A decrease in penalty rates would boost major retailers’ profits or result in tiny reductions in consumer prices without changing employment levels, an independent financial analysis suggests.

The analysis has been seized on by opponents of penalty rate cuts who say it shows shareholders, not workers, would benefit from any cut.

According to Citi Research, a division of Citigroup, cutting Sunday penalty rates from double-time to time-and-a-half would increase earnings per share by up to 8% for both Myer and JB Hi-Fi and 5% for Wesfarmers, if retailers retained the benefits.

Citi made the estimate in a confidential financial analysis of the penalty rate issue for institutional investors in retail shares, seen by Guardian Australia.

The analysis, dated 23 November, said retailers would either “retain all the benefits for their shareholders” or pass on the benefits of lower penalty rates to consumers, depending on the level of competition in their industry.

But the saving “will be negligible at less than 1%”, it said, estimating reduced wages could result in cost savings of just 0.1% to 0.4%.

The analysis makes no mention of the effect of a penalty rate cut on employment levels, suggesting Citi does not anticipate retailers would hire more workers or increase shifts.

Tim Lyons, a research fellow at the Per Capita think tank and former Australian Council of Trade Unions assistant secretary, said the Citi analysis “destroys the dishonest employer and Turnbull government case for lower penalty rates”.

“It confirms that cutting penalty rates will not create more jobs but result in increased profits.”

Employer groups have asked for Sunday penalty rates to be cut from 100% to 50% in a Fair Work Commission (FWC) review of awards including the general retail award, the result for which is expected soon.

In its submissions the Australian Industry Group argued that employers consider penalty rates in rostering Sunday shifts and they would offer more or longer weekend shifts if the rates were reduced. It based the submission on evidence to the commission from smaller retailers.

The Australian Retail Association noted it was difficult to demonstrate the effect of cutting penalty rates but evidence from experts, surveys and retailers suggested penalty rates decreased trading hours and therefore employment.

The Turnbull government’s policy is to leave the commission to determine penalty rates, but a number of MPs including Angus Taylor and Ian MacDonald have called for penalty rate cuts to tackle unemployment.

They have received encouragement from the Productivity Commission review of workplace laws completed in December which recommended Sunday penalty rates be cut to Saturday levels in the hospitality, retail and entertainment industries.

Lyons said the Citi analysis was “work by people paid to advise on what the financial effects of a penalty rate cut are”.

“This is a merchant bank confirming ... the big dollars involved in cuts to penalty rates will end up on the hands of shareholders.

“The penalty rate debate has been an enormous attempted con job. It’s about lower wages and higher profits, not more jobs.”

The Citi document noted that most major retailers including Big W, Bunnings, Just Group, Kmart, Target and Myer had expired enterprise agreements. It suggested they might be waiting in “hope that wage reform will be implemented, lowering penalty rates”.

Lyons said the analysis also “destroys a number of myths”, because it showed Australian retailers had higher productivity than key overseas comparison countries.

The Citi analysis stated that while Australia had higher wage rates, “productivity is also higher than offshore peers”. For example, Australian supermarkets have 10%-30% more sales per employee than their UK peers.