For more information please co ntact [email protected] Commonwealth of Australia Copyright Act 1968 Notice for paragraph 135ZXA (a) of the Copyright Act 1968 Warning This material has been reproduced and communicated to you by or on behalf of Central Queensland Univ ersity under Part VB of the Copyright Act 1968 (the Act ). The material in this communication may be subject to copyright under the Act. Any further reproduction or comm unication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. - Tuesday 28 March 2017 www.afr.com I The Australian Financial Review Editorial&Opinion 39 'Better off overall' test creates more jobless workers Industrial relations Those who are young and don't have jobs are just more disadvantaged by our high minimum wages and rigid awards. ~ ·~""- Graeme Watson A perfect storm is brewing in our retail and hospitality industries. Twelve months ago, enterprise bargaining in the sector ground to a halt because of the combined effect of uncertainty over penalty rates and increased attention to the Better Off Overall Test Combined with rapid changes in retailing and increased attention to award compliance, the industry is now facing its most challenging time. The implications extend to the entire community. In the retail and hospitality industries, the nature of the safety net is inextricably linked to enterprise bargaining. For larger businesses, enterprise bargaining provides an avenue to modify award obligations, such as penalty rates, in order for businesses to operate profitably at opening times we all consider to be standard in the 21st century. Many businesses have made use of this approach for the past 25 years. However, last year it became clear that an agreement is no longer likely to be approved just because a union has lent its name to it, and the demise of enterprise awards that flattened penalty rates for many retail large employers has removed their traditional advantage. The Better Off Overall Test is now being applied more strictly against an award that has not kept pace with changes in retail opening hours. Instead of a rational debate about all of the issues affecting the retail industry and a holistic assessment of the award safety net, we appear to have a politicised contest which revolves around the proposition that any reduction in a historical position is a social evil. But the stakes are too high for such simplistic notions. The retail and hospitality industries are first-job industries and the elephant in the room of the penalty rates debate in these industries is youth Retail and hospitality are "first-job" industries for youth. PHOTO: BEN RUSHTON unemployment. Ever since 2013, G20 leaders have emphasised that unemployment and underemployment, particularly among young people, remains one of the key challenges confronting the global economy and a top priority for G20 nations. The International Labour· Organisation has labelled the youth unemployment problem a "crisis" and estimated that an extra 10 million jobless young people were added to unemployment lists since the GFC. Inclusive access to growth is the mantra to address inequality and poverty in challenging economic and social times. The OECD average youth unemployment rate increased from 12 per cent to 15 per cent between 2007 and 2014. The increase in Australia over the same period was from 9.4 per cent to 13.3 per cent. The safety net needs to be comprehensively reviewed to ensure a fair go for all. Since then, the Australian figure has remained at similar levels and operates with an additional underutilisation rate in the orderof30 per cent Rates vary by region. Youth unemployment in Cairns is 26.3 per cent. In outback Queensland it is 34.4 per cent. Between 2008 and 2015 the percentage ofyoungjobseekers who have been unemployed for over a year jumped from 8.7 per cent to 18.2 per cent. Where is the analysis of the combined effect of all elements of the safety net on the employment of our young people? Australia has a very high minimum wage by international standards. Higher classification rates, allowances and penalties add to the minimum pay floor. According to the OECD, employment opportunities for low-skilled youth decline if the minimum wage is too high. A large proportion of young people depend on the retail and hospitality industries for their firstexposuretoemploymentc Thescarring effects of youth unemployment are more pronounced the longer unemployment continues-through the deterioration of job skills and a higher level of discrimination in recruiting processes. There needs to be an objective consideration of options including a reduced pay floor for the long-term unemployed Who is representing their interests in the current penalty rate debate? There is no guarantee that enterprise bargaining will return to the retail sector, as it is hard to identify a rational reason to undertake such a costly and time- consuming process. Yet the perfect storm of the above factors appears likely to alter employment practices and further discourage the employment of those most in need. The safety net needs to be comprehensively reviewed to ensure that it providesafairgoforall, based on an objective analysis of 21st century social and economic circumstances. A proper analysis is crucial for economic advancement and social inclusion. Australians are not well served by a piecemeal politicised debate and shallow analysis. Graeme Watson recently resigned asvice- president at the Fair Work Commission.