Hospitality and retail employees will also see their public holiday rates cut from 250 per cent to 225 per cent.

The FWC said it agreed with the Productivity Commission there were likely to be some “positive” employment effects from the reductions.

“The evidence also supports the proposition that a reduction in penalty rates is likely to lead to increased trading hours, an increase in the level and range of services offered on Sundays and public holidays and an increase in overall hours worked,” FWC president Iain Ross said on Thursday.

However, Ross noted Sunday penalty rates would still be higher than for Saturdays.

“Generally speaking, for many workers, Sunday work has a higher level of disutility than Saturday work,” he said.

“Though the extent of the disutility is much less than in times past.”

Sunday rates for hospitality workers will fall from 175 per cent to 150 per cent while those for fast food workers will drop from 150 per cent to 125 per cent.

Retail workers face a reduction from 200 per cent to 150 per cent.

Pharmacy workers who work from 7am to 9pm will see their penalties cut from 200 per cent to 150 per cent.

Ross said the changes would provide greater consistency to penalty rate settings in the hospitality and retail awards.

Australian Council of Trade Union president Ged Kearney said workers on minimum wages relied on weekend penalty rates to survive.

“This is a bad day for workers in this country,” she told reporters.

Australian Retailers Association executive director Russell Zimmerman said the decision would grow the sector.

“Reducing these rates from double time to time and a half, will increase retail growth nationally and reduce the unemployment rate in Australia,” he said in a statement.

Kearney said that was a “complete furphy”.

“People whose pay is going to be cut … will simply have to work more hours to make up that take-home pay.”

The ACTU estimates the FWC decision will cost low paid workers up to $6000 a year.

SA Unions State Secretary Joe Szakacs said unions were urging political parties to pass legislation locking in penalty rates before the FWC decision comes into effect on July 1 this year.

“We call on the Malcolm Turnbull and all political parties to immediately act to protect working people from any cuts to their take home pay,” Szakacs said.

“Fair Work President Ian Ross admits that many of these employees “earned just enough to cover weekly living expenses” so how on earth does do he expect them to survive now?

“Our hearts go out today to workers in retail, hospitality and fast food who will be doing the same work for less money.”

He added that: “our hearts especially go out to working women, who are the majority of the workforce in these industries – retail is the second largest employer of women nationally and of women aged under twenty-five”.

“The majority of Australians work Monday to Friday – people who give up their nights and weekends, who miss out on family time, should be compensated for working those unsociable hours.

“We are gob smacked that at a time when wages growth is at a record low, and when the Reserve Bank is warning about a slowing economy, that Fair Work Australia, the Federal Government and employer groups think this is a good time to take more money out of the economy.”

– with AAP