IPA Research Exposes Selfish Union Campaign On Penalty Rates

A new report released today by the free market think tank the Institute of Public Affairs: Penalising work, a historical account of penalty roles in Australia, examines the history of penalty rates in Australia and the current Fair Work Commission (FWC) decision to reduce penalty rates for some sectors of the workforce.

The second major report of the IPA’s Dignity of Work program authored by IPA Legal Fellow Aaron Lane and IPA Research Fellow Gideon Rozner, finds that the main beneficiaries of the reduction of penalty rates are award-reliant employers. Small businesses in the retail and hospitality industries are more reliant on the award system than their larger competitors, and compared to other industries.

IPA Research Fellow Gideon Rozner said “Small businesses will be hammered by any overturn of the FWC decision. Big business are able to organise special deals with big unions.”

“This is a case of big unions, big business and big government special interests having no regard for hard working small business owners.”

“The unions claim is that the decision is unfair. I would ask how is it fair that a small bed and breakfast must pay their staff $10 an hour more than a 5-star hotel? How is it fair that a family chicken shop must pay $8 an hour more than KFC? And how is it fair that a family greengrocer must pay $5 an hour more than Woolworths?”

“The ACTU’s political campaign against the Commission’s decision has been disingenuous. The ACTU have been taking figures that are estimate rates for all weekend work across awards, EBA’ s and individual contracts, and imply that this total amount is under threat.”

“The ACTU’s methodological errors are obvious in that the scope of employment considered is far beyond the modern award system considered in the four-yearly reviews, and the implication that penalty rates would be reduced to zero is without any proper foundation.”

“The Union Movement have failed to model the positive impact on working hours and employment that the Commission explicitly based its decision on. They now argue that the FWC be only allowed to increase penalty rates, a position unsurprisingly endorsed by the Australian Labor Party, which would turn it into a dictatorial quango.”

“This is a selfish, irresponsible position by the union movement and the Labor Party that wilfully dismisses the challenges of the 700,000 Australian’s currently looking for work,” Mr Rozner said.

IPA Legal Fellow Aaron Lane added, “The recent minimum wage increase will limit the negative effects on employees facing lower take-home pay due to reduced penalty rates; the union movements campaign is disingenuous and dishonest.”

“The only way to remove distortions in the market is to have penalty rates being a binding arrangement between an employee and employer.”

“An ideal workplace relations system should provide that penalty rates are a legal possibility, but they should not be mandatory. Mandatory rates have the effect of penalising work, even if it is not the objective. ”

“We need to look at solutions to level the playing field for small business, like fast tracing the EBA process by allowing new businesses to adopt an existing EBA from within the same industry as a pro-forma for their own greenfields agreement.”

“Although the current system of an independent commission is certainly better than misguided proposals to enshrine penalty rates in legislation.”

“Mandated penalty rates have displaced individual decision-making, while restricting choice, opportunity, and the chance for particularly younger unskilled people to enjoy earned success and the dignity of work,” said Mr Lane.

Download media release here

To read the full report, click here.

For media and comment: Evan Mulholland, Media and Communications Manager, on 0405 140 780, or at [email protected]