Fair Work System Must Help Australia Compete and Prosper

The Fair Work Act is not supporting Australian businesses to stay competitive in a particularly challenging economic environment.

At this time in our history, Australian businesses and their workforces need to be able to respond quickly to stay ahead of economic challenges and opportunities. Workplace relations play a key role in this and important changes need to be made to the current system.

This is the key finding in the Business Council of Australia’s submission to the Fair Work Act review, lodged today.

The council has recommended changes to eight areas of the Act related to the way it is affecting the capacity of Australian businesses to be competitive, to meet the needs and preferences of a changing workforce and changed consumer demands, lift productivity, and create and protect jobs.

The impact the current system is having on Australia’s largest companies has far-reaching consequences, according to the council’s Chief Executive, Jennifer Westacott.

“Australia’s key business organisations are as one that the Act is not supporting the competitiveness and flexibility we need to respond quickly to the many challenges in our economy and our labour market.

In essence, it is limiting the flexibility of employers to respond to a particularly dynamic economic environment and increasingly diverse requirements of the workforce.

“The greatest impact is on members and sectors that are most affected by changing global market conditions and consumer preferences – the resources sector on which Australia is heavily reliant, and the manufacturing and retail sectors, which are under great pressure from the high dollar and increased global competition.”

The council’s submission, which is based on the direct experiences of member companies, highlights issues of concern in five areas:

  • The system has affected competitiveness by boosting the bargaining power of unions and putting more matters on the table for negotiation. It is facilitating intervention in business decision-making beyond the rights and conditions of employees and making it difficult for companies working to meet new patterns of consumer demand. This is muddying the accountabilities of directors and managers.
  • It has not promoted increased productivity with many unions having refused to agree to productivity offsets for wage increases.
  • It has affected enterprise focus by reducing the range of agreement options in individual workplaces despite continued support by many employees for a greater diversity of arrangements. It gives greater involvement to third parties, which is jeopardising direct engagement between employer and employee.
  • The administration and timeliness of the system is highly variable and outcomes uncertain. The highly prescriptive and technical nature of the Act allows it to be used to create delays and uncertainty for employers needing to respond quickly to market changes.
  • It has created some disincentives to job creation and reduced career pathways by introducing structural impediments to business transformation. For example, transfer of business provisions have led to some employees being made redundant where, under the previous Act, they would have been offered ongoing employment.

“As with any new piece of significant legislation, its operation needs to be evaluated to ensure it is having the desired outcome,” said Ms Westacott. “On that basis, it is clear that some important improvements can be made to the Fair Work Act.

“Our submission recommends amendments to provisions of the Fair Work Act that are being used to undermine competitiveness, impede productivity, job creation and collaboration, and add unnecessary delays and costs to doing business.”

The BCA’s recommended areas for amendment include:

  • improving the validity and efficiency of bargaining processes
  • strengthening flexibility arrangements for both individuals and employers
  • reducing the capacity for unnecessary industrial disruption by removing enablers in the legislation and providing employers with more capacity to respond
  • improving the efficiency and predictability of Fair Work Australia decisions
  • providing more efficient and timely outcomes on greenfield projects
  • reducing the scope of the general protections (adverse action claims) to align with other anti-discrimination legislation.

“Other submissions to the review may seek to trivialise the consequences of employer issues and portray business as simply ‘wanting its own way’,” said Ms Westacott.

“The reality is that these issues go to Australia’s capacity to protect and grow the economy. Their consequences are being felt increasingly by individual Australians.”