Penalty rate cuts to hasten “mass casualisation” of Australian workforce: report

By Adam Gartrell for The Sydney Morning Herald. February 27, 2017.

Cuts to penalty rates will hasten the “mass casualisation” of Australia’s workforce, leading to a decrease in job security, less paid leave and more workplace stress, a new report warns.

The McKell Institute says the Fair Work Commission’s “alarming” decision to cut penalty rates for a range of retail, hospitality and fast food workers will further discourage employees from pursuing secure part-time or full-time work, pushing them instead into less secure but higher-paying casual jobs.
“For many workers, casual work can be an attractive and flexible option,” the left-leaning think-tank says in the report.
“But for others, casual work means less job security, less annual work breaks, and a more tenuous relationship between them and their employer. These factors result in enhanced job insecurity, which can lead to financial stress and poor health outcomes.”
McKell says the commission “failed to adequately consider this externality” before delivering Thursday’s verdict. Executive director Sam Crosby says the ramifications extend well beyond people’s pay packet.
“The mass casualisation of Australia’s workforce has now been stimulated. We know that this has significant potential social and mental health impacts,” he said. “This will drive up inequality at a time when the gap between the haves and the have-nots is already growing rapidly.”
The Fair Work Commission draft decision, which came after almost two years, 39 days of hearings, statements from nearly 145 witnesses and reading through 5900 submissions, will see Sunday penalty rates for full- and part-time retail workers cut from double time, to time and a half.
Casual retail workers will see their Sunday rates fall from 200 per cent to 175 per cent. Full- and part-time hospitality workers will also see a cut, from 175 per cent to 150 per cent, although casuals will see no change. Fast food full- and part-time workers will see rates drop from 175 per cent to 150 per cent.
Unions have estimated about 700,000 workers will see their weekly wages reduced by the changes, with most due to come into effect by July 1. McKell puts the figure at an estimated 681,378 workers.
The report points out the cuts will also disproportionately impact female workers, who account for close to 55 per cent of those affected. The disparity is particularly evident in retail and will exacerbate the gender pay gap.
The report warns the changes may also impact future EBA negotiations because it “signals an economy-wide devaluation of Sunday penalty rates” and may serve to undermine future collective bargaining.
Labor hopes to neuter the cut by introducing legislation that would prevent the Fair Work Commission’s decision from taking effect.
“You say that you will not intervene because you respect the independence of the Fair Work Commission but it is absurd to suggest that it is not the role of the Parliament to rectify decisions of statutory bodies which undermine the Parliament’s intent in setting them up,” Mr Shorten said.
“It was clearly the Parliament’s intent that the award review process would not ever result in a cut to worker’s pay.”
The Coalition has previously overturned decisions of independent tribunals, Mr Shorten said, pointing to its intervention in Road Safety Remuneration Tribunal and the Country Firefighters Association.