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Penalty rate cut: unions have golden opportunity to flex their muscles Penalty rate cut: unions have golden opportunity to flex their muscles
(2 months later)
For Azlan, who works part-time in a pub and has worked in hospitality for 15 years, the prospect of a $2,000 pay cut is enough to drive him out of the industry.For Azlan, who works part-time in a pub and has worked in hospitality for 15 years, the prospect of a $2,000 pay cut is enough to drive him out of the industry.
That’s the size of his share of the cut to Sunday penalty rates ordered on Thursday by the Fair Work Commission, a name that must seem Orwellian to the hundreds of thousands of workers in the retail, fast food, hospitality and pharmacy industries.That’s the size of his share of the cut to Sunday penalty rates ordered on Thursday by the Fair Work Commission, a name that must seem Orwellian to the hundreds of thousands of workers in the retail, fast food, hospitality and pharmacy industries.
“It’s a massive kick in the teeth for me and countless workers,” he says.“It’s a massive kick in the teeth for me and countless workers,” he says.
“Some of the most vulnerable workers are told to tighten their belts and get better jobs by politicians who don’t rely on penalty rates and can fly around in helicopters if they want – it’s contemptible.”“Some of the most vulnerable workers are told to tighten their belts and get better jobs by politicians who don’t rely on penalty rates and can fly around in helicopters if they want – it’s contemptible.”
But that’s exactly what Azlan plans to do – get out of the hospitality industry before the cuts take effect, as they are phased in over a number of years from 1 July.But that’s exactly what Azlan plans to do – get out of the hospitality industry before the cuts take effect, as they are phased in over a number of years from 1 July.
Azlan works a 35-hour week in the pub, including every Sunday, but to cope with the decision he will take on more freelance work as a graphic designer and retrain, if he can.Azlan works a 35-hour week in the pub, including every Sunday, but to cope with the decision he will take on more freelance work as a graphic designer and retrain, if he can.
He counts himself lucky that he doesn’t have children to support or a mortgage, suggesting that big cuts to take-home pay could create serious problems for others.He counts himself lucky that he doesn’t have children to support or a mortgage, suggesting that big cuts to take-home pay could create serious problems for others.
The Australian Council of Trade Unions has calculated that the worst off will be casuals in the pharmacy industry, who face cuts of up to $6,000 a year.The Australian Council of Trade Unions has calculated that the worst off will be casuals in the pharmacy industry, who face cuts of up to $6,000 a year.
Azlan, a member of the hospitality union United Voice, plans to fight back. “It’s something I’ve always tried to agitate in my workplace – to get others to join the union,” he says.Azlan, a member of the hospitality union United Voice, plans to fight back. “It’s something I’ve always tried to agitate in my workplace – to get others to join the union,” he says.
“The labour movement isn’t as strong as it used to be, unfortunately. That’s what we need to fight back: we need more people joining their unions.”“The labour movement isn’t as strong as it used to be, unfortunately. That’s what we need to fight back: we need more people joining their unions.”
Tim Lyons, a research fellow at the Per Capita think-tank and former assistant secretary of the Australian Council of Trade Unions, agrees.Tim Lyons, a research fellow at the Per Capita think-tank and former assistant secretary of the Australian Council of Trade Unions, agrees.
He says the pay cut is a political issue and the government deserves to be attacked because it wanted penalty rates to be cut.He says the pay cut is a political issue and the government deserves to be attacked because it wanted penalty rates to be cut.
“But the solution is not political – it’s a workplace issue. The answer is not to send a petition to the prime minister.”“But the solution is not political – it’s a workplace issue. The answer is not to send a petition to the prime minister.”
Lyons calls the penalty rate cut “the greatest workplace organising opportunity in 20 years” because it gives unions a chance to recruit members and fight back directly against pay cuts.Lyons calls the penalty rate cut “the greatest workplace organising opportunity in 20 years” because it gives unions a chance to recruit members and fight back directly against pay cuts.
“It’s not compulsory for employers to cut pay, there’s no reason employers can’t sign a letter promising they won’t cut workers’ rates of pay on a Sunday,” he says.“It’s not compulsory for employers to cut pay, there’s no reason employers can’t sign a letter promising they won’t cut workers’ rates of pay on a Sunday,” he says.
Unions should be helping workers either negotiate enterprise agreements or simple one-page agreements committing not to implement the cut, he says.Unions should be helping workers either negotiate enterprise agreements or simple one-page agreements committing not to implement the cut, he says.
The cosmetic retailer Lush, which employs people on the retail award and common law contracts of employment, has already committed not to cut penalty rates in line with the decision.The cosmetic retailer Lush, which employs people on the retail award and common law contracts of employment, has already committed not to cut penalty rates in line with the decision.
