FW Act a barrier to growth and flexibility, says Ridout

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FW Act a barrier to growth and flexibility, says Ridout

A major employers’ group has called for significant changes to the Fair Work legislation, stating the current laws are a barrier to productive growth and labour flexibility.

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A major employers’ group has called for significant changes to the Fair Work legislation, stating the current laws are a barrier to productive growth and labour flexibility.

Australian Industry Group (Ai Group) chief executive Heather Ridout told the Workforce Conference in Sydney that the idea the Fair Work Australia (FWA) laws are a ‘perfect balance’ between competing interests is not sustainable.

‘Any country which freezes its workplace relations system in time and decides that no further improvements are desirable or necessary, will subject its citizens to low levels of productivity growth, reduced employment, reduced competitiveness, and harsh effects from globalisation,’ she said.

Ridout conceded the high Australian dollar was a major factor in the cost gap between Australia and the United States (or countries rightly linked to the US dollar) but said its rise meant wages paid in Australia had risen by 45% compared to those other countries.

New restrictions
 
She said Ai Group had recently surveyed more than 250 employers, and the results showed that of the 82 who had made an enterprise agreement under the Fair Work Act 2009, 37 had reported it contained new restrictions.

As well, 74% of large employers (more than 500 workers) said the Fair Work Act bargaining laws had made it more difficult to negotiate flexibility or productivity agreements.

‘These results point to two things,’ Ridout said.
 
‘Firstly, in itself the Fair Work Act has not delivered increased productivity or flexibility to Australian employers.’

‘Secondly, the Act has introduced barriers to productivity growth and labour flexibility which need to be addressed.’

Major barriers
 
Ridout said the major barriers to productivity were:
  1. provisions that restrict the engagement of contractors and onhire workers
  2. the lack of a workable form of agreement that provides flexibility to employers and individual employees
  3. increased union power, including the ability for unions to disturb lawful and fair workplace arrangements that are supported by the majority of employees in a workplace
  4. ill-conceived transfer of business provisions
  5. general protections provisions which are too loose and uncertain.
She said that for more than a decade Australian Workplace Agreements (AWAs) provided important flexibility to employers and individual employees, and the survey showed most employers wanted them reinstated.

Little flexibility
 
The Individual Flexibility Arrangements (IFAs) introduced via the Fair Work Act as a replacement had ‘promised so much but delivered so little’.

Areas of the IFAs that needed to be addressed were:
  • The four-week termination provision — IFAs should last for up to four years.
  • IFAs should be able to be incorporated into the contract of employment at commencement.
  • Leave provisions should be included.
Ridout said there were growing problems with increased union power, including the ability for unions to disturb lawful and fair workplace arrangements that are supported by the majority of employees in a workplace.

As well, union rights of entry had been expanded substantially under the Fair Work Act.

She also said unions were using the general protections in the Act to threaten employers and drag them into conciliation proceedings in FWA, often over highly speculative claims.

Ridout said that 61% of the employers surveyed chose to pay compensation to settle the claim before it was dealt with in court.

Problems
 
‘The Fair Work Act has been in place for over two years,’ she said.
 
‘It has been rigorously tested and some problems have been identified.’

‘The Government needs to move to address the problems rather than continuing to argue that the Act is working well in the face of evidence that it is not in some areas.’

‘The Opposition needs to work with the Government to address the problems. It is vital that the major parties find common ground on workplace relations given the retrograde IR policies of The Greens who now hold the balance of power in the Senate.’

‘The common ground should be the need to reduce barriers to productivity growth and labour flexibility.’

‘It is beyond contention that Australia’s productivity performance needs to be urgently addressed if Australian companies are to survive, and Australian workers are to enjoy higher wages and higher living standards in the future.’

Ridout urged the government to release the timetable and process for the planned Fair Work Act review from 1 January, so that all interested parties can start preparing their evidence and submissions.
 
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