Michael Cooney

Michael Cooney
Monday, 3 April 2017

New report measures the impact of penalty rate cuts on workers

A new report for the Chifley Research Centre shows the high cost for typical working Australians of cutting penalty rates.

People with normal jobs in middle Australia will be significantly worse off every week if penalty rates are cut.

Cutting penalty rates: measuring the impact contains modelling which shows case studies for hours worked under the key awards which have protected penalty rates.

Some workers are set to lose nearly one sixth of their earnings.

Every case study shows workers worse off, either through lost earnings or extra hours of work to maintain their pay.

The pay cuts range from four per cent to fourteen per cent of take home pay. (Detailed tables are contained in the report.)

  • A typical part time retail worker is $78 worse off every week – or she will have to work an extra four hours every week to make it up.
  • A typical part time fast food worker is $39 worse off every week – or he will have to work an extra two hours every week.
  • A typical full time hospitality worker is $35 worse off every week – or he will have to work an extra two hours.
  • A typical part time pharmacy worker is $78 worse off every week – or she will have to work an extra four hours every week.

The report Cutting penalty rates: measuring the impact shows that many Australians will be much worse off because of penalty rate cuts. Chifley’s research also shows that our economy is being damaged by rising inequality.

This is why the conservative combination of plans to cut wages for low paid Australians with plans to cut taxes on the highest-income earners is very worrying. Labour market changes to squeeze working and middle class Australians and tax changes which reward top earners are making this even worse.

The report of the Chifley Research Centre’s Inclusive Prosperity Commission showed that rising inequality is damaging productivity by restricting skills formation; damaging participation by hurting public health; and hurting demand by squeezing wages.

View the report below:

About Michael Cooney:

Michael is a former Executive Director of the Chifley Research Centre. He was previously Speechwriter to Prime Minister the Hon Julia Gillard MP, Senior Adviser at the HR Coombs Policy Forum, Crawford School of Public Policy at the Australian National University, and was Principal Policy Advisor to Federal Labor Leaders Kim Beazley and Mark Latham.