Did Sunday rates cuts lead to more hours or jobs?

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A survey of more than 1,000 retail and hospitality workers has found no evidence that cutting Sunday penalty rates has led to more hours for workers or employers hiring additional staff

The Fair Work Commission’s decision earlier this year to cut penalty rates for Sundays and public holidays for workers covered by Award (minimum wage) agreements in Retail and Hospitality industries affected up to 700,000 employees, say researchers from the University of Wollongong and Macquarie University.

Dr Martin O’Brien and Dr Eduardo Pol from UOW and Professorial Fellow Ray Markey from Macquarie University aimed to test the argument that cutting penalty rates on Sundays and public holidays would enable businesses to open longer and potentially hire additional staff.

Dr Martin O’Brien, a senior lecturer in UOW’s Faculty of Business, said their survey of more than 1,000 employees tracked hours worked in June and July when the decision became effective, allowing them to measure its immediate impact.

“We really wanted to test three key claims from the Fair Work Commission decision: did the number of employees working on Sundays increase; did average Sunday hours for existing employees increase; and did weekly average hours increase?” Dr O’Brien said.

Their results showed there was no increase in employment on Sundays in the retail and hospitality workforce after the penalty rate was introduced.

In addition, the average number of hours worked on Sundays for existing employees remained steady at six hours. This also meant there was no increase in average weekly hours worked by employees affected by the penalty rate cuts, the two say.

“Our survey results and statistical analyses provide no support to the Fair Work Commission’s assertions that a cut to penalty rates would stimulate either the number of people employed in the retail and hospitality sectors on Sundays, nor average hours of employment,” Dr O’Brien said.

“We are approaching the holiday season and a number of public holidays. Our results from the analysis of Sunday employment imply that minimum wage employees are simply working the same hours for relatively lower take-home pay.

“This is an ironic finding given that these sectors rely on consumer confidence and discretionary spending power, and at a time where Australia is experiencing record low wage growth and weak economic growth.”

Dr O’Brien said the retail and hospitality industries may experience recruitment difficulties in coming years based on the conditions created by Award changes such as penalty rate cuts.

“Other information collected in our survey indicates that approximately 20% of retail employees and 15% of hospitality employees intend leaving their respective industries in coming years purely due to their dissatisfaction with wages and conditions,” he said.

The two hope to extend the research over a longer time span as Sunday penalty rates continue fall each year until 2020.

By 2020, employees in the pharmacy sector may see rates cut for full-time employees from 200 to 150%, and part-time employees from 225 to 175%.

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  1. Andrew

    Hoisted by their own retards.

  2. Joseph Conway

    I wonder if the cheaper labour costs will lead to cheaper prices for consumers rather than an increased number of jobs. Also, it will take a while for EBA’s at the bigger companies to reflect the now cheaper award rates and hence any increased number of jobs will take time to filter through once the existing EBAs expire…

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