In a statement on Thursday, Lush’s Australia and New Zealand directors Peta Granger and Mark Lincoln said that applying the Fair Work ruling was a choice and promised that their employees would not be adversely affected by the decision.In a statement on Thursday, Lush’s Australia and New Zealand directors Peta Granger and Mark Lincoln said that applying the Fair Work ruling was a choice and promised that their employees would not be adversely affected by the decision.
“We believe that those making the sacrifice to work on Saturdays, Sundays and public holidays deserve to be fairly compensated,” they said.“We believe that those making the sacrifice to work on Saturdays, Sundays and public holidays deserve to be fairly compensated,” they said.
Lyons says other employers may follow suit, in the hope of attracting and retaining quality staff.Lyons says other employers may follow suit, in the hope of attracting and retaining quality staff.
But the biggest surprise about the Fair Work Commission decision, according to him, is that it was made not just with employees in mind but also consumers.But the biggest surprise about the Fair Work Commission decision, according to him, is that it was made not just with employees in mind but also consumers.
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.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.
Cutting rates would therefore increase trading hours, and the “level and range of services” on Sunday and public holidays, the commission president Justice Iain Ross had said.Cutting rates would therefore increase trading hours, and the “level and range of services” on Sunday and public holidays, the commission president Justice Iain Ross had said.
But Lyons says: “There’s nothing in the Fair Work Act with respect to community access to services. As far as I can see, that’s clearest bit of new jurisprudence from the decision.”But Lyons says: “There’s nothing in the Fair Work Act with respect to community access to services. As far as I can see, that’s clearest bit of new jurisprudence from the decision.”
The commission also found there could be “some positive employment effects” from a penalty rate cut, although it couldn’t be certain how big.The commission also found there could be “some positive employment effects” from a penalty rate cut, although it couldn’t be certain how big.
Small business owner Kate Mizerski says she works all day on Sundays and uses “the cheapest labour I can find”.Small business owner Kate Mizerski says she works all day on Sundays and uses “the cheapest labour I can find”.
“If penalty rates are brought back in line with Saturday rates, I can afford to give the older employees shifts,” she says. “If they don’t want to work for that wage, then don’t; they’re not forced to. But small business owners are struggling too and if we go down, there’s more jobs lost.”“If penalty rates are brought back in line with Saturday rates, I can afford to give the older employees shifts,” she says. “If they don’t want to work for that wage, then don’t; they’re not forced to. But small business owners are struggling too and if we go down, there’s more jobs lost.”
But while the impact on employment is yet to be determined, retailers are already counting on the prospect of increased profit.But while the impact on employment is yet to be determined, retailers are already counting on the prospect of increased profit.
As Guardian Australia reported in November, financial analysts calculate that a decrease in penalty rates would increase the profits of big retailers or result in tiny reductions in consumer prices.As Guardian Australia reported in November, financial analysts calculate that a decrease in penalty rates would increase the profits of big retailers or result in tiny reductions in consumer prices.
According to Citi Research, a division of Citigroup, cutting Sunday penalty rates from double-time to time-and-a-half would increase earnings per share by up to 8% for Myer and JB Hi-Fi, and 5% for Wesfarmers, if retailers retained the benefits.According to Citi Research, a division of Citigroup, cutting Sunday penalty rates from double-time to time-and-a-half would increase earnings per share by up to 8% for Myer and JB Hi-Fi, and 5% for Wesfarmers, if retailers retained the benefits.
The Citi document noted that most big retailers, including Big W, Bunnings, Just Group, Kmart, Target and Myer, had expired enterprise agreements. It suggested they might be waiting in “hope that wage reform will be implemented, lowering penalty rates”.The Citi document noted that most big retailers, including Big W, Bunnings, Just Group, Kmart, Target and Myer, had expired enterprise agreements. It suggested they might be waiting in “hope that wage reform will be implemented, lowering penalty rates”.
The Fair Work Commission cut to award penalty rates has exposed another feature of the Australian industrial relations landscape – employees covered by collective enterprise agreements are not affected.The Fair Work Commission cut to award penalty rates has exposed another feature of the Australian industrial relations landscape – employees covered by collective enterprise agreements are not affected.
The chief executive of the Council of Small Business Australia, Peter Strong, says that because 80% of workers in affected sectors are employed by big businesses such as Coles, Woolworths and McDonald’s, which have enterprise agreements, they will not be directly affected by the decision.The chief executive of the Council of Small Business Australia, Peter Strong, says that because 80% of workers in affected sectors are employed by big businesses such as Coles, Woolworths and McDonald’s, which have enterprise agreements, they will not be directly affected by the decision.
