Labor’s plans to restore penalty rates will force businesses to close, Retail Association warns

The retail sector’s peak body has warned that if Bill Shorten wins the election, one of his policies will reduce jobs and force small businesses to close.

The retail sector’s peak body warns the Labor Party’s promise to restore penalty rates will force small business owners to cut staff and drive many out of business.

Opposition leader Bill Shorten said last month he will scrap the industrial relations changes in the first 100 days in office if he claims victory at the election, and legislate to prevent the decision from being overturned.

“Hundreds of thousands have had their penalty rates cut arbitrarily. They didn’t get an increase in the pay Monday to Friday; they just got a cut,” he told reporters at the time.

“We believe that the lowest paid workers in Australia, when they give up their time away from their family, when they serve and make sure the rest of us are having a great time, you shouldn’t have to pay for it with a cut to your own pay.”

The Australian Retail Association chief executive Russell Zimmerman says the sector is already on its knees, struggling to keep up with online competitors as profit margins continue to be squeezed.

Napoleon Perdis makeup stores were one of the Aussie businesses that went into receivership this year. Picture: Richard Waugh/AAP

And the higher cost of business if wages are increased will force many into administration.

“What you’re going to see, especially in the small to medium enterprise sector, if things like penalty rates get over turned, is retailers will seek to reduce hours of their staff and there will be closures,” Mr Zimmerman told news.com.au.

“There certainly will be (small business) retailers that close their doors.”

The flurry of retailers going out of business last year, combined with the closures of chains Ed Harry and Napoleon Perdis this year, illustrates how frail the sector is, warns Mr Zimmerman.

He says retail employs more than 10 per cent of the working population and any further closures would be a “sad indictment” on the country’s state of business.

“We are an important part of the fabric of Australia’s economy and if we start to see retailers having to close their doors because of higher penalty rates … that would be a major shame for the industry but an even bigger shame for the economy.”

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Brendan O'Connor says the Liberal Party’s cutting of penalty rates didn’t work.

Shadow minister for employment and workplace relations Brendan O’Connor told news.com.au the Coalition Government’s assurance that cuts to penalty rates would create more jobs did not eventuate.

“The Council of Small Business recently confirmed that cutting penalty rates has not led to jobs growth, just real cuts to workers’ wages,” he said.

Australian Council of Trade Unions secretary Sally McManus called the changes to penalty rates an “own goal” and reinforced the notion that no jobs were created as a result.

“Instead, money was taken from 700,000 low-paid workers who have less to spend in retail shops,” she said.

“It is not surprising retail sales have slowed. If low paid workers get a pay cut, so does small and medium business.

“Australians need a pay rise. These workers could not afford and did not deserve these pay cuts, only a change of government will fix it.”

Aussie retailers expect a change of government and they’re not happy about it.

BUSINESSES JUST WANT POLITICAL STABILITY

The continual music chairs at The Lodge as a result of prime ministerial changes has been bad for consumer spending and confidence, according to Barry Urquhart, retail analyst and managing director of Marketing Focus.

He said the sector’s fears transcend the looming changes to penalty rates, and most businesses in the industry are longing for political continuity and stability.

Market Focus recently conducted a survey among small businesses which found 77 per cent expect to be directly and adversely impacted by the results of next week’s Federal Election.

And 81 per cent of the study anticipate Bill Shorten will eclipse Scott Morrison as Prime Minister.

“Small business owners clearly exhibited concerns about possible and probable consequences to a change of government, policies and priorities,” Mr Urquhart said.

“Forget about the outcome of the election, it’s just they’re having it and it’s a distraction that we don’t need to have.”

As well as weakened consumer confidence, Mr Urquhart said the sector was sensitive to expenditure patterns, competition and operating costs.

“A lot of small business people indicated that they weren’t actively engaged in politics, politics didn’t have a large upside for them,” he told news.com.au.

“They didn’t think that lobbying politicians was going to offer a lot of green shoots for them, it’s kind of a tolerance and they want it minimised and stabilised so they can just get on with business.”

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