ACTU youth wage plan a disaster

Just one day after the Productivity Commission reported a 0.8 per cent decline in labour productivity in the June quarter, ACTU secretary Sally McManus has set out a list of trade union demands for a re-elected Albanese government if it wins a second term. The main item on the wish list, Ewin Hannan reports, is legislating to scrap junior pay rates for more than 500,000 young workers aged 18 to 21 across the retail, fast-food and pharmacy sectors if unions do not convince the Fair Work Commission to abolish them. Doing so would destroy countless small businesses, cost many students’ jobs and undermine the economy.

The ACTU also wants 10 days reproductive leave, watering down employers’ capacity to lock out staff during strikes, and better deals for casual and gig workers and freelance journalists. Workplace reform should be an important issue at the coming federal election, primarily to encourage productivity growth by reversing retrograde developments imposed by the Albanese government. These have recast the system heavily in the unions’ favour, including multi-employer bargaining; same job, same pay changes; the “right” to disconnect; onerous red tape for businesses; and new definitions of casual workers. Rigid centralism that has taken authority away from individual enterprises to negotiate with their own staff needs to be reversed, and the policies and attitudes of the Hawke-Keating and early Howard years revived. These brought flexibility and productivity to workplaces and sustainable pay rises to workers. Forcing retailers, fast-food shops and pharmacists to pay top dollar to young staff who currently receive 70, 80 or 90 per cent of adult rates would worsen the predicament of many businesses and young staff who would be priced out of jobs.

The nation’s woeful productivity performance – an increase of just 0.5 per cent across the 12 months to June – will hamper the fight against inflation, an issue identified numerous times by the Reserve Bank. Productivity growth is also the engine for higher living standards, which is why years of sluggish performance need to be addressed. As a starting point, the worst productivity performances in recent months were recorded in administrative services and the retail sectors. That point underlines the folly of the ACTU’s push to force employers to pay adult rates to retail and other workers.

Productivity Commission deputy chairman Alex Robson’s observation that the post-Covid productivity bubble had burst and the economy had returned to the weak productivity growth levels of 2015-19 demands an effective policy response from the government and the opposition ahead of the election. It is a poor performance compared with the US, where labour productivity has increased by almost 15 per cent in the past decade. Here, the growth has been 1.5 per cent. In seeking a remedy, the Albanese government should not resort to its standard response of enlarging the imprint of government in the economy. What are needed are reforms to promote private sector activity. These should include reversing union influence on the IR system and a more competitive tax system to promote investment and initiative, less reliance on personal income tax and, ideally, lower payroll tax across the states.

Jim Chalmers is proud, understandably, of posting back-to-back surpluses and banking 87 per cent of upward revisions to revenue in 2023-24, which is higher than the average of 40 per cent of revenue upgrades banked under the Abbott-Turnbull-Morrison governments. But this is far from the whole story on government spending, as Judith Sloan argued on Tuesday. Public sector demand has soared from 22.5 per cent of GDP before the pandemic and is set to reach 27.3 per cent this year because of the actions of the federal and state governments. It is a contributing factor, as the RBA has noted, to interest rates remaining elevated.

Ms McManus may not realise it but her IR wish list reinforces the need for a change of economic course to kickstart productivity for the sake of Australians’ living standards.