Billions to be lost if penalty rate cut spreads

As the second biggest category of weekend workers, health care workers would be hit hard by cuts to penalty rates.

Australia’s hospitals, residential care facilities and medical and other health care services employ more than 310,000 weekend workers, a report by the Centre for Future Work reveals.

They are the second biggest category of weekend workers after retail workers who had their Sunday penalty rates cut by the Fair Work Commission in February.

Saturday and Sunday work is worth an additional $658 million for residential care workers. Hospital staff earn an extra $524 million on weekends.

These earnings from penalty rates and related provisions in awards and enterprise agreements are increasingly at risk, says the report’s author, Jim Stanford.

“The Fair Work Commission’s decision to significantly reduce penalty rates for Sunday work in retail and hospitality sectors is important and damaging, but just the tip of the iceberg if the process of ‘normalising’ weekend work continues,” he says.

“Our estimate suggests that merely cutting Sunday penalty rates in half (as the Fair Work Commission’s recent decision does for permanent retail, pharmacy, and fast food employees) would ultimately reduce cash compensation for Sunday workers by over $4.25 billion per year.

“But the total loss, if weekend penalty pay disappears altogether (surely the ultimate goal of employer organisations) would be much larger, and would be experienced throughout all sectors of the economy.”

The Centre for Future Work studied employment on Saturdays and Sundays in 108 different industries.

It found an average of 2.75 million Australian employees are on the job on a typical weekend.

The extra income generated by penalty rates and related provisions for their weekend work adds more than $14 billion per year to Australian pay packets, the Centre estimates.

ACTU President Ged Kearney says the report confirms that if penalty rate cuts spread to other sectors the economic impacts for health care workers will be severe.

“After retail and hospitality, the hospital, aged care and medical services workers do the most weekend work, making them extremely vulnerable to potential future cuts,” she says.

“Legal advice obtained by the ACTU highlights the potential for the Fair Work Commission’s ruling to spill into other sectors.

75 economists sign letter against penalty cuts

Meanwhile, former Reserve Bank boss Bernie Fraser has savaged the Fair Work Commission’s cuts to penalty rates and the Turnbull government’s company tax cuts, saying the measures will further entrench inequality but do little to produce jobs and growth.

Mr Fraser told Fairfax Media that Australia is approaching a “danger point” where the gap between rich and poor becomes so vast it could have “awful” far-reaching consequences at every level of Australian society.

Mr Fraser, who was the head of Treasury for five years before serving as RBA governor from 1989 to 1996, was one of 75 prominent Australian economists and academics to sign an open letter deeply critical of the cut to some Sunday penalty rates.

The letter says the decision will not deliver any meaningful boost to employment.