Scrutinising the argument for reducing penalty rates
The issue of weekend penalty rates has been an important area of contention in Australian industrial relations in recent times, with employers seeking reductions in penalty rates or their elimination altogether. In its recent review of Modern Awards, the Fair Work Commission decided to reduce Sunday...
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Published in | Journal of industrial relations Vol. 59; no. 5; pp. 652 - 669 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
London, England
SAGE Publications
01.11.2017
SAGE PUBLICATIONS, INC |
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Abstract | The issue of weekend penalty rates has been an important area of contention in Australian industrial relations in recent times, with employers seeking reductions in penalty rates or their elimination altogether. In its recent review of Modern Awards, the Fair Work Commission decided to reduce Sunday penalty rates in a number of awards. The decision was in part informed by a recent review by the Productivity Commission, which had gone so far as to recommend that penalty rates on Sundays be made equivalent to Saturdays. In this article, we examine two of the main justifications for reductions in Sunday penalty rates. We begin by examining the question of whether Sundays are still ‘special’ in a sense likely to warrant penalty rates additional to those on a Saturday. We find that Sundays remain the least preferred day to work, are most valued by employees, and occupy a particular role in time shared with family. We also examine the key claim by the Productivity Commission – accepted by the Fair Work Commission – that a reduction in penalty rates would necessarily result in increased employment in the industries considered. We find that there is little direct empirical evidence for this, and that minimum wage studies have been largely unable to find a net employment effect. The relationship among wages, policy and unemployment is complex in a way that defies simple predictions. There is a need for more direct evidence of the effects of penalty rates on employment. |
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AbstractList | The issue of weekend penalty rates has been an important area of contention in Australian industrial relations in recent times, with employers seeking reductions in penalty rates or their elimination altogether. In its recent review of Modern Awards, the Fair Work Commission decided to reduce Sunday penalty rates in a number of awards. The decision was in part informed by a recent review by the Productivity Commission, which had gone so far as to recommend that penalty rates on Sundays be made equivalent to Saturdays. In this article, we examine two of the main justifications for reductions in Sunday penalty rates. We begin by examining the question of whether Sundays are still ‘special’ in a sense likely to warrant penalty rates additional to those on a Saturday. We find that Sundays remain the least preferred day to work, are most valued by employees, and occupy a particular role in time shared with family. We also examine the key claim by the Productivity Commission – accepted by the Fair Work Commission – that a reduction in penalty rates would necessarily result in increased employment in the industries considered. We find that there is little direct empirical evidence for this, and that minimum wage studies have been largely unable to find a net employment effect. The relationship among wages, policy and unemployment is complex in a way that defies simple predictions. There is a need for more direct evidence of the effects of penalty rates on employment. |
Author | McIvor, Joseph Markey, Raymond |
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Cites_doi | 10.1093/cpe/bzp005 10.1111/j.1467-8543.2009.00723.x 10.1177/00197939140670S307 10.1111/j.1467-8543.2010.00799.x 10.3109/07420528.2011.565896 10.1016/j.jebo.2012.03.005 10.1177/0022185614560068 10.1177/0959680109355307 10.1590/S0034-89102004000700004 10.1111/jomf.12127 10.1016/j.jce.2008.10.001 10.1177/1035304616647694 10.1111/j.1468-232X.2009.00579.x 10.1257/app.3.1.129 10.1016/j.labeco.2008.12.007 10.1111/bjir.12086 10.38024/arpe.100 10.1002/wow3.26 |
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References | Doucouliagos, Stanley 2009; 47 Avdagic 2015; 1 Neumark, Salas, Wascher 2014; 67 Lee, Suardi 2011; 49 Charpe 2011; 1 Addison, Blackburn, Cotti 2009; 16 Feldman 2009; 37 Lewis 2014; 21 Pocock 2016; 27 Wirtz, Nachreiner, Rolfes 2011; 28 Oesch 2010; 16 Craig, Brown 2015; 57 Apergis, Theodosiou 2008; 6 Alexiou, Tsaliki 2009; 28 Palley 2011; 3 Craig, Brown 2014; 76 Dracas, Machin, Van Reenan 2011; 3 Slonimcyk, Skott 2012; 84 Bohle, Quinlan, Kennedy 2004; 38 Storm, Naastepad 2009; 48 Productivity Commission (bibr38-0022185617704012) 2015 bibr30-0022185617704012 Lewis P (bibr29-0022185617704012) 2014; 21 bibr43-0022185617704012 bibr19-0022185617704012 bibr44-0022185617704012 bibr1-0022185617704012 bibr36-0022185617704012 bibr27-0022185617704012 Croucher R (bibr17-0022185617704012) 2011 bibr14-0022185617704012 Skinner N (bibr42-0022185617704012) 2014 bibr32-0022185617704012 bibr45-0022185617704012 Apergis N (bibr5-0022185617704012) 2008; 6 Productivity Commission (bibr37-0022185617704012) 2015 bibr24-0022185617704012 bibr15-0022185617704012 Daly T (bibr18-0022185617704012) 2014 bibr11-0022185617704012 Palley T (bibr34-0022185617704012) 2011; 3 bibr20-0022185617704012 bibr3-0022185617704012 bibr16-0022185617704012 Peetz D (bibr35-0022185617704012) 2014 bibr12-0022185617704012 Charlesworth S (bibr13-0022185617704012) 2015 |
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SubjectTerms | Awards Elimination Employers Employment Family roles Fines & penalties Labor relations Minimum wage Productivity Sundays Unemployment Wage & price controls Wages & salaries Work |
Title | Scrutinising the argument for reducing penalty rates |
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