Penalty rates: Day of rest just like the rest

Weekend penalty rates depress labour demand, push up prices and embody an outmoded view that weekends are “special”.

Myer chief executive Richard Umbers told the ­Beyond the Boardroom event hosted by The Australian recently of the need for ‘flexibility’ to meet ‘changing societal and behavioural attitudes’. Picture: Aaron Francis

Weekend penalty rates depress labour demand, push up con­sumer prices and embody an outmoded view that weekends are “special”, particularly among the young, evidence before the Fair Work Commission has found.

Research by Deloitte Access Economics, submitted to the commission’s four-yearly review of penalty rates, concluded penalty rate cuts “could create more employment opportunities” for weekend workers and the unemployed, and finds most workers have “no major objection” to shifts on Saturday or Sunday.

“Higher penalty rates on Sunday rest on the assumption that working on Sunday is more disruptive than working on Saturday,” the report, commissioned by the Australian Retailers ­Association, the Australian ­Hotels Association and other ­industry bodies, says.

“Our survey addresses this view directly by asking weekend workers which day is viewed as more important to keep mostly free from work. Our results show that a majority of respondents viewed both days as equally ­important.”

The paper — The modern face of weekend work: survey results and analysis — underscores the Productivity Commission’s draft report on workplace relations this week, which recommended the Fair Work Commission align Saturday and Sunday award rates for non-essential workers.

The Productivity Commission further advocated the use of flexible agreements for small businesses, which would create more scope for cutting penalties.

While the report finds “only limited special significance ­assigned to working Sundays”, employers tend to bring on fewer staff on weekends — particularly Sundays — owing to penalty rates. This is “contrary to prior claims to the FWC that weekend labour demand is a fixed function of employer size”, the report ­explains, adding that half of the 2000 respondents report lower staffing on Sunday.

Workers were asked about the importance of socialising, ­religious observance and work-life balance among other weekend activities, with 55 per cent responding that they viewed no difference between Saturday and Sunday. And the results were starker among the young, with a mere 19 per cent of under-35s nominating Sunday as more ­important than Saturday.

“This suggests that any special importance associated with Sunday is currently associated pri­marily with older generations and hence it may decline with time,” the report concludes.

Part-time and casual workers were even less “troubled” by weekend work than full-time workers, with “narrow majorities reporting no problems at all in relation to both Saturday and Sunday”.

The findings also support calls from retailers to bring more flexibility to staffing.

Last week, Myer chief executive Richard Umbers told the ­Beyond the Boardroom event hosted by The Australian of the need for “flexibility” to meet “changing societal and behavioural attitudes of the customer … shopping at different times of the week”. “They’re now shopping quite late into the evenings, they’re now shopping at weekends and on Sunday,” he said. “And in a retailer that has decades and decades of history, the allocation and the way that the hours have been spread across the spectrum of the week has meant that at some of those key times, we haven’t got the ­labour that we’re required to have or that we need to have in order to bring the service that our customer is demanding.

“What it’s about at its core is about introducing a level of flexibility that allows us to make sure that we’re there for the customer when the customer is in our store and looking for service from us. We have to change the … employment model that we have as traditional retailers.”

Mr Umbers also said younger workers were also “making demands on employers that they have flexible work regimes”.

The paper submitted to the FWC — also backed by the Pharmacy Guild of Australia, the ­National Retail Association, the Australian Chamber of Commerce and Industry and the Queensland Tourism Industry Council — says lower costs to employers from penalty rate cuts would be passed on to customers.

“Reductions in penalty rates in competitive industries like retail and hospitality will tend, in the medium term, to reduce both ­employers’ cost base and also ­prices charged to consumers, both during the week and on weekends,” it says.

“Consumers would be expected to respond to any lowering of ­prices by increasing their demand for weekend services, which would be expected to increase employment.”

And higher employment would also follow, “since, with penalty rates, weekend opening hours are shorter and workers work harder on weekends in general, then it follows that removing or reducing penalty rates may provide a real opportunity for additional weekend employment”.

Stephen Ferguson, chief executive of the AHA, said the report “shows very clearly that weekends are not what they used to be when penalty rates came in 50 years ago”. “It states categorically that ­employment would be created if the punitive weekend penalty rates situation was addressed,” Mr Ferguson said.