Employers’ group provides economic case for IR reform

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Employers’ group provides economic case for IR reform

The Australian Chamber of Commerce and Industry (ACCI) has today released an economic case for further workplace relations reform which cites 84 academic studies.

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The Australian Chamber of Commerce and Industry (ACCI) has today released an economic case for further workplace relations reform which cites 84 academic studies. 

The Federal Government has been heavily criticised in recent weeks for not producing an economic case to back up its WorkChoices legislation, which is currently before the Senate.

Position paper

Peter Hendy, ACCI chief executive said the position paper, called The Economic Case for Workplace Relations Reform, shows that the workplace reform imperative is supported by domestic organisations such as the Reserve Bank of Australia, Productivity Commission and Department of the Treasury as well as international bodies such as the International Monetary Fund (IMF) and the Organisation for Economic Co-Operation and Development (OECD). Position Paper  

‘A number of Australian academic studies support these statements,’ he said. ‘Overseas, the IMF and OECD amongst others have supported the call for more labour market reform in Australia.’ 

Hendy said there is also a substantial body of international evidence supporting ACCI’s call for more workplace relations reform. 

Other points

Among other points made in the paper, it states: 

  • Other countries that have reformed their workplace laws have achieved significant successes, and have not had those reforms overturned by successive or incoming governments.

  • Productivity in New Zealand grew much more strongly after reform (when correctly measured) and New Zealand currently has the lowest unemployment rate in the OECD.

  • Similar success occurred after labour market reforms in the United Kingdom. Notably, European countries that have not reformed their labour markets have higher unemployment rates, which causes multiple social problems.

  • A large number of detailed academic studies of the differences between countries show that less labour market regulation is clearly associated with better economic performance.

Outcomes

The paper says this evidence consistently shows that workplace relations reform, particularly when coupled with other complementary economic and social reforms, will:

  • Reduce unemployment and increase workforce participation, particularly for women, youth, and older men and reduce long-term unemployment.

  • Reduce poverty and the informal economy.

  • Increase growth in productivity, employment, output, consumption and investment.

  • Increase wages in line with productivity growth.

  • Improve job security and living standards.

  • Increase business entry (and thus employment and self employment).

  • Allow Australia to benefit from economic opportunities, particularly expanding world trade.

  • Make the economy more flexible– that is, the economy will adjust to shocks faster.

  • Reduce the variability of economic performance.

  • Reduce the risk of economic downturns and minimise the economic and social costs if a downturn occurs. 

  • Reduce unnecessary regulation of business, which impedes growth and innovation.

  • Encourage skills development and training.

  • Expand the use of enterprise bargaining.

  • There are substantial benefits from the increasing use of collective and individual agreements, to employees as well as employers and the broader economy. It is important to understand what workplace relations reform is not about.

Big picture

The paper says further workplace reform is ‘not about removing or diminishing Australia’s social safety net’. 

‘It is about designing the safety net in the most efficient and economically sustainable way. A simpler safety net dealing with a minimum wage and certain employment conditions can be part of the workplace relations system if its terms are economically responsible.

‘However, if a more comprehensive safety net is needed, it is better for the economy and society for this to be provided through the tax and income support systems rather than through regulation of workplace relations.’ 

Not competing with Asia

The paper says workplace reform is not about trying to compete with Asia (particularly China) by lowering wages.  

‘We cannot, and should not, try to compete with Asia on wages. Instead we can (and should) compete by having higher productivity – a key goal of labour market reform. Australia should stick to those industries and areas where it can compete on the basis of productivity and not try to compete on low wages,’ it says. 

‘Reform is not about reducing wages. Reform will increase wages, growth and wellbeing by allowing labour market outcomes to be linked to workplace productivity. This has already happened following the workplace reforms of the 1990s.

‘It is not about delivering employers unfettered bargaining power. Giving unfettered power to any party is not a path to productivity, efficiency or job creation.

Co-operative workplace relations and direct work relationships characterised by agreement-making is.’ 

Hendy said ACCI is strongly supporting the Government’s WorkChoices package of reforms, even though the reforms maintain detailed regulations in some areas.

Copies of the paper are available from the ACCI website.   

Managing an ageing workforce – free seminar

Part of Australia's economic future involves managing an ageing workforce. Employers need to be alert to this issue. How many employers know which of their employees are aged 45 or more, and are planning to retire in the next two, five or 10 years?

Are employers aware of the changing needs, wants and motivations of their employees as they grow older?

Statistics the Australian workforce is ageing and employers are facing greater competition for workers.

‘Age Management Training’ is an initiative of the Federal Department of Employment and Workplace Relations that aims to assist employers in meeting the challenges of Australia’s ageing workforce.

As part of the program, VECCI is hosting a one-day pilot workshop for experienced workers and job seekers to provide practical help for participants to review their work/life goals, plan their retirement and work with their employer to make the best use of their knowledge and experience.

The workshop will be held from 9.00am to 4.30pm on Thursday 8 December in the VECCI Training Centre, 486 Albert Street, East Melbourne.

The workshop is free and spaces are limited.

To register, contact Manuela Sartore at VECCI on email: msartore@vecci.org.au or ph: 8662 5229.

Related 

Federal IR changes 2005

 

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