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Slashing penalty rates: a misguided response to problems of the past

TJ Ryan Foundation Board member, John Quiggin, writes in The Conversation (10.10.17) about a Senate committee decision to reject the Fair Work Commission's recommendations to slash weekend penalty rates.

'A Senate committee has finally handed down a report on the Fair Work Commission’s decision to reduce Sunday penalty rates for workers in a range of service industries.

'The report recommends that the government bring in legislation to overturn the decision, citing mixed evidence of the impact of the penalty rate cut, and the fact that “penalty rates are not a luxury”.

'However, as I presented in evidence to both the Senate and the Commission, there needs to be more of a focus on the adverse effects of lower wages for the economy as a whole. While there has been much discussion about the implications of the decision for workers and employers, the broader context has been missing.

'Wages policy discussion in Australia over the past 40 years has been dominated by the belief that we have a problem with excessive wages and restrictive working conditions. The objective of wages policy has been to push down the wage share of national income and remove restrictions on working conditions. But this view is not backed by the research.'

 

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