Australia

Penalty rate cuts did not create jobs: Labor

Sweeping cuts to penalty rates have failed to deliver the jobs boost promised three years ago when workers were told to accept lower pay for the good of the economy.

A new analysis finds the lower rates did not lead to significant new jobs in hospitality and retail, the two sectors where workers lost their old rates for working Sundays and public holidays.

Today, an estimated one-third of the workforce work part-time.

Today, an estimated one-third of the workforce work part-time.

Labor will use its findings to push for a “decent wage” for millions of workers in the wake of the coronavirus crisis, just as the Morrison government considers workplace reforms to fix “rigidities” in the rules.

The Coalition accepted the cuts to penalty rates when the Fair Work Commission announced them in early 2017 amid claims that employers would use the savings to hire more staff or keep workers on for more hours.

Labor innovation spokeswoman Clare O’Neil said the new analysis of figures from the Australian Bureau of Statistics refuted those claims.

“Wages were cut for no economic benefit. And the government stood back and did absolutely nothing,” she said.

“While jobs and hours worked across the economy grew significantly over the relevant period, the number of jobs and hours affected by the penalty rate cuts actually fell or were flat.”

Australia had 732,000 sales assistants and salespersons in May 2017, before the penalty rate cuts began, but had only 694,000 in November last year.

While the number climbed to 710,000 in February this year, before the coronavirus crisis forced huge job losses, it remained below the level before the penalty rate changes.

The number of fast-food cooks fell from 48,400 before the cuts to 47,700 last November, Labor said in its analysis of the official figures, but the results across job categories varied widely and some rose or fell at different points in time.

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Labor said there were 522,000 people employed as managers in hospitality, retail and services but this had fallen to 518,000 by February this year.

Ms O’Neil, whose portfolio includes the future of work, said the results meant Labor and the unions would push for better pay rather than accept claims that lower rates would create jobs.

“We are currently on track for the future of work in Australia to be some of our lowest paid workers getting paid even less for absolutely no benefit in terms of more jobs and additional shifts,” she said.

“Parts of the country are racked with under-employment, and insecure work is like a cancer, eating away at the dignity of Australians.

“We can and should seek to do better by our workers on the other side of this crisis.”

ANZ senior economist Catherine Birch said retail trade employment rose by 2.5 per cent from February 2017 to February 2020, while accommodation and food services employment rose by 8.6 per cent. This compared with total employment growth of 7.9 per cent.

Ms Birch cautioned against assuming causality between the penalty rate changes and the jobs data.

AMP Capital senior economist Diana Mousina said there were big differences in outcomes, with a strong rise in part-time jobs in accommodation and food services since late 2017.

“Over the year to November, annual growth in part-time jobs in accommodation and food was up by 3.5 per cent,” Ms Mousina said.

“And in February it was 9.1 per cent higher over the year.”

“Full-time jobs growth has been worse: it was down by 4.6 per cent in the sector over the year to February and only 1 per cent higher over the year to November.”

Ms Mousina said the retail sector had seen disappointing jobs growth in both part-time and full-time roles but this was shaped in part by the broader struggles of the retail sector and the structural decline in department stores.

“Before COVID the consumer backdrop was already weak in Australia – low wages growth, high household debt and poor confidence, which doesn’t bode well for the retail sector,” she said.

Full-time jobs in retail were down by 3.7 per cent over the year to February and part-time jobs were worse – they were down by 1.2 per cent over the same period.

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