Rural areas ignored in penalty rate cuts

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Rural areas have been overlooked in the Fair Work Commission's decision to cut penalty rates. Imogen Bailey reports.

Lily Harrop is a 16-year-old student who lives on a 52-acre farm with her family, in Kilmore. Surrounded by rolling hills and dreamy landscape views, the farm is secluded and expansive. The house is perched at the top of a hill and from the porch you can see horses grazing on a hill opposite. She’s excited about getting her own horse, whose name is Tyrone.

Like most of her urban contemporaries, Harrop has a casual job in retail. But for a large percentage of youth in her area, Harrop is very fortunate to have work. “Pretty much the only place you can get a job is at the supermarkets or at Maccas, if you want a job anywhere else it just depends on who you know,” she said.

More than half of the youth aged 15-19 years old in Kilmore are studying full-time and are not employed, according to the 2011 census data. This trend is seen across many rural areas, with 46.7 percent of youth in Daylesford and 47.2 percent in Wallan studying full-time and not working.

“A lot of people at my school can’t have jobs because they’re boarders (residential students), and some can’t have jobs because their parents can’t drive them. They can’t get to and from work so they can’t have a job,” Harrop said.

In February, the Fair Work Commission (FWC) concluded their review of the penalty rates, finding that in selected awards the pay rate for Sundays and public holidays is to be reduced. The FWC concluded that with reduced penalty rates businesses could increase trading hours on Sundays and public holidays, reduce the hours worked by some owner-operator businesses, increase the range of services offered and increase overall hours worked. The lower pay rate will also allow small businesses to hire more staff, which in Kilmore, would be a bonus for young people.

“I don’t think they’ll (small businesses) struggle to find people because there’s so many young people and not enough places for jobs,” Harrop said.

Unsurprisingly, the reaction to the pay cut has been negative from the employees. Lauren Sugg, a 23-year-old retail manager, tries to see the cuts from both perspectives. “I can see where they’re coming from, because if they don’t give double pay, they can give more hours and put more staff on. But I think, on a Sunday especially, people have earned double time as a minimum,” she said.

Rob Mitchell, federal Labor MP for McEwan; the electorate in which Kilmore resides, is firmly against the pay cuts. “What they’ve done is picked out the most vulnerable people.  It attacks the young, it attacks the vulnerable. The FWC does its work, and in this case it got it wrong. Very badly wrong,” he said.

The FWC cited that the contemporary working week is changing and thus pay rates need to be relevant and fair to both employers and employees in this alternative week. The FWC found that the disutility associated with working on Saturday is dissipating; however they did concede that working on Sunday and on a public holiday was still an adverse situation for employees.

“Monday to Friday isn’t really a job anymore, weekdays become the weekend,” Sugg said. For many in hospitality, retail and fast food this is the reality. Often working unsociable hours, casual and part-time workers in these awards are generally students or young people, whose work has to fit around their school or university timetable.

“I work Saturdays, I don’t want to, but I do. The only other time I can work is after school, and that is only a certain amount of time too,” Harrop said.

“Try and ring the business council or the business commissioner on a Saturday or Sunday. They’re closed, so this theory that weekends don’t matter anymore is only ok when they’re telling other people,” Mitchell said.

Lowering the pay rate should allow small businesses to hire more staff, however, during proceedings some employers admitted it was unlikely that they would hire more employees, even if the pay was reduced.

“The ones who are higher up are going to get more money in their pocket. The ones who make all the sales and get the customers in the door are losing out. Where’s the drive? How inclined are people going to be to come in to work where they could be losing $30 or $40 a shift?” Sugg said.

“The argument from the government that this will increase job opportunities for young people is just wrong,” Mitchell said.

The FWC claims that cuts to penalty rates allows small businesses in urban areas a chance to grow their business by hiring more employees and be open longer, however, it is unlikely it will make any change to small businesses in rural areas. “Employees would be sitting there all night getting paid with no customers coming in. So I don’t think the owners would do it because it’s not worth it for them. Even the pub shuts at 11pm, and Kilmore is pretty big compared to the rest of the towns around here,” Harrop said.

“It’s easy to say, ‘well if we’re open more we might get more business’, but that’s not going to happen in a small town,” Mitchell said.

“The Maccas here isn’t even 24-hours. Big businesses like that can’t even be 24-hours here, then what about all the other little shops and stuff, they don’t really have much chance,” Harrop said.

Sugg is doubtful even in urban areas that the expected increase in customers will occur. “I get that at restaurants they’ll be able to get rid of the surcharge and then more customers will come. But what if they don’t?” she said.

“In the broader community these cuts will mean that people have less discretionary spend. If they’ve got less discretionary spend, they’re going to be tightening things up, they won’t be going to restaurants or to the shops, so you could actually see a contraction in small town economies,” Mitchell said.