Skip to content Skip to main navigation

News

Chamberlains - complete legal services for business

Canberra’s experts divided over economics of Easter holidays

By David Tuckwell - 10 April 2017 10

hot cross buns on board

In Canberra, we love our public holidays. We love them so much, that we have more of them than any other part of Australia.

It is Easter this weekend. With Easter comes a lot of holidays — more than any other time of year, besides Christmas.

So what’s the effect of all this holidaying on the ACT economy? Expert views differ widely.

According to the Canberra Business Chamber, the territory’s top business lobby, the effect can be negative as public holidays mean penalty rates, and penalty rates mean unemployment.

“Generally speaking, penalty rates on public holidays make businesses think staying open on a public holiday is just not viable,” says Robyn Hendry, CEO of the Canberra Business Chamber.

“Some businesses – particularly small businesses – look at their cost of operation compared to potential income and think it’s not commercially viable to open.”

These effects hit young employees hardest as they’re most likely to be working as casuals or in unskilled roles. It’s also bad for tourism, Ms Hendry says.

“We have a major tourism industry whose numbers are heading north. If everywhere is shut on public holidays because of these penalty rates, then Canberra becomes less interesting for tourists.”

Other sources take a different view.

“The problem with this entire penalty rates debate is the ‘fallacy of composition’,” says Matt Grudnoff, an economist at The Australia Institute, a left-leaning think tank based in Civic.

“It’s where I, as a business owner, look at myself and say “I’ll employ less people” then assume the same for everyone else.

“Other firms might not think like I do and the firms that stay open will get more business because I’ve closed shop.”

Mr Grudnoff rejects the idea that public holidays cause higher unemployment. He says that workers are also consumers and the fact that they are being paid more means they can spend more, which in turns creates more jobs.

“What you’re effectively doing by having public holidays and penalty rates is workers have more pay and businesses have lower profits. But the effect on employment is negligible.”

According to Professor Phil Lewis, an economist at the University of Canberra, there are both moral and economic considerations to keep in mind.

“If you have a public holiday, employers who pay the award will be obliged to pay $45 an hour for a person on the lowest wage. It doesn’t take much imagination to realise that your business has to make a lot of money to cover that.”

“We had an example of what public holidays do some years ago when the government gave everyone in Canberra a holiday for Melbourne Cup Day. That day, most restaurants closed down.

He says that some businesses will stay open, especially family-owned businesses, as family members won’t demand penalty rates.

“There is also a moral question about whether people should have to be paid these higher rates — especially as it is really inconvenient for people to lose their Easter, which is a day usually spent with loved ones.”

What’s Your opinion?


Post a comment
Please login to post your comments, or connect with
10 Responses to
Canberra’s experts divided over economics of Easter holidays
1
Maryann Mussared 3:59 pm
10 Apr 17
#

Easter usually means the last of the good weather, so lots head off down the coast. But Canberra has heaps of things to do, including major exhibitions such as Versailles, The Sell and the National Folk Festival. This means it is still tourist season here. It is a real conundrum for small businesses with so many public holidays gazetted. Disappointingly, I know both the cafes at my local shops (but I understand why) will be closed, although the very popular takeaway will be open as it is family-run and it will be really busy. Many cafes will start to upload their Easter hours on Facebook in the next few days, so I will check there or phone before I go anywhere. I have learned not to rely on establishments updating their hours on Google places.

2
devils_advocate 3:59 pm
10 Apr 17
#

We already have a minimum wage. Having additional minimum wages for public holidays is a bit of a joke. If workers are able to command a higher wage they will get it. Others would be just happy to get the basic wage.

If workers really, really value their public holidays, then they will not turn up to work, forgoing both the wage for that day and potentially their employer’s good will. By contrast, if employers want to stay open on a public holiday but their workers don’t want to work on that day, the employer will offer them more money (and maybe recoup it through a service surcharge).

How much extra money? Well, the answer might lie somewhere between the non-penalty rate and the current penalty rate. The only real way to tell would be to let the market decide.

3
JC 4:13 pm
10 Apr 17
#

The post seems like just another anti penalty rate rant.

Yes it costs more to hire staff on a Sunday for example but in my experience as a customer the expensive days are also the ones where there are more customers.

Now seeing as the customers are getting served I doubt any cut to rates will see more people get employed. So really comes back to reducing costs to increase the profitability of the business as to any great social benifit. Same mostly true for the now passed tax cuts for business. That won’t result in people getting paid more or in more employment.

4
gazket 5:04 pm
10 Apr 17
#

most canberrans leave the territory on public holiday weekends. Cafe’s and restaurants close regardless as no one with any money to spend at restaurants is here. Most people left here are at home paying off their overpriced utility bills.

