Cutting penalty rates would create 40,000 jobs: Research

Small businesses are supportive of new research that suggests around 40,000 extra Sunday or public holiday jobs could be created if penalty rates were reduced.

The research, which features in the a submission to the Fair Work Commission by the Restaurant and Catering Association, follows outrage in the Victorian business community last week over the state government’s decision to introduce two new public holidays, which could see businesses pay an extra $105 million in penalty rates.

Restaurant and Catering Australia (RCA), which represents more than 35,000 businesses nationally, outlined the new research to the Fair Work Commission in its submission to the review of modern awards last month.

The research, which was compiled and released by Jetty Research in May, surveyed 1000 businesses owners and managers across Australia.

It found 42% of those surveyed believe they would have to reduce staff and almost a quarter would consider reducing weekend trading if labour prices continue to rise.

However, the research estimated reducing penalty rates could lead to approximately 39,000 extra staff being employed across the country on any given Sunday or public holiday, or approximately 60,000 hours of extra work.

RCA’s submission also included the results of a benchmarking survey that showed more than 70% of businesses indicated no weekend penalty rates would be the most beneficial change for businesses if the Restaurant Industry Award was to change.

RCA argued penalty rates in the award were deterring employers from providing employment for workers on weekends and a flat rate of 125% penalty rate for Saturday and Sunday would be beneficial for the whole industry.

Council of Small Business of Australia chief executive Peter Strong told SmartCompany the reality is penalty rates are “too high” for small businesses and it was having negative flow-on effects.

Strong says it is the small, “quirky” restaurants and cafes that struggled with penalty rates.

“It’s impacting on culture and choice for the consumer,” he says.

“The more little shops that close (for the weekend), the less choice there is.”

Strong says RCA had “spent millions trying to put what is obvious in place” while the big end of town has been able to manipulate the workplace relations systems to avoid such high penalty rates.

“We totally support them (the RCA), the problem is how you’ve got to go and spend that much money trying to get obvious stuff done,” he says.

Strong also took aim at the Fair Work Commission, saying it is not “connected to reality”.

“They think penalty rates aren’t too high but will let McDonald’s pay lower rates on the weekend than small businesses,” he says.

“Of course it’s beneficial for the industry and therefore beneficial for workers.”