Canberra Business Chamber chief executive Robyn Hendry said changes proposed in the Productivity Commission's draft workplace relations could also help tackle long-term youth unemployment because more businesses would be likely to open on Sundays.

"Sometimes workers in these areas are not well paid, they are often at the lower end earning capacity, so I don't say this lightly. What we have been seeing for a long time is many of the businesses are closed on Sundays," Ms Hendry said.

Chief Minister Andrew Barr is not so keen.

"A two-tiered penalty rate system is a bad idea and would hurt low-income workers in the retail and hospitality sectors in the ACT," he said.

Under another draft proposal, workers can swap public holidays to different days of the year, but Mr Barr says the ACT government will retain the right to manage public holidays in the territory.

Ms Hendry said small and big businesses in the ACT were looking for more flexibility. Sunday shifts would suit the city's large student population sector aiming to maximise income on weekends, and people with family responsibilities during the week, who could do a baton change with their partners on weekends.

"None of us want long term unemployment increasing, if we can create jobs around broadening that base on the weekend, I think we have a big opportunity on the visitor economy front as well," Ms Hendry said.

Retailers like IKEA and Costco, entertainment hubs and football games had the potential to draw more people from the region of 800,000 people into the city, creating demand for businesses on Sundays.

Engineering and IT student at the ANU, and a hospitality worker, Alan Babaei says reducing penalty rates takes away the incentive of putting weekends aside to work.

"Sunday penalty rates are helpful in terms of managing our time, helps us spend less time working and more time focusing on building our lives, studying our courses," he said.

"If they're only making [pay] similar to Saturday, it probably won't be a huge effect, it's probably not terrible, but again, they're just taking away the incentives which is the wrong way to go. My friends and I would have to take on more shifts to balance our lives to pay off the rent and other expenses that we have."

ANU arts/law student Isabel Vaughan says workers should be compensated for giving up their time that could otherwise be spent with family and loved ones.

"I think penalty rates are personally important to my income, and also to young people who work in hospitality and who commonly get paid the minimum wage or even less, and that don't get paid superannuation."

Ms Vaughan said students who didn't receive assistance from their families, were independent and worked to pay for living costs or education fees, would be hardest hit by the lower penalty rates.

The commission's final report is due in November.