Magazine of Socialist Action in Australia

Cuts to penalty rates benefit bosses not workers

Reading Time: 3 minutes

A recent report from the Productivity Commission has recommended that low-paid workers in retail, hospitality and the entertainment sectors have their weekend penalties slashed. This follows a determined campaign by big business representatives like the Restaurants and Catering Industry association to undermine penalty rates in the hospitality industry. Now, new Liberal Prime Minister Malcolm Turnbull has jumped on the anti-penalty rates bandwagon, saying reducing Sunday penalties is “under consideration” by his government (The Age, September 23).

The arguments advanced by business lobbyists simply don’t add up.

Since 1909 penalty rates have been part of industrial law won and maintained by the pressure of the workers’ movement. Higher pay on weekends, public holidays, early or late shifts and during overtime compensates workers for being rostered to work anti-social hours. This is to protect our leisure time and time with family and friends, meaning we can enjoy life outside of work. Bosses hate penalty rates because they increase their wages bill.

George Calombaris, famous millionaire chef and multiple-restaurant owner, is a vocal proponent of removing penalty rates in the hospitality industry. He claims that penalty rates are forcing restaurants out of business. Yet figures from the Australian Bureau of Statistics (ABS) show that there has been an overall growth in the number of cafes and restaurants, growth in their revenue and significant growth in the amount of money people spend eating out. In fact cafes, restaurants and pubs represent one of the fastest growing industries in the economy.

In a similar vein Prime Minister Tony Abbott has claimed penalty rates are “killing jobs”. This argument effectively blames the lowest paid group of workers for the unemployment of others. It also assumes that businesses run in order to offer maximum employment, rather than maximum profit. Anyone familiar with the workings of a restaurant knows that it is routine for more staff are employed on busier shifts and fewer on quieter shifts. It is not the wages of staff that determine the number of employees, but the demand for service. If a boss can get away with fewer staff they will do it and pocket the extra revenue.

It is this experience that has led to polling showing that 4 out of 5 people aren’t buying the argument that reducing penalty rates will create more jobs.

The argument that workers need to take a pay cut to increase profitability in the hospitality industry is simply an attempt to squeeze further profit from an already strained workforce. Those in the hospitality industry already work some of the longest hours for the smallest pay checks.

For many, penalty rates are crucial to their ability to make ends meet. Much of the hospitality industry is poorly unionised or unorganised, meaning working conditions are poor. It is common that hospitality workers are employed as casuals, meaning they have little-to-no safety net if they become sick or injured or if their hours are reduced.

There is no need for hospitality workers to face these precarious conditions or have their pay checks reduced further. As hospitality takes up a greater portion of the overall employment, the conditions of these workers impacts overall income inequality.

As relatively well-paid, union jobs in manufacturing are lost, more low-paid jobs in hospitality are being created. In fact, according the ABS statistics employment in the “food services and beverage” industry grew by 18% in the last 5 years. By mid 2016 the amount of people employed in this industry could outnumber those in manufacturing.

As well-paid jobs are replaced by those in low-paid industries, the gap between rich and poor will continue to increase. Many people a recognising that jobs in restaurants and cafes are not just for students and young people. Many people rely on these jobs for their full, long-term income. A study by the McKell institute suggests that cutting penalty rates would disproportionately worsen economic, social, family and mental health problems in rural and regional areas.

When you look at who is set to gain and who is set to lose if penalty rates are reduced or even removed all together, it’s clear to see the class interests behind the push. It is not only bosses and their business organisations that are campaigning to get rid of penalties. Even some conservative unions have happily reduced penalties at the behest of employers.

To defend penalty rates workers who rely on them need to get organised, just like our employers are. This means waging a battle to unionise our workplaces and using our collective strength to improve our working conditions. It is these traditions, eroded by ALP-aligned leaders in the union movement, that socialists fight for to improve the lives of working people.

By Kirk Leonard


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