According to the ABS, in 2013/14 there were almost a quarter of a million businesses that stopped trading. With soaring commercial rents, increased competition and the looming threat of digital disruption, the average business operator has a lot of variables to juggle to make their venture a success.
Yet the one issue that always seems to get the most attention from industry lobbyists is penalty rates – as if it’s some magical panacea for all that ails the business community.
Kate Carnell last month, for example, was writing on this very site calling for penalty rate reform in the context of innovation and start up flexibility.
We are always excited to talk innovation – unions have an obvious vested interest in helping to create new business opportunities that deliver increased employment opportunities – but is that really the limit of this argument? Can’t we stretch our imaginations for innovation past penalty rates? I think we can and we should.
Furthermore workers are already increasingly flexible and productive.
Business can operate at any time on any day of the year and workers are willing and able to work for them. Our system is not “stuck in an old paradigm”, nor is it limiting employment opportunities and hampering business.
The ABS data on business numbers show the Accommodation and Food Services sector had the highest business entry rate in 2013-14 (latest figures available) with 15,615 new entries.
The NAB Business Conditions Index remains at +10 points in the month of November, the fourth consecutive month of conditions at this level which is well above its long-term average (+5 points). While the ANZ’s monthly Business Outlook report says business confidence has risen to six month high.
New business entries in a sector that is typically most exposed to penalty rates is high, and new jobs are being created a rapid rate. Business is enjoying positive conditions and is acting accordingly, without any additional legislative help.
On top of this, labour productivity increased by 1.3% over the year to June 2015 – this follows on from a 2% increase the year before and represents a new 25 year high water mark for worker output.
Yet, despite the 40% boost to productivity over this time, worker’s pay continues to lag, with the latest ABS figures in September showing wages growing at the slowest rate since 1998.
Our workplace relations system seems to be doing just fine. The problem I suspect people like Kate really have with it is that it ensures that workers are paid more than some employers would like to pay them.
And this is what Kate really means by “modernising workplace relations”: cost cutting.
Yes business need to make money, and cutting costs is a legitimate, ongoing endeavour for every commercial enterprise. But reflexively going after workers’ wages whenever business conditions are sub-optimal is hardly innovation.
As Kate notes, penalty rates are “historic” – they have been around for a long time and are a settled aspect of our employment system. All business owners know they exist and all good business owners – particularly those starting up – know to factor them into their business plan along with the other unavoidable costs like rent, stock, tax and depreciation etc.
All workers should be fairly paid for their labour, particularly those who work on Saturday, Sunday or late at night. These workers are operating outside the normal pattern of employment in this country - no matter how hard the Australian Chamber of Commerce and Industry wishes it wasn’t.
Kate says, “There is little doubt that penalty rates will remain common in employment contracts as employers seek incentives for staff to work weekends and public holidays.” But she also argues that penalty rates are “out of step with contemporary attitudes” and that a majority of people have no problem or only a minor problem working on a weekend.
So why would employers possibly need to offer staff incentives to do so?
The unavoidable reality is that we are still a Monday to Friday society. Over the past 15 years, the percentage of people working only Monday to Friday has dropped by just 1%, from 70% to 69%.
When the AFL or NRL grand final are played on Tuesday, Parliament sits on a Saturday and investors can trade live on the ASX over Sunday brunch, then maybe this argument will have a bit more weight.
It’s also misleading to conflate star-ups with hospitality – two business models that couldn’t be more extreme – to make a case for flexibility.
Workers in start-ups are typically highly skilled, creative technology experts who command relatively high salaries and also expect significant additional benefits from their employers as well.
In return they work long hours under considerable pressure and are often left high and dry when the company they are working for collapses as so many start-ups are prone to do.
Start-up workers are much like early angel investors – they see their contribution as a high risk/reward investment that is in many ways a calculated gamble. You only have to glance at the list of early Facebook staff members who became instant millionaires when the company floated in 2012 to see the payoff these workers are hoping to receive.
It’s a completely different arrangement to your typical 20 year old barista putting themselves through university or 35 year old part time customer service assistant trying to make ends meet. They just want a steady income that fairly recognises their work and the additional contribution they make by working on a weekend.
So let’s have an honest conversation about penalty rates. But let’s also have an honest conversation about the realities of flexibility and innovation in 21st century Australian and how technological and other advancements have to work for all of us, not just who manage to harness a unicorn.
About the author: Gerardine (Ged) Kearney commenced as ACTU President on 1 July 2010, and is the third woman to hold the position following the departure of Sharan Burrow to the Brussels-based position of General Secretary of the International Trade Union Confederation. You can follow her on Twitter @ https://twitter.com/GedKACTU
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