This opinion article by Business Council President Tim Reed was published in the The Australian on Thursday 22 March 2021.

Behind this week’s welcome unemployment data are the stories of 89,000 Australians who were able to return to work last month.

As a nation, it’s clear we are heading in the right direction but the job of creating jobs is far from over. With 805,000 people still unemployed, almost 1.2 million people wanting extra hours and around one million workers about to come off JobKeeper, there’s still so much more to do. 

Before we entered the pandemic Australia had suffered from a decade of low real wage growth.  When we do get unemployment and underemployment back down to pre-pandemic levels, low productivity growth resulting in low wage growth will once again rise to be our top economic challenge.

It therefore defies belief that the Senate this week passed up a rare opportunity to save the enterprise bargaining system in a betrayal of Australian workers.

This is the system that not only pays workers more, but it gives employers a greater ability to work with their teams to grow businesses, innovate, invest and create more jobs.  The number of new enterprise agreements has fallen 66 per cent since 2009. This is a disaster because on average, non-managerial workers on EBAs are $100 better off a day than those on awards.

The Morrison government’s carefully calibrated reforms were modest, well considered and would have been effective. Last year, when the government engaged in a process of consultation with unions and industry regarding workplace reforms, the Prime Minister and the Attorney General were very clear - they were not aiming to build a new industrial relations system, but rather were aiming to improve and revitalise the current system; a system which now faces a slow and painful death.

When enterprise bargaining was introduced by the Keating Government, it sought to allow employers and workers, represented by unions, to seek win-win agreements.  This meant agreeing to workplace arrangements that lifted the profitability of the business in return for higher wages.  And it worked.  For two decades this system led to higher real wages as more and more workers and businesses chose to make use of such arrangements.

But over time changes to the system meant that it stopped working.  For example, changes introduced in 2009 meant that even if 100 per cent of workers, a union and a business agreed on an enterprise arrangement, the possibility that a hypothetical future worker might not be better off could see that agreement rejected by the Fair Work Commission. 

This week, the Senate failed to pass modest, but real improvements to the workplace relations system that would have addressed failings that allow ridiculous outcomes like this to occur.  This failure leaves Australia hamstrung by a complex and rigid industrial relations system that doesn’t reflect modern workers or a modern economy.

While much of the media focus was aimed at the cross-bench, it must also be noted that it is nonsensical that the Labor Party - which established the EBA system - to walk away from the centrepiece of our workplace relations system.  A system that they put in place.  In doing so they have turned their back on a system that has underpinned higher productivity, higher wages and given unions a seat at the table alongside the nation’s job creators.

The union movement has also let down their members because they know the current system doesn’t work for modern workers and it doesn’t work for modern businesses.

When we reflect later on what unfolded in the Senate this week, while the agreement on a proper definition of casual workers creating more certainty for workers and their employers will be seen as a step forward, overwhelmingly we will reflect on another lost opportunity. 

Business desperately needs a workplace relations system that actively encourages new investment to transform the economy, deliver more and higher paying jobs, new industries and greater opportunities. By sticking its head in the sand, the Senate has left Australia to continue with an EBA system that remains so technically complex, drawn out and difficult to navigate that workers miss out on pay rises as the parties chose to fall back on the lower paid, more rigid award based system. 

Unfortunately, opportunities for even the most incremental reform these days are rare.

We thank the Government for their efforts to get important reforms through and encourage them to continue pursing reforms to the EBA system. 

To those that have let Australian’s down this week, we note that fearing that others will campaign against you is not a good enough reason to fail to act in the national interest.

Consequences exist for the nation every time we don’t take action to modernise the economy. It means decision by decision, dollar by dollar, job by job, industry by industry, they chose to go somewhere else – which means we all lose.

Tim Reed is the President of The Business Council of Australia