Industrial Relations - Howard's End?

The Industrial Relations (IR) changes introduced in late 2005 by the conservative Howard Government in Australia have been controversial to say the least, and as a consequence have generated a significant amount of coverage and comment.

As someone who supports the principles of trade unionism, I have a strong interest in these laws, but given the comprehensive coverage I have thought carefully about what I can contribute to the debate.

I believe that these changes represent an attack on an industrial relations system that has been responsible for creating one of the best living standards in the industrialised world, an attack that has been motivated solely by ideology.

Some may deem the characterisation of the changes as 'ideological' extreme, but it is hard to argue with the chain of events, briefly:

During the 2004 election campaign the Howard Government didn't seek a mandate from the electorate for the changes, though when Howard gained control of the Senate (The Australian Upper House) it meant that the Government had unfettered legislative power.

This control has enabled the Government to pass legislation without any negotiation with minor parties and the Opposition.

So on to the issue of ideology.

If the IR changes were not based on 'ideology' but on sound public policy and in the country's economic interests then it would have been simple for the Government to provide the economic and policy evidence that supports the changes.

However to date the evidence has been somewhat flimsy and in some circumstances contradictory.

For example:

It has been claimed that the restricting the access to unfair dismissal laws will result in increased employment, especially for small businesses, despite no empirical research to support this argument.

How do we know this?

The economist who the Governmnet has used to support its claims regarding unfair dismissals, Professor Mark Wooden, made the following admission in a Federal Court case (Para 66)
"the existence or non-existence of unlawful dismissal legislation has got very little to do with the growth of employment and that it is dictated by economic factors".

This lack of evidence was also recently acknowledged by Howard himself.

Critically though this claim fails to explain why, under the previous IR system, was unemployment consistently falling?

What is more relevant is that according to the OECD (see note 12), Australia is the one of the easiest countries in the world to dismiss an employee, which hardly constitutes grounds for further restricting access to unfair dismissals.

Another claim from Howard and Government Minister, Kevin Andrews, is that due to the labour shortage, Australian workers, not necessarily employers, have the upper hand in bargainaing over wages, penalties, overtime and their conditions at present.

Specifically Howard stated that "employees in this country are going to get a very good deal" whilst Andrews suggested that "the reality of the environment in which we're living today...means that workers have quite a distinct advantage in terms of what sort of rates of pay they're paid, the overtime that they want, the penalty rates, all of those things."

However an analysis of 250 Australian Workplace Agreements (AWA) signed since the introduction of legislation by Professor Peetz indicates that:

82% removed or reduced overtime rates;
73% removed or reduced public holiday pay rates;
69% removed or reduced rest breaks;
64% removed or reduced annual leave loading;
63% absorbed penalty rates;
54% removed or reduced shift loadings.

If these are the types of outcomes for workers with a strong bargaining position in a strong economy, it it disturbing to think what workers with little bargaining power are negotiating, let alone what might happen to all workers if there is an economic downturn.

Some might question the sample size but given that the Office of the Employment Advocate has decided not conduct any further anlaysis of AWA's signed after the introduction of the legislation, we can only rely upon this evidence.

One final observation is that Howard has relied upon the 14% increase in real wages over the past decade to reinforce that Australian workers can trust his Government, especially in relation to the IR changes, however like the falling unemployment, those results were achieved under the previous IR system, suggesting that it was indeed fit for purpose.

So without a political mandate, in the absence of any empirical evidence and given the contradictory arguments, it would seem that the changes have been motivated by some other factor, ideology perhaps?

There is much more in the legislation that is objectionable and that can be commented on but for now I have chosen to highlight those that are the most obvious for now.

I would welcome any discussion or feedback on these observations.

Yours in union,

Eamon.