Thousands of hospitality and retail workers will have their penalty rates cut on 1 July following a decision from the independent Remuneration Tribunal.

It’s a cut that could leave workers in the hospitality industry up to $2,000 worse off, United Voice secretary Jo-anne Schofield said. But 700,000 retail and hospitality workers will be affected altogether.

The average hospitality worker makes $20.91 an hour for working during the week, with a 10 percentage point penalty rate cut on 1 July equating to a loss of $40 a week.

“Retail and hospitality workers are having real difficulties putting food on the table or meeting their utility and medical bills from week to week as they face yet another round of penalty rate cuts,” Schofield said.

“Working people need jobs that are secure and pay them fairly – not more cuts that stop them from being able to pay for life’s essentials.”

The Australia Institute’s Centre for Future Work chief economist and director Jim Stanford also observed that Australia is struggling with low wage and consumer spending growth.

“These continued reductions in penalty rates will just make things a little bit worse – because hundreds of thousands of Australian workers will have a little less money in their wallets,” he told Yahoo Finance.

“This whole experiment was justified by employers’ promise that lower wages would lead to more jobs and longer hours of work. But two years of evidence have decisively disproven that promise.”

He said those sectors have created fewer jobs than other sectors in which penalty rates weren’t cut.

“The retail sector in particular has one of the worst job-creation records of any sector – creating just 100 new jobs in 21 months after the first penalty rate reductions. The claim that lower wages will lead to more jobs is just a lie.”

The Fair Work Commission decided in 2017 to reduce penalty rates from then-levels. At the time, Sunday penalty rates for retail, hospitality, fast food and pharmacy workers were as much as twice normal, or weekday hourly wages.

The reductions were to take place on 1 July each year from 2017, with full-time and part-time workers both affected.

How much are they to be cut?

View photos More penalty rate cuts ahead. (Source: Johnson Winter & Slattery) More

The 1 July 2019 cut is the third cut of a series designed to bring the penalty rates down to the Fair Work Commission’s desired level.

The Australian Council of Trade Unions said workers will ultimately be $6,000 worse off a year.

However, the Business Council chief executive Jennifer Westacott said the decision was a “step in the right direction” which reflected Australian businesses’ “24/7 existence”.

“The common-sense changes announced by Commission President Iain Ross, who was appointed by Bill Shorten as Minister for Employment in 2012, have the potential to create new jobs and boost economic growth while indicating there will be transitional arrangements for workers.”

But the Council of Small Business Australia chief executive, Peter Strong, admitted in April this year that the penalty rates have not created extra Sunday jobs.

He told The Australian: “There’s no extra jobs on a Sunday. There’s been no extra hours. Certainly, I don’t know anyone (who gave workers extra hours). It’s been just a waste of time.”

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