Award rationalisation rethink, says Howard - but what then?


Award rationalisation rethink, says Howard - but what then?

Prime Minister, John Howard has vowed to adjust the rationalisation of Australia's 4,000 awards if the process would leave workers worse off - a move that would concern employer groups if awards are rationalised by 'levelling up' wages and conditions.


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Prime Minister, John Howard has vowed to adjust the rationalisation of Australia's 4,000 awards if the process would leave workers worse off - a move that would concern employer groups if awards are rationalised by 'levelling up' wages and conditions.

Howard also replied to a question on whether the fairness test would remain in its current form by saying: 'We certainly wouldn't be weakening it' - which left open the prospect that it could be changed. This caused the ACTU to accuse Howard of having plans to go further with the WorkChoices reforms.

Howard said yesterday the Government would continue with the process of award rationalisation, which has been given to the AIRC to undertake.

'But in the process we won't be in any way weakening protections, and if any of that involves weakening protections then we won't be doing it,' he said.

But what if it means award rationalisation stops completely?

Awards frozen

The problem is that Federal awards and State awards (which became NAPSAS) are currently frozen. NAPSAS expire in March 2009 and parties will move to the most appropriate Federal award after the expiry date. The AIRC is to determine appropriate Federal award coverage based on Award Review Task Force recommendations, so something has to happen before March 2009.

One way would be for all workers to move onto AWAs, and the awards abolished be replaced by a minimum adult wage with four or five other safety net provisions, which is what Finance Minister, Senator Nick Minchin and Treasurer, Peter Costello have proposed in the past.

However WorkChoices has been a negative for the Government in the current election campaign, so any further deregulation of the IR system would be a high risk strategy.

Doing nothing not an option

But doing nothing is not an option, as employer bodies are agitating for a simplified award system, all Federal awards will expire in 2011, and the State awards (NAPSAs) in 2009.

The new rationalised and simplified awards are supposed to be the benchmark for the future, and are the basis for the classification structures that will set pay rates against skills. If the process is to stop, what happens next? And if it is to continue but not to the disadvantage of any worker's current rates and condition then 'levelling up' is a likely consequence.

Employers have already expressed consternation about this, concerned that when awards are combined for simplification, that the highest rate or condition - such as penalty rates - in one award, does not become the benchmark for awards with lower rates.

Backward step

Last year when the award rationalisation process was announced, the Australian Industry Group (AiG) put in a submission in which it said 'levelling up' would be 'a backward step which would decrease the competitiveness of Australian industry and have negative effects on employment'.

'The levelling-up of award wage rates mainly affects those employees who do not receive over-award payments,' AiG said. 'Therefore, the cost impact is limited in non-award reliant industries.

'However, there is the potential for massive cost increases to be imposed on employers in all industries if penalty rates, shift loadings and weekend loadings are levelled up. These rates and loadings are typically applied to over award payments.'

Very damaging

In giving an example, AiG said it would be very damaging for employers in the metal industry if award rationalisation resulted in the Metal, Engineering and Associated Industries Award 1998 (which contains a penalty of 150% for ordinary time worked on a Saturday) was combined with the Graphic Arts - General - Award 2000 (which contains a penalty of 200% for ordinary time worked on a Saturday) and the combined award contained the Graphic Arts penalty.

'This would result in a 50% increase in labour costs for employers in the Metal Industry in respect of Saturday work,' AiG said.

Get rid of awards?

The ACTU points out that the Business Council of Australia, in its Workplace Relations Action Plan for Future Prosperity, proposes getting rid of the entire award system and adopting a single, statutory minimum set of conditions covering only six allowable matters.

ACTU President, Sharan Burrow said this plan would abolish workers' award rights to rest breaks, annual leave loadings, overtime and shift work loadings, penalty rates, redundancy pay, skill allowances, disability allowances, work expenses, incentive payments and bonuses, controls over the roster, and stand-down provisions.

She said the Australian Chamber of Commerce and Industry, in its submission to the Award Review Taskforce, proposed getting rid of the current system of award wages and having only a 'single adult minimum wage'.

Cut minimum wage

'This would cut the minimum award wage for a tradesperson by $150 a week,' Burrow said. 'We know from WorkChoices, about which only business was consulted, what John Howard and Peter Costello really believe when it comes to workers' rights - they simply cannot be trusted on IR.

'These proposals for reducing award coverage and stripping away the award safety net could leave millions of workers worse off.'

Howard has now confused the picture with his latest comments.


Review awards, but leave them behind - employers

Award Review Taskforce Report - released September 2006

Cut pay for skills down to four levels, says ACCI



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