The IR conundrum: society or economy?

Despite the protection afforded by this safety net, low-income Australians on individual contracts have experienced a relative decline of wages and conditions. In particular, David Peetz of Griffith University concludes in his report, “The impact on workers of Australian Workplace Agreements and the Abolition of the No Disadvantage Test” that non-managerial employees on AWAs are significantly disadvantaged relative to their non-AWA counterparts. While the Minister for Employment and Workplace Relations, Kevin Andrews, has argued, “Workers on AWAs earn on average 29 per cent more than their colleagues on collective agreements,” Peetz discovered that these gains - while significantly overstated - accrue largely to management-level employees. Thus, employees who are in a position to bargain can make the most of individual contracts; but what about the other half?

Peetz’s survey of non-managerial workers on individual contracts showed they received an average 2 per cent less per hour than workers on registered collective agreements. While this doesn’t seem a huge difference, it was the most vulnerable workers who fared the worst.

Women on AWAs had hourly earnings that were 11 per cent less than women on collective agreements. Casual workers were paid 15 per cent less than those on collective agreements, and AWAs paid permanent part-time workers 25 per cent less. This evidence indicates a bleak future for non-managerial employees after the removal of the no disadvantage test.

Australians can expect to see a freeze on real weekly earnings, particularly among new workers, those changing jobs and disadvantaged employees. We may also anticipate some worsening problems with the gender pay gap, and between full-time employees and those on casual and part-time contracts.

The future of the Australian labour market

The Minister for Employment and Workplace Relations, Kevin Andrews, declared earlier this year:

Australia needs a more flexible labour market to maximise economic growth and employment opportunities and to maintain and improve our standard of living in an increasingly globalised world.

However, the “flexibility” offered by developing countries, with their ready supply of educated graduates, low wage costs, few minimum conditions such as holidays and annual leave, and timid labour unions makes them incomparable destinations for foreign investors or multinational companies looking to reduce costs. Australia, with its high average annual earnings and minimum labour market conditions simply cannot compete on flexibility alone. In the “race to the bottom” of wages and condition, we are simply too far behind to catch up.

A second question is whether winning the race to the bottom, in the pursuit of low-skill and unskilled jobs, is a race worth winning at all. While the Federal Government signals that changes are necessary to “maintain and improve our standard of living,” many commentators have argued that the proposed changes to Australia’s Industrial Relations system will only result in declining living standards, particularly for the least well off.

Since the Federal Government announced its intended changes, Church leaders from across the denominational spectrum have warned that the needs of the economy should remain second to the rights and working conditions of employees and their families. Sydney’s Anglican Archbishop, Dr Peter Jensen, explained that Australia’s present prosperity had already been purchased, “at a fearful price to relationships”. He cautioned that “in the quest for an even better economy, we may be getting rid of the very things that make our money worth having: namely relationships. After all, without relationships, we may as well be robots.” Like many Australians, Dr Jensen is worried what will become of the already strained work-family balance as employers come to expect weekend work and overtime.

The other critical concern is what will happen to the more than a million unemployed and underemployed Australians, and all others who lack the bargaining position to ensure maximum returns from a negotiated, individual contract. The Minister for Workplace relations has already signalled that single parents and other welfare recipients who knock back jobs because of poor wages and conditions will be stripped of benefits under the new industrial relations regime. How will we ensure that these groups won’t be exploited?

By removing the link - established by the Harvester decision - between work and family wellbeing, the introduction of the AFPC and scrapping of the no disadvantage test and the reduction of minimum rights and conditions threaten to significantly reduce the quality of life for the unemployed and low-paid. By breaking the link between a job and prosperity, these changes threaten to swell the ranks of the working poor.

As a nation, we have to consider what effect these changes will have on society. We must ask ourselves whether it is morally acceptable to let wages and conditions fall below a level at which employees can sustain a decent standard of living for their families. We must question whether in the interests of greater labour market “flexibility”, workplaces will become less friendly to the needs of families and communities. Most importantly, we must guard against the social and economic costs associated with the creation of a permanent underclass of expendable, disposable individuals.

These are trade-offs between society and the economy. It is worth considering whether while fulfilling our responsibilities as employees, we are neglecting equally important responsibilities as parents, spouses and citizens.