Low-paid women and young people are tipped to be the biggest losers from cuts to penalty rates in four industries. Who’s next?

Years of campaigning by employer lobby groups and Coalition politicians paid off when the Fair Work Commission cut Sunday and public holiday penalty rates by 25 to 50 per cent for workers under hospitality, fast food, retail and pharmacy awards.

Up to 700,000 low-paid workers will lose money from July 1 – and the cuts may soon extend to other industries.

Restaurant employers could not convince the commission to reduce Sunday penalty rates for their employees, but it did agree to cut their public holiday rates.

The commission invited restaurants to restate their case for Sunday cuts later this year and left the door open to review penalty rates for hairdressers and beauticians.

The Fair Work decision came after the Coalition government asked the Productivity Commission to review penalty rates. It recommended that Sunday rates be reduced to the same level as Saturday rates.

In agreeing to reduce Sunday rates, the Fair Work Commission found working on Sunday was more adverse to workers than Saturday but “much less than in times gone past”.

The commission cut Sunday rates to narrow the gap between Saturday rates, which it did not change.

Gender pay gap will get worse

Some commentators asked why the commission did not also raise Saturday rates so that workers wouldn’t miss out.

“A cut in penalty rates isn’t anything to do with equalising Saturday and Sunday and whether we go to church on a Sunday. It’s actually just a pay cut for young people and women,” said Caitlin Fitzsimmons, the “Money” editor for The Sydney Morning Herald and The Age.

The ACTU pointed to the effect of the commission’s decision on a permanent part time shop assistant doing eight hours every Saturday and Sunday while studying at university.

That person’s earnings before tax will fall from $505.44 a week to $427.68 – a yearly wage cut of $4043.52 or 15.38 per cent.

Caitlin Fitzsimmons called the decision “a huge blow to working women. It’s likely to make our gender pay gap even worse, because the cuts disproportionately target women.”

Marian Baird, professor of gender and employment relations at the University of Sydney business school, agreed that it would have a “disproportionate and negative impact on women” who make up more than 54 per cent of employees in retail and hospitality.

Marie Coleman, from the National Foundation for Australian Women said the Fair Work Commission’s decision was a “fair smash at younger women and female-headed families”. “It is a very rough deal,” she told the Herald.

Wages in sharp decline while profits soar

Lyn Craig, director of the University of NSW Social policy Research Centre told the Herald penalty rates are being reduced at the same time welfare and family payments are also being cut.

“This will impact on single parents and young people who depend on those things at a time of the lowest wages growth we’ve had for a long time,” she said.

Wages have suffered their sharpest decline in eight years, while company profits have surged to record highs.

The three months to December 2016 saw a 20 per cent jump in profits, while wages fell 0.5 per cent – the largest decline since mid-2009, according to the Australian Bureau of Statistics Wage Price Index.

Over the course of 2016, company profits rose 26 per cent. Despite this the Turnbull government is pushing for a $50 billion company tax cut.

Following the commission’s decision, James Pearson from the Australian Chamber of Commerce and Industry claimed reducing penalty rates would help businesses “open their doors longer, take on more staff and give them more hours”.

However, some businesses gave evidence at the commission hearings that it was unlikely they would put on more staff if penalty rates were cut.

Citigroup bank last year conducted financial analysis which found big retailers including Myer and JB Hi-Fi were likely to pass any savings from penalty rate cuts directly to shareholders rather than hire more staff.

Where our politicians stand

The federal government declined to make any submission to the Fair Work Commission’s penalty rates hearing. However Prime Minister Turnbull in 2015 described Sunday penalty rates as a “historical anachronism”.

Other prominent Liberals who publicly argued for penalty rate cuts include Employment Minister Michaelia Cash, who claimed that penalty rates “deter weekend work”, and Environment Minister Josh Frydenberg.

In 2014, 10 Liberal/National MPs demanded that then PM Tony Abbott do something about “job-killing” penalty rates.

That was despite the hospitality sector growing twice as fast as the rest of the workforce in the last five years and becoming the biggest user of the 457 temporary visa system for foreign workers.

Pauline Hanson said her One Nation party will support lower penalty rates.

The Labor Party unsuccessfully argued against any penalty rate cuts in its submission to the Fair Work Commission.

After the commission’s ruling Labor leader Bill Shorten vowed: “We will do everything in our power, in the parliament and in the courts, to remedy this bad decision.”

Greens MP Adam Bandt said he would introduce legislation to stop the cuts. “Coffees won’t get any cheaper on Sunday, but young people will find it harder to pay the rent,” he said.