Although HR practitioners are, understandably, focused on the immediate consequences of WorkChoices for their organisations, Russell Lansbury believes they should also be thinking about the longer-term reforms in employment relations needed to benefit Australian society as a whole
Although HR practitioners are, understandably, focused on the immediate consequences of WorkChoices for their organisations, Russell Lansbury believes they should also be thinking about the longer-term reforms in employment relations needed to benefit Australian society as a whole
Despite the outward appearance of an affluent Australia, in which jobs are plentiful and consumer spending is high, many Australians are living on the edge, with high exposure to unsecured debt and insecure employment. While the stock market continues to boom, largely fuelled by high commodity prices, there is a feeling that many people are living beyond their means, and that a correction in the share prices could damage the whole economic edifice. Even sober economic decision makers such as Ian McFarlane, Governor of the Reserve Bank, are warning the Government and business leaders that the good times cannot last forever and that significant issues need to be urgently addressed, such as under-investment in both the intellectual and physical infrastructure of the nation. The Federal Government’s WorkChoices legislation needs to be viewed against this background in order to assess whether it is likely to assist or hinder the achievement of economic prosperity and social cohesion.
Much of the recent debate surrounding WorkChoices has focused on concerns about its likely effects on job security, the minimum wage, productivity and employment levels. Prime Minister John Howard has argued that reforms are needed to “transform the industrial relations culture from the stultifying effects of the old centralised model”. The Workplace Relations Minister, Kevin Andrews, claims that the reforms will result in higher productivity, lower unemployment and increased wage flexibility. Yet there is little evidence to support these claims.
Indeed, the outcomes in recent years, from similar reforms in New Zealand and Western Australia (under previous conservative governments), indicate that productivity and employment growth were slower than Australia, which had a more centralised employment relations system at the time. Australia has been moving towards a more decentralised approach to industrial relations for more than two decades but, until recently, had done so within a broader legal framework, which provided a degree of protection for the lowest paid through the ‘safety net’. The Federal Government has now embarked on radical industrial relations reforms which have taken even some of their supporters by surprise.
The new laws are complex, lengthy and likely to result in expensive litigation that will give considerable advantage to the better resourced parties. The reduction in the role and scope of the Australian Industrial Relations Commission is likely to make effective agreement making and dispute resolution between employers and employees more difficult to achieve. The extensive restrictions on unions undertaking lawful industrial action and the lack of access by employees to collective agreements negotiated by unions will tip the balance towards employers. Individual employees with strong bargaining power, due to skills in short supply, are likely to gain major wage increases. Yet those workers with weak bargaining power will see their relative wages decline. The overall result will be growing socio-economic inequality, especially as the ‘safety net’ provided by the award system is weakened.
The much-vaunted Fair Pay Commission is unlikely to adjust the minimum wage, established by the 2005 National Wage Case, to meet increases in the cost of living. The abandonment of the No Disadvantage Test, which ensured that award standards underpinned all agreements (including Australian Workplace Agreements), means that employers are no longer obliged to ensure that their employees’ wages and conditions are, on the whole, equal to those offered by the relevant award. Even Professor Ian Harper, President of the Fair Pay Commission, has conceded that a reduction in real wages for Australia’s 1.6 million lower paid workers “is certainly an outcome which could arise”when the new Commission delivers its first decision around September 2006.
While some HR managers may feel that the changes introduced by WorkChoices will give their companies an economic advantage, and even the capacity to be more internationally competitive, the danger is that the legislation may lead Australia down the low road, to a less skilled and less productive society. By facilitating the growth of a low paid sector of workforce, the Government is likely to encourage employers to provide more low cost jobs, which require workers with low skills and limited training. That will, in turn, exacerbate rather than solve Australia’s problems of skills shortages and low productivity. This is in contrast to the development of high performance work systems that encourage high skills, greater worker involvement and team-based approaches to organising work.
A leading international expert on HR management at the Sloan School, MIT, Professor Thomas Kochan, has argued that HR professionals in the US have largely remained silent while the nation has failed to invest in human capital and renew its skill base. Rather than criticise the government or business for taking the “low skills/low value added/low wage approach” to their economic problems, HR professionals have become the “perfect agents for their CEO”, thereby undermining the credibility of the HR profession and organisations. The same can be said of HR professionals in Australia who have been largely silent on the damage done to the nation’s future workforce by the lack of a strategic vision for HR development and employment relations.
While neither Labor nor the other opposition parties have produced a coherent blueprint for the future, they are beginning to exploit the weakness of the Government’s position. In his recent Laffer Memorial Lecture at the University of Sydney, Kim Beazley pledged that a Labor government would abolish prohibitions on what can be negotiated in workplace agreements and would reinsert fairness as one of the criteria for setting minimum rates. An unfair dismissal tribunal would be established to restore workers’ right to remedies if they are found to have been dismissed unfairly. However, whichever political party achieves government at the next election must forge a new ‘social contract’ with the key stakeholders in employment relations (including employers and unions) that will ensure that economic efficiency is achieved without undermining social equity, which is the basis of a successful democratic society.
A new social contract or partnership between governments (federal and state), employers, unions, workers and the community would rest on four pillars: access to employment for all those willing and able to work; an entitlement for all citizens to education and training in order to build the intellectual capital required for the future; a coherent retirement incomes system that will provide sufficient coverage for a rapidly ageing population; and an employment relations system which provides access to either collective or individual workplace agreements.
A new employment relations tribunal will be required which is independent of government and has representatives from the social partners. This is necessary to ensure that workers and employers have access to an independent third party to resolve differences between them, if they so choose. The new employment relations tribunal should cover both federal and state jurisdictions and facilitate the role of non-legal representatives and procedures. It is not just the pillars of a new social contract that are important but the foundations on which they rest. This requires a sense of trust and mutuality between workers, unions, employers and government – which has been undermined by the WorkChoices legislation. HR professionals have a significant role to play in the creation of a new system which will be appropriate to the future.
Russell Lansbury is Professor of Work and Organisational Studies and Associate Dean for Research in the Faculty of Economics and Business at the University of Sydney
