Fair Work is a farce that panders to unions

The Prime Minister and the Opposition must step in to prevent Julia Gillard from threatening jobs at a time when the economy is almost certainly moving into recession, maintains Des Moore

HE ACTU ’s submission to the Senate inquiry into the Fair Work Bill reportedly demands wide-ranging changes, including a return to pattern bargaining.

Those changes would further increase the power of the union movement in legislation that already enhances its role, even though unions represent only about 15 per cent of the private sector workforce.

At the same time, reinforced by emerging large union wage claims and a growing realisation that the legislation is already far from balancing the interests of employers and employees, employer groups are making submissions arguing in effect that there is no justification for giving unions relatively favourable treatment The test for Employment and Workplace Relations Minister Julia Gillard, who hopes to present herself as the Dame of Fair Work, is whether she will continue to repeat previous assertions that the Government has struck the right balance between two opposing groups. And will our conservative Prime Minister emerge from the shadows and involve himself in a matter in which he has so far given Labor ’s Left relatively free rein, but which has significant implications for the national interest and the future of his Government? The Opposition will also have to decide whether it is prepared to abandon the pusillanimous attitude it has taken so far and at least oppose provisions in the legislation that will threaten employment levels at a time when the economy is almost certainly moving into recession. It also has an opportunity to challenge the nonsensical claim that the legislation bases itself on "the enduring principle of fairness" and meets "the needs of the modern age" when, in reality, it is a big step back in time to cope with circumstances that no longer exist.

The enhanced role given the union movement in the draft legislation would already involve a substantial increase in power with regard to such issues as unfair dismissals, entry into workplaces, the right to force employers to bargain on certain mailers, and even a return to compulsory arbitration in certain circumstances. But additions are apparently sought to the outrageous provisions already in the draft allowing unions to enter private workplaces and examine union as well as non-union pay records.

Similarly, the provisions allowing unions to bargain with more than one employer where low-paid (not defined) workers are involved, and for compulsory collective bargaining, are claimed to be inadequate even though they imply a return to union-employer battles of yore.

So far, very liille attention has been given to the return of the Australian Industrial Relations Commission in the guise of Fair Work Australia. But a change of appearance is unlikely to affect its one-sided approach.

FWA constitutes a significant change that threatens to take Australia back to the day when decisions on employer-employee relations paid little heed to the economic situation facing employers.

If passed as now drafted, the legislation would act as a deterrent to employment and undermine job security, just as the then highly regulated labour market did in the early 199Us, when unemployment jumped to about 11 per cent. Nor would the legislation, as claimed by Gillard but without any analytical back-up, likely stimulate any substantive increase in productivity.

To date, the Coalition has adopted the ridiculous position that the Government has a mandate for every measure proposed before the election.

But as the Coalition opposed the Government ’s workplace relations policies in the election, it should surely not limit itself to opposing measures added since. The Government should be pressed to hold an independent public inquiry into the basis for regulating employer-employee relations in a modern economy.

The basic rationale behind the extensive proposed regulation is that a serious imbalance in bargaining power exists between employers and workers. However, in modern-day economies employers operate in a competitive environment; employees normally have alternative job options; and protection is already provided to employees under the common law and in ordinary contracts and criminal legislation.

Australia has more than 800,000 businesses competing with each other and bargaining with a workforce of more than 10 million employees.

Moreover, 90 per cent of those businesses have workforces that have judged it unnecessary to seek protection through union membership.

No valid argument can be mounted that today ’s employers as a group would force wages down or impose unfair conditions. When working conditions are unacceptable to either party, each side has alternatives, albeit not necessarily their first best option.

Employees have the capacity to readily quit jobs and more than two-thirds of the nearly two million employees who left their jobs in 2005-06 did so voluntarily. Suggestions of potential extensive exploitation overlook that businesses need competent staff.

Nor is there any basis for giving unions the proposed relatively favourable treatment. During the period of reduced regulation and union activity in recent years, average hours of work and industrial disputation fell while real wages increased, which scarcely suggests employees ’ bargaining power was weakened in the less regulated labour market.

Although a small minority of work
ers employed under Australian Workplace Agreements did experience reduced working conditions, those conditions reflected awards by the AIRC. But that body created more than 4000 awards that now require modernisation. The AIRC was a poor judge of the economic and employment basis for awards and the reduced conditions under AWAs may well have been fully justified. The Government ’s proposed continued resort to awards is thus archaic in Australia ’s economy of frequently changing conditions, market forces rather than regulators should determine wages and conditions.

The attempt to assist workers through protective workplace relations legislation also reflects a fundamental misunderstanding of the respective roles of employment and social welfare policies. By contrast with circumstances faced by disadvantaged workers in earlier times, Australia ’s now extensive social security system provides a protective bulwark for those at the bottom end of the social spectrum.

Accordingly, with more than half of low-wage earners in the top half of household incomes, it is absurd for the Government to (in effect) prescribe minimum (and other) wages as a protective mechanism. These unfairly limit the job opportunities for about one million unemployed and underutilised workers with lower skills. In short, Gillard ’s thesis that the legislation would ensure fairness is fundamentally flawed.

Australia ’s existing economic and social framework, along with ordinary law, already provides protection for workers and the proposed legislation is both unnecessary and counterproductive. It is in the Government ’s own interests to rethink the whole exercise by instituting an independent inquiry into the need for regulatory legislation that can only add to unemployment levels.

Des Moore, a former deputy secretary of the Treasury, is director of the Melbourne-based Institute for Private Enterprise.