Why Fair Work works well


Fair Work AustraliaA major review into the Fair Work Act (FWA) says the nation's workplace laws are 'working well'. Industry response has been predictable, uncompromising and perhaps even dishonest. Their critique produces more heat than light — a few good sound-bites heavy on rhetoric and light on substance.

The 'Towards More Productive and Equitable Workplaces' report by Professor Ron McCallum, the Hon. Michael Moore and Dr John Edwards and initiated by the Minister for Workplace Relations Bill Shorten says:

Industrial disputes are uncommon, overall wages growth has remained consistent with low consumer price inflation while wages growth between industries and regions is responding to supply and demand, unemployment has steadily declined while participation in the workforce has increased, wages after inflation have markedly improved, and at the same time the profit share of incomes has increased. These are considerable achievements, not to be put at risk lightly.

The 294 page report has made 53 relatively minor recommendations — my analysis suggests 21 of the 53 are neutral (they either cut both ways or are technical/procedural in nature), 15 favour employees and 17 favour employers (although they fall dramatically short of what employers actually called for in their submissions).

The Australian Chamber of Commerce and Industry has described the review as 'disappointing' and a 'missed opportunity' with 'alarming indifference' to productivity, competitiveness and unemployment.

The Business Council of Australia responded by saying 'Every day in Australia, jobs are lost, businesses are shutting ... We're just missing the point.'

What is clear is that industry has developed a definitive media strategy; piggyback broad economic concerns with calls for workplace deregulation. The business sector is yet to produce any real evidence that Australia's industrial relations laws are having an adverse impact on the economy.

By contrast, the review concludes:

Since the FWA came into force important outcomes such as wages growth, industrial disputation, the responsiveness of wages to supply and demand, the rate of employment growth have been favourable to Australia's continuing prosperity. The exception has been productivity growth, which has been disappointing in the FWA  framework and in the two preceding frameworks over the last decade.

Many agree that the nation's productivity problems may well be related to our industrial relations system. However, diminishing productivity is a multi-faceted issue and the exact link with IR laws is genuinely unknown. There is also no avoiding the fact that lower productivity actually started during the Workchoices years.

What is missing is evidence of clear cause and effect. While some of the most productive countries in the world like Norway and Sweden have highly regulated industrial relations regimes, many other highly productive nations like the United States have among the most deregulated workforces in the world.

Simplistically conflating neoliberal reform of the workplace with productivity gains is a disingenuous, at worst insidious proposition that scapegoats Australian workers for the failings of our economy. In industry submissions to the review, many of the suggestions were aimed at increasing profits, not necessarily enhancing productivity.

If workers are to concede that industrial relations may have  some causal relationship with flailing productivity, business also needs to take some responsibility. Poor management practices, a reluctance to innovate, group-think, workplace bullying, a lack of investment in skills, and 'old boys clubs' — where insiders are hired and promoted based on their position within a self-interested network — may contribute to the overall lull.

Red tape needs to be reduced, especially for small business — this has little to do with employment conditions. Tax reform as well as investment in technology, infrastructure and education will do far more to improve productivity than stripping back worker pay and conditions.

It is also a great shame that the efficacy of industrial relations should be framed in pure economic terms, whereby wage rises for instance would be evidence of a poorly performing industrial relations system — rather than one that is delivering important and equitable outcomes for Australian workers.

The same might be said for the rise in unfair employment termination rates; do they necessarily indicate our IR system is in chaos or do they merely suggest more unjustly terminated workers are now able to find justice?

Perhaps the question we should really be asking is: do the majority of Australians (not just bosses) think we have a fair, harmonious system which rewards hard work and productivity? The majority of working Australians work in small business, are not members of unions, do not have access to the media and are certainly not represented by the business elite — it's these voices we really need to hear.

The FWA may well have the balance right. It was in many ways a simple rebranding of the pro-employer Workchoices provisions with some important differences. While there is much talk of a spike in industrial disputes, levels are still far lower than pre-Workchoices days. Meanwhile wages growth has been lower and the growth rate of labour productivity has been higher in the FWA period than under Work Choices.

