The World after WorkChoices

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What should take the place of the WorkChoices legislation?

The question, of course, presupposes that something should take its place. Clearly, many in the Government think this should happen.

Peter Costello, number two Liberal in the Government, thinks that unfair dismissal rights should be abolished for all workers, not just those in firms with less than 101 employees. Number three, Nick Minchin, apologises that ‘there is still a long way to go’, especially in further changing the system’s ‘edifice’ — ‘awards, the IR Commission, all the rest of it’. Number eight, Ian Campbell, agrees. Number one, John Howard, says that the Government ‘won’t be taking further major proposals in that area to the next election’. But then they didn’t take WorkChoices to the last election.


Thanks to Sean Leahy.

Others, however, take the view that what is needed is not more ‘steps’ along this ‘path’, but a different path altogether. They take this view because the great benefits we were promised from WorkChoices are unlikely to materialise, but the costs are likely to be significant.

These costs arise because WorkChoices represents an unambiguous transfer of power from employees to corporations.

Every major change made in this legislation has this effect — be it the abolition of unfair dismissal protections for workers in firms with less than 101 employees, the abolition of unfair dismissal protections for workers in any firm where merely part of the reason for dismissal can be said to be for ‘operational’ reasons or the removal of the ‘no-disadvantage’ test as the benchmark for agreement making and its replacement by five parsimonious minimum standards. Similarly, the effect is also there in the removal of employees’ access to compulsory arbitration through the Australian Industrial Relations Commission (AIRC), the transfer of minimum wage fixing responsibilities from the AIRC to the ‘Fair Pay’ Commission, the abolition ‘forever’ of awards covering the jobs of employees who sign any agreement and the penalties for including ‘prohibited content’ in agreements. The promotion of and primacy given to individual contracting also achieves this, as does the imposition of restrictions on the right to strike which are harsher than those imposed in any other industrialised democracy.

But won’t this lead to higher labour productivity? All the evidence tells us that it will not. New Zealand saw labour productivity growth stagnate following radical legislation promoting individual contracts and abolishing awards was enacted in 1991. In the growth cycle after the introduction in Australia of the Workplace Relations Act 1996, promoting individual contracts and constraining employee power, productivity growth dropped below the rate achieved under the traditional award system in the 1960s and 1970s.

Meanwhile a number of workplace-level studies have shown individual contracting to be no better than collective bargaining, and often worse than it, at promoting workplace productivity. For every workplace that loudly boasts an increase in labour productivity after individual contracts were introduced, there’s at least another one down the road silently experiencing the reverse.

Sure, profits may rise. On the other hand, workers in vulnerable positions, especially those in industries where labour cost is a key factor in competitiveness, may face the danger of having to negotiate away penalty rates, overtime pay and other conditions supposedly ‘protected by law’ — without necessarily receiving a cent in compensation. These workers tend to be low paid. Many are women. Workers in occupations in high demand will probably feel little impact in the short term. But over the long run, the loss in employee bargaining power will affect them. And even the medium term consequences may be adverse if the current trend growth in unemployment continues.

What is the best way forward for the future? There’s no point in trying to go back to the old Workplace Relations Act, or even that which preceded it. Those Acts were flawed, and as the award system is being gutted and dismantled, we need to think anew about what a decent industrial relations system would look like.

The proposal for the future

At the core of a new industrial relations system should be an acknowledgment of the primacy of the internationally recognised rights of employees to freedom of association and to engage in collective bargaining. These rights are clearly breached by WorkChoices. They should not be able to be suspended by third parties such as the Minister, or a corporation’s customers or suppliers, as a result of inconvenience, the content of a proposed agreement or whether it resembles someone else’s agreement.

Individual contracts should not be able to be used to undercut these rights. If employees wish to engage in collective bargaining, this right must be recognised by the corporations concerned. Britain, Canada, the US and New Zealand provide a range of examples — some good, some bad — of how employees’ desire for collective bargaining could be recognised. Both parties should be obliged to behave and bargain in good faith. The overseas experience tells us that the effectiveness of such obligations depends on the administering body (the AIRC) having powers to impose timely, sufficient and exclusive remedies for unfair practices.

Individual contracts need not be abolished altogether. Informal ones have been part of the system for over a century, and normally provided opportunities for a higher rate of pay than the award minimum. The main problems arise from the minority of individual contracts that are registered—that is, Australian Workplace Agreements (AWAs)—as these provide the easiest opportunities to undercut minimum conditions and undermine collec¬tive bargaining. One option—the best approach—is simply to abolish AWAs. Alternatively, the requirements and procedures for AWAs could be substantially tightened, and they could be required to satisfy a ‘net advantage’ test. Regardless of what forms individual contracts take, they should be subservient to collective agreements and unable to override them, unless permitted by the collective agreement. There should be no prohibition on protected action in support of a collective agreement merely because there are individual contracts in place. Corporations should not be able to sign ‘greenfields’ agreements with themselves that lock out collective bargaining until their expiry.

The AIRC should not hold a centralised role in wage fixing, but it should be able to set minimum wages, to act to prevent discrimination and unfair practices in bargaining, to deal with all unfair dismissals, to arbitrate intractable disputes, especially in essential services, and to take action to redress gender inequity.

The Government sees WorkChoices, radical as it is, as just a step along an evolutionary path to a presumed neo-liberal nirvana. We can confidently expect that the next steps it wishes to take would further reduce employee power. We need more debate about genuine alternatives in industrial relations policy, to make sure that a new path can be carved out that benefits employees and not just large corporations.

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