How to Wreck a Working Nation

The Howard Government ‘reforms’ to workplace relations will cost the community dearly and achieve next to nothing for employment or productivity. Genuine leadership and investment in people would. The Government should play a different role and address the complexity of the issues in the long-term. Employer groups, especially the Australian Chamber of Commerce & Industry (‘ACCI’), in endorsing these reforms, talk of increased opportunities, greater flexibility, higher productivity and more jobs. The present system they say, particularly ‘unfair dismissal’ provisions, frustrates employers in their efforts to increase productivity. Those opposing the changes are addressing different consequences. The ACTU, individual unions, the ALP opposition, and even some church groups, point out that there will be less job security which will have a severe effect on employees. In future, those offering individual contracts will not need to consider whether employees will be worse off. Data from the Australian Bureau of Statistics shows that individual contracts pay less than Workplace Agreements. Casual loadings, holiday pay, penalty rates and overtime pay – all gained over a considerable time through accepted judicial processes and considerable economic argument – are to go. These should be issues of immense concern to us all. Uncertainty about future employment arrangements leads to stress, which leads to illness and higher medical costs (John Merson, ‘Stress – Causes, Cost and Cures.’ Sydney: ABC Books, 2001 and ‘The Anatomy of Stress’ , ABC Radio National Science Show, September 1998). Long work hours mean less time spent in personal relationships, with families and especially children. Less time spent supporting the education of children leads to poorer educational attainment and employment outcomes and higher crime rates (Margaret Norrie McCain, and J. Fraser Mustard, Reversing the Real Brain Drain: Early Years Study Final Report. (Toronto: Canadian Institute for Advanced Research, 1999)) The result is the expenditure of vast quantities of taxpayers’ money. One would have thought a responsible government would be greatly concerned. The Government’s case for industrial reform fails mainly because the evidence does not support the gains they claim will follow. Specifically, there will not be increased productivity or more jobs. Achieving these outcomes involves very big issues: genuine accountability, honesty and democracy, how we approach problems – especially those with long-term consequences – the working of the Australian Federation and the kind of society we want. There is no evidence for their claims of increased productivity. Access Economics (AE’s) advanced the productivity argument last year in commenting on the ALP’s industrial relations election platform. Productivity was claimed to be positively correlated with individual contracts and negatively correlated with reliance on awards. A table in AE’s report further claimed that there was a relationship between economic growth and industrial relations reform. As I have pointed out in another article (‘What price economic growth and progress? Taylorism revisited’ On Line Opinion, 24 September 2004), the data does not support their claim. Anyone can test this by taking the data off AE’s charts and submitting them to tests in an Excel spreadsheet. It is not rocket science! Despite that, the Chairman of the Business Council of Australia’s Employment and Participation Taskforce, Michael Chaney, branded the ALP’s moves to strengthen the Industrial Relations Commission as ‘reversing important cultural and attitudinal changes that have enabled employees and local workplaces to be more accountable for performance, productivity and rewards’, Federal Workplace Relations Minister Kevin Andrews excoriated the ALP over its policy. Had he looked at the data? In various interviews ACCI’s Chief Executive Peter Hendy has claimed the award system has been a hindrance to real wage rises and to people who are unemployed getting jobs; if a flexible workplace can take account of productivity changes, then more people can stay in work and more people can get real wage rises. Hendy has also asserted that workers will only lose from the strikes the union movement will run in protest, that the ACTU’s emotional arguments are contrary to community wishes, and that anyway, employees can make decisions for themselves. We should have faith, he says, that employers will ‘do the right thing’ and the safety net will protect against unscrupulous employers: laws against coercion will stay. There is no evidence that higher wages will result. If individual contracts lead to higher wages, surely workers would have rushed to accept them. The Sydney Morning Herald’s Adele Horin says the uptake has been slow (‘Workers will be on their knees for fair pay’ Sydney Morning Herald 25 June 2005). She quotes case study research concluding that individual contracts have rarely been bargained but instead are unilaterally determined by management. Professor David Peetz of Griffith University has shown unequivocally that non-managerial workers on individual contracts received less than workers on registered collective agreements. While the difference is not significant for men employed full-time, it is substantial for women and for casual and part-time workers.(‘Lies, AWAs and Statistics’ , Workers Online June 2005). Peetz used the latest figures from the Australian Bureau of Statistics and his facts contradict the assertions of Minister Andrews. Employers do not have an overwhelming record of fair employment in an unregulated environment. Professor Bill Mitchell of the University of Newcastle and others have pointed out, ‘The incentive for capricious behaviour is compelling. Only workers on individual contracts will be able to pursue unfair dismissal claims in tort. But in reality, the expense, legal complexity and time lags of common law claims, coupled with the fact that these actions do not offer reinstatement, means that few workers will achieve any reasonable recourse.'