Union’s Penalty Rates Deal A Smoke And Mirrors Trick

THE DEAL ON PENALTY RATES announced yesterday between Business SA and the Shop Distributive and Allied Employees Association may be a rare and welcome shred of labour market flexibility, and it may even constitute a step in the right direction. But robbing Peter to pay Paul is a fraught pursuit, and this smoke and mirrors trick simply cloaks the underlying burden of wage costs to businesses in a veil of “consultation” and “consensus.”

I have been reading about the “historic” template agreement signed yesterday between the Shop Distributive and Allied Employees Association (SDAEA) and Business SA — which is said to “slash” penalty rates — and I have to wonder if I’m the only one who hasn’t been conned by what can only be described as a hoax; The Australian‘s Grace Collier tears strips from it in a complementary argument to mine, although stablemate Judith Sloan takes a gentler view of it.

The whole point to any debate over penalty rates (at least, where the poor bastards in small business lumbered with paying them is concerned) is that these archaic, obsolete relics from a bygone era as “compensation” for “unsociable hours of work” have in fact become a millstone around the figurative necks of many small and medium-sized enterprises, forcing them to restrict the times they trade, the number of staff they can hire, or both.

But this deal is simply a conjuring trick; everyone with a stake in it professes to have had “a win” — even the employers, their industry representatives, and the supposedly pro-business Liberal government — yet the only winner out of this is the union involved, which has hoodwinked the business interests concerned by a breathtaking sleight of hand.

First, the positives as I see them.

One, the abandoning of penalty rates on a Saturday is an absolute no-brainer, and this indefensible impost on businesses ought to be removed across the board: Saturday has become a day just like any other over the past few decades, and there is nothing unsociable about working on it.

Two, and similarly, the reduction of penalty rates from 100% to 50% on Sundays and from 150% to 100% on public holidays is at least a step in the right direction, reducing at face value as it does further imposts on small enterprises that — with a tiny number of exceptions, such as Christmas — simply fail to stack up against the ancient criteria still wheeled out by Labor and the unions to justify them.

The “right” — set to be enshrined as part of the agreement at hand — not to work on Sundays and/or public holidays is one I can find no fault with; after all, if people don’t want to work on given days they shouldn’t be forced to do so, although I reiterate that with a very small number of exceptions they shouldn’t have their hand out for multiples of their ordinary time earnings if they do work at those times.

And anything that helps flatten out and simplify a ridiculously complex regime of penalty allowances, loadings, and other wage components for hourly employees can only be a good thing.

But the positives are instantly neutralised with one very big negative: the 8% increase in base pay rates the agreement enshrines for its workers in return for surrendering a portion (not all, mind, just a portion) of their entitlement to be paid penalty rates at certain times, and the guaranteed 3% annual increases it includes will simply compound this.

On the one hand, this agreement takes some penalty rates away — some — from the hourly employees it will cover.

But on the other, it will mostly give them straight back in the form of a higher hourly rate.

The proof is that the template calls for the workers it covers for it to be no worse off under its terms for the agreement to be binding.

And the employers, desperate for relief from the punitive burden of paying penalty rates, will still pay out the same amount of money in wages — but broken down and accounted for a little differently.

The higher hourly rates will mean the employer effectively pays current penalty rates at any time of the day or night on any day an employee is working in their business.

What an absolute farce.

It’s unsurprising Labor and the unions are gushing over this; the SDAEA has probably uncovered an exciting new mechanism, compliant with the Fair Work Act, with which to continue to shaft small businesses whilst preserving their self-designated status as the “champions” of Australian workers.

It’s unsurprising the union, even a right-wing union like the Shoppies, would strike such a deal (despite any illusion otherwise) because it enables it to diminish a contentious area of industrial policy — penalty rates — by hiding part of it in an area of wage entitlements that it will never be held to account or challenged over; the penalty rate problem becomes smaller, more manageable and easier to fend off, whilst the unmitigated overall pressures on business are maintained.

But it is a surprise, distastefully enough, that various employer and industry bodies are hailing this as some kind of breakthrough when it is nothing of the sort; a red herring like this should have been easy to spot, and apparently it wasn’t.

And it’s just obscene that various figures in the Abbott government have seen fit to crow about this deal as “a constructive approach” and a “vindication” of its thoroughly gutless position that setting penalty rates should be left to the Fair Work Commission — which Labor in government set up as part of its sop to unions for their role in destroying the Howard government over its WorkChoices legislation.

About the only one of the key players quoted in the articles I’ve included today who has it right is Liberal Democrat Senator David Leyonhjelm, who described South Australia as an “economic basket case” and correctly observed that those who want to work on weekends had been priced out of the market by penalty rates.

And crucially, when the dust settles and the businesses affected reconcile their outgoings on labour — and find nothing has changed — this deal will not make it easier for a single new job to be created, despite the loose rhetoric being tossed around to that effect.

In the final analysis, the union has insulated the earnings of its members by permanently entrenching the cost burden of penalty rates on the affected employers under a different guise.

It can hardly be described as a reform. The parties to this silly agreement might as well have not bothered in the first place.

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2 thoughts on “Union’s Penalty Rates Deal A Smoke And Mirrors Trick

  1. I could never figure out why a part time worker, working Mon, Tue gets paid normal rates and a part time worker working same times on Sat, Sun gets paid penalty rates. The Sat and and Sun are by choice for that worker, so why pay more? In my book, they should get the same.

  2. Heads I win, tails you lose! And the people who hail this as son form of advance are so stupid they no doubt think an IQ of 50 is a pass!

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