Luke’s employer has given him five weeks’ paid leave. The trend is catching on

Retail workers are leading a push for more paid leave, with an increasing number of employers offering five weeks of annual leave in what an industrial relations expert calls a “win-win-win” for workers, employers and the economy.

IKEA and Bunnings are among major retailers that have agreed to five weeks of annual leave, while the retail union says it is in negotiations with Coles, Woolworths and Kmart for more paid leave.

The union movement says more paid holiday leave will improve workers’ wellbeing and boost the economy, but employer groups warn it will impose extra costs on businesses.

Luke Nocke is one of 4000 IKEA employees who will receive an additional week of annual leave.
Luke Nocke is one of 4000 IKEA employees who will receive an additional week of annual leave.Credit: Wolter Peeters

Shop, Distributive and Allied Employees’ Association NSW secretary Bernie Smith said there had been no wages trade-off to achieve five weeks of annual leave in agreements negotiated with Bunnings and IKEA.

“Other employers like Big W, Apple and The Reject Shop have either included a fifth week of paid leave or are on a pathway to five weeks of annual leave,” he said.

Smith said retail workers deserved extra annual leave entitlements after years of productivity gains but low wages growth.

Bunnings and IKEA are among major retailers that have agreed to five weeks of annual leave.
Bunnings and IKEA are among major retailers that have agreed to five weeks of annual leave.Credit: IKEA

“We also know the importance of a healthy work-life balance for workers and the benefits this creates for customers and businesses,” he said.

Smith also said that giving workers more paid holiday leave would boost the economy, “particularly for the retail, hospitality and tourism sectors, where many people spend their leisure time”.

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But Business NSW chief executive Daniel Hunter warned that widespread adoption of five weeks’ annual leave would raise inflation because higher staff costs would be passed onto consumers.

“While big corporates may have the flexibility to offer five weeks of annual leave, this prospect is challenging and potentially damaging to small and medium businesses,” he said.

“If widely adopted, it could add billions of dollars in cost to the books of already struggling businesses – limiting their growth and ability to borrow.”

IKEA’s 4000 Australian employees are entitled to five weeks of annual leave – or six if they regularly work overnight shifts – which the company’s co-worker experience manager, Greg Day, said had a positive impact.

“We believe it makes for a more engaged workforce who can more easily balance work and home life and want to build a meaningful career in retail with us,” he said.

Bunnings chief people officer Damian Zahra said five weeks paid holiday leave was designed to help the retailer attract and retain staff.
Bunnings chief people officer Damian Zahra said five weeks paid holiday leave was designed to help the retailer attract and retain staff.Credit: Patrick Scala

Day said the introduction of five weeks’ annual leave would not affect customers or workflow.

“The main motivation for us is to be able to attract the very best co-workers to join IKEA, and for them to want to stay with IKEA and build their career with us,” he said.

IKEA employee Luke Nocke wants to use his extra week of annual leave to go to concerts and musical festivals outside Sydney and a motorcycle trip up the coast.

“It means I have enough extra leave days up my sleeve to take one here and there for things like spending time with friends, playing basketball and catching up over lunch with my family,” he said.

Nocke also said more holiday leave would benefit his physical and mental health.

“Having five weeks means it’s easier to take a day off to re-energise when I need it without stressing that I’m using up all my leave days,” he said.

Annual leave for full-time workers at Bunnings will increase from four to five weeks across the life of a new enterprise agreement, which began in November 2023.

Bunnings chief people officer Damian Zahra said the new package also provided higher rates of pay, more flexibility and choice on how employees structure their workweek in addition to the phased increase in annual leave.

“We want to attract and retain a high-performing team by providing industry-leading benefits and a great culture,” he said. “The new agreement, including the five weeks of leave, plays an important role in doing that.”

Australian Council of Trade Unions president Michele O’Neil said more annual leave would improve the wellbeing of workers. The union movement is also pushing for new laws to support rights for casual and gig workers and the right for workers to disconnect.

“Improved annual leave entitlements enable working people to have a better work-life balance, spend time with the people they love and it’s good for our community’s health and wellbeing,” she said.

Australian workers are legally entitled to four weeks of annual leave, which University of Sydney Business School associate professor Chris F. Wright said was relatively standard in international terms but was outdated.

“These entitlements reflect outdated social norms, originating in a time when family structures were very different from today, and there is a strong case for updating them,” he said.

Wright said European countries such as Austria, Denmark, Finland, France, Germany, Luxembourg and Sweden provide workers with 24 or more days of annual leave.

But Korea (15 days), Canada (10-20 days depending on provincial law and an employee’s length of service), Japan (10-20 days depending on an employee’s length of service) and the US (no statutory entitlement exists) are less generous.

Wright said additional annual leave would relieve a major source of pressure for workers with care responsibilities.

“Overall, I would expect additional annual leave to be a ‘win-win-win’ for workers, employers and the economy.”

More paid leave will also alleviate the recruitment challenges that are endemic in industries such as retail, hospitality and agriculture, Wright said.

“Jobs in these industries are often low-paid and insecure and the quality of employment conditions are not competitive compared to other industries.”

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