Sorry Students, More Bad News. Why We Should Care About The Penalty Rates Cut

If you spend your day tied to a desk, you probably won’t noticed the latest slash in penalty rates. However, for 700 000 workers in retail, hospitality and pharmacy, the recent Sunday penalty rates cut has disrupted their earnings. For many uni students, part-time workers, single mums and immigrants, penalty rates are a crutch to support their lifestyle. The decision to cut penalty rates in 2017 has recently come into effect and it’s expected to deliver a significant blow to this crutch. So, we wanted to investigate. Where are these cuts happening and why?

What are the facts?

In 2017, Australia’s Fair Work Commission decided to gradually cut Sunday and public holiday penalty rates. Each year until 2020, penalty rates will decrease. The full or part-time retail, fast food, restaurant, hospitality and pharmacy workers will gradually feel the sting of the penalty rates cut. Following the cut, the Australian Council of Trade Unions (ACTU) has concluded that nearly half of a million people would lose up to $6,000 a year. Some of these workers are the lowest-paid employees in the country. President of the Fair Work Commission, Iain Ross has confessed that,

“Many of these employees earn just enough to cover weekly living expenses.”

Yet, the cuts are going ahead as planned by the Fair Work Commission and the sitting parliament. The President wishes to implement a scheme to help workers experiencing financial hardship, but have yet to decide on an appropriate plan. The only workers left untouched by the penalty rates cut are casual restaurant and hospitality employees. Casual restaurant workers will receive no cuts to their Sunday or public holiday rates. And casual hospitality workers will only see cuts to their public holiday rates.

The rest of the employees have scheduled cuts on the horizon. To help us visualise the drop in penalty rates we have whipped up a pretty fancy graph:

Info gathered from the Fair Work website.

Before diving into the nitty-gritty of penalty rates now, let’s look to the past! Penalty rates have been a staple for the Australian industrial regimes since the late 1800s. The first national penalty was established in 1947, before that, states deliberated rates amongst themselves. Like most things before the turn of the century, introducing penalty rates was motivated by religion. The government wanted to reduce business from opening on Sunday and performing evil Sunday work. The initiative was motivated less by compensating workers for their time, and more to appease religious laws.

However, after the economic boom of the post-war world, the need grew and businesses began to operate on a Sunday despite having to pay higher wages. Soon it became accepted that workers were paid penalty rates for compensation, rather than religious rationale.

Who does the penalty rates cut effect?

We know that the recent penalty rates cut will affect hospitality, fast food and pharmacy workers, but, who exactly are those people? To put it bluntly – they are mostly low-income earners. The penalty rates cut comes at an unfortunate time for low-income earners. The latest report from the Australian Bureau of Statistics (ABS) showing that growth in the private sector is falling and the cost of living has reached new heights.

So, let’s look at who these low-income earners are. The penalty rates cut mostly affects industries where the majority of the employees are under 25. So, that means students and fresh-faced grads. We’re sure we remember hearing something else in the news that was costing students – ah, yes, the lowering of the HECS debt threshold. Not a great year for low-income students. Yet, despite the increase of loan repayments and a decrease in wages, Australians youth has it pretty comfy compared to other countries (they are the snowflake generation, after all). That’s the popular opinion. However, recent evidence suggests that Australia has the lowest ratio between the youth wage and the average minimum wage, in the world.

For students, or anyone forced to work weekends to make ends meet, the lifestyle can disrupt their social lives and their ability to engage in family life. If we zoom into an industry that employs 1 in 4 young Australians, Retail, we can see the micro effects.

Imagine

You’re a 20-year-old student who works weekends to pay for, well just life. Sunday is your favourite day, your friends are out on a Sunday sesh, your family is catching up for their weekly BBQ and you’re folding clothes. But, Sunday is still your favourite day. It pays such a vital role in the survival of your budget, that you can’t help but love it. That’s about it change. You’re about to lose almost $10 an hour. And that equates to losing $80 a week if you work a typical three-hour Sunday shift. Doing the math, that’s a $4,160 loss for the entire year. That’s a lot of rent money. Approximately 26 weeks worth of rent. Seems like a lot now doesn’t it?

Now, it’s time for the opposing side, those who advocate for the penalty rates cut to increase employment and reduce costs for small business.

Who wants the penalty rates cut?

