Media & Speeches

Workplace Relations: Third Article in The Australian

This opinion article by Jennifer Westacott, Chief Executive of the Business Council of Australia, was published in The Australian on 21 March 2015 under the title ‘Workplace relations framework must find common ground between workers and employers’.

It is the third in a series in The Australian about the BCA's submission to the Productivity Commission's Inquiry into the Workplace Relations System.

Changes to our workplace relations system over the past decade have been damagingly polarising because they have been driven by ideology.

The first tranche of reform was seen to favour employers. The second was seen to favour workers and unions. Neither created common ground between the three parties in the labour market, or the community more broadly.

The Productivity Commission’s inquiry into workplace relations is a rare opportunity to move beyond the ideology of the past decade and create a system that supports Australia becoming an innovative and knowledge-driven economy by unlocking the potential of people and workplaces.

The challenge for the commission is how we continue to create national wealth and the jobs of the future in the face of the demographic, technological and competitiveness challenges Australia is facing.

The Business Council of Australia’s submission to the Productivity Commission proposes a new strategic framework for workplace relations that seeks to create jobs by making Australian businesses more competitive, and our work arrangements more flexible for workers and companies.

The recent Intergenerational Report was a sobering reminder that reform of the workplace relations system cannot be about more ideological tinkering.

A key finding was that in 2055 there will be only 2.7 working aged people for every person over 65. This compares to 4.5 today and 7.3 in 1975. Our ageing population means we’ll have lower workforce participation. We simply have to get more people working in the next few years.

Future income growth will depend primarily on achieving higher productivity, yet productivity growth remains weak. It is only through higher productivity that we can support higher wages and economic growth.

At the same time our companies are increasingly exposed to global competition where technology removes geographic barriers. Companies have to be able to respond faster and adapt their business models to manage these new global challenges.

All of this points to the need to improve the capacity of workers and businesses to adjust. That adjustment cannot occur if our existing workplace relations system remains unchanged.

Rather than more tinkering, what is required is a new framework that gets the balance right between what should be in a safety net, what should be up for negotiation as part of agreements, and what are operational matters that should be left to employers to decide on.

First, the safety net. It’s important that all workers are guaranteed a minimum standard of pay and employment conditions. That’s why the Business Council is proposing safety net measures and industrial protections such as the minimum wage and minimum penalty rates, and protection from unfair dismissal and the right to industrial action, continue and are mandated in legislation.

While an appropriate safety net still includes awards and penalty rates, both need some change.

The 122 awards in the system have too many conditions and are too complex. Not only does this make awards difficult to understand and navigate, but over time they have included requirements that go beyond their core purpose of defining minimum standards for each industry. An example of this is the requirement to convert casual to permanent roles.

The Business Council supports penalty rates being paid for unsociable hours. But the definition of what constitutes unsociable hours and how you set penalty rates needs to reflect the realities of the 24/7 economy we now live and work in. Additionally, the overall cost to the economy of the rate we pay for unsociable hours must receive greater scrutiny.

That leads us to the second issue — matters for negotiation. There is a need to refocus the negotiation process between workers and businesses on the employment relationship.

Similar to awards, the Business Council believes that, in many instances, these negotiation processes have gone beyond the employment relationship. Many enterprise agreements include clauses that are concerned with operational management, rather than employment conditions.

For example, some enterprise agreements include clauses that determine when a company can shut down, irrespective of consumer demand, or how a roster is constructed.

The inclusion of such clauses in enterprise agreements leads to our third issue — management decisions.

Having the freedom to construct a roster so that a company can respond to consumer demand is precisely what that company needs to be able to do to adapt quickly and stay competitive.

Matters like these are operational management decisions because they are matters which determine how fast a company can respond to changing market circumstances. In a globally competitive economy these matters should sit outside the regulatory framework and should not be subject to the review of a third party.

Our submission proposes the agreement-making process be refocused on negotiating the terms and conditions of the employment relationship, not specifying how a business can operate.

The Business Council welcomes debate about the way our submission allocates matters in the framework. It is essential that we have an open, respectful national discussion about what is mandated, what is negotiated and what sits outside the regulatory framework. This is the only way to leave ideology behind.

Where there is less room for debate is the fundamental architecture required for a future-focused system.

We stand ready to work collaboratively with all stakeholders to build a system that restores the trust of workers and employers. A system that positions Australia for another 40 years of economic growth and the broader prosperity that flows from it.