OPINION
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At the Press Club on May 26, the Prime Minister said he was so "heartened" by the "constructive approach" of employers and employees and their representative organisations in controlling the coronavirus and related measures that he wanted to "turn that co-operation to create even more jobs."
Then he hopped into the industrial relations system which he said "had settled into complacency...lost sight of its purpose....and retreated into tribalism, conflict and ideological posturing." He reckons "This will need to change or more Australians will unnecessarily lose their jobs."
The Prime Minister offered no evidence in support of his assertions which are at odds with recent major reviews of the IR system, for example, the McCallum report in 2012 found that relevant "legislation is broadly operating as intended". In late 2015 the Productivity Commission concluded that while some repairs could be made, "Australia's workplace relations system is not systemically dysfunctional". Then late last year the government's IR minister, Christian Porter, implicitly backed these conclusions saying that "The IR system is far from terrible ....and benefits from the great virtue that in most sectors most of the time it is a relatively orderly rules based system". So what is it for the government - "tribalism, conflict and ideological posturing" or a "relatively orderly rules based system"?
Whatever, Mr Morrison's analysis of the IR world is not the first to be glibly untroubled by evidence and he now has Minister Porter chairing five working groups composed of employer and employee representatives to look at award simplification, enterprise agreement making, casual and fixed term employment, compliance and green fields agreements.
Minister: In case you've forgotten, the devastation of employment in the hospitality industry has been caused by the COVID virus not by the IR system.
The Australian Council of Trade Unions, for obvious reasons, is a keen participant, leading some with faulty historical understandings to see the government's initiative as a revival of the so-called Accord between the Australian Labor Party and the ACTU in the 1980s. That's boloney. The Accord was about wage restraint and did not concern itself with the IR system. Mr Morrison's venture is about the IR system and is not seeking an accord with the union movement although one to now unleash wages would have something going for it.
Mr Morrison says he has one objective for his stroll down IR lane - to "make jobs". He's setting himself up for failure. The IR system has made no contribution to the present dire levels of unemployment and it can make no meaningful contribution to reducing them. Sally McManus from the ACTU says that any changes will only have a "tiny effect" on jobs; she's right. Let's look at award simplification and enterprise bargaining to see why this is so.
To a large extent award simplification has been done. In the last 15 years, the number of major awards has been reduced from around 2000 to about 120 and they've been "restructured" along the way. While these changes may have made things easier for employers and employees and their representatives, there's scant evidence they've affected productivity and employment.
Minister Porter whinges about the Hospitality Award which he says is "the most complicated award in the most distressed industry ... it has I think 61 different pay points with 14 classifications inside each pay point". While this is a garbled reading of the Award, Mr Porter has a point. The Award is long, detailed and prescriptive in many ways. It is a great leap of illogic however to claim, as Mr Porter does, that this aspect of the IR system "is hurting jobs". Minister: In case you've forgotten, the devastation of employment in the hospitality industry has been caused by the COVID virus not by the IR system and before the virus had arrived the hospitality sector had been one of the fastest growing in the economy. It would be as silly to say that the Award had anything significant to do with this huge employment growth as it is now to claim it's inhibiting it.
The Hospitality Award covers a vast range of employment and work from the corner sandwich shop, to high style restaurants, hotels and motels, boarding houses, health farms, guest houses, caravan parks, wine bars and taverns, resorts, caterers, casinos and much more. It includes functions like food and beverage preparation, serving up the results thereof, guest services, administration, security, leisure services, purchasing and stores, maintenance and managerial. Surprise - the Award's complexity reflects the complexity of the workforce. A pay and classification structure for a cook will not be suitable for a maintenance worker. Irregular hours of work in the industry cause largely unavoidable complications in the Award.
Further, the Award is prescriptive in part because the hospitality industry is susceptible to staff exploitation and thus employers and employees need to know where they stand. And, it makes sense to have a range of pay points within each classification structure so that different levels of experience and ability can be recognised. A single pay point that rewards a person recruited yesterday at the same rate as a long term employee is usually unhelpful.
It may be possible for the hospitality and other awards to be further simplified with marginal savings in operational costs. Reducing costs, however, is an unreliable recipe for creating jobs. The number of "team members" at the local fish and chip shop depends primarily on the number of customers it can entice. Why should it employ more staff on the basis of $50 a week saving in costs?
Moreover, Messrs Morrison and Porter are starting at the wrong point. Pay, classification structures and conditions in awards should be designed through solid analysis of what best fits the work to be done. Looking for simplification as an end in itself will not produce an effective award structure, except by accident.
Mr Porter's criticisms of present laws governing enterprise bargaining are on more solid ground. These are lengthy, turgid, complex and seemingly designed to deal with every eventuality no matter how remote. They require the parties to crawl through all sorts of hoops. They may be partially responsible for the decline in the number of employees covered by enterprise agreements although that is probably not the whole story.
It's likely that linking improved working practices to increases in staff benefits via industrial bargaining has a limited shelf life. It can work for a while but over the longer haul it can give rise to bad habits. Unions, for example, can be tempted to store up and even manufacture restrictive work practices as bargaining chips for better pay. Management can be overly tempted to see enterprise bargaining as the main means of improving the working of their organisations and when they're through its strains and stresses, rest on their laurels. Indeed, the system can limit managements' discretions and make it more difficult for them to make change without paying for it by way of better conditions for their staff. This mixture of influences may also have helped to reduce the number of staff covered by enterprise bargains. Many in the public service seem to be being simply rolled over with pay increases but no bargaining - that is to say, they're enterprise bargains in name only.
Much has been claimed for enterprise bargaining and some of it may be warranted. For example, it may have prevented or slowed the flow-on of remuneration increases through the economy. The stubborn fact remains, however, that employees expectations about what they should be paid will be primarily affected by what they see others getting for doing like work. It's not accidental that wage relativities over the medium to long term tend not to change much. Whether enterprise bargaining has done much to improve labour productivity is more usually asserted than proved.
The critical point for enterprises is for the IR system to enable them to maintain remuneration at levels sufficient to attract and retain staff and keep them well motivated. That does not require enterprise bargaining in its usually accepted sense. So maybe it's time to give it a rest, without changing the law, and allow employers and their staff to rely on more traditional means for settling staff benefits. That would reduce IR's transaction costs although without doing much to boost employment.
Governments of course have got to be able to do many things simultaneously. Still, with its plate piled high the Morrison government's flirtation with changes to the IR system is a needless distraction with little potential to affect today's main game. It is also fraught with political risk and could easily degenerate into unhelpful contests about the relative power of employers and employees and, God help us, "ideological posturing". It can't rationally be expected to affect employment materially. That can best be done by continuing, in one of Mr Morrison's favourite turns of phrase, a "laser-like" focus on controlling the virus, protecting the unemployed and imperiled businesses and promoting demand and investment, causes which will not be advanced by messing around with the Hospitality Award.
- Paddy Gourley is a former senior public servant. pdg@home.netspeed.com.au