Junk Explained: Why Proposed Changes To Penalty Rates Threaten To Leave Young People Behind

Today is International Youth Day. Let's talk about some issues.

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It’s been just a couple of weeks since Melbourne Grill’d worker Kahlani Pyrah was sacked, after demonstrating the exploitation that young people face every day in the Australian workforce, and issues surrounding fair work conditions and penalty rates are once again in the spotlight.

Last week, the Productivity Commission – an advisory group to the government on Australia’s workplace relations – published a draft blueprint for a suite of changes to existing workplace legislation.

Amongst the recommendations, bar, café, restaurant and retail workers would see a cut in their weekend penalty rates: Sunday double-time would fall in line with Saturday time-and-a-half, while a new type of ‘enterprise contract’ could see employers offering their own award conditions on a ‘take it or leave it’ basis. 

Unions and workers’ rights groups instantly cried foul over the changes, with hospitality union United Voice calling it a “two-tiered wage system” akin to “economic apartheid”. “Australia’s workplace system is based on fairness, equality, protection of the vulnerable and rewards for hard work,” said Australia Council for Trade Union Secretary Dave Oliver in a statement. “The system works, and Australians have demonstrated they want and support it.”

While the Commission’s final report won’t be submitted until November, the draft is a telling glance at what the Abbott government will likely run with in the forthcoming election. Given how reliant the hospitality and retail industries are on them, young people and student workers stand to lose the most should the proposed recommendations be taken on board.

Unpacking The Proposal: Bye-Bye Penalties

For years, Australian workers – particularly those in hospitality and retail – have relied on higher weekend rates to supplement their incomes. It’s a convention borne of the past, when weekends were designated days of rest, purpose built for hammock-lazing and church-going. If they opened up shop on weekends, employers would be ‘penalised’ by compensating a little extra per hour to their workers for sacrificing valuable time otherwise spent with family and friends.

When it comes to paying penalty rates to hospitality and retail workers, Productivity Commission chairman Peter Harris believes community expectations have changed. “Australian society expects to be able to shop, go to a pharmacy, and eat at cafes and restaurants on weekends,” Harris told the ABC.

Under the Commission’s plan, Sunday penalties for hospitality and retail workers would drop, while other industries — like emergency services — would stay untouched.

“It is outrageous to say that some people’s weekends matter more than others,” responded United Voice Assistant Secretary David McElrea in a media statement. “Penalty rates must acknowledge the importance of the weekend to the Australian way of life for all workers”. On Monday night’s Q and A, journalist Anne Summers agreed: “There is no rationale made for why this change to penalty rates should apply to certain occupations and not others.”

Regardless, the Commission argues that lowering Sunday rates would actually be a good thing for workers in these fields: it would incentivise businesses to boost their opening hours, encouraging higher staffing ratios and job opportunities.

Are Enterprise Contracts The New Work Choices?

Except for perhaps Tony Abbott, society as a whole has changed a fair bit since the ‘50s and ‘60s, and these days, working weekends is nowhere near as ‘unconventional’ as it used to be. Part of the rationale for shaving down the Sunday rates is the idea that weekends aren’t as sacred anymore – at least not for hospo and retail workers.

Yet community perceptions don’t seem to have changed quite as much as the Productivity Commission thinks. A recent Essential poll showed that 81% of Australians support higher award wages for weekend workers, while 68% were against any reduction to weekend and public holiday rates for retail and hospitality employees.

As well as shaving down Sunday rates, the Commission’s proposed ‘enterprise contracts’ could see employers do away with weekend penalties altogether. Given that they effectively allow employers to bypass union negotiation and award conditions, some have likened these new contracts to the unpopular John Howard-era Work Choices agreements, in which hospitality workers were widely considered far worse off, and many lost up to 30 percent of their wages.

The Vulnerable Cop The Brunt Yet Again

Greens employment and industrial relations spokesperson Adam Bandt responded to the proposed changes by saying his party will make penalty rates a key issue in the forthcoming election.

“Any cuts to penalty rates will be a body blow for young people across the country,” Bandt said in a media release. “With housing prices so high and wages growing so slowly, young people working in retail and hospitality depend on penalty rates to support themselves and make ends meet.”