The Productivity Commission and small businesses were the two main parties in the wages equation campaign for the Sunday penalty rates cut. The Productivity Commission believes Sunday penalty rates should align with Saturday rates to create a unity across work hours. Small businesses, of course, a campaign to reduce wage cost. Some businesses argue they cannot afford to open on Sunday, because of the high cost of wages. And others say it would also open the door to offer employment to more people.

With most issues, there’s always more than one clear-cut answer, and there are many arguments for the change in penalty rates:

• It will allow employers to hire more staff
• An increase in the number of hospitality venues open on a Sunday
• Provides a better experience for customers if venues have more staff and a wider availability of entertainment
• Business would become more profitable with an increase in opening hours and staff levels
• Price could decrease (some business charge a surcharge for Sunday)

Whether these positives have any bias, in reality, is for the future to reveal. But, with the penalty rates cut gradually coming into effect, we may not see the effects on business for a while.

Are penalty rates outdated?

The penalty rates cut has inspired a debate on whether penalty rates are even relevant in today’s economy. In an economy that has become a landmark for flexibility and diversity, some critics find penalty rates irrelevant. Some workers can easily divert from the traditional landscape of the 9-5 Monday to Friday work week. So, is it really that inconvenient to work weekends?

We asked the young bucks in the office (all survivors of work weekends), and it was a unanimous yes.

How we reacted

Of course, any major government decision demands a chorus of varied responses from us – the public. According to a poll taken after the 2017 decision to cut Sunday penalty rates, 82% of Australians supported penalty rates as a compensation for working outside of designated hours.

How to cope with a change of income

All talk and no action made Jack a very poor boy. Unfortunately, all the debating won’t change the fact that the penalty rates will decrease and people will lose income. So, we want to help people prepare for a change in income.

A change of income can happen in any job. Whether your company is downsizing, or you may be in the midst of changing careers, a change of income can be disruptive. So, we want to minimise the damage to your savings account with these handy tips (or any income change):

Re-calibrate your outlook.

When change is on the horizon, it’s time to adjust the direction of your thinking. The first step is to remain calm. Then, begin to get used to your new income. Also, begin to change the way we think about money, and where you spend it. Perhaps doing out to dinner with friends, you can host a potluck at home. There is a myriad of practical ways to save money, but it all starts with your mindset.

Re-work your budget.

Start with recurring expenses. Maybe you pay too much for the internet or your mobile plan? Go on a hunt for cheaper plans to ease the stress on your weekly income. And whatever you do, stay away from impulse buying! Treat it like your archenemy. If you ever find yourself strolling innocently past a sale and feel compelled to make a quick purchase, leave it. Then, if you’re still dreaming about the item in a week, you know it’s something you really want.

You mean think budgeting and inconvenience come hand-in-hand, but when you harness the power of technology, all your budgeting info is a tap away. You can input your budget into an app and simply have the info ready to go. Budgeting is made easy and convenient with apps like Mint and Wally.

Set your finances to Autopilot.

Again, when you harness the power of technology, anything is possible, including automating your bills and expenses. That’s less time spent on paying bills and worrying about paying them. If the money is already set aside, you’ll struggle to miss it. You can set up automatic payment in your internet banking app.

Invest time in a side hustle.

If it’s money you’re short of, why not make a little more? Without much hassle, you can profit from a little side hustling. We mean the good kind. Think of your passion, and see if you find a way to make a little moolah from it. Such as photography, design, gardening or blogging – where ever your passion lies, in our 24/7 online economy you’ll find somewhere to start your passion into gold.

So, when all is said and done there’s always a way to cope with the stirring winds of change. No matter what you can find a way to adapt to change. That’s what we humans do best!

Before you leave

Sometimes with all the budgeting in the world, plans just don’t go to…plan. So, if you’re ever in the need for quick loans, you can trust us to find you the perfect lender. All you need to do is simply fill out our quick application and we’ll let you know within minutes if you qualify. If you’re approved, we will begin the process of finding you the perfect lender. So, when you think your wallet is looking a little light, you can trust to find you some moolah!

Let’s stay in touch

Speaking of change, if you’re ever in a financial bind, you know where to turn to. We can FIND you a loan that’s right for you. If you’re on the hunt for small loans or short-term loans, we can help you out. So, think about applying today with We Find Loans.

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