Modern awards: the ‘cheapest option’ or ‘manipulation’?

by Chloe Taylor24 Aug 2015
Head of the Australian Productivity Commission Peter Harris defended the award system last week, naming it “probably the cheapest way to employ people in this country”.
Harris also suggested that Australia would not be moving towards a New Zealand-style deregulated labour market model.
However, across the Tasman, New Zealand’s Productivity Commission chair Murray Sherwin said that the Kiwi market has been successful in employing people.
“Life goes on and the markets work their way through," he said at a Trans-Tasman Business Circle event. "The New Zealand labour market has actually been pretty good at employing people."
“I am really loath to attempt to even ascribe that to regulatory frameworks. I think a lot of it's really come down to market forces as much as anything else.”
According to media reports, Harris said that those who were campaigning to change the national regime in Australia had to prove that small businesses wanted the change.
“I'm not sure if you're offering them something that they have shown any inclination to pick up,” he said, adding that the awards were the least costly option for employers to hire new staff.
“It's actually probably the cheapest way to employ people in this country, not necessarily but probably, and moreover the firms that use awards are small to medium enterprises.”
In a 1000-page report, Australia’s Productivity Commission said that overhauling the awards system was not practical because of its costliness. It was also noted in the report that there had been few suggestions from those affected that the awards should be altered or abolished.
According to the Australian Financial Review, Harris’ comments are reflective of what some observers have dubbed the “industrial relations club”: a reluctance to venture away from the current framework or consider alternatives, such as New Zealand’s deregulated labour market.
Richard Clancy, director of workplace relations at the Australian Chambers of Commerce and Industry, disagreed with Harris that the complex award system was the best choice for Australia.
“Its complexity creates apprehension, encourages avoidance strategies and acts as a barrier to employment as far as small businesses are concerned,” he said.
In just one month this year, six businesses faced investigation by the Fair Work Ombudsman (FWO) for underpaying staff, in some cases because they were unaware of the correct minimum pay rates under the awards.
Another argument for the disestablishment of Australia’s award system came from Ken Phillips, executive director of the Independent Contractors Association, who praised the approach employed in New Zealand.
“There are too many snouts in the trough, too many people getting advantaged out of all this,” he said.
“They've done away with penalty rates in New Zealand and they still pay penalty rates because if they don't, people don't want to work weekends.
“The market speaks much, much louder that the regulated system here.”
In New Zealand, the Employment Relations Act sets standard conditions that are applicable to the national workforce, including minimum wage and leave entitlements.
The rest is left for the market to decide, meaning that in sectors with unions, employees have the freedom to choose between individual employment contracts and collective agreements negotiated by their union.
Phillips slammed the Australian system as a make-work scheme for “legislative bureaucracy”.
“You've got to understand that this is a collusion between employers and unions to manipulate the markets,” he claimed.
“This is the dirty secret in industrial relations. The big end of town is extremely keen on complexity as they can leverage off it. They really don't want to see a simpler system.”


  • by MM 24/08/2015 10:23:19 AM

    I always wonder why it is the Award's fault that businesses don't know that they exist or know which one covers their business. Surely one of the obligations of running a business and employing people is to find out what you should pay your employees? It isn't like the information is hidden away or hard to find. That a business chooses not to do their due diligence is not an argument for dismantling the Award system.

  • by Fred 24/08/2015 10:58:53 AM

    Its BS to say the big end of town doesn't want change. Its large companies that have the most to lose by lobbying publicly for change because they're always attacked by unions and Labor for 'engaging in a race to the bottom'.

  • by KOD 27/08/2015 12:51:34 PM

    If anyone has recent experience with attempting to obtain approval for an Enterprise Agreement will have found how pedantic the FWC has become now that Vic is approving all EBA's. One would expect that if the EA included elements of the Modern Award that it would be acceptable. This is not the case and provisions in the FW Act in relation to termination, deductions and public holidays for example, is such that the employee can do what they like without fear of any penalty. Why have provisions that only apply to one party?
    Why not just have as NZ has basic NES based standards and leave the rest to the employees and employer.
    It is getting to the point where you need to be a lawyer simply to work in HR.

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