Penalty rate cut to hurt regional workers


time sheet, pay, wageThe Riverina economy would be up to $9.4 million worse off each year if penalty rates for retail workers were cut, new research by the McKell Institute has found.

The Economic Impact of Penalty Rate Cuts on Rural NSW study conducted by the McKell Institute found that if penalty rates for retail workers were cut, entirely or partially, rural retail workers in the Riverina would lose between $7 million and $24.8 million each year in take home pay.

The Riverina, an agricultural region of south-western NSW, is estimated to have 7337 retail workers, one of the highest number of any region in NSW.

Shop, Distributive & Allied Employees’ Association (SDA), NSW Branch Secretary, Gerard Dwyer, said the study, which was commissioned by the SDA, warned regional and rural communities would suffer disproportionately from any reduction in penalty rates for retail workers compared to the city.

“The recent narrow debate from employers on penalty rates has been about the cost to business. It completely misses the untold story of the loss to local workers, local communities and local economies across regional NSW if penalty rates are cut,” Dwyer said.

“Penalty rates compensate people for working at unsociable times late at night, on weekends or on public holidays. Cut them and that money goes back to the business and if it is not a local business that money leaves the local community.

“The new McKell Institute study clearly demonstrates cuts to penalty rates will blow a hole in the family budget of many retail workers and take up to tens of millions of dollars out of the Riverina economy in the long term.

“Cutting penalty rates would mean an average loss for a low-paid retail worker of about 4.6 per cent to 16.5 per cent of their take home pay. For many workers, dependant on penalty rates to make ends meet, the pay cut would be far deeper. Penalty rate cuts would increase the pressure on balancing already tight family budgets trying to pay for essentials like electricity and food.

“Ironically, it will be discretionary retail spending that will be among the first to feel the pinch as people spend less in their local community. Retail workers make up about 12% of the workforce in rural NSW so if they tighten their belts, the flow-on will hit local businesses and economies hard.

“Penalty cuts are simply not a sustainable, long-term way of ensuring profitability for retailers in regional and rural areas. We mustn’t forget that penalty rates are paid in compensation for the loss of time with family. Retail workers should be given a fair go and retain penalty rates for working long hours, weekends and public holidays.

“The perverse outcome of cutting penalty rates for rural NSW will be less money to spend in local shops and businesses in the community; and the retail workers who lose the compensation of higher pay for lost family and community time will have to try and chase more hours of work at lower pay to make up for it and so lose even more family and community time.

“Whichever way you look at it the families, communities and local economies of regional and rural NSW will lose if retail penalty rates are cut,” Dwyer said.



  1. Brett Stevenson posted on August 5, 2014

    Two obvious responses that are hard to avoid 1. What is the McKell Institute? Have a look at their board composition. Is a Union/Labour Party organisation. Just look at the 14 board members backgrounds - union leaders(5), Labour politicians(2), Labour Party advisors(4), well known labour oriented lawyer, academic and communications people(3). Mmmmm. This organisation is bound to give a good balanced review of the problems of penalty rates eh? 2. Penalty rates are an anachronism from the early 20th century and how times have changed. Perhaps the McKell Institute needs to consider how many people are not employed because of penalty rates. I wouldn't be holding my breath for that to occur.

  2. Egor posted on August 5, 2014

    Well Said Brett. Where do majority of people live?, Regional or Metro area?, surely a decision should be made on what affects the majority and not the minority.

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