Labor realised this in a major embarrassment when it chose a young Coles worker to highlight the effect of the cuts, while his pay is set by an enterprise agreement.Labor realised this in a major embarrassment when it chose a young Coles worker to highlight the effect of the cuts, while his pay is set by an enterprise agreement.
But the national secretary of the Shop Distributive and Allied Employees Association (SDA), Gerard Dwyer, tells Guardian Australia that while the decision will not immediately affect employees on an enterprise agreement, “it will flow through in their long-term wage outcomes”.But the national secretary of the Shop Distributive and Allied Employees Association (SDA), Gerard Dwyer, tells Guardian Australia that while the decision will not immediately affect employees on an enterprise agreement, “it will flow through in their long-term wage outcomes”.
While the SDA already accepts the lower 150% penalty rate on a Sunday in its agreement, Dwyer says it does so in return for higher base rates of pay and other conditions.While the SDA already accepts the lower 150% penalty rate on a Sunday in its agreement, Dwyer says it does so in return for higher base rates of pay and other conditions.
“Those take-home pay packages will be adversely affected ... it’s fair to say that pay rates are now under pressure. The outcomes we can achieve are not going to be as high as if the award rates were not cut.“Those take-home pay packages will be adversely affected ... it’s fair to say that pay rates are now under pressure. The outcomes we can achieve are not going to be as high as if the award rates were not cut.
“That’s how it will express itself at the bargaining table – the benchmark for an agreement and an overall package has been lowered.”“That’s how it will express itself at the bargaining table – the benchmark for an agreement and an overall package has been lowered.”
The National Retailers Association chief executive, Dominique Lamb, who welcomes the decision, agrees that “any change to the minimum wage would be considered in enterprise bargaining”.The National Retailers Association chief executive, Dominique Lamb, who welcomes the decision, agrees that “any change to the minimum wage would be considered in enterprise bargaining”.
“Anything that employers can use to ensure that they are in best position to trade is something that will come into their minds in negotiations, but agreements still have to leave workers better off overall so they will still be fair.”“Anything that employers can use to ensure that they are in best position to trade is something that will come into their minds in negotiations, but agreements still have to leave workers better off overall so they will still be fair.”
For Lyons, the fact workers covered by SDA agreements will be shielded from a pay cut is “very telling” and he thinks it and the United Voice union should be looking to build their membership in non-unionised sectors of the hospitality and retail sectors with the promise of such protection.For Lyons, the fact workers covered by SDA agreements will be shielded from a pay cut is “very telling” and he thinks it and the United Voice union should be looking to build their membership in non-unionised sectors of the hospitality and retail sectors with the promise of such protection.
But the more radical upstart Retail and Fast Food Workers Union (RAFFWU) takes a different view on big SDA enterprise agreements.But the more radical upstart Retail and Fast Food Workers Union (RAFFWU) takes a different view on big SDA enterprise agreements.
Its secretary, Josh Cullinan, says the agreements “sold out” workers’ penalty rates, and the landmark Coles case shows that two-thirds of workers will be better off under the award.Its secretary, Josh Cullinan, says the agreements “sold out” workers’ penalty rates, and the landmark Coles case shows that two-thirds of workers will be better off under the award.
“Our model is not particularly secret, we intend to apply to the commission to terminate the agreements of all major retail and fast food outlets.“Our model is not particularly secret, we intend to apply to the commission to terminate the agreements of all major retail and fast food outlets.
“Workers will still be better off on the award than the agreements they are currently on, but yesterday’s announcement would have a devastating effect on them by reducing their Sunday rates.”“Workers will still be better off on the award than the agreements they are currently on, but yesterday’s announcement would have a devastating effect on them by reducing their Sunday rates.”
Cullinan says that if the half a million workers now covered by large retail agreements return to the award and are better off, it will build a political constituency against the commission’s cuts.Cullinan says that if the half a million workers now covered by large retail agreements return to the award and are better off, it will build a political constituency against the commission’s cuts.
“They will be looking at these pay cuts with a different view – we’ll involve them in the process and no politician will be able to hide from these cuts.”“They will be looking at these pay cuts with a different view – we’ll involve them in the process and no politician will be able to hide from these cuts.”
Dwyer denies that the SDA sold out workers. He says companies’ wage bills overall were higher under their agreements than the award, proving workers were better off overall.Dwyer denies that the SDA sold out workers. He says companies’ wage bills overall were higher under their agreements than the award, proving workers were better off overall.
“The RAFFWU campaign to cancel enterprise agreements and revert to the award, which is now facing even more cuts, is completely illogical.”“The RAFFWU campaign to cancel enterprise agreements and revert to the award, which is now facing even more cuts, is completely illogical.”
