Briefing paper

Penalty rates and employment: one year later

2 Jul 2018
Description

One year after the first stage of the reduction of penalty rates for Sunday and holiday work in several retail and hospitality industries, there is no evidence of improved job-creation performance in the affected sectors. To the contrary, employment growth in the sectors which experienced lower penalty rates has ranked among the worst of any of the 19 broad sectors for which employment data is reported by the Australian Bureau of Statistics.

The accommodation and food services (hospitality) sector recorded a rate of jobcreation in the past 12 months significantly slower than the overall Australian economy. The retail sector experienced no job growth at all.

For full-time employment, the retail sector shed 50,000 full-time jobs in the last year – a decline of 7.6 percent, the worst of any sector. The hospitality sector also recorded a decline in full-time work (2,000 lost jobs, a decline of 0.6 percent).

Hours of work patterns also deteriorated in both the retail and hospitality sectors (most dramatically in retail). Average weekly hours worked declined, the incidence of very short hours of work grew, and underemployment rose. Those trends contrast with stability in working hours patterns in the broader economy.

These weak employment results were recorded in a year when the overall rate of job creation in Australia (including full-time job creation) was relatively strong. Almost all of the sectors where penalty rates did not change created jobs (both total and full-time) faster than the retail and hospitality sectors (where penalty rates were reduced).

This relatively poor employment performance was not caused by lower penalty rates; rather, it reflects other sectoral and macroeconomic issues (including the weak growth of domestic purchasing power, which in turn reflects the very slow growth of economy-wide wages). Nevertheless, this finding certainly contradicts arguments by employer representatives that lower penalty rates would lead to both more jobs and longer hours of work.

 

Publication Details
Language: 
English
License Type: 
All Rights Reserved
Published year only: 
2018
177
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