Extended trading hours and the retail labour market

This was a rather rushed article for a local newspaper. I thought some readers here might be interested too.

In the public debate surrounding Western Australia’s highly regulated retail trading hours one of the chief economic benefits cited by advocates of deregulation has been that longer trading hours create jobs and reduce unemployment. Critics of the theory argue that the retail sector has already exhausted the potential labour pool and that relaxed regulation will simply divert workers from small businesses to larger and more aggressively competitive outlets. In November 2010 the WA government under the direction of Premier Collin Barnett introduced new legislation to lengthen the allowed opening hours for general retail stores by an additional 3 hours on weekdays, allowing shops to stay open until 9pm. One year later critics were quick to point out that the unemployment rate in WA was up by 22 basis points, while others responded that we fared well relative to the overall decline in employment across Australia during that same period, which was 7 basis points higher.

To make any conclusions about how the new trading hours legislation shaped the WA labour market some amount of further examination is required. In 2008 the Australian Bureau of Statistics released a special report on the condition of the retail labour market in WA, providing a basis for comparison in the 12-24 months before and after the new rules were enacted. The ABS also provides a detailed quarterly report on labour markets across Australia compared to which the performance of the WA labour market and the individual industries it comprises can be benchmarked. At time of writing the latest report covers the September-November quarter of 2011, providing a full year of employment data following the 2010 reform.

Taking the data at face value, as at November 2011 there were 3700 fewer workers employed in the retail sector than there were 12 months earlier. Relative to other industries in WA, retail lost half a percentage point of its formerly 10.5% market share, while nationally the retail labour market remained steady at 10.5%. This was not a smooth transition in WA: there was actually a sharp uptick of retail employment share in the six months following the change, obscured in the results by an equally sharp fall from the quarter preceding. This kind of cyclic behaviour makes trends difficult to identify, but in this case even smoothing out the cycles with seasonal adjustments yields, at best, no relative growth in WA’s retail sector since trading hours were extended.

Retail share of labour force

The post-reform declines in both number and relative size of WA’s retail labour market may appear to defy the clear reality that many shops are indeed open later, with supermarket chains such as Coles and Woolworths requiring many workers at each outlet to operate.  Identifying the source of this labour requires looking a little deeper, at the composition of employment within the retail sector.  ABS data reveals that the extended trading legislation came in the middle of a strong upwards trend in the proportion of retail workers employed full-time. While nationally the retail employment ratio was hovering around 51%, the proportion in WA was racing up from a low of 46% to a peak of over 54% working full-time.  Though the total number of retail workers had fallen after the change, there were on average nearly 2,000 more full-time workers during this period. The ABS figures show that full-time employees in retail work twice as many hours as part-time employees, indicating that the nominal loss in employment numbers experienced by the retail sector  may be substantially or entirely ameliorated by a large boost to the number of hours worked by the average employee.

Percentage of retail workers employed full-time

Instead of attracting new employees from the outside, when shops were allowed to open later they found the additional labour within their own ranks. Though the effect on unemployment in the state remains unclear, the increased availability of full-time work in the retail sector brings the benefits of greater and more regular income to the wide segment of society employed within in it. Retail in WA employs more workers than any other industry and plays an important role in setting prices for consumer purchases. In the year following the introduction of extended trading hours we have already seen extensive restructuring in the balance between full time and part time employment. The full impact may well be yet to come.

1 comment to Extended trading hours and the retail labour market

  • I agree when it comes to iatardny volatility. But the long term volatility , trends not as long as they used to be, etc;, probably comes from the convoluted economic outlook. Seems that every 2-3 months everybody falls from elation to depression and press is pumping up these emotions…

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