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Penalty rates case turns on a jobs claim yet to be proved

Mark Kenny

Not that long ago, in the 1960s and 70s, shops traded from 9am to 11.30 am on a Saturday and that was it.

Closed in the afternoon. Closed on Sunday.

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Miss that window and you only had the corner deli as a fall back. This might do for the basics from milk (probably one type) and white or brown bread (probably yesterday's) to luncheon meat, baked beans and spaghetti.

Quaintly, service stations stuck to car stuff like petrol, oil, and those plastic-threaded puncture repair aerosols that never quite worked. The servo's overlap with corner stores, which would eventually render the latter unviable, was marginal back then – lines like cigarettes, confectionary, magazines, and softdrinks – sometimes from a vending machine.

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In any event, they were closed by midday also.

Parents juggled their kids' sporting obligations with the inevitable late morning dash to the supermarket to get the household through the weekend.

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Despite it being morning still, a strange, even doleful, mood descended over the local shopping precincts as the 11.30 close approached and the crowds thinned out.

Parking spots stayed empty right through to Monday.

Saturday arvos were dead for retail.

The advent of Thursday night trading until 9pm, was the first big change designed to give office workers a shot at the weekly groceries for which they had adequate money but inadequate time.

Since then of course, there's been a revolution. Choice. Variety. Competition. Jobs. It was a case of activity begets activity and with the ability to shop every day came the explosion of options of where to do it. New products and services too.

Now, you can take the kids to netball or dwell in a favourite cafe all Saturday morning, ambling through the weekend papers, surrounded by the frenetic activity of staff and customers, safe in the knowledge that the fruit and veg shopping is a job for later that day. Or the next.

For all the talk of the seven-day working week, employment for most of us not connected with retail, hospitality, and fast food, has stayed largely within the Monday-to-Friday tramlines. Weekends are our own.

This labour market dualism is the key to making bookshops, cafes, supermarkets and hardware stores the buzzing enterprises they are today. And it is the foundation of much quality time in most households too.

By trading "out-of-hours", businesses capitalise on the discretionary time the market – indeed they rely on their customers being simultaneously employed and yet not at work.

And, despite all the frothing about exorbitant Sunday penalty rates, it is how some businesses make their weekly sums add up.

As one cafe owner told Fairfax Media, weekend labour costs are high but not so high as to be unrealistic. Others would disagree of course, but as the owner pointed out, many restaurants and cafes place a surcharge on their Sunday menus and suffer no appreciable loss of trade for doing so.

"People are happy to pay it," he said, "because, it's not that price sensitive."

The case for reducing the Sunday and public holiday pay in fast-food, hospitality, and, retail, turns on two pretty basic propositions.

The weaker proposition holds that in the 24/7 economy, the rest day has become much like any other with businesses remaining open, department stores, pubs, and hairdressers all trading furiously.

The Fair Work Commission's recent ruling suggests it had some sympathy for a Saturday equivalence, given its moves to bring Sunday penalties closer to those attaching to Saturday shifts.

The more compelling element of the commission's ruling, which has the unprecedented effect of lowering pay across a whole industry without offsets, can be called the jobs-justification.

This posits that lowering peak labour costs on a Sunday will encourage new or reluctant business owners to trade when they otherwise would not or could not. Thus, the reduced rate will lead to more jobs overall.

This is a worthwhile project to be sure, especially with youth unemployment currently running at 13.5 per cent and perhaps twice that in some regional areas. But it is hard to quantify. Economists point out that aggregate demand is unlikely to grow, meaning some businesses could become more marginal, not less, by surrendering market share to new entrants.

One advocate for the lowered Sunday rate conceded the promised employment increase might be overstated, but said even if it amounted to a modest 10,000 new positions across the country, this was still worthwhile.

When I put that to a Labor source, he called it "dud arithmetic" because it paled against the claimed 700,000 who will go backwards following the decision.

The government, which puts the figure at more like 450,000 – which is still dangerously high politically – is said to be tooling up for this fight. About time, because statements like "we embrace the benefits that the decisions will bring" from Employment Minister Michaelia Cash, as reported on Friday, will not cut it.

Missing is the small business stepping forward to prove the theory that new jobs are being created.

The government will pay a higher penalty again, in the absence of that proof.

Mark Kenny is national affairs editor.

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