Abolish awards, one safety net will do: report

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Abolish awards, one safety net will do: report

A conservative think tank says the award system should be abolished, leaving just a minimum wage and statutory working conditions, saying there is no need for ‘two safety nets’.

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A conservative think tank says the award system should be abolished, leaving just a minimum wage and statutory working conditions, saying there is no need for ‘two safety nets’.

The Centre for Independent Studies has released a report Relics of a Byzantine IR System: Why Awards Should Be Abolished saying ‘times have changed’ for Australia’s industrial relations system.

Written by policy analyst Alexander Philipatos, the report says awards are ‘the remnants of a protectionist and interventionist policy firmly at odds with Australia’s open, competitive market’.

‘Despite more than two decades of reform and a shift from arbitration towards enterprise bargaining, the old award system still remains central,’ report says.

Anachronism

‘In today’s competitive economy, the award system is an anachronism. Awards set industry-wide wages and conditions based on the principle of equal pay for equal work.

‘This approach to determining wages and conditions ignores the particular circumstances of individual firms and their capacity to pay.’
 
‘Employers who cannot afford to pay these conditions must either sack workers or employ them “off the books” at below award rates.’

‘Awards can also hamper productivity growth by preventing employers from restructuring remuneration arrangements to introduce performance-based pay.’

‘Unfortunately, Prime Minister Julia Gillard’s commitment to leaving workers no worse off has meant a significant increase in award wages and conditions.’

Raised costs

‘This wage hike has raised costs for business and cut jobs because employers who cannot afford the additional costs lay off workers to cope.’

The report says ‘out-dated’ employment conditions such as penalty and overtime rates are ‘increasingly out of step with the nature of business and employment in many industries, particularly retail and hospitality, where consumers expect round-the-clock service.

It says that the comprehensive set of statutory entitlements under the Fair Work Act 2009 which the award system builds upon, is one of the most generous safety nets among the world’s richest countries.

‘In 2011, Australia’s minimum wage represented 54% of the median wage and ranked fifth highest among OECD nations,’ the report says.

No need

‘There is no longer a need for two safety nets. This report proposes abolishing the award system in favour of the existing federal minimum wage and statutory conditions.’

‘These changes will provide much-needed flexibility in the labour market, ease cost pressures for struggling small businesses, and create more jobs for the unemployed.’
 
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