5
wildturkeycanoe 6:29 am
11 Apr 17
#

Although it isn’t in the ACT, I have a story from NSW about Easter and the public holiday question.
My sister was supposed to have Easter off as she was not rostered on, but the extra money from the holiday loading has made it tempting enough to work instead. If she hadn’t worked, the store would have been understaffed and possibly there would be less hot cross buns for everyone to enjoy. So here is a real life case showing that the penalty rates are actually good for business.
Yet, if you think about that if penalty rates didn’t exist, people like my sister would not have as much money to spend on the holidays so they would probably be considering working the holidays for normal rates anyway, just to make their budget balance.
So both ways we still have people working, but without penalty rates the winners are the businesses and the losers are the workers. This is why there is such a push by businesses to scrap penalty rates, so they can increase their profits by exploiting the desperation of their workers. The only drawback is that the workers won’t be spending their extra money over the holiday break because they are too busy working.

6
chewy14 9:05 am
11 Apr 17
#

So a left wing economist thinks penalty rates are a good thing because it gives workers more money and if businesses close because of higher costs, then other businesses will open and make more money.

But isn’t the exact same argument applicable to employees and why penalty rates aren’t necessary? If penalty rates aren’t legislated, then some workers will decide that the pay is not worth it to work that day at normal rates. Then employers will have to pay higher wages to encourage them to work on those days due to lower labour supply.

Well that’s if those days (times) penalty rates are currently applicable are really as unsuitable and unsociable as they are made out to be……

7
Maya123 10:43 am
11 Apr 17
#

wildturkeycanoe said :

Although it isn’t in the ACT, I have a story from NSW about Easter and the public holiday question.
My sister was supposed to have Easter off as she was not rostered on, but the extra money from the holiday loading has made it tempting enough to work instead. If she hadn’t worked, the store would have been understaffed and possibly there would be less hot cross buns for everyone to enjoy. So here is a real life case showing that the penalty rates are actually good for business.
Yet, if you think about that if penalty rates didn’t exist, people like my sister would not have as much money to spend on the holidays so they would probably be considering working the holidays for normal rates anyway, just to make their budget balance.
So both ways we still have people working, but without penalty rates the winners are the businesses and the losers are the workers. This is why there is such a push by businesses to scrap penalty rates, so they can increase their profits by exploiting the desperation of their workers. The only drawback is that the workers won’t be spending their extra money over the holiday break because they are too busy working.

If businesses can’t get people to work for them they will have to pay more. Without penalty rates it will sort itself out. Some places won’t need to pay higher rates, but other places will. What about the people who work days during Monday to Friday? I don’t just include cafe workers, shop workers and the like, but Monday to Friday low paid workers such as child care workers and the like. They have expenses too, but they don’t get penalty rates. I don’t know why it is considered by some, that people who work weekends are any more deserving than people who work weekdays. I can understand someone arguing for an increase in the basic wage for all, but not for penalty rates only for weekend workers, while ignoring the Monday to Friday workers.
As for roistered days off, if I had a choice I would get roistered off when there isn’t a holiday, as anything I wanted to visit would be less crowded, and maybe even cheaper.

8
Garfield 1:03 pm
11 Apr 17
#

chewy14 said :

So a left wing economist thinks penalty rates are a good thing because it gives workers more money and if businesses close because of higher costs, then other businesses will open and make more money.

But isn’t the exact same argument applicable to employees and why penalty rates aren’t necessary? If penalty rates aren’t legislated, then some workers will decide that the pay is not worth it to work that day at normal rates.

Then employers will have to pay higher wages to encourage them to work on those days due to lower labour supply.

Well that’s if those days (times) penalty rates are currently applicable are really as unsuitable and unsociable as they are made out to be……

Hit the nail on the head there – in a free market public holiday pay rates will find the equilibrium point where the number of people willing to work will equal the number of people employers want to have working. Its basic economic supply and demand.

9
JC 1:58 pm
11 Apr 17
#

chewy14 said :

Well that’s if those days (times) penalty rates are currently applicable are really as unsuitable and unsociable as they are made out to be……

Do you work Saturday or Sunday or night shift?

I must admit I don’t but did it in the past. And I will tell you I would not have done those hours for no additional pay and I know of few if any who would.

Whilst some enjoyed having a couple of weekdays off not one I knew would have choosen to work those hours even with a side benifit for that if there was no additional pay attached.

10
chewy14 7:18 pm
11 Apr 17
#

JC said :

chewy14 said :

Well that’s if those days (times) penalty rates are currently applicable are really as unsuitable and unsociable as they are made out to be……

Do you work Saturday or Sunday or night shift?

I must admit I don’t but did it in the past. And I will tell you I would not have done those hours for no additional pay and I know of few if any who would.

Whilst some enjoyed having a couple of weekdays off not one I knew would have choosen to work those hours even with a side benifit for that if there was no additional pay attached.

Yes, I worked many years of weekend work, some with penalty rates, some not.

Don’t work weekends anymore because it doesn’t suit me although I could earn more money (sans penalty rates) if I chose to.

But regardless, aren’t you basically agreeing with me? That the people you know wouldn’t work those hours for the same money so there would be a labour shortage forcing higher pay?
But what if there are other people who will work those hours because it suits them better?

The current form of penalty rates places an artificial restriction on society and individuals, telling them what they must value rather than letting them choose individual.

Related Articles

CBR Tweets

Sign up to our newsletter

Top
Copyright © 2017 Riot ACT Holdings Pty Ltd. All rights reserved.
www.the-riotact.com | www.b2bmagazine.com.au

Search across the site