Take Gus, 21, for example: an undergraduate student and retail worker in Melbourne’s east:

“Personally I think it’s bullshit that any employer would want to take away penalty rates,” he told me. “The weekend is a massive sales boost for my company’s revenue. There’s incentive for people to want to work those days, which [my company needs] in order to get the sales.”

“We have to force ourselves to become extremely employable, to be available as much as we can to secure as many shifts as possible, which in turn involves sacrificing a lot study and downtime,” Gus adds. “It’s especially hard for myself living out of home with multiple bills to manage, car usage and maintenance, tuition fees and of course attending lectures and tutes. Earning an income is extremely important to me, and the weekends are crucial.”

From The Employer’s Perspective

Hospitality can be a tough game in anyone’s book, particularly for small- to medium-sized operators that work within very slender profit margins.

“It’s around an average of 4% net before tax,” says Allan, 51, a restaurant owner in the Mornington region. “Labour is typically around 34 to 40 percent of our revenue. In fact it is our largest expense, so it follows that reducing weekend rates will help businesses that open on the weekends.”

The logic here is that by shaving down Sunday penalties more businesses will open on these days, boosting shifts and thus greater take-home pay for workers.

Of course, this is based on the assumption that Sunday rates actually dis-incentivise businesses from opening. But is that really the case? ACTU Secretary Oliver says there’s no economic evidence for it, while government and business leaders argue otherwise:

“One-third of restaurant and catering businesses did not trade on Sundays due to high wages,” Restaurant & Catering Association chief executive John Hart told the SMH. It’s a sentiment backed by Kate Carnell, head of the Australian Chamber of Commerce and Industry, who recently spoke to the Guardian: “The cost of opening can be absolutely prohibitive. If those costs were reduced, small-to-medium businesses could employ more of our young people.”

Unfortunately, there’s little hard evidence beyond the anecdotal that this would be true. “I think that the reality will be that people may be open but they’ll be using their existing staff and they’ll be doing additional work,” said Assistant Minister for Vocational Education Sharon Bird, on Monday’s Q and A.

“It would effect operators differently,” adds the restaurant owner I talked to, Allen, who rightly highlights the huge diversity between businesses in his industry. While some might be incentivised to open up shop, there’s no real guarantee that they will if the rates drop – and little assurance that there’ll be more shifts to go around if they do.

For Young People, This Is About A Lot More Than Penalty Rates

As we saw with Kahlani Pyrah and Grill’d, giving employers the power to decide their own award conditions can be a slippery slope to exploitation. While one-to-one contracts might appear to offer more flexibility for workers and employers, the fact is that young employees are typically not in an equal position to negotiate with bosses and superiors, particularly when national youth unemployment and underemployment remain sky high.

The cost of living has doubled in Australia over the past decade. Though executive and high-end wages match and typically exceed the arc, the same can’t be said for students and young people. As Lucas Walsh points out in The Conversation, living costs for university students in Australia are the third highest in the world: 60% of students are living below the poverty line, and almost half of our undergraduate students are living on less than a third of the national minimum wage. Consider the knock-on effects of stress, compromised study time and health.

There’s a bigger picture at play here. Penalty rates were designed for fairness, not subsistence: why is it that, surrounded by rocketing affluence in other sectors of the community, young Australians still rely on an elevated weekend rate to scrape by?

“Times are tough for young Australians,” says Australia Youth Affairs Coalition spokesperson, Leo Fieldgrass in a recent statement. “They’re likely to be the first generation with lower standards of living than their parents.”

All this dovetails in the fact that today, Wednesday August 12, is UNESCO International Youth Day, set up to celebrate young people’s involvement in policy and decision-making. Given the lack of government consideration and respect towards our nation’s young people in recent years, Fieldgrass laments that “there is currently little for young Australians to cheer”. Cutting back penalties only adds to the weight.

The responsibility for a viable livelihood for Australia’s 4.5 million young people extends well beyond the employer and what they ought or ought not be paying on the weekends. This issue is about a prosperous first-world economy, and the government at its helm, that systemically and enduringly leaves its young people behind.

Cam Hassard has been published in Spook Mag, VICE, Carryology and Geckos Tales. Some of his other stuff lives at