Let’s add some truth to the debate on the Fair Work Act
Matt Thistlethwaite posted Monday, 6 February 2012
This year will be a big year for the Government and for Australia. One of our challenges will be the review of our Fair Work Act. This will be an examination of whether the Act is operating as intended and whether the legislation could be improved in order to achieve its objective.
The Opposition will no doubt be using this opportunity to soften the ground for a return to WorkChoices. The Liberal backbench are falling over each other to force Tony Abbott to move closer to the policy of the Howard government.
The sensible question that people should be asking in this debate is – what makes an effective modern workplace relations system?
The answer is three basic elements:
• Protection of the rights of vulnerable workers;
• Fostering the making of enterprise agreements in workplaces; and
• Promoting productivity and co-operation between employers and employees.
Any objective assessment of the measures of these elements indicates that the Fair Work Act is quite an effective piece of legislation. The reality is our workplace relations system promotes economic growth, employment, real income growth and productive conditions for doing business.
In respect of the protection of vulnerable workers rights the Fair Work Act achieves the right balance. The National Employment Standards, modern awards, and the National Minimum Wage establish a safety net of fair minimum conditions that allows low paid workers to earn a fair and reasonable income, be active participants in society and consumers contributing to domestic demand. Importantly, this regime does not allow vulnerable workers to be forced to negotiate conditions that are below the award standard as individuals, as was the case under WorkChoices. So we now have a fairer industrial relations system to support economic growth.
When it comes to fostering agreement making in workplaces under the Fair Work Act the figures speak for themselves.
Active Enterprise Agreements at 30 June 2011 totalled 23,403. This represents a rise of more than 30% from 17,532 active at 30 June, 2008 under WorkChoices. The trend increase in agreement making under the Fair Work regime indicates that in more workplaces employers and employees are sitting down to negotiate terms and conditions that suit their business.
A simple measure of unsuccessful bargaining in workplaces is the number of days lost due to industrial disputes. Since 1991 the number of days lost to industrial disputes has been falling. In 1991 the average days lost during the year was 239.4 days per 1000 employees. To compare, last year the figure was 15.9 days lost per 1000 employees. This is a significant drop. There has been an average reduction in days lost to industrial disputes almost every year for the past two decades.
Annual figures have been calculated by aggregating four quarters of data (September to June) for each financial year.
Source: ABS, Industrial disputes (cat. no. 6321.0.55.001)
The Howard Government had more than 105 days lost to industrial action per 1000 employees in 1999-2000. This figure represents the first four years of the Howard Government’s initial industrial regime, a policy that turned the screws on working people.
Since the introduction of the Fair Work Act, this figure has not risen higher than 20 days lost per 1000 employees.
When the Opposition’s cheap seats bleat that Australia is heading back to the bad old days, it is important to maintain perspective.
Opposition Leader, Tony Abbott, has declared, "we've got a militancy problem”. Mr Abbott outrageously links this “militancy problem” with the Fair Work Act.
The reality is that there is less industrial action in Australian workplaces than there ever was under the conservatives. The result is more harmonious, co-operative workplaces. Positive proof that the current regime is working.
The debate about labour productivity is one of the most illogical economic debates we have seen.
Labour productivity is measured as Gross Domestic Product (GDP) per hours worked. As such, labour productivity relies on many factors that may have nothing to do with industrial relations. A drop in GDP (due to the impact of external factors, such as the current financial crisis in Europe or large-scale natural disasters such as the Queensland floods) coupled with steady or increasing employment will see a fall in labour productivity numbers. This, obviously, has nothing to do with the operation of any industrial relations system.
Tony Abbott pushes facts to one side and tells anyone who will listen that “we’ve got a productivity problem”.
Wrong again.
Despite the danger and difficulty in linking productivity with an industrial relations regime the long term labour productivity trend in Australia is positive. Labour productivity has increased on average by 2.4% per year over the past two decades.
The 1992 Keating Government saw the biggest labour productivity gains since the early 1970s when data became available. It was at a time when industrial relations reforms, promoted firstly by the then Australian Industrial Relations Commission (1991) and then by federal legislation (1992, 1994), introduced a formalised system of decentralised bargaining.
These reforms removed nation-wide and industry-wide determination of wages and conditions above a safety net level, which allowed individual enterprises and their employees to create their own arrangements for their specific needs. Allowing employers and employees to bargain for what they wanted at their workplace built on earlier ‘structural efficiency’ reforms (1988-91) which allowed multi-skilling in the workplace and removed role-based demarcation barriers and similar restrictive work practices.
The Opposition needs to accept that WorkChoices did not have a positive impact on labour productivity. Attacking the rights of those earning $16 an hour does not and will not lead to productivity growth.
An objective assessment of the measures of strong workplace relations systems indicate that the Fair Work Act is meeting it’s objectives. More agreements are being made, disputes are decreasing and we remain a productive nation. But at the same time incomes are increasing and vulnerable workers cannot be exploited. All proof that Labor is doing a great job in managing the Australian economy in the interests of workers and their families.
Tags: Workplace Relations