As George Christensen pledges to protect penalty rates, do SMEs have more worries than wage levels?

Business owner planning

Nationals parliamentarian George Christensen has entered the debate over changes to penalty rates with his own policy alternative, as SMEs continue to face uncertainty on the rollout of changes to weekend rates in some sectors.

Christensen has this week launched a plan to protect Sunday penalty rates, which are set to be lowered across some awards to match Saturday loadings in the retail and hospitality sectors from as early as July, after the Fair Work Commission handed down a ruling in February.

The Queensland politician has promised a private member’s bill to protect Sunday penalty rates as they stand, as well as an amendment to a Labor party bill also designed to override the changes. However, the catch is the changes would overturn some cuts to penalties negotiated by unions under enterprise bargaining agreements (EBAs).

Speaking on 4BC last night, Christensen told Ross Greenwood’s program he wants to restore penalty rates for workers employed by bigger businesses, who receive different entitlements to their awards because of an EBA arrangement.

The penalty rates issue has been fiery in parliament since the Fair Work Commission made its ruling on Sunday rates in February, and as the Commission has started working on the actual rollout of the changes, various stakeholders have put their cases forward, even floating the idea of a parliamentary inquiry into the decision or legislation to override the changes.

Meanwhile, small business groups are facing up to the fact that they still don’t quite know how the changes will come into effect or what that means for their business.

Changes to public holiday penalty rates will automatically kick in at the start of the new financial year on July 1, whereas changes to standard weekend rates have been a matter of more detailed consultation, which is ongoing.

SME groups, including the Council of Small Business Australia (COSBOA), have previously told SmartCompany they are aware fairness is a big issue when rolling out the changes, and many parties are advocating for a transition arrangement that would involve a number of phases.

However, the exact shape of the changes, and when they come into effect, remains unknown and the Fair Work Commission was taking submissions from stakeholders on the issue as recently as weeks ago.

The business community is facing significant uncertainty on wages in the lead-up to June 30, as SMEs also await the Fair Work Commission’s verdict on this year’s increase to the minimum wage.

Director of Market Economics Stephen Koukoulas says the business community has always preferred certainty on these issues, even when there’s discussion over whether policies are perfect.

However, on penalty rates he says there are still a number of unknown impacts that will play out once the decision is made on the rollout.

“There’s things like how the transition is actually going to impact on demand for labor, because in theory, when wages are weaker, demand for labor should go up,” Koukoulas tells SmartCompany.

“But there’s going to be a lowering of income for people, and if wages are too low for working undesirable hours, then people might not bother to turn up.”

Then there’s the balance that has to be struck by business-centric policies like penalty rates cuts, and the overall issues of wages growth and consumer spending, Koukoulas says.

“It’ll be interesting to see just how [changes to penalty rates] works, because the other thing is that this is occurring at a time when retail spending is pretty weak. If you think, ‘okay, I might be saving a couple of dollars on my wages bill’, you’ve got this other problem which is that the economy is just not that strong,” he says.

This combines to make the long-term effects of penalty rates changes much less clear, he believes.

“It’s not clear cut, it’s ambiguous. There is an element of uncertainty still.”

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