(‘Industrial relations changes – a further descent’ , the Centre for Policy Development, 1 June 2005) The argument that more employment will be generated by higher productivity is economic nonsense, as any Economics 101 student would know. Additional employment, like investment, flows from increased demand for the goods and services of the economic entity. That hardly arises from a workforce paid lower wages, especially in an ever-tighter labour market where casual work is declining. Australians already work longer hours, on average, than people in any of 16 other comparable countries (Rodney Tiffen & Ross Gittins, ‘How Australia Compares’ (Cambridge University Press, 2005)). Australia’s average increase in productivity has been half a percentage point above the OECD average and for the period 1996-2000 it was less only than Ireland and Finland, countries with more centralised labour markets than ours and stronger unions (Joe Isaac, ‘Danger in flexibility mantra’, The Australian Letters 19 February 2005.). How much more could one get out of the workforce? Then there are the matters of political honesty, how we make important decisions and what all this means for the Australian Federation. Politicians are willing more than ever to ignore or distort the truth or to claim evidence for their policies when there is none. Not only in foreign policy and immigration but also in the ways in which individuals and community groups are supported, funded and informed. Prime Minister Howard, Minister Andrews and employer groups demand that unions inform their members at the same time as they are doing anything but that. Professor Mitchell said, ‘Australia is steadily becoming a totalitarian society with the same imprint of lawlessness that characterises such regimes.’ How democratic are governments that use dodgy statistics and selective information? There is an immature and simplistic tendency in Australia to overturn or remove alleged impediments to ‘progress’ and put in place new structures, instead of seeking out the real problem. Airport security problems are to be overcome by another body with greater powers; problems at ports are to be fixed by the Federal Government’s intervention. (Is the problem with the ports a failure to invest in infrastructure and/or a problem with the procedures used to manage the queue?) The proposed changes involve the new Commonwealth legislation overriding the present arrangements within each State. But can the Commonwealth demonstrate superior performance and show that it has achieved greater benefits than the States? The Government can in fact play a unique and quite different role. Work is not just an economic issue. It contributes to the way people perceive themselves. The workplace is an alternative village where significant relationships develop. What happens in the workplace impacts personal life, health and safety and significant external areas such as the physical and natural environment and the futures of our children. Investment in education significantly enhances the qualities of employees, amongst many other benefits. No employer or business can take all these issues into account. Unfortunately, governments in Australia have increasingly failed to develop integrated policies reflecting all of these relationships. Despite most major issues requiring long-term solutions, governments have failed to address the long-term and, especially since 1996, have merely pursued ideological goals. What are the real problems faced by smaller businesses? Are they due to the unfair dismissal provisions? Do they really require the wholesale changes proposed? How much of the advocacy is just chest thumping by employer groups trying to justify their existence? Is their advocacy based on polls of members’ wishes? Are the margins to which owners and managers of small businesses work — the combination of the resources, knowledge and skills in place — sufficient to effectively manage staff and achieve their goals or only to deal with the technical aspects? How much of the problem relates to tax laws and reporting requirements? Government should be supporting best practice: there is evidence and experience. Some of it comes from previous employer-sponsored research. In November 2000, Campbell Anderson, then President of the Business Council of Australia, speaking at the launch of ‘A Unitary Industrial Relations System: Unfinished Business of the 20th Century’, said, ‘The days of master/servant relationships are long gone and the boundaries between managers and other employees are increasingly blurred. Emphasis is increasingly being placed on teamwork, workplace cultures with mutual trust, and the alignment of personal and organisational objectives and values.’ In truth, increases in productivity will come mainly from one area of endeavour: the development of productive working relations between employer and employee. More than 30 years of research on leadership has shown that concern for employees, including commitment to excellence, trust in others, setting high standards and absolute commitment to best practice in recruitment, contribute to outstanding results. As well, contingent compensation, highly selective recruitment, substantial investment in training, employee empowerment, higher wages and reducing status differences are significant; and the most important factor, genuine and honest leadership. If people share common values and feel they have reasonable control over their own lives they will work hard to achieve goals they believe in. These are the results of studies of successful enterprises in many industries. Issues of how people work together and how decisions are made, genuine employee performance management systems, and the hard-yards of achieving change in organisations are not being given the attention they deserve. Yet it is only at the end of that path that the rewards will be achieved. Unfortunately, politicians, business advocates and the media seem to have a minimal understanding of this. They are still seeking the dramatic and imposed solution. As Justice Isaac said ‘Industrial relations reform should be justified not by rhetoric but by a transparent account of the evidence on which it rests … more attention should be given to constructive dialogue between the representatives of employers and employees on the nature and need for reform’.