So why exactly do we need to reform our industrial relations system? If there is a case for change, it is yet to be properly made. 

Luke WilliamsLuke Williams is a freelance journalist who is studying law at Monash University in Melbourne. 


Topic tags: Australian Chamber of Commerce and Industry, Productivity Commission, WorkChoices, Fair Work Australia



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Existing comments

Well said, Luke Williams.It is so sad that such a vital part of what makes society tick - namely work - can only be seen in terms of power, prestige, profit. I know society is made up of fallible and flawed human beings but surely we can summon up enough rationality so see that the relationship between the workers and the bosses is one of mutual interdependence not one-up-manship. Of course the bosses (industry's) response to the FWA review was predictable, uncompromising and to some extent dishonest. It is in their DNA that they are the superior beings, the risk-takers, the un-appreciated. They need psychological help to deal with their emotional immaturity and their grandiosity. As for the workers they have to overcome their paranoia that all bosses at all times and in all places are out to screw them. I don'thold out much hope for the dichotomy between capital and labour has been solidified into the two main political groupings, which I am sorry to say regard politics as a combative sport where the winner takes all. Despite my cynicism the fact that someone like Luke williams can write so clearly on industrial relations gives me hope.
Uncle Pat | 08 August 2012

There is a need for fairness in the workplace. At the same time it is true that at present it can take 12 months or more for a person who is not able or not willing to be an effective worker in a role to be dealt with in a reasonable manner. A common experience is that quite a number of workers who are not performing in a role will take stress leave or make claims of bullying and harassment when they are challenged on their poor performance. The employer is then forced to use lawyers to prepare a response to these accusations, even if they are clearly vexatious. That is expensive, as well as the fact that the employee is usually on leave in that period, at the employer’s expense. At the last moment, when it comes time for the employee to spend money to promote his or her case, the employee withdraws. Sometimes employees go to court or mediation representing themselves, but are so poorly prepared the action cannot continue, again causing lost time and money. The worker who is “using the system” in this way will maintain their income for, say, an additional 12 months. A cost of $50,000 in time spent by the employer, lost work by the employee, legal fees etc is not at all unusual. That is a great cost to any small business, but even tough for larger businesses. For non-profits, it means that services to people in need are reduced or lost. For Luke Williams to see this as such a black and white situation where the worker is being stomped upon by the uncaring employer in search for profit is naïve. There is a need for balance. Many of the readers who manage non-profits will recognise the scenario given above.
Non-profit Manager | 08 August 2012

Non-Profit Manager certainly shows an area in the employer/employee relationship that needs fixing. How widespread the practice is I do not know. Maybe that is something Luke Williams could investigate.
I wonder if Non-proft Manager would like to comment on how it is possible for some enterprises to make such huge profits..
Would not at least one factor be that they pay their employees the smallest wages they can get away with and have workplace conditions that just barely meet accepted standards. Is there such a being as a generous and compassionate for-profit manager.

In the absence of the profit motive I would expect (perhaps naively) non-profit managers to be on the whole more compassionate and generous.
Uncle Pat | 10 August 2012

Thanks for your comments everyone.

Non-profit manager (NPM) makes a very good point. However, I think NPM raises another important issue related to bullying and worker compensation law. Bullying and harassment are not really covered by the Fair Work Act.

My article addressed the way the business lobby conflates concerns about productivity with the need to deregulate industrial relations. I humbly suggest the legislation might have the balance about right.

Vexatious litigants are a problem for workplaces and the issue is rarely black and white.

Regarding "bullying" claims. It is certainly not bullying to be told to improve your performance when it is not up to scratch. Many people think they are being bullied at work when they are not.

Conversly, often managers can bully workers by dressing up bullying as performance management. So it's difficult to make hard and fast rules about how to address the complex issue of what is and is not bullying.

My parents ran a small business when I was growing up and they frequently ran into trouble when trying to dismiss staff who were actually engaging in illegal activity at work.

So there are many caveats to this debate and thankyou for raising them.
Luke Williams | 18 August 2012


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