Reform Still a Work in Progress

By Michael Chaney
Chief Executive, Wesfarmers
Vice President, Business Council of Australia

IT is a given that any proposed changes to Australia's workplace relations laws will provoke a strong and often emotional response. Perceptions of a them-and-us divide between employer and employee still provide a convenient catchcry for those opposed to further workplace reform.

Certainly there is no shortage of claims that Australian workers will lose out under further changes to workplace relations proposed by the federal Government. But the reality is these proposed changes are effectively a continuation of the reforms in workplace relations during the past 20 years, changes that have engendered significant improvements in Australia's productivity and delivered widespread benefits to employees, employers and the economy.

Reforms started by the Hawke-Keating Labor government have moved Australian workplaces away from the highly regulated, centralised structures to focus on enterprise bargaining, and have allowed business and employees to better align their interests. These changes have enabled business to reward employees for performance and have strengthened accountability on all sides. This has positively changed workplace cultures -- that is, broken down the them-and-us approach -- in ways not anticipated.

The benefits of moves to free up the workplace on a broader level are clear: strong productivity growth matched by strong real wages growth, job creation and low unemployment.

The Government's proposals for further reform of the labour market are aimed at continuing this trend and are strongly supported by business.

Growth has supported profitability of companies, which in turn has underpinned tax revenues and the capacity of government to redistribute wealth and income, as well as profits that have benefited shareholders. At the enterprise level the benefits have been equally clear but more diverse. The dramatic reduction in workplace injuries is one of many telling examples.

Although unions claim that lower-paid workers will be worse off under the reforms, the experience of labour market deregulation suggests otherwise.

Based on figures from the National Centre of Social and Economic Modelling, the strongest private income growth recorded since 1994-95 -- when the trend to workplace deregulation was strongest -- has been among the 20 per cent of households on the lowest incomes.

Some will claim that a push towards greater use of individual contracts or Australian Workplace Agreements will erode worker rights and deliver poorer outcomes to employees. Again, the realities of the modern workplace suggest otherwise.

First, labour market circumstances are changing. Our future is no longer one of abundant labour supply; quite the opposite. Business will need to work harder to attract and retain staff.

Second, individuals can choose to be represented by a bargaining agent in negotiating an AWA. That agent can be any person, including a union representative. An employee cannot be coerced into choosing a particular agent (or not) or into signing an agreement.

Third, Australian Bureau of Statistics data shows that workers on AWAs earn on average 23 per cent to 50 per cent more than their counterparts on collective agreements. AWAs have delivered higher earnings in a wide range of sectors including manufacturing, construction, retail trade, transport and storage.

Finally, survey results show that those on AWAs report higher levels of satisfaction than collective employees in terms of hours, the amount of work performed, training received, recognition for effort, and their influence over how they work.

Given past workplace reforms have delivered widespread benefits, it is incumbent on government, business and the community to consider how best to extend those benefits if we are to sustain our record of growth and prosperity.

In supporting further labour market reform, the Business Council of Australia and its member companies aim to sustain high levels of participation and job creation, and flexible, innovative and creative workforces that support high productivity and reward employees in line with these positive outcomes.

Why do we need more reform to achieve this? Because our workplace relations regulation remains excessively complex and focused on conflict and process rather than outcomes; and because, despite our successes, Australia's economy remains less productive than the economies of many of our competitors and peers.

A case in point is Australia's overlapping state and federal systems of workplace relations.

The duplication across the state and federal systems and different rules in each jurisdiction increase the costs, complexity and uncertainties for business.

These costs are reflected in lower productivity and profitability and fewer jobs than would otherwise be the case. The benefits of a national system have been recognised for decades but little progress has been made.

The BCA considers referral of state powers would be the best outcome and encourages state governments to play a constructive role recognising the value a national system could deliver to business, its employees and the wider economy.

The BCA is confident that a comprehensive package of workplace relations reform, implemented as a priority, will lay the foundations for Australia's future prosperity.

We live in an intensely competitive and increasingly open global economy. The rest of the world is not standing still and, unless we innovate and find new ways to continually increase our productivity and workforce participation, we will go backwards as a nation.

Michael Chaney is chairman of the Business Council of Australia's employment and participation taskforce and managing director of Wesfarmers Ltd.