A mass union campaign is needed to defend penalty rates

March 3, 2017
Socialist Alliance election candidate Petrina Harley speaks at the protest against penalty rate cuts in Perth on March 1.

The misnamed Fair Work Commission’s (FWC) decision on February 23 to cut penalty rates will hit hundreds of thousands of casual and part-time workers. But women will fare worse because the gender pay gap continues.

The employer’s argument, that penalty rates prevent them from hiring and remaining open on Sundays, is disproved by the facts. Australian Bureau of Statistics (ABS) figures show that despite the mining boom slow down, the retail and hospitality sectors are booming.

The supposedly neutral FWC decided to lower Sunday and public holiday penalty rates for part-time and full-time hospitality, fast food, retail and pharmacy awards. It has left Sunday penalty rates for restaurant workers alone — for now — but has cut their public holiday rates.

According to the Australian Council of Trade Unions (ACTU), cutting Sunday and public holiday penalty rates means that close to 1 million people in the retail, fast food, hospitality and the pharmacy sectors, already on very low pay, will be worse off. The ACTU calculated that those facing the biggest cuts will be casuals in the pharmacy industry, who face cuts of up to $6000 a year.

The FWC received more than 450 submissions, mostly from employer groups urging it to cut penalties so that bosses could offer more jobs and at higher rates per hour.

John Quiggan, from the University of Queensland who submitted for United Voice, said the hospitality industry had expanded as a result of an increase in household income, but that wage costs are not the primary determinant of employment or profitability in the industry. He warned that changes in penalty rates are “unlikely to have much effect on aggregate employment in the cafe and restaurant industry”.

Harsh decision

The FWC acknowledged the harshness of its decision. “Many of these employees earn just enough to cover weekly living expenses,” it noted in its summary decision. “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 Sundays.”

It also noted that those most affected would be “non career” workers — casual and part-time workers (Level 1) and largely young workers. Managers’ pay rates (Level 2 and 3) would not be affected.

The FWC hinted its decision would be the beginning of the end of penalty rates, saying it “may have implications” for Saturday penalty rates. It also said it would be prepared to review the hair and beauty award, if requested.

No wonder federal employment minister Michaelia Cash is happy.

Cash, whose own base rate income is $336,599 a year, has predictably gone in to bat for the FWC’s decision, saying everyone should respect the so-called “neutral” umpire. Opposition leader Bill Shorten said the same thing before last year’s federal election.

But the FWC is a creature of the Labor and Coalition governments. It is appointed by the Governor General on the recommendation of the government.

Today, the purpose of the FWC is to help governments make anti-worker decisions, such as these latest penalty cuts, by pointing to the supposed “independence” of the commission and declaring it to be a “neutral” body.

This is Cash’s line and, of course, she has also pointed to Shorten’s change of tune. Last year, he was certain the FWC would not cut rates. Now, Labor is introducing a bill to protect penalty rates. The Greens MP for Melbourne Adam Bandt is also introducing a bill to do the same.

While these bills may help, penalty rates and other entitlements under threat will only really be defended and extended by a union-led campaign of grassroots action.

This is what Cash is worried about. She has been lobbying employer organisations to back the FWC ruling in the face of a union-led campaign to defend penalties. The mass campaign against Work Choices from 2005–07 played a significant role in removing the John Howard Coalition government from office.

Gender pay gap

Young women, in particular, will be hardest hit by the cut to Sunday rates because they are disproportionately employed in retail, sales and hospitality — all sectors with longer and longer work hours.

The federal government’s Workplace Gender Equity Agency reports that gender segregation is alive and well across the country.

Using 2016 ABS data, it looked at the percentages of part- and full-time employment across 19 industries and whether women and men have equal access to jobs with paid leave entitlements. It found that more women worked part-time than full-time in seven of these industries, including in accommodation and food services and retail.

Women make up of 54.7% of the food services workforce and 54.6% of the retail trade. Overall, it found a larger proportion of women (21.2%) than men (9.5%) work part-time. Women working part-time comprise more than one-third of those working the accommodation and food services areas (37.9%).

Female workers make up the majority of workers without paid leave entitlements. More than a quarter of women (26.5%) and more than a fifth of men (20.7%) do not have paid leave entitlements. In all industries, a higher percentage of part-time employees (both women and men) had no paid leave entitlements compared with full-time employees.

Weekend workers

Removing penalties is not mandatory and some employers have stated their unwillingness or refusal to do it. But the FWC’s decision is political and helps the Coalition push its anti-union ideological agenda. Whether it backfires remains to be seen.

Many Sunday shift workers are people who cannot find full-time work during the week, or are students who cannot work through the week due to study commitments. They too are workers who need a living wage.

Penalties were legislated into individual awards so that workers would be compensated for working all hours — particularly on Saturdays, Sundays and public holidays — to compensate them for giving up their social or free time on times still considered to be “not normal hours”.

But for some time, bosses have been pushing to eradicate this concept.

The retail and hospitality industries employ young people because they can be paid less. Go to any cafe on a weekend and you will see young people taking the lion’s share of responsibility for the enterprise.

Many hospitality and retail workers who work weekends are still at school. Working weekends gives them some financial independence and/or enables them to contribute to the household.

The FWC report noted a growing consumer expectation of “access” to the hospitality and retail industries on Sundays. It also noted that these were the industries most likely to be “important sources of entry level jobs for, among others, relatively unskilled casual employees and young people (particularly students) needing flexible working arrangements”.

FWC’s decision to cut Sunday penalties, it said, was to encourage “demand responsive” services on weekends. But this could easily backfire as people decide not to work for the pittance offered.

To add insult to injury the FWC’s penalty rate decision comes as the Coalition government is attempting to reduce the company tax rate from 30% to 25%, even though one in three large businesses pay no tax at all and profit margins for the rich are still climbing.

The public holiday penalty rate cut comes in on July 1, but the date for the Sunday cuts has not yet been set. This allows unions and their allies an opening to fight and defeat this attack on the least organised sector of the workforce.

As the French say: “Our lives are worth more than their profits”. Let make sure penalty rates are protected and extended.

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