The ACTU is planning a campaign around penalty rates. The ACTU president, Ged Kearney, says it will first demand that workers’ current rates of pay are protected and then that decisions such as Thursday’s “cannot be made in future”.The ACTU is planning a campaign around penalty rates. The ACTU president, Ged Kearney, says it will first demand that workers’ current rates of pay are protected and then that decisions such as Thursday’s “cannot be made in future”.
Labor and the Greens have developed policies to prevent a repeat of the decision. Under a bill released by the Greens on Friday, penalty rates will be frozen at the level at the start of 2017, meaning the most recent cut will never take effect.Labor and the Greens have developed policies to prevent a repeat of the decision. Under a bill released by the Greens on Friday, penalty rates will be frozen at the level at the start of 2017, meaning the most recent cut will never take effect.
“The Greens want parliament to act urgently before the FWC makes legally binding orders that will smash many of our lowest-paid and youngest workers,” the Greens industrial relations spokesman, Adam Bandt, says.“The Greens want parliament to act urgently before the FWC makes legally binding orders that will smash many of our lowest-paid and youngest workers,” the Greens industrial relations spokesman, Adam Bandt, says.
“Coffees won’t become cheaper on Sundays and there won’t be golden flowing rivers of new jobs, but many people will find it much harder to pay the rent.”“Coffees won’t become cheaper on Sundays and there won’t be golden flowing rivers of new jobs, but many people will find it much harder to pay the rent.”
Labor proposes that cuts to penalty rates should be accompanied by beneficial pay and conditions so workers are not left worse off.Labor proposes that cuts to penalty rates should be accompanied by beneficial pay and conditions so workers are not left worse off.
Kearney says the independent umpire “makes decisions based on the rules which are laid out in our laws”.Kearney says the independent umpire “makes decisions based on the rules which are laid out in our laws”.
“If it is possible for this commission, which was established to protect the rights of workers, to cut their pay, then obviously changes need to be made to those laws.”“If it is possible for this commission, which was established to protect the rights of workers, to cut their pay, then obviously changes need to be made to those laws.”
She warns that if the system doesn’t change, workers in disability and homeless support services, emergency service workers and nurses “could be next”.She warns that if the system doesn’t change, workers in disability and homeless support services, emergency service workers and nurses “could be next”.
“These are all sectors that rely heavily on penalty rates.”“These are all sectors that rely heavily on penalty rates.”
The employment minister, Michaelia Cash, has rejected the union’s contention as a “scare campaign”, noting that the commission’s decision affects only four of 122 modern awards. The employment minister, Michaelia Cash, has rejected the union’s contention as a “scare campaign”, noting that the commission’s decision affects only six of 122 modern awards.
According to the commission, retail and hospitality industries have a number of “distinguishing characteristics”, including that consumers expect those services on weekends.According to the commission, retail and hospitality industries have a number of “distinguishing characteristics”, including that consumers expect those services on weekends.
But Lyons warns that “one of the most worrying aspects of the decision” is that if one of the objectives is to make services available out of hours, “that could apply to anyone”.But Lyons warns that “one of the most worrying aspects of the decision” is that if one of the objectives is to make services available out of hours, “that could apply to anyone”.
One worker who fears he will be next is Tomas Hamilton. He works in a club and faces cuts only to public holiday rates, because clubs have been spared from Sunday rate cuts.One worker who fears he will be next is Tomas Hamilton. He works in a club and faces cuts only to public holiday rates, because clubs have been spared from Sunday rate cuts.
The cut of $60 or $70 every public holiday means he will have “less disposable income and I don’t have much in the first place”, he says.The cut of $60 or $70 every public holiday means he will have “less disposable income and I don’t have much in the first place”, he says.
“But the reason people are panicking is that they know we’ll be next.“But the reason people are panicking is that they know we’ll be next.
“It’s only a matter of time before they come for our Sunday rates and then possibly Saturday rates will be next.”“It’s only a matter of time before they come for our Sunday rates and then possibly Saturday rates will be next.”
Meanwhile, there are hundreds of thousands of workers in Azlan’s position weighing their options – ranging from make do with less, move into a different industry, or organise to demand that employers don’t pass on the cuts.Meanwhile, there are hundreds of thousands of workers in Azlan’s position weighing their options – ranging from make do with less, move into a different industry, or organise to demand that employers don’t pass on the cuts.
The Turnbull government insists that the ruling of the independent umpire must be respected, and the crossbench, so far, shows no desire to interfere with it either.The Turnbull government insists that the ruling of the independent umpire must be respected, and the crossbench, so far, shows no desire to interfere with it either.
But the size and scale of the cuts may prove a powerful motivator for working people to get more involved in the politics of parliament and the workplace.But the size and scale of the cuts may prove a powerful motivator for working people to get more involved in the politics of parliament and the workplace.