FEARS that the Coalition government wants penalty rates to be cut have reignited debate on the issue in Tasmania.
The state's three main parties were quick to rule out supporting any changes to penalty rates after the government urged Fair Work Australia to consider the "softening economic environment and labour market" and employers' ability to hire staff as it reviews the modern award system.
Industry figures say "excessive" penalty rates are holding the state's economy back by forcing cafes, restaurants and shops to close on the weekends and public holidays.
However, unions say any moves to reduce penalty rates would be an attack on workers and would add to the number of working poor.
Tourism Industry Council Tasmania chief executive officer Luke Martin said it was frustrating that unions and political parties were unwilling to budge from their entrenched positions.
"We have a model that's currently not encouraging economic activity in the areas that need it," Mr Martin said.
If the major parties refused to tackle the politically fraught issue, it would be up to industry and employee representatives to negotiate special arrangements.
He said this could see groups of businesses in particular areas joining forces to offer all employees better standard conditions in return for forgoing double time and a half rates on public holidays.
Mr Martin said the spike in employee costs on a public holiday stopped even successful businesses opening.
"We're going to have a busy public holiday on Monday and half of Salamanca will be closed," he said.
Unions Tasmania secretary Kevin Harkins said nothing had changed to justify cutting penalty rates for working on the weekend or public holidays.
Mr Harkins questioned whether businesses were overstating the impact of wage costs on their profitability."Why don't they go and crack down on the cash payments?" Mr Harkins asked.