Productivity Commission Draft Report into Workplace Relations

The Productivity Commission has released its draft report in which it has  reviewed the current workplace relations framework. The commission found that “contrary to perceptions, Australia’s labour market performance and flexibility is relatively good by global standards” but several major deficiencies need to be addressed. Chief among concerns over the report is the recommendation that hospitality, entertainment, retail, restaurant and café workers will have their Sunday penalty rates cut. Minimum pay workers can expect a moderate pay rise and modern award employees may be able to negotiate the swapping of public holidays. Furthermore, the report delivered a scathing review into the current framework and approach of the Fair Work Commission.

Wage and Penalty Rates

Commission chairman Peter Harris stressed that the changes to the Federal workplace policy were about repairing existing weaknesses rather than replacing long-standing protections for employees. Overall the commission found the system was working well, with few wage break outs, inflation not a problem, and unemployment periods tending to be shorter and, while there was more casual work, it was up only marginally since 1992.

Harris stressed that minimum wages should remain the same and commented that the Fair Work Commission’s modernisation standards had worked well overall. However, the usually double rate penalty rates for café, entertainment and retail workers on Sundays could fall to the same level as Saturdays; i.e. time and a half. Harris specifically pointed out that the rate cuts would apply only to these industries and would not include other workers, including emergency workers such as paramedics and nurses.

In justifying the recommendation, Harris argued that compensation for Sunday work was implemented previously because of traditional community views that did not accept a seven-day work week. However, demand for weekend work has increased over the past few decades as a result of the increase in women workers, shopping hours and the decrease in Sunday church goers. The commission expected employment and hours worked on Sundays to grow as a result. He argued:

Mr Harris said that for those who worked abnormal hours, night shift was more taxing than weekend work, yet “the penalty rates are set the other way around”. And toiling on Sunday was no different than being rostered on a Saturday, so the pay rates should be the same for both days.

Despite criticism from business lobby groups, the Commission has described the current system of minimum wage setting as “justified”, saying the view that existing levels are “highly prejudicial to employment is not well founded”. The report argues that minimum wage increases do not pose a risk for employment, especially against a weakening labour market.

However, in lieu of increase in pay, the Commission recommended a system whereby employees and employers could negotiate to swap public holidays for another day off that better suited the employee with full penalty rate benefits.

Unions strongly oppose the proposed changes, with Australian Council of Trade Unions secretary Dave Oliver vowing to make penalty rates an election issue. Oliver said equalising weekend penalty rates would result in a pay cut for thousands of Australians who work in restaurants, cafes and shops. He said:

Mr Abbott has said he will take penalty rate changes to the 2016 Federal Election, stating that they are stifling the jobs market, while Opposition Leader Bill Shorten has labelled the commission’s inquiry a “new front in the war against fairness”.

Fair Work Commission

The report criticised the FWC arguing that it lacked rigour in its labour market analysis and was poorly equipped as a tribunal for adjudicating on unfair dismissal claims. It criticised the FWC’s excessively onerous web of protection for employees that often held employers at fault even where employees were properly dismissed but for a small procedural mistake on the part of the employer. Harris said:

The report further highlighted that history and precedent have played a large part in the decisions of the Commission and little attention has been given to research analysis into the current dynamics of the workplace. The report argued that the FWC was structurally flawed and should be reworked to include a minimum standards division and a tribunal division. The minimum standards division would oversee changes to the minimum wage taking into account macro-economic factors as well as the impacts of potential wage decisions on key sectors including, importantly, the unemployed.

It was further argued that the FWC was often dominated by an overly legalistic approach to issues like wage regulation as opposed to analysing the merits of the matters before them.

Response

Peter Strong, chief executive of the Council of Small Business of Australia, has said that he isn’t opposed to the new wage system recommended. “It sounds wrong but we already have a multi-tier system at the moment”, he says. Russell Zimmerman, chairman of the Australian Retailers Association, says he backs the move to cut Sunday penalty rates to Saturday levels:

Dave Oliver, Trade Unions Secretary, further accused the Abbott Government of setting up the Productivity Commission inquiry as a platform to cut penalty rates and swing even more power to the employers. He argues that this is a pay cut for thousands of underpaid workers in Australia and will drastically affect the life style of young workers who are already struggling with the rise in housing prices. The Greens said they would make penalty rates a key election issue in the upcoming Federal election. Greens employment spokesman Adam Bandt said:

Union Voice criticises the report saying that it is outrageous to suggest that some people’s weekends matter more than others. They went as far as to call the recommendation ‘economic apartheid.’ 

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Workplace Relations Framework

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Sundays are similar to Saturdays for workers: Productivity Commission

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