The state of enterprise bargaining in Australia

Enterprise bargaining was introduced by Labor in the early 1990s and sector wide bargaining was restricted. Awards moved from being the main way of setting pay and conditions to a safety net. A set of national minimum standards was introduced in 2006 and these were expanded in 2010 to establish the National Employment Standards

But Australia has a productivity problem that is dragging on our living standards. The Better off overall test (BOOT) is no doubt contributing to the weakness we are seeing in productivity growth:

  • Non-managerial employees on EBAs get paid more (earning on average $42 an hour compared to $29 on awards).
  • Just over 50 per cent of non-managerial workers on EBAs earn over $1,600 a week compared to around 20 per cent on awards.
  • Wages growth for workers on active, federally registered EBAs (with quantifiable wage increases) is higher than the economy-wide average – growing at an annual average of 2.7 per cent compared to 2.3 per cent.
  • About 40 per cent or 4 million workers are on EBAs and just over 20 per cent or 2.2 million workers are on an award.
  • But we currently have the lowest number of active federal enterprise agreements in 20 years.
  • We believe the BOOT is part of the problem – it’s become so unworkable in the real world.
  • In part, due to the complexity and uncertainty around the BOOT, employers and employees are choosing not to renegotiate agreements, its taking longer to renegotiate EBAs, or employers are not using them at all.
  • The proportion of people working under a federally registered EBA that has lapsed - but is still operational - has climbed over the past four years to almost 40 per cent of federally registered EBAs.
  • Workers on an agreement that is not or has not been able to be renegotiated (after the nominal expiry date) could remain on the same pay rate
  • We want to see the BOOT replaced with the no disadvantage test as recommended by the Productivity Commission.

Read the full report here.