More magic pudding economics on penalty rates

The Parliamentary Liberal party is rallying behind the push to abolish penalty rates for weekend workers, particularly in retail and hospitality.

Someone has come up with the bright idea of cutting penalty rates over the weekend and compensating workers by paying them more for working during the week.

If the idea of cutting penalty rates is to enable retailers, restaurants and pubs to employ more people, there doesn’t seem to be much logic to this. It’s just a matter of cutting the magic putting into slightly different size slices.

One of the central arguments for cutting penalty rates over the weekends is that businesses are not able to increase prices over the weekend. It is probably true that most businesses will be trading over the weekend are generating higher turnover during that period, so to some extent, it is possible to pay the staff extra.

Prime Minister Martin Turnbull came up with a great reason why we have penalty rates, its historical apparently.

Nothing to do with the fact that when people need to work over the weekend, which is a time that most people would like to devote to spending with family and friends, they should be compensated in some way.

The other interesting aspect of the new magic putting argument is that if pay rates are equal over a seven-day week, then much of the incentive to work on weekends which of the busiest periods, will disappear. Businesses may still be forced to pay a premium to get people to work over the weekends while paying compensation to other workers who only work during the week.

Stay tuned, I’m sure Blinky Bill will come up with some more great ideas.

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