Penalty Rates and Labour Supply: Employee Attitudes to Non-Standard Hours of Work

Abstract

This paper considers the supply of labour to non-standard hours of work. If penalty rates for such hours of work were reduced, any potential employment creation due to increased labour demand would depend in part on the labour supply response. We consider the rationale for penalty rates, changes in the labour force and in the length of working hours, and evidence on employee attitudes (including in-depth discussion groups that we have organized). It is concluded that changes since the introduction of penalty rates and the heterogeneity of employee preferences make the rigid structure of penalty rates inappropriate. Appropriate patterns of working time and associated compensation vary substantially among industries and occupations.