'Meltdown': Labor's triple wage hit for retailers

David Marin-Guzman
Apr 29, 2019
AFR
Business is bracing for an unprecedented rise in the cost of weekend work if Bill Shorten is elected, as wages are expected to rise by up to 21 per cent after July 1, if Labor proceeds with its promise to increase penalty rates.
New analysis from the Australian Retailers Association shows Labor’s pledge to reverse cuts to Sunday penalty rates within the first 100 days would mean employers would suffer a triple wage hit when combined with minimum wage increases and further rises in award rates for evenings and Saturdays in the retail industry.
Employer groups said the total increase would be even bigger than the increases in rates from transitioning to the national award system from state awards a decade ago.
Although the Fair Work Commission phased in cuts to Sunday and public holiday rates over four years to ease the effect on employees, a spokesman for shadow employment minister Brendan O’Connor confirmed Labor’s reversal would be in “a single hit”.
Australian Retailers Association executive director Russell Zimmerman says the cost to business from multiple wage rises this year will be “astronomical”. Arsineh Houspian
Russell Zimmerman, executive director of the Australian Retailers Association, said the size of the increases over such a short space of time risked employers cutting jobs and would “certainly mean retailers will look at the number of hours they employ people”.
“It’ll send us into meltdown,” he said. “Industry won’t know where we are. We’ll be changing rates left, right and centre. The cost to business will be astronomical.”
Shorten ‘dictating to business’
ARA calculates Labor’s increases to penalty rates, on the back of a “conservative” 3 per cent estimated increase in the minimum wage on July 1, would see Sunday wages rise by 21 per cent for permanent workers and 14 per cent for casuals.
With Fair Work’s recent decision to lift Saturday casual rates under the retail award to 145 per cent from October 1, the average cost to employ workers on weekends is predicted to climb by 9.5 per cent for casuals and 14.6 per cent for permanents.
The estimates are based on the lowest classification rate for retail and a 7.6-hour day on weekends. They only account for the retail sector, which received the biggest cuts in Sunday rates from 200 per cent to 150 per cent by 2020, and do not include other sectors affected by the cuts such as fast food, hospitality and pharmacy businesses.
Award-covered workers have already seen record increases of 3.5 per cent and 3.3 per cent over the past two years, well above wage growth in the broader economy of 2.3 per cent, and Labor will urge the commission to award a “substantial” increase this year.
The new increases would come at a time when major retailers, such as Toys R Us, Maggie T and Napoleon Perdis, have collapsed or been forced to close stores while others such as Lush and Super Retail Group have mistakenly underpaid workers.
In an interview with The Australian Financial Review, Mr Shorten promised to work with business if elected and to hold a summit on wages and the economy with employers, unions and other stakeholders within the first 100 days of office.
But chief executives and business groups are sceptical of Mr Shorten’s pledge given signs that Labor is seeking to rush through its penalty rates reversal before July 1.
“If Bill Shorten rammed through the penalty rate increases through Parliament in June it will really show Labor isn’t interested in partnering in business but dictating to business what he wants or what the ACTU wants,” Mr Zimmerman said.
Australian Industry Group CEO Innes Willox said “consultation with business needs to take place over a reasonable timeframe and there needs to be a preparedness to modify proposals to address clearly identified problems and issues for employers”.
Employment law professor Andrew Stewart says Labor rushing through the reversal of penalty rate cuts suits it politically. James Brickwood
‘Political purposes’
Labour law expert and University of Adelaide professor, Andrew Stewart, said business was “raising reasonable concerns”.
He said Labor would encounter many complications in legislating to reverse a decision by the independent umpire, with changes required for several award rates and to ensure business is not liable for backpay, and that was before any additional demands from crossbenchers.
“If Labor is going to consult over the legislation, it will have to do so in a tearing hurry and that can often be a recipe for uncertainty and mistakes,” he said.
“It suits Labor for political purposes to put a great deal of priority on this change because they feel it’s working well in their favour. But the practicality of legislating their policy with that degree of haste is another matter. I do think it would be better to get the legislation right rather than rush it through.”
‘No credibility’: ACTU
Opposition employment spokesman Mr O’Connor downplayed employers’ claims of job cuts.
“At the time of the decision to cut penalty rates, employer bodies and the Liberals claimed this would create more jobs and increase hours for workers, which hasn’t eventuated,” he said.
“Just last week the Council of Small Business confirmed that cutting penalty rates has not led to jobs growth, just real cuts to workers’ wages.”
Australian Council of Trade Unions secretary Sally McManus said ARA, which is seeking a 1.8 per cent increase in the minimum wage this year, had no interest in improving the living conditions of low-paid workers.
“They campaigned for penalty rate cuts on the false claim that the money taken from the wages of working people would be used to create new jobs. Instead they have taken it as profit. They have no credibility.”