Remuneration Debacle

On Saturday January 3rd 2015, Fairfax publications in Melbourne and Sydney published this piece, entitled, Employers step up efforts to get rid of penalty rates.  According to the article, numerous industry groups are seeking a cut to wages via cutting ‘penalty rates’, which are rates at which one’s wage increases based on the time of day or type of day they are working on.

The employers argue that the penalty rates are a disincentive for them to open stores or roster on employees on certain days.

The commercial world that employers operate in is a vastly different one to the one in which the rates were first made and some of their justification can certainly be questioned, like why should people working on a Sunday be paid more than people working on a Saturday?  Both days are weekend days and the majority of people treat them in the same way.

Perhaps though, the importance of a person’s personal time is being diminished in the face of increased competition in a global market where trade can occur across our many Earthly borders but the rules by which businesses operate differ greatly from country to country.  There are constant calls to reduce penalty rates and make wages more ‘flexible’ (usually code for giving more power to the employer), often with big businesses complaining about it being difficult to compete with Asian countries.

This is a very real factor in global competitiveness for businesses.  However, suggesting that the only lever to pull is the wages lever and the only direction downward shows a total disregard for the realities of the people’s lives who are the employees of these businesses.

Earlier in 2014, Crikey published a piece entitled Hunting for the penalty rates evidence proves a tricky task which pointed out the kind of employees likely to be affected to changes to penalty rates.

The attempt to distinguish between “real wages” and penalty rates is a furphy: a worker who loses her penalty rates will be just as out of pocket as if she had her basic wage cut; her spending will be just as reduced; the impact on those businesses that benefit from her spending exactly the same. Cutting penalty rates will cut consumer spending; one business’ gain will be another’s loss by the same amount, unless income obtained from penalty rates has some magical property that we don’t know about. Moreover, the people dependent on penalty rates tend to be low-income earners, who save little and for whom even small reductions in income can have significant impacts on their standard of living.

The arguments made for removing penalty rates are often either complex to interpret from the data, because there are so many flow on effects, or they are made anecdotally, based on assumptions about human behaviour and consumption behaviour.
It seems that businesses are going for an obvious and easy solution to the problems of global competition and reduced costs of trade.  Rather than trying to compete on quality of product or on technological innovation, there are many who would rather compete on wages.  This is effectively competing on living standards.  If someone has less money because their penalty rates have been cut then they either work more or multiple jobs – potentially hindering opportunities in areas like family and social development, personal development and career/education development.  Or they have less money.  They consume less, they buy cheaper things and go out to fewer places.

Considering this suggestion in isolation, it seems another attempt to wedge a greater rift between the haves and have-nots.  Between those who can afford certain lifestyles and those who cannot.

People’s work is being valued less by other people who want to make more money from those same people.

What does that say about how these people see their employees?


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