Is the Fair Work system broken?

Analysis

Is the Fair Work system broken?

'Broken', 'failing' and in need of a fix: that's the state of our IR system according to a lively debate at the recent Industrial Relations Society of NSW annual conference. But can it be fixed?

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'Broken', 'failing' and in need of a fix: that's the state of our IR system according to a lively debate at the recent Industrial Relations Society of NSW annual conference.

Employers, unions and pollies all came out swinging when asked: "Is the system broken?"

Mark Morey, secretary, Unions NSW


“Yes, doesn’t do justice to the question”, Mr Morey told the room. He said the system was broken and was more broken for some than for others.

He drew the audience’s attention to two major issues that he believed threatened “the integrity of our labour market”.

The first is the operation of a secondary, exploited, labour market – the use of international students, working holiday makers or temporary skilled visa holders in working arrangements that are illegal, often underpaid, and provide workers with virtually no industrial or re-employment rights, Mr Morey said.

He blamed the exploitation on ineffective labour market regulation since the mid '90s, the poor interaction of immigration and industrial relations laws, and “a toxic combination of race and class”.

He criticised the Fair Work Ombudsman’s ability to police 2.6 million workplaces effectively using a taskforce of 250 inspectors. He also urged that migrant workers should be afforded the same work rights as Australians.

He lamented the lack of a formal agreement between the Fair Work Ombudsman and the Department of Home Affairs to ensure amnesty for exploited persons assisting in investigations. He was also concerned about the unexplained referral of individuals to immigration officials.

Mr Morey called for an immediate deportation amnesty of foreign workers and the creation of a firewall between relevant government departments.

The gig economy is the other major problem for the Australian workforce, he said.

“An abuse of loopholes” has allowed 21st century companies such as UberEats and Deliveroo to benefit from fabrication of employees as “independent contractors” to avoid providing workers with entitlements.

Mr Morey told the room “there is nothing empowering or liberating about losing rights” and emphasised that “work of equal value should attract equal remuneration”.

He suggested that, together, the gig economy, migrant exploitation, public sector wage caps and union bargaining restrictions provided a compelling explanation for what he called “anaemic” wage growth.

He also reflected on the difficulties the above factors were causing for law-abiding companies, who were adhering to industry standards and investing in quality systems, to compete in gig-economy markets.

Scott Connolly, assistant secretary, ACTU


“The rules are broken”, argued Mr Connolly, adding “we have record inequality, record low wage growth, and a record number of people in insecure work”. 

He blamed the issues on “trickledown economics” and the ability of employers, and capital controllers, to make all of the decisions.

He was concerned about the lack of rights associated with insecure work, and the impact this would have on future generations due to the taking away of individuals’ rights to band together, the removal of protections that once guarded workers against casualisation, sham contracting, and labour hire.

“Where once we had a level playing field where workers could stand together and demand better pay and conditions, we now have workers who are divided through the use of labour hire and contracting, and who are unable to stand up and bargain from a position of strength”, he said.

He said severe migrant exploitation, privatisation, corporate tax cuts and profitable companies not paying tax, weak legislation, and trickle-down economics contributed to the situation.

Mr Connolly said Australia needed to even the playing field for workers by updating industrial laws to reflect modern workplaces and the labour market. He referred to an ACTU strategy, ‘Our Jobs You Can Count On’, which he said sets out to improve the quality and quantity of work by creating new jobs, lifting pay, enhancing job security and conditions and ensuring access to work.

He also called for a fight against gender inequality, marginalisation and discrimination to ensure all people had access to secure work.

Brendan O’Connor MP, shadow minister for employment and workplace relations


Brendan O’Connor did not entirely agree that the system was broken.

However, he contended that parts of the system did not work as they should, and structural issues existed which needed addressing.

The cumulative impact and effect of structural changes to the labour market, the pace and impact of technological advancement, widespread ‘corporate gaming’ of the system, and the interpretation of the Fair Work Act in ways that weren’t intended were all unexpected consequences of the Act’s implementation in 2009, he said.

Mr O’Connor queried whether the minimum safety net and enterprise-level collective bargaining practices were achieving the purposes or objects that the legislation intended.

A number of reforms currently backed by the Labor party were outlined, including an objective definition of a casual employee, calls for fair and reasonable increases to the minimum wage, restoral of penalty rates, a reversal on the onus of proof for wage underpayment, and a national labour hire licensing scheme.

The MP lamented the ease with which employers could terminate enterprise agreements against employee wishes due to power imbalances.

He considered the imposition of an arbitral power for the Fair Work Commission as a way to commence negotiation and create stronger dispute resolutions.

He also criticised an alleged politicisation of the Fair Work Commission, suggesting there had been a recent and “shameless stacking” of the system against workers by senators Eric Abetz and Michaelia Cash.

Mr O’Connor said Australia’s record-breaking 26 years of uninterrupted economic growth suggested that the system had not gone “completely awry”. He argued the changing labour market needed laws which responded to “increasingly precarious” work.

Stephen Cartwright, CEO, NSW Business Chamber


Mr Cartwright said the system was failing.

The Fair Work Act was not meeting its objectives with regard to a safety net for minimum terms and conditions, he said. He criticised the statute, regulations and awards as being highly prescriptive, complex and restrictive, and suggested they were not fit for purpose. 

Organisations were increasingly falling back on awards and abandoning bargaining, he added.

Mr Cartwright criticised the abolition of individual bargaining, and the loss of an ability to allow workers and employers to make flexible work arrangements that suited genuine needs. He called for protection for employers and employees to freely choose whether or not to be represented in dispute resolution.

Mr Cartwright highlighted increasing youth unemployment and an inability to create entry level jobs as failings of the system.

In his opinion, Australia needed to implement a “solid safety net” and let individuals see what worked for them. Praise was given to the Fair Work Commission for its ability to protect workers against unfair or unlawful employment termination.

Steve Schofield, group head of HR and IR, Downer Group


From an employer’s perspective, Mr Schofield was more optimistic about the system than Mr Cartwright.

“The system is surviving the political agenda we are enduring”, he said, adding that there was no appetite for politicians to take on the IR issue when governments were only surviving one term.

He emphasised the need to engage with the workforce, to give people a choice, and to respect those choices. There was also a need for executives to “buy-in” to the IR function. He suggested there was a lack of industrial relations exposure for organisations on a regular basis, and too much outsourcing of issues to lawyers.

He saw IR education as key to helping the system, and communication with unions as integral to the system’s function.

Mr Schofield believed “you get the IR you deserve”, and added “If pragmatism prevails [in IR approaches], we’ll have a good outcome”.

WorkplaceInfo attended the IRSNSW annual conference at Crowne Plaza Terrigal on 25-27 May as a guest.
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