Yesterday, the Fair Work Commission decided to cut penalty rates for hospitality, restaurant, fast food, retail and pharmacy workers. Loadings for working Sundays and public holidays will go down significantly, leaving many of Australia’s lowest paid workers in poverty. It is to come into effect on 1 July.
In its decision report the Fair Work Commission admitted that “Many of these employees earn just enough to cover weekly living expenses, saving money is difficult and unexpected expenses produce considerable financial distress. The immediate implementation of the variations to Sunday penalty rates would inevitably cause some hardship to the employees affected, particularly those who work on Sunday”. Cutting penalty rates will have a direct impact up to one million Australians.
The full bench of the Commission has shown that this is not its concern. This throws its real role into the public spotlight.
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An attempt to mitigate the fallout was made, with talk of “appropriate transitional arrangements.” This was no more than a platitude with no content.
The ruling bought the line that because this involves the service industry, in an economy that is under transition to services, more business and more jobs can be created by cutting penalty rates. The decision hinges on once again wheeling out the old trickle down effect argument. Of course, the trickle down effect has never worked.
This decision of the Fair Work Commission will not surprise anyone who has dealt with it before. Most of the Commissioners are closely connected with business and government. They are not going to be even-handed and objective. Secondly, they are dependent on their position on the favour of a government that carries its own agenda.
The decision is in line with the recommendation handed down by the government’s Productivity Commission.
Dr Jim Stanford from Australia Institute think tank said the decision would reinforce wage stagnation and further widen income inequality. “It’s painfully ironic that the Fair Work Commission’s decision was released, just a day after the ABS confirmed the pace of Australian wages had already slowed, to the worst in the history of their data.”
ACTU president Ged Kearney described the decision as a “game changer for industrial relations in Australia”.
United Voice national secretary Jo Schofield said the union that represents many hospitality workers would “investigate all options to ensure the people who give up their weekends to serve the rest of us don’t suffer a pay cut they can’t afford and don’t deserve”.
“Let’s be clear that this has happened because the big business lobby made an application to cut the pay of the lowest paid workers in the country,” she said. “It didn’t happen by accident.
The Shop, Distributive and Allied Employees Association, which also represents hospitality workers stands against the decision too.
There are signs that public opinion is galvanising against the decision, providing a solid foundation for the rise of an on the job and community campaign to stop the cut. If by any chance it is implemented, the matter can become such a bitter problem that it may even terminally injure an already immensely unpopular government.