​Is the workplace relations system fixed?

Analysis

​Is the workplace relations system fixed?

Is the IR system fixed? Employers and unions tackled the issue at the recent Industrial Relations Society of NSW conference.

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Is the system fixed? That was the theme of this year's Industrial Relations Society of New South Wales conference, held recently at Terrigal. Both employer and union representatives had their say. Both said the system wasn’t yet fixed, but unsurprisingly for different reasons.

Employer view


Nola Watson, president of the NSW Business Chamber, claimed that the federal election result included a rejection of proposed major changes to the system by the ALP. The focus should instead be on making changes at the margins.

Wages


Watson said that 54% of small businesses currently have an income below the poverty line. The owners pay themselves last of all. She added that Australia has the world’s second highest minimum wage rate (behind France), and in the decade of operation of the Fair Work Act, wages have risen by an average 2.9% per year versus 1.6% for the Consumer Price Index.

Her message: don’t put the burden of increased wages on businesses that are already under pressure.

Superannuation


The original aim of the Superannuation Guarantee system was to trade off wage increases for superannuation contributions. The next increase in the contribution rate is due in July 2021, but it may be hard for low-paid workers to have to divert more of their pay into superannuation.

Casual employment


Last year’s Workpac v Skene decision that found that a “labour hire worker” was in fact entitled to leave payments has had a big impact, with many employers now confused about whether they are compliant or may have to back-pay some workers.

Watson outlined the business chamber’s current proposal of a “perma-flex” employee category – someone who receives a smaller leave loading than a permanent employee but has some of his/her conditions, such as annual and personal leave, notice of termination and access to unfair dismissal provisions. The union movement opposes the proposal. Watson noted that the rate of casual employment has changed little over the past 20 years, and that not all casual employees want/need the “casual conversion” provisions.

Enterprise agreements


Watson noted the big fall in the use of enterprise agreements in industries such as retail, and claimed that delays and complex approval processes have caused the current system to lose credibility.

She added that the Better Off Overall Test (BOOT) for approving agreements does not require changing, but the assessment should focus on the overall position, not a line-by-line comparison of every provision.

Claiming that the previous Australian Workplace Agreements (pre- Fair Work Act) worked well for more than 10 years, she argued that union-based collective bargaining should not be prescribed, also given the fall in union membership.

Construction industry perspective


Shaun Schmitke, deputy CEO of the Master Builders Association, claimed that 90% of the breaches of right-of-entry provisions occurred in the construction industry. He claimed that the standard of debate over workplace relations is generally poor, citing the following:
 
  • “hysterical” reactions to proposed reforms, plus an obstructive Senate and unions being reluctant to respond to Government approaches to discuss issues
  • media more interested in quick headlines than constructive debate
  • failure to sell proposed reforms to the general public
  • employer organisations less united than the ACTU
The Master Builders Association wish-list is as follows:
 
  • retain the Australian Building and Construction Commission
  • stronger right-of-entry provisions
  • less pressure for pattern bargaining
  • preserve the independence of the Fair Work Commission (the Opposition had proposed to intervene)
  • support passage of the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017 and Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 – Schmitke said that losing privileges is a greater deterrent than imposing penalties.

Union view


Geoff Derrick, national campaign coordinator of the ACTU, explained the ACTU’s “Change the Rules” campaign, pointing out that it is an ongoing campaign that continues beyond elections. The campaign comprises a list of 20 goals.

Derrick claimed that workplace inequality has increased despite 27 years of continuous economic growth in Australia and about 35 years of “trickle-down” economics.

To support his claim, he quoted the following statistics:
 
  • six years of flat wages growth, which is now adversely affecting the economy
  • the highest level of “insecure” work in the developed world
  • reductions of penalty rates
  • one-third of companies pay no tax
  • more employees than ever are paid award rates only (now about 25%)
  • four of the past five major changes to workplace relations legislation have favoured employers
  • the number of employees on enterprise agreements has halved since 2013.
He argued that for many employers the benefits of “theft” now exceeded the risks of being caught. He also warned: “don’t outsource immigration to corporate interests”, combined with a claim that if the Adani coal mine proceeds, few of its jobs will go to Australians.

Stephen Crawford, senior legal officer of the Australian Workers Union (AWU), used the recent death of former Prime Minister Bob Hawke to claim that many indicators of balance in the system have reversed between 1982 and 2019.

These include:
 
  • GDP per head has doubled at the same time as the rate of wage increases has declined, so employees’ share of GDP has declined
  • On the other hand, wages growth was rate was very high in 1982, well above the CPI
  • Casual employment increased sharply during the early 1990s, but has been roughly level since then
  • Industrial action peaked in the late 1970s, early 1980s, but is now very rare
  • Union membership has fallen from about 50% of the workforce to about 15%
  • The “gig economy” has had a substantial negative impact on job security
  • Overall, the level of inequality was much less in 1982.
Crawford claimed that the Hawke Government of the 1980s identified that the balance had shifted too far in favour of unions, and took action, but by 2019 it has now swung too far the other way. He claimed that militancy by employers has increased since 2007, citing the use of sham contracts, shifting employees between corporate entities and using low-paid workers from overseas.

Referring to an increased trend for employers to terminate enterprise agreements, he commented “you can’t shame the shameless”. The economy has moved on since the rules for enterprise bargaining were set, and there is now little motivation for employers to engage in it.

Other comments


Some other comments that arose from audience questions and comments:
 
  • The “thought bubble” of providing school holiday leave – one parent stays at home, possibly on lower pay or offset against annual or long service leave entitlement. The rationale is that school holidays are 12 weeks per year, but annual leave only covers four of them.
  • Many European countries use a combination of enterprise and industry-wide bargaining. This is claimed to avoid a “ritualistic conflict system”.
  • In large buildings, contract cleaners should be able to negotiate with the building owner, not only the contractor who controls the floor they work on.
  • In response to contact from the ACTU, the federal government has not indicated any significant proposed changes to workplace relations legislation.
Further information about the conference is available from the NSW Industrial Relations Society.
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