Penalty rate reduction may encourage businesses to be open more hours or more days, but may not increase retail trade. If a consumer only has a certain amount of money to spend, it won’t matter if there are more spending hours available. The reduction in penalty rates was strongly contested by the unions and comes at the same time as a 3.3 percent minimum wage hike. This wage hike could cripple businesses already on the brink.
- There is much debate on the idea of reducing penalty rates but business owners believe that it may not be consumer friendly.
- The issue would be that people don’t have excess cash but rather are limited to the amount of funds that they can spend and the consumer would also have to embrace a full 7 day trade.
- If the rates are cut the businesses are left with the task of trying to balance the costs to run business seven days a week and the consumer actual spending during the week.
“While the ruling to cut penalty rates has been sighted to promote better customer service by offering opportunities to hire more staff, it has angered unions and some retailers.”