The Productivity Commission’s recommendation to slash Sunday penalty rates has been labelled a “bad idea” and a “bad policy” by critics including the ACTU, the Greens and Labor.

The Opposition’s Shadow Treasurer, Chris Bowen, said the Productivity Commission’s draft report into workplace relations was a policy that “doesn’t stack up”.

“This is a policy which is bad for Australian families and Australian business,” Mr Bowen said.

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“It will kill enterprise … Where is Joe Hockey? The job of the Treasurer is to promote good economic policy.”

Greens deputy leader and industrial relations spokesman Adam Bandt joined the chorus of dissent, saying that with high housing costs and slow wage growth, young Australians in particular relied on penalty rates to make ends meet.

Shadow Tresurer Chris Bowen thinks Joe Hockey is hiding. Photo: AAP 

“Any cuts to penalty rates will be a body blow for young people across the country,” Mr Bandt said.

“With housing prices so high and wages growing so slowly, young people working in retail and hospitality depend on penalty rates to support themselves and make ends meet.”

ACTU secretary Dave Oliver was similarly scathing: “What they are suggesting is a wage cut for the lowest paid workers in the country.

“What’s coming out of the Productivity Commission has all the hallmarks of WorkChoices.”

In its draft report into Australia’s workplace relations framework, the commission suggested keeping penalty rates for essential services.

“There is no comparable case to alter them,” it says.

Productivity Commission chairman Peter Harris told reporters in Canberra that Australia’s workplace relations system was not systemically dysfunctional.

Adam Bandt from the Greens says any cuts to penalty rates will hurt young people in Australia. Photo: Getty

The way in which members of the Fair Work Commission were appointed should be changed, the report suggested, with the suggestion governments create a panel to select suitable people.

The existing appointment process was clearly flawed, the report also said.

A requirement to review awards every four years should be scrapped and a new system put in place based on need.

The report proposes the option of allowing the commission to make temporary changes to the minimum wage in exceptional circumstances.

It recommends tweaking unfair dismissal laws, so employees can only receive compensation when there was no evidence of underperformance or misconduct.

How the productivity commission report could affect you

– Sunday penalty rates that aren’t included as overtime or shift work to be set at Saturday rates for hospitality, entertainment, retail, restaurants and cafes

– Essential services keep current penalty rates

– Creation of new statutory enterprise contract for small to medium businesses

– Creation of independent expert panel for Fair Work Commission appointments

– Compensation for unfair dismissal only where there’s evidence of underperformance or misconduct

– Awards reviewed only when necessary, rather than every four years

– Fair Work Commission able to make temporary changes to minimum wage

– Review apprenticeship and traineeship arrangements

– Create a no-disadvantage test in place of better-off-overall test for individual flexibility arrangements

– More resources for Fair Work Ombudsman to investigate employers suspected of underpaying migrant workers

– with AAP