Pay drop for thousands of workers as Sunday penalty rate cuts kick in


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With hundreds of thousands of employees to feel the pinch, we take a look at the impact on employees and businesses

Hundreds of thousands of Australia’s lowest paid workers will begin to lose penalty rates on Sunday, while Labor and the unions intensify their efforts to have the decision overturned.

The Fair Work Commission ruled in February that Sunday and public holiday penalty rates would gradually be reduced for retail, pharmacy, fast food and hospitality awards.

Unions estimate the cut will hurt almost 700,000 workers.

So what does the decision mean for Australian workers? How will it affect the industries involved? And what is being done to reverse it?

Guardian Australia has spoken to one woman affected by the cuts, and attempts to address the questions many workers across Australia will have about the decision.

Selina Young, a hospitality worker in Queensland, wants to start a young family. She’s working two jobs, one in a pub and another in a club, so she can scrape together the money for in-vitro fertilisation.

She works most weekends, and is heavily reliant on penalty rates to make ends meet.

“I know how hard it is now, so I can only imagine how hard it is if it gets any worse,” Young says.

“That’s exactly why I do two jobs, because there’s no other way for me to survive.”

Her colleagues are in the same position, and are concerned about what the cuts will mean.

“We’re all in the same boat … we don’t choose to spend our weekends away from family and friends for nothing.”

Young, a member of the hospitality union United Voice, has a message for the government and the commission.

“I’d like them to try it for a week and see if they could survive, and not spend any time with your family and do it for less money than you’re doing it for now,” she says.

Who will be affected by the decision?

Aside from Selina Young, the decision to cut penalty rates will affect hundreds of thousands of workers in the retail, pharmacy, fast food and hospitality industries. It deals with workers on the following modern awards:

• Fast Food Industry Award 2010 (the Fast Food Award)
• General Retail Industry Award 2010 (the Retail Award)
• Hospitality Industry (General) Award 2010 (the Hospitality Award)
• Pharmacy Industry Award 2010 (the Pharmacy Award)
• Full-time and part-time workers will be hit, as will casuals, although not quite as severely.

Workers in restaurants and clubs will not be subject to cuts at this stage, but may be in the future.

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The Council of Small Business Australia believes 80% of workers in affected sectors are employed by big businesses such as Coles, Woolworths and McDonald’s, which have enterprise agreements, and will not be directly affected by the decision.

This was an embarrassing realisation for Laborafter it chose a young Coles worker to highlight the effects of the cuts, while his pay was set by an enterprise agreement.

But unions say the cuts will eventually flow through to worsened conditions.

How much do they stand to lose in dollar terms?

The commission’s decision is complex and affects different industries and employment categories in varying ways.

A retail worker on an hourly rate of $19.44 will be $77 worse off after working an eight-hour Sunday shift.

The ACTU estimates a reduction of $6,000 in take-home pay a year for workers. That’s a significant amount for Australia’s lowest paid groups, although that figure is disputed by small business groups.

The cuts are not quite as severe for casual workers.

The cuts to public holiday rates are effective from today, but the Sunday rates will be gradually reduced over two to five years.

This chart illustrates how the cuts will be phased in.

Why was the decision made?

The Fair Work Commission justified the cuts on the grounds they would help boost employment in the relevant industries.

The commission was persuaded by evidence from business owners that the current level of Sunday rates had led them to restrict trading hours, reduce staff levels and curtail the services provided.

Justice Iain Ross, president of the commission, said it had decided to cut Sunday and public holiday rates because they were not a “fair and relevant” safety net.

He acknowledged the cuts to Sunday rates would “inevitably cause some hardship to the employees affected”, and promised transitional arrangements would mitigate that.

How does the public feel about cutting penalty rates?

The Guardian Essential poll asked voters in March how they felt about the decision to cut Sunday penalty rates and most (56%) disapproved. Only 32% supported the decision and 12% were undecided. The polling showed a clear split along partisan lines, with Liberal voters much more likely to support the cut. Only 24% of people believed the cut would result in businesses employing more workers, while 57% of those surveyed said they believed the most likely result of the change would be bigger profits for business, not more jobs in retail and hospitality.

Is there any chance they will be overturned?

Bill Shorten has pledged to legislate to restore the existing Sunday penalty rates should Labor win the next federal election. Shorten told the Australian Council of Trade Union’s 90th anniversary dinner that a Labor government would pass legislation to reverse the cuts, but said that forcing employers to pay back workers for the lost penalty rates was not an option.

Unions, including United Voice and the SDA, have also launched legal action in the federal court aimed at overturning the decision by the Fair Work Commission.

What happens from here?

The commission is yet to decide on penalty rates for clubs. Those apart, its decision will start taking effect from today.

But, as Guardian Australia’s Paul Karp wrote in February, the decision is likely to galvanise the left. Labor is already campaigning hard on penalty rates, and the unions are mobilising their members in opposition to the changes. Expect a tough legal and public campaign.

Online Source: The Guardian

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