Labour regulation reform and sectoral employment outcomes

a case study of public holiday penalty rate reductions in Australia

Martin O’Brien*, Raymond Markey

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

In 2017 Australia’s central employment relations regulator determined a decrease to wage premiums (penalty rates) paid to minimum wage Retail and Hospitality industry employees on Sundays and public holidays. Employers claimed that these penalty rate cuts would stimulate greater employment levels and hours and reduce pressure on owner-managers to work on these days. In this paper, we test these claims for public holiday employment outcomes using a natural experiment setting, a unique survey of both employer and employee outcomes, and difference-in-differences modelling accounting for program non-compliance. Ultimately, we failed to establish any evidence for positive public holiday employment outcomes emanating from the penalty rate reduction. We discuss the potential reasons for this outcome, including the inadequate and flawed evidence presented in the penalty rate determination case, confounding factors associated with adjacent minimum wage rate determinations and weak income growth affecting consumer confidence and demand in Retail and Hospitality sectors.

Original languageEnglish
Pages (from-to)559-563
Number of pages5
JournalApplied Economics Letters
Volume27
Issue number7
DOIs
Publication statusPublished - 15 Apr 2020

Keywords

  • employment
  • Labour regulations
  • minimum wage
  • wage premium

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