Microeconomics - Effect of Penalty rates on unemployment
Contemporary Economic Analysis: Written Assignment
The Impact of a Reduction in Sunday Penalty Rates for Casual Employees on the Price Mechanism
The Australian Financial Review recently published an article titled “Sunday penalty rate to be cut to 50pc” (Dunckley 2014). In summary:
A Fair Work Commission ruling has reduced the 75% penalty pay rates for casual employees in Australia who work on Sundays to 50%.
Penalty rates are designed to compensate employees for the loss of time interacting with family and friends.
The commission acknowledged that there was a link between penalty rates and employment.
Business groups are now likely to call for more sweeping changes to entitlements for working weekends or nights.
Restaurant and Catering Australia say that the decision makes opening on a Sunday more viable.
Government policy impacts upon supply and demand. The main policy that the article discusses is related to the laws around penalty rates. Current legislation on this issue is contained in the Fair Work Act 2009. The Act sets expectations that lead to cooperative and productive workplaces (Fair Work Act 2009). The Fair Work Commission is the Australian workplace relation’s tribunal that was set up to enforce the provisions of the Fair Work Act 2009, including making decisions on penalty rates (Australian Government 2014).
As a result of the reduction in Sunday penalty rates business owners are now likely to reconsider whether they can see benefit in Sunday trading (Department of Commerce 2014). Some restaurant owners indicate that prior to the reduction in Sunday penalty rates many establishments were reluctant to trade on Sundays without surcharges because of high labour costs on Sundays (Keen 2014).
Using economic models and examples, which assume ceteris paribus, we will examine the main economic issues that arise from the article. These
The Impact of a Reduction in Sunday Penalty Rates for Casual Employees on the Price Mechanism
The Australian Financial Review recently published an article titled “Sunday penalty rate to be cut to 50pc” (Dunckley 2014). In summary:
A Fair Work Commission ruling has reduced the 75% penalty pay rates for casual employees in Australia who work on Sundays to 50%.
Penalty rates are designed to compensate employees for the loss of time interacting with family and friends.
The commission acknowledged that there was a link between penalty rates and employment.
Business groups are now likely to call for more sweeping changes to entitlements for working weekends or nights.
Restaurant and Catering Australia say that the decision makes opening on a Sunday more viable.
Government policy impacts upon supply and demand. The main policy that the article discusses is related to the laws around penalty rates. Current legislation on this issue is contained in the Fair Work Act 2009. The Act sets expectations that lead to cooperative and productive workplaces (Fair Work Act 2009). The Fair Work Commission is the Australian workplace relation’s tribunal that was set up to enforce the provisions of the Fair Work Act 2009, including making decisions on penalty rates (Australian Government 2014).
As a result of the reduction in Sunday penalty rates business owners are now likely to reconsider whether they can see benefit in Sunday trading (Department of Commerce 2014). Some restaurant owners indicate that prior to the reduction in Sunday penalty rates many establishments were reluctant to trade on Sundays without surcharges because of high labour costs on Sundays (Keen 2014).
Using economic models and examples, which assume ceteris paribus, we will examine the main economic issues that arise from the article. These