The Productivity Commission Inquiry into the Workplace Relations Framework (December 2015) found the workplace relations system was not dysfunctional and required repair rather than replacement.
Modern Awards and agreements have expanded their scope beyond the employment relationship and ventured into territory that should be negotiated by employers and employees.
In 2015, the Business Council reviewed 25 Awards to test their breadth.
24 contained more than five wage classifications.
The Business Council has argued the number of wage classifications should be limited to 5 to help ensure the minimum weekly wages in awards do not go beyond a safety net.
In 2015, the Business Council reviewed 20 agreements to test their breadth.
19 of the 20 have clauses that limit an organisation’s ability to make staffing decisions.
19 have clauses that impact on how or when an organisation can operate.
12 have detailed descriptions of the tasks and duties a worker should perform.
13 have clauses that require consultation before the organisation can introduce production, program, organisation, structure or technology changes.
Enterprise agreements were meant to be about the unique circumstances of the enterprise and its workers, but awards are the starting point for agreement-making.
This means that before the parties even begin to negotiate, a whole set of arrangements have been pre-determined.
Enterprise agreements provide a mechanism for workers to negotiate higher wages and improved conditions.
The average annualised wage increase (AAWI) for all agreements approved in the March quarter 2018 was 2.8 per cent, up from 2.5 per cent in the December 2017 quarter.
In many cases, employers are moving away from enterprise agreements to rely on the award system.
The numbers of employees covered by current enterprise agreements have fallen dramatically: from a peak of 2,626,600 employees covered in March 2014 to 1,781,900 in March 2018.
The system is complex and hard to use, and decisions stemming from the legislation are not predictable.
The Fair Work Commission’s decision in May 2016 to reinterpret the Better Off Overall Test is a clear example of this.
The system is based on the assumption of conflict. This creates an environment where collaboration is unlikely to occur, dampening the capacity of the enterprise to increase productivity and ultimately create jobs.