The Howard Government has marked out industrial relations as one of its big reform goals in its fourth term – a term where it will enjoy the unusual luxury of a clear legislative path in the Senate.
The key question will be whether this extension of the government’s “reform” agenda which began in 1996 will be of long-term benefit to Australia’s employed and unemployed, or pave the way for Australia to follow the questionable American path of absolute flexibility of the labour market.
At its best, the American system is truly responsive to the needs of its massive and dynamic economy. Its workers are flexible, they change jobs and locations frequently; business is not bound up by complex awards and industrial procedures; wage rises are tied to productivity and very often negotiated by the business itself without recourse to unions or government commissions.
At its worst, America offers a pitiful minimum wage of $3.50 an hour, minimal extra benefits such as long-service leave or even holidays, together with no long-term government social security safety net.
The US system produces an economy which benefits the bulk of the population, and makes many people very rich, but which also locks tens of millions into the misery of merely existing in a low-paid underclass.
Indeed, the American system treats workers just like any other commodity – wages rise and fall and jobs come and go in line with “the market”.
For more than a century, Australia has adopted a different model with much greater government intervention and concern for the common good of workers.
On the other hand, the Australian system has certainly had its shortcomings, not least of which have been bloody-minded and selfish unions which have abused the system and sometimes sabotaged the economy for their own base purposes.
The task of workplace relations reform has been given to Victorian federal Liberal MP, Kevin Andrews.
There are also senior government ministers who are enthusiastic about following the American path. However, Mr Andrews appeared to make a good start recently in outlining the government’s vision at a Committee for Economic Development of Australia (CEDA) gathering in Melbourne.
“The workplace relations system is inextricably linked with the social good of job creation, which in turn is a foundation and expression of human dignity,” he said.
Indeed any economic model should be predicated on the notion of the ability of people to earn a decent living and support a family.
The Australian system – for all its faults – has endeavoured to pursue that goal.
However, Mr Andrews argues that Australia’s unique system of conciliation and arbitration was born in the 20th-century and designed for “the old economy”, which was heavily regulated and protected.
“The goal of the system in 1904 was simply to conciliate and arbitrate the rights of existing employers and employees,” he said. “One hundred years later, the goals of our workplace relations system should be much broader.”
To this end, the Howard Government wants to break up the “one-size-fits-all” approach to IR. Its aims include:
- A system which reduces the barriers to employment and the costs of employment and which has as its fundamental aim the growth of Australia’s productive capacity and the provision of work for all who are capable of it.
- A system in which employers and employees are encouraged to determine their own working arrangements and hours by looking to their common interests, rather than being stuck in an adversarial system.
- A system which reduces formalities, costs, and unwarranted interference by “third parties” (i.e., unions).
- A simple and genuine safety net, rather than a complex system of prescriptive and competing regulations.
Much of what Mr Andrews is saying has substantial weight, but there are major concerns including the prospect of the elimination or cutting of the minimum wage, and award provisions such as jury duty and long-service leave.
Australia can cut wages at the lower end, but it will never be able to “compete” with China or India. It can eliminate much of the baggage of yesterday’s industrial club and streamline the system, but the idea of “an umpire” has been a welcome part of Australia’s system.
The idea of a 14-year-old shop assistant proposing an individual contract or special conditions with a mega-giant like Coles or Woolworths without the help of a union is ludicrous.
With record low industrial disputation in Australia and low unemployment, the Howard Government should be careful not to be pushed into a complete dog-eat-dog world in workplace relations.