Penalty rates change to create 10,000 jobs in Australia

Australia's Fair Work Commission (FCW) is currently considering a proposed restructuring of wage systems which would see penalty rates redefined.

Under current employment legislation, employers are required to pay any employees working Saturday and/or Sunday 'penalty rates' - typically time and a half or double time. However, employers argue this drives up wages disproportionately to other industries.

The proposal to the FCW suggests redefining the wage structure to remove Saturday and Sunday from penalty rates and replacing them with the sixth and seventh day of work.

The report from R&CA claims the proposal - submitted to the FCW by PriceWaterhouseCoopers - would allow employers to operate more freely without the burden of disproportionately high wages, and in turn create 10,000 new jobs over the next 15 years.

John Hart, chief executive of the R&CA, said 1,000 hospitality businesses would be forced to close in the next 12 months due to the pressure of wage costs and 50% of restaurants were unprofitable.

"[Australian hospitality] wage rates compared with the rest of the world started on this escalation that means it's unsustainable for businesses as labour-intensive as ours," Mr Hart said.

"There's a systemic problem here - it costs more to run a business in this sector than you get in returns. And it's worse at the top end. Fifty per cent would be in a net-loss situation."

R&CA's report supports the PwC proposal, predicting a restructuring of the wage system would create almost 4,000 jobs in the first 12 months following a restructure, with a further 8,000 coming by 2030.

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