekend off. Now you will need twice as many staff earning half as much.
Penalty rates should only kick in if an employee has worked too many hours in a day/week or too many days in a week.