IR changes are not going to lift pay

28 October 2022

This opinion article by Business Council chief executive Jennifer Westacott was first published in The Australian Financial Review on Friday 28 October 2022

The Business Council wants Australian workers to have more money in their pockets.

To grow real wages over the long term without increasing unemployment, the nation’s workplace relations system needs to drive productivity well above its current 60 year low. This is not about working harder for less; it's about working smarter.

It's about working together to create additional value by doing things differently, and this means having collaborative workplaces at an enterprise level that can share the benefits of higher productivity through improved pay and conditions.

Reviving bargaining at an enterprise level is the best and most widely accepted way to achieve this.

We welcome changes to amend the Better Off Overall Test. These long overdue reforms to restore the BOOT as it was originally intended will make it easier and simpler for workplaces to bargain, innovate and lift wages. Workers on EBAs are paid at least $100 a day more than those on awards.

But the Business Council and other employer groups are deeply concerned that the government’s current proposal to expand multi-employer bargaining will upset the balance in the workplace relations system between employers, unions and workers without substantial amendments. 

Against the backdrop of global economic storm clouds and fragile domestic economy, we cannot risk anything that tips the scales in the wrong direction.

As currently drafted, we do not believe the multi-employer bargaining changes in the Secure Jobs, Better Pay legislation will solve Australia’s slow wages growth dilemma.

Under these proposed changes, we are worried that legal complexities will delay workers receiving pay rises. The hold-up will be caused by determining which employers are in which multi-bargaining streams.

We are seeking urgent amendments, and welcome the Minister for Industrial Relations, Tony Burke’s comments on Thursday that discussions were underway on how to fix certain issues with the legislation.

This includes how to best ensure that one business and its workers, who already successfully negotiate single enterprise agreements and to properly embed basic democratic principles, can continue to do so.

But as drafted, we also remain concerned that the changes could see smaller businesses roped into multi-employer agreements and protected industrial action. This is not in their interests.

One large, unionised workplace could vote to pull smaller workplaces into an agreement. We are concerned the bill only requires a majority of employees overall to agree, irrespective that workers in a number of smaller workplaces were not in favour.

This runs against the principles of enterprise agreement making and democracy.

We are pleased that we have brought the government back to the table on critical changes. The ball is now in the government’s court. It must act in good faith to deliver a workplace industrial relations system that is fit for purpose and doesn’t take the country backwards.

Again, we welcome the Minister’s commitment to clarify that the voting processes in relation to multi-employer agreements are fair, democratic and workable and occur at the enterprise level.

And to clarify that multi-employer bargaining is not extended to industries where it is not appropriate, nor necessary, particularly in commercial construction.

But the government is wrong to dismantle the Australian Building and Construction Commission, leaving the construction sector – one of the nation’s most important economic drivers – vulnerable to militant sections of the union movement.

We are also concerned that the legislation, as it stands, could force large companies that are in competition to bargain together on wages. Instead of achieving higher wages, one of the unintended consequences would be to force businesses into lowest common denominator negotiations.

This would decouple wage settings from productivity – the key driver of higher living standards in Australia,undermining competition and forcing up prices for consumers.

In addition, business is worried that the legislation as drafted would allow unions to prise the door open to industry-wide industrial action. Some unions have gone public on their wish for industrial turmoil.

This would be bad for workers and the community.

With families and workers experiencing day-to-day cost of living pressures, no one wants to experience strikes, disruption and delays.

Business believes the government must also turn its attention to Australia’s awards system.

Rather than being a well-functioning industrial safety net, the bloated and outdated system of awards is complex and holds back wages growth, particularly for low-income workers. 

We welcome the Minister for Industrial Relations, Tony Burke’s commitment and willingness to negotiate amendments. It would be a shame to lose the momentum of the Jobs and Skills Summit through rushed and ill-conceived changes that have unintended consequences.

As always, we will act in good faith and work with the government, opposition and crossbench to find workable solutions that avoid a conflict driven system and genuinely delivers a revival of enterprise bargaining at the workplace level and real wage increases that stick and last the distance.


Jennifer Westacott AO is the chief executive of the Business Council of Australia


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