Event: Jobs and Skills Summit panel – Sustainable wage growth and the future of bargaining
Speakers: Jamila Rizvi, host; Tim Reed, President Business Council of Australia
Topics: Industrial relations; pay equity; productivity; enterprise bargaining
Jamila Rizvi: We're now going to turn to Tim Reed, who is the President of the Business Council of Australia.
Tim Reed, President Business Council of Australia: Thank you, Jamila. And it's great to be here with you all. I'd also like to start by paying my respects to the traditional owners, the Ngunnawal people elders past and present.
Prime Minister, thank you for pulling this gathering together and Treasurer for your hard work. The Business Council enters today in the spirit of cooperation and with a solutions orientation because we do believe that is by Australians coming together that we will be able to achieve our best.
It goes without saying that workplace relations, the IR system overall, has been a difficult conversation over the past decade. We've made very little progress. In fact, in areas we've gone backwards.
That is because at times I think, Prime Minister, you used the expression, the old playlist that you wanted left at home. We seem to have reverted to corners and seem to have reverted to old thinking. But I think if we reposition this and think about the objectives of the parties here, certainly we speak at the BCA of our desire for this conversation to be about driving national prosperity and ensuring that prosperity is shared with all Australians. We want real wages growth. We want real wages to grow sustainably and consistently over time and we do believe that the IR system should be able to contribute to real wages growth. I would like to thank Sally and her colleagues because over the past few weeks, in fact, over years, we have been able to have very productive conversations around how we might be able to achieve that.
And in listening to Paul's Welcome to Country this morning, I think he used the word respect more than any others and I think that is what is needed in this conversation going forward.
So, there are three notes that I would like to make, and I did have a speech prepared, but this morning, the Treasurer and Danielle more or less covered most of what I wanted to say. So I'll make this brief. Since Federation, the productivity commission has determined that pretty much all real wages growth has come from productivity improvements. In the note that the Treasurer sent around in advance of this gathering, he made a similar observation over the past 30 years. So, if we really want to sustainably get real wages growing, we need to consistently get productivity improvements.
Productivity is driven when we have the ingenuity of people combined with investment in tools, skills, and capability to innovate. And it is only that process of innovation that will drive productivity. And so the question becomes, how does an industrial relation system support, enhance and accelerate innovation? We believe that happens primarily at the enterprise level. The way in which our economy is structured is capital comes together, people come together, processes, investment in skills, managerial capability, all come together at the firm level. And indeed, if you think about breakthroughs that we've had, big breakthroughs and small ones, it tends to be by people getting around a table and collaborating inside that framework. We have a system for bargaining within enterprises, and unfortunately it is broken. There are different models around the world, but the one that we have used, and the one that has worked at times is enterprise bargaining
Today, non-managerial employees who are paid under an EBA are paid a hundred dollars more per day than those that aren't. That's $25,000 a year. But over the last decade, the number of employees covered under an EBA has declined by a million. Why is that? Well Sally ran through lots of the reasons in her opening comments. The system is complex. The system is based on legalities. The system is difficult to navigate, and frankly, therefore businesses are opting out of using it. And going back to the rigid confines of awards. We have to be able to do better than that. We need to make the bargaining system simpler. We need to make it more accessible. We do believe that the concept of the boot ensuring that outcomes through bargaining are that every employee, all employees are better off in an overall sense is an important baseline. We do believe that the primacy of the parties negotiating has to be taken into account, that we can't have systems where months of negotiation take place. And then at the last minute, they get blown up by an outside organisation. And we do believe it's important that at the end, there is a single instrument. So that businesses, once they have negotiated, can rely on that instrument rather than layering it on top of others.
Moving on from enterprise bargaining, we do believe that we need to have a conversation about award simplification. By that we don't mean reducing the number of the 122 awards that exist, but simply going through them and making sure that the out of date definitions, the out of date terms and clauses are removed, and that they are presented in a way that everyday people, workers and employers can understand. Because I don't know how many of you have read an award, not many? Not seeing many hands go up. But they are extraordinarily complex and difficult to navigate.
And the third thing I would say, and this feeds very much on from the panel before, the IR system has to address the gender pay inequalities that are embedded in our society today.
I thought it was enlightening, uplifting to hear about the conversation about that. Having to go back to the very culture that we bring, our mindsets that we bring to workplaces, because I think fundamentally that is where the problem is. I don't think it's in bargaining per se, but I think there could be solutions through the industrial relations system that addresses that. But I do think it's going to take leadership from all of us to ensure that we address the mindset that gets brought to work, not just the legal frameworks that are negotiated through a bargaining system.
So look, perhaps I'll end there and hand any other time that I have to others, but I would end on just saying that from the business council's perspective, we are here. We are here to collaborate. We are here to try and find solutions and I'm actually pretty optimistic that together we will be able to. Thank you.