Productivity the New Focus

31 March 2009

The Age

By Greig Gailey

Business Council of Australia 

Workplace relations reforms by successive governments over two decades have done a lot for Australia’s economic and employment success. They have helped us to manage our way through significant challenges and external shocks.

Now, Australia is taking the next step in that reform journey, with new laws from July 1. These laws will require all parties in Australian workplaces – employers, employees, unions, regulators and others – to rethink how they conduct workplace relations.

This time, however, the workplace overhaul will be put in place against the backdrop of a dangerous global economic downturn that is posing challenges to Australia’s governments, businesses and the community that are far greater than any seen in recent decades.

It will take some time before we know whether the new system can, in this uncertain climate, contribute to productivity growth, or whether it will cause increased economic disruption. The answer will lie largely in how the parties to new workplace agreements behave.

The concepts underlying the new laws, we are assured, are radically different from those that have previously underpinned collective bargaining. They assume a collaborative and constructive approach to agreement-making that will make productivity the focus, rather than the adversarial approach that has often gone before, where the interests of employees and employers lacked commonality. However, the claimed potential of the new laws will be realised only if practitioners perceive the system to be different, and therefore behave differently.

To date, the reactions to the laws suggest little has changed. So far we have heard little about the government’s plans for their implementation and for encouraging the different behaviour implied in the new system.

Research by the Business Council of Australia suggests that in other international jurisdictions that have adopted this approach, major investment has been needed to change the functions, attitudes and operating procedures of workplace regulatory bodies.

Widespread education for employers and employee groups alike about alternative modes of “bargaining” and dispute resolution are also required. This is a long-term process of cultural change that needs to start now. Change by assertion doesn’t do it.

To be part of our future economic prosperity, the government’s new workplace laws must pass the tests of speed of adaptability and, ultimately, productivity. Too often, the debate is conducted as if Australian businesses are immune from international forces, as if we have an unfettered capacity to determine our own destiny.

Australia faces significant challenges. The ageing of our population alone throws up problems for workforce participation and productivity, rising government expenditures and a smaller tax base. And the challenges of moving to a low-carbon economy require changes in the way businesses operate.

We must be vigilant in ensuring our international competitiveness, not just for those of our businesses that depend on international markets, but also those businesses, large and small, affected by international forces. From the large resource exporters to the small and medium-sized retailers, tourist operators, restaurants – all are affected by those changes in international markets.

BCA members’ experience strongly suggests that genuine enterprise-level bargaining offers the best opportunity for agreements to contain specific terms, conditions and wages appropriate to the needs of the particular enterprise and its employees.

Any weakening of the focus on the specific needs of each enterprise has the potential to de-couple reward and productivity, with dire consequences for business and jobs sustainability. A worksite-specific focus is essential to understanding the sense of urgency with which negotiations must be conducted.

The next 18 months will be telling in terms of how all parties in workplace arrangements respond to these changes – how people behave in the new system.

Without employment, there can be no full social or economic participation in our economy.

The next few months will tell whether Australia’s new workplace relations system allows the flexibility employers will need to manage their way through these difficult times.



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