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WorkChoices - not so good: Fair Work Australia - frightening!

By Des Moore - posted Wednesday, 10 October 2007


By contrast, although (regrettably) WorkChoices retains the award system and operates what amounts to an industrial police force to enforce the detailed regulation of employer-employee relations, it contains no obligation to bargain in good faith, leaves it completely open to employers and employees to decide whether to bargain on a union or non-union basis, and allows individual agreements that meet fewer conditions and have protection from industrial action.

The institutional framework

The acceptance of the imbalance of bargaining power argument has inevitably led both major parties to establishing or proposing special authorities or tribunals to administer the supposedly protective legislation. The Coalition has in effect created industrial police and quasi-judicial forces and Labor’s Fair Work Australia would take over those forces and the roles undertaken by the institutions established by the Coalition.

This has significant implications for the operation of the award system. Hitherto, awards were often not fully enforced and the unions (the primary enforcers) tended to use any award breach they found more as a bargaining weapon in negotiating workplace agreements or in regard to other “deals”. This limited application of awards was particularly important for small businesses in the service industries, which operated more in a de facto deregulated labour market. Now, however, the Coalition has established well-funded bodies to ensure awards and other regulations are enforced and that will continue if Labor takes over.

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This is the first time that this has happened in Australian industrial relations. Importantly, the much stricter enforcement of awards would likely lead to reductions in employment and the cessation of small businesses.

The minimum wage and fairness

The Coalition’s policy of continuing to set, and to prevent any reduction in, minimum wages is among the worst features of the WorkChoices legislation. Moreover, the “guidelines” given to the Fair Pay Commission virtually ensure Australia’s minimum will continue close to the highest among OECD countries relative to the average wage.

Labor’s policy of determining an annual minimum wage is cause for similar if not greater concern. The FWA would apparently have wider minimum wage responsibilities, including an annual updating of minimum wage rates for all awards under an award system that would be more extensive. The difficulty of obtaining employment for those outside the job market would likely increase.

The minimum wage system misuses the wage system as a vehicle of social welfare policy and applies it unfairly. While households with incomes in the bottom quintile receive only a small proportion of their income from wages (about 10 per cent), many of those receiving the minimum wage live in households that have high incomes with no need for an income supplement. With over 100,000 separately regulated minimum wage points, the whole minimum wage system (sic) is little short of farcical.

ABS surveys show that about 1.7 million Australians want work or more of it. But as many are relatively unskilled, their capacity to obtain jobs is importantly dependent on employers being able to offer a wage commensurate with their lower productivity. A minimum over $27,000 a year, or close to 60 per cent of the median wage, necessarily prevents a significant proportion of lesser skilled being offered employment.

Unfair dismissals and individual agreements (AWAs)

WorkChoices allows both individual and collective agreements by direct negotiations between employers and employees. Although this is an important in-principle recognition of the right of employers and employees to negotiate the terms of employment, that principle has been heavily qualified by the introduction of the fair compensation test. Beyond that, all agreements must also comply with mandatory legislated minimum standards. In fact, they apply universally to all employment contracts in Australia, and are unable to be varied or altered even by agreement.

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The inclusion of these conditions represents a major change compared with the situation already existing in practice in the labour market.

Labor’s plan would go much further, with “guaranteed” minimum conditions extended to ten and, under its “modern, simple industry awards”, a further ten minimum employment standards could be compulsorily arbitrated. Moreover, such conditions/standards would apply to all individual employment contracts under common law (except for employees “historically award free, such as managerial employees”). Labor would also effectively remove the exemption of small businesses from unfair dismissal claims.

Industrial disputes

Under the Workplace Relations Act 1996 (WRA 96) industrial action may be taken during the negotiation of a collective agreement but not during the operation of that agreement. Moreover, unions are not able to take industrial action in respect of employees on AWAs. Although the application of the WRA 96 provisions by the AIRC frequently caused costly settlement delays to employers, amendments in 2006 remove the discretion previously available to the Commission in processing industrial action and termination of agreement cases.

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This is an edited version of an address given at the Industrial Relations Society of Victoria, Annual Convention 2007: “A World at Work: Challenges and Opportunities for Workplaces” on September 28, 2007.



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About the Author

Des Moore is Director, Institute for Private Enterprise and a former Deputy Secretary, Treasury. He authored Schooling Victorians, 1992, Institute of Public Affairs as part of the Project Victoria series which contributed to the educational and other reforms instituted by the Kennett Government. The views are his own.

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