Radical workplace relations reform needed

THE CURRENT system of workplace relations is no longer relevant to today’s economy, and radical reform is needed to drag the Australian system of wage determination and labour market regulation into the 21st century, according to leading think-tank The Centre for Independent Studies.

Commenting on a recently released report, The Road to Work: Freeing Up the Labour Market, policy analyst Kayoko Tsumori said award minimum wages destroy jobs without helping the low-paid while minimum wage increase raise the cost of low-skilled workers and discourage employers from hiring them.

“Labour market regulations are intended to protect workers. But in today’s complex economy, they are more likely to have unintended consequences of increasing joblessness among the low-skilled, the most vulnerable of all workers,” Tsumori said.

She also reinforced the case for abolishing unfair dismissal laws as they apply to small businesses because they also deter hiring, despite their being intended to make firing difficult.

Tsumori stopped short of advocating the complete dismantling of the award system, but argued that the award system must be made a lot more flexible.

“Uniform labour market regulation might have been suited to the uniform workforce of the past; but it is not compatible with the diverse and rapidly evolving workforce of today,”she said.

“The more appropriate role for the government is to help maximise the capacity of the labour market to create jobs by freezing minimum wages, phasing out unfair dismissal laws and making the award system more flexible.”

Tsumori acknowledged that reform in this area is fraught with political difficulties, citing that unions make for deeply conservative opponents and public opinion is cautious. She said, however, that the present system is protecting the ‘insiders’ at the expense of those without work.

“An adequately deregulated labour market provides the best protection for employees, because it encourages job creation and boosts the employment prospects of jobseekers.”

Workplace Relations Minister Kevin Andrews has said that he’s considering suggestions for more profound workplace relations reform, but rejected calls for an inquiry into a more radical overhaul of the system.

Short of a “cautious and careful approach”, he wouldn’t rule out anything following the clearing of a backlog of legislation that would effectively overturn the High Court’s Electrolux decision and exempt small businesses from unfair dismissal laws and having to make redundancy payments.

However the ACTU lashed out at the Federal Government’s proposed new laws, claiming that almost half the Australian workforce – up to 5 million employees working in small businesses – face the threat of being unfairly sacked for no reason as a result.

“No-one should be sacked without a valid reason, but that is the threat that will face everyone who works in one of Australia’s small businesses,” said ACTU president Sharan Burrow.

She said the move to push through such laws was basically a licence for bullying and harassment in the workplace that will not create one extra job.

“The Prime Minister and the Treasurer can cite no credible evidence in support of their recent claims that scrapping unfair dismissal requirements for small business will significantly reduce unemployment,” said Burrow.

Citing a Federal Court case that examined whether exempting small business would lead to the creation of 50,000 jobs, she said that no such link exists between unfair dismissal laws and employment.

“The ACTU regards the Government’s unfair dismissal laws as an unwanted distraction from the real issues facing our economy – the national skills shortage and the casualisation of the workforce.

“It’s no wonder that for the past eight years the Senate has rejected this unnecessary and extreme aspect of the Government’s radical industrial relations agenda – being able to sack people for no reason is a throwback to the 1800s and the master-servant relationship.”

The ACTU predicted that instances of bullying and harassment in workplaces will rise as a result of the new law.