Woolies chairman says further penalty rate cuts would create more jobs

Gordon Cairns, Woolworths chairman. (Source: AAP, Getty)

Making further cuts to weekend rates would create more jobs and boost the economy, a top Woolworths executive has said.

According to Woolworths chairman Gordon Cairns, weekend penalty rates are an obstacle to job creation.

"With 15 per cent unemployment staring us down the barrel of the gun, the first priority is to get people back into work," he said.

Scrapping penalty rates would see more people in jobs, Cairns indicated in a conversation with the AFR about the overhaul of the industrial relations system.

“What's happening is more and more shopping is being done at the weekend. And so what we want to do is put more people on [at] the weekend. The problem is at the weekend [wages are] double time.”

"The argument from parts of the community is that Saturday and Sunday is sacrosanct. Well, the problem is that the shoppers are going, 'Well, both of us are working during the week and therefore we want to go and do our shopping at the weekend' and the way things are structured, that penalises us."

And would Woolworths hire more people if penalty rates were lower? “Obviously,” he said.

He also said this issue was not specific to Woolworths, but rather was the case across the board. “This is a national problem.”

Cairns is also the chair of Origin Energy and a director of Macquarie Bank.

Woolworths hired 20,000 extra staff at the height of the coronavirus crisis when panic-buying was at its peak.

Earlier this year, Woolworths estimated it had underpaid staff by $315 million.

"We deeply regret the salaried team member payment shortfalls and want to reassure the team and shareholders that we are addressing them as quickly as possible," Cairns said at the time.

A Woolworths spokesperson told Yahoo Finance in a statement that the company welcomed employers and unions working closely together during this critical time for the country.

“There is no doubt our industrial relations system is capable of delivering much better outcomes for Australian workers, consumers, businesses and the economy.

“We look forward to contributing to a constructive discussion in the months ahead.”

Has slashing the penalty rate actually created jobs?

In late May, Labor analysis found that the reduced penalty rates, implemented at the beginning of 2017, did not create new jobs in hospitality and retail, the two key sectors where workers lost rates for Sundays and public holidays.

“Wages were cut for no economic benefit. And the government stood back and did absolutely nothing,” said Labor innovation spokeswoman Clare O’Neil.

“While jobs and hours worked across the economy grew significantly over the relevant period, the number of jobs and hours affected by the penalty rate cuts actually fell or were flat.”

In a piece for The Conversation, University of Wollongong economics lecturer Martin O’Brien also said there was no evidence that slashing the penalty rates had created new jobs.

“Two years on, with cuts to public holiday penalty rates fully implemented and Sundays partially implemented (being introduced over three to four years) how many extra jobs have been created?

“Our research suggests basically none.”

Last year, a joint report by the Australia Institute Centre for Future Work and United Voice found that the federal government’s public holiday penalty rate cuts, implemented at the beginning of 2017, had cost workers $80 million lost pay across the 2019 Easter and Anzac period alone.

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