This is interesting: the Fair Work Commission (FWC) has pretty much agreed with the Productivity Commission's (PC) recommendations on penalty rates, so penalty rates should be sharply higher for everyone on shift work.
Ah, but the FWC is considering weekend and public holiday penalties for only a couple of specific industries. Therefore the people most deserving of higher penalty rates will continue to be undercompensated. The often-low penalty rates for working through the night at physical and mental risk will remain low.
More BusinessDay Videos
Penalty rate cut: how did it happen?
Workplace reporter Nick Toscano contextualises the Fair Work Commission's announcement on Thursday that Sunday penalty rates paid in retail, fast food, hospitality and pharmacy industries will be reduced from the existing levels.
The PC's draft report spelt out the discrepancy: "Long hours of work involve risks not only to an employee's health and safety but also for the community. There are proven adverse health effects from night shift and rotating shift work."
As endorsed by the PC, a key part of the reason for overtime, night and shift work penalty rates is to discourage such work as well as to compensate workers for the extra burden they carry. Yet while there was double-time for working during the day on Sundays, evening shift penalty rates can be as low as 10 per cent and night shift loadings as low as 15 per cent.
So, faced with such a glaring anomaly, the FWC is trimming hospitality and retail industry Sunday rates.
Lest you think the FWC heartless, the full bench acknowledged the pain of the many relatively low-paid workers who will lose money by suggesting "transitional arrangements".
"Many of these employees earn just enough to cover weekly living expenses, saving money is difficult and unexpected expenses produce considerable financial distress," the FWC states.
"The immediate implementation of the variations to Sunday penalty rates would inevitably cause some hardship to the employees affected, particularly those who work on Sundays. The full bench concluded that appropriate transitional arrangements are necessary to mitigate the hardship caused to employees who work on Sundays."
![A key reason given for the decision is to encourage employment in the hospitality industry, which is already our star ...](/web/20170225092423im_/http://www.theage.com.au/content/dam/images/g/s/q/b/i/i/image.related.articleLeadwide.620x349.guk5vo.png/1487906144033.jpg)
But by "transitional arrangements", the FWC only means the cuts should be phased in over two or three years. Those being stiffed by the changes will still be stiffed, just with the full stiffing perhaps not occurring immediately. The full bench is still making up its mind about that, but there's no suggestion of workers actually being compensated somewhere else in the system for the change.
There is a certain irony in the FWC actively reducing wages at a time when low wages growth is a major problem for our economy. And it's particularly rich that a key reason given for the decision is to encourage employment in the hospitality industry, which is already our star performer in employment growth.
Crikey's Bernard Keane and Glenn Dyer summarised it thus: "Today the Fair Work Commission, reflecting three years of Coalition government appointments to the industrial relations body, decided that Sunday penalty rates are too high for retail and hospitality workers and should be wound back. The hospitality sector, despite evidently being hampered by having to pay its workers too much, has grown its employment by 11.4 per cent since 2011, far outstripping the overall workforce, which grew by just 6.8 per cent. But at least the commission has partially solved the problem of major retailer franchisees like 7-Eleven, Caltex, Domino's and others systematically underpaying their workers — now they don't have to pay them as much in the first place."
The FWC decision is at pains to make clear it doesn't totally go along with the PC, saying it had access to extra reports the PC didn't have. While the PC's 2015 report decided the disadvantages of working Sundays in the second decade of this century are the same as working Saturdays, the FWC thought there was still greater "disutility" attached to the Sabbath.Â
The people most deserving of higher penalty rates will continue to be undercompensated.
As previously opined, reforming weekend penalty rates, making sense of the big gap between Saturdays and Sundays, is like the old Irish road directions story – you wouldn't want to be starting from here.
For most people, there's really little difference, if any, between working Saturday or Sunday. For some people, it's actually quite convenient to be able to work Sundays. The big difference in rates does not make sense – but unscrambling the egg, taking money away from not particularly well-paid people, is politically and socially difficult.
The final PC report reached the less-than-startling conclusion that weekend work is now common: "The traditional Monday to Friday week is not dead, but nor is it as predominant as in the past. Some 4 million employed people — around one in three in the workforce — work at least a Saturday or Sunday each week."
That's a lot of people to feel sensitive about any suggestion of changes to weekend penalties, no doubt why the FWC and PC were careful to stress they were aiming at a limited target – and also why the federal opposition will be delighted to whip the penalty rates issue along.
"Penalty rates have a legitimate role in compensating employees for working long hours or at asocial times," wrote the PC.
"However, Sunday penalty rates for hospitality, entertainment, retailing, restaurants and cafes are inconsistent across similar work, anachronistic in the context of changing consumer preferences, and frustrate the job aspirations of the unemployed and those who are only available for work on Sunday. Rates should be aligned with those on Saturday, creating a weekend rate for each of the relevant industries."
The economic argument for the reduction is that there is so much competition in the hospitality and retail industries, the benefit of the lower wages bill should flow through to customers through cheaper and better services rather than increase employers' profits. Some owner-operators would be likely to work less themselves and employ more staff and the changed differentials could encourage the hiring of more part-time rather than casual staff.
There is much, much more in the PC's report than the weekend penalty rates issue, some of it shocking, some of it perhaps explaining why the FWC is keen to put some distance between itself and the PC.
You know how we pride ourselves on having a somewhat reasonable safety net while those crazy Americans have an appalling subsistence minimum wage?
Well try this: "Australian youth wages start at comparatively low levels relative to those in many other countries. For example, a fast food level 1 employee aged under 16 years could have more than a year of experience, but would get $7.59 an hour (44 per cent of the adult minimum wage). In many states in the United States, many such employees would receive at least $US8 (100 per cent of the adult rate). The decisive test in some countries is not age per se, but also experience, with much lower wages for someone with short experience in a job. In the United States, the federal minimum wage is around 60 per cent of the adult minimum for a person aged under 20 years who has worked with their employer for less than 90 days. New Zealand has a similar system, with no minimum wage for people aged less than 16 years, and a discounted wage for 16‑ and 17‑year olds with less than six months' job experience with their employer."
The PC report, largely forgotten now in the penalty rates dust, found that Australia has a good industrial relations system overall:Â "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 the economic cycle and there are multiple forms of employment arrangements that offer employees and employers flexible options for working."
There were still things that needing improving though, including the FWC itself:Â "While the Fair Work Commission undertakes many of its functions well, the legalistic approach it adopts for award determination gives too much weight to history, precedent and judgments on the merits of cases put to it by partisan interest groups. This calls for a change in institutions and in practices. The wage regulation function of the FWC should be separated from it. The existing FWC would concentrate on its tribunal and administrative functions. A new body, the Workplace Standards Commission (WSC), would be dedicated to determining minimum wages and award regulation.
"The WSC would use different types of expertise, and apply a clear analytical framework supported by evidence it collected.
"The appointment process for FWC members can lead to inconsistencies in some of its decisions, a problem that a new 'fit for purpose' governance model involving all Australian jurisdictions could resolve."
There's no sign of the politically appointed FWC full bench wanting to get into that.
0 comments
New User? Sign up