Workers suffer $80 million penalty rate hit with more to come
Australian workers suffered an $80 million hit to their wages across the recent public holiday period due penalty rate cuts, according to recent modelling.
Worse still, arbitrary cuts to penalty rates will cost workers $2.8 billion over the next three years as further cuts are set to be phased in from July 2019.
The cuts have coincided with a period of anaemic wage growth, which even the Reserve Bank of Australia has argued is a major problem.
Last year, RBA Governor Philip Lowe said that stagnate wages were causing a rift in Australians’ sense of shared prosperity and damaging social cohesion.
Meanwhile, cost of living continues to rise and workers are feeling the impact – especially those who rely on penalty rates to cover essentials such as food and electricity bills as well as healthcare costs.
Cuts garner no new jobs
In early 2017 the Fair Work Commission (FWC) passed the decision to reduce Sunday and public holiday penalty rates for workers in certain industries.
James Pawluk, Executive Director of the McKell Institute, said business lobby groups had pushed for lower penalty rates under the argument it would stimulate employment.
“Yet, there is no compelling evidence to suggest that lowering penalty rates has affected employment…,” Mr Pawluk said.
Last week, the Council of Small Business also admitted penalty rate cuts have failed to create a single new job.
The McKell Institute has previously found a correlation between the reduction in take-home pay for workers experiencing reduced penalty rates and a decrease in consumption which suggests they now have a smaller capacity to spend.
Evidence suggests when workers have more disposable income they are likely to spend that money in their communities which stimulates the economy through investment into local businesses – and possibly stimulating employment.
We need to restore penalty rates and a living wage
IEUA-QNT Assistant Secretary Brad Hayes said the reduction in penalty rates was an arbitrary pay cut that workers did not deserve and cannot afford.
“The Change The Rules campaign has been lobbying for the past two years to overturn penalty rate cuts,” he said.
The Labor Party has committed to reverse penalty rate cuts to pre-July 2017 levels should it win government at the upcoming election.
The Morrison Coalition Government remains wedded to penalty rate cuts, including the forthcoming July 2019 cuts which will entrench a $1.25 billion annual wage cut to affected workers.
“We need to change the rules on wages and reverse these unfair cuts to penalty rates,” Mr Hayes said.
“With wage growth at its lowest recorded level, now is not the time to arbitrarily reduce the pay of workers in some of our lowest paid industries,” he said.
“All workers are entitled to fair pay rises that keep pace with cost of living and reflect the value of the work they perform.”
Mr Hayes said with the Coalition refusing to endorse the Change The Rules agenda workers would have to change the government at the upcoming election to see real action on wages.
“If we’re going to change the rules, we will have to change the government.”