Opinion | Penalty rate cuts hurt workers and communities

WHO'S NEXT?: "Tomorrow it may well be nurses, teachers and cleaners facing savage pay cuts," Sharon Claydon says.
WHO'S NEXT?: "Tomorrow it may well be nurses, teachers and cleaners facing savage pay cuts," Sharon Claydon says.

The decision of the Fair Work Commission to cut Sunday penalty rates for workers in hospitality, retail, pharmacy and fast food was as shocking as it was unprecedented.

 It is a kick in the teeth for as many as 700,000 hard-working Australians who stand to lose up to $77 a week.  

Penalty rates are an important compensation for the sacrifices weekend workers make as they forego recreational and family time to serve their communities. Until Parliament sits on a Sunday, or courts open on weekends, arguments that penalty rates are an outdated legacy in a 24/7 world will continue to ring hollow.

In the Newcastle-Hunter region, 47,500 people, or one in six workers, are employed in the affected industries of retail, food and accommodation. In Newcastle, retail is the second-largest employing industry. It employs close to 13,000 people who will now be at risk of these cuts.

Penalty rates aren’t a luxury – they’re a necessity that help low-income workers meet the ever-increasing costs of living. 

The fact that the Turnbull Government is backing pay cuts for low-income Australians while it continues to mount the case for $50 billion worth of tax cuts for big business is appalling.

Malcolm Turnbull argues that cuts to low-paid workers wages are actually a good thing; suggesting they will somehow drive ‘jobs and growth’. But there is simply no evidence of this. In fact, if these cuts proceed, millions of dollars will be ripped out of workers' pockets and out of regional economies like ours, as a recent study from the McKell Institute demonstrated.

Businesses don’t employ more staff just because they’re making bigger profits. They employ more staff because increased demand for their products and services demands more hands on deck. Far from boosting business, cuts to penalty rates will actually decrease customer numbers as residents who have taken a hit to their weekly income are forced to forego any non-essential spending in their communities. What Newcastle businesses stand to gain through reduced labour costs, they will pay for through greater competition for a reduced pool of customers.  

Today, it’s hospitality, retail, fast food and pharmacy workers in the firing line. Tomorrow, it may well be nurses, teachers and cleaners facing savage pay cuts. This was confirmed last week by independent legal advice which showed that if these cuts proceed, they would set a damaging precedent and trigger a domino effect that would spread to other industries.  

Next week, Labor will introduce legislation to the Federal Parliament that would not only protect the pay of workers affected by the recent decision, but prevent future decisions that would slash minimum wages. And this has never been more important.

Last month, the Australian Bureau of Statistics Business Indicators data showed companies registered a 20.1 per cent boost to profits in the last quarter. Sadly, this prosperity wasn’t shared by workers. In fact, in the same period, wages actually went backwards by 0.5 per cent, laying bare the conservative myth that when companies are doing well, employees do well too.

Treasurer Scott Morrison correctly identified stalling wage growth as the single greatest threat to the economy. The onus is now on the Turnbull Government to reverse this trend by standing up for Australian workers and supporting Labor’s legislation.

Sharon Claydon MP is the Federal Member for Newcastle