Full employment could be jeopardised by IR policy

Reserve Bank of Australia governor Michele Bullock was condemned by union bosses three months ago for her assertion that the jobless rate was too low to be consistent with the central bank’s 2 to 3 per cent inflation target. On the eve of the government’s releasing its employment white paper – in a sign of where power currently resides – Jim Chalmers has sided with the unions’ perspective over that of the RBA. The Treasurer has endorsed the idea, expected to feature in the white paper, that everyone who wants a job should be able to find one without searching for too long.

The ACTU’s rhetorical victory of the definition of full employment, however, could be undermined, ironically, by the Albanese government’s enacting the unions’ agenda through its workplace relations changes. These include multi-enterprise bargaining, imposed after the Jobs and Skills Summit a year ago, and the same job, same pay legislation to be examined by a Senate committee that will report in February. On what is known so far, there is an inherent contradiction between current IR policy and the goals of the white paper.

Employer groups insist the unintended consequences of the changes in the legislation “will add uncertainty and complexity to the employment of millions of casuals, contractors and labour hire workers’’, Innes Willox, chief executive of national employer association the Ai Group, has warned. Business Council of Australia chief executive Bran Black has said the bill is already affecting businesses’ hiring decisions for fear they will be breaking a law that does not yet even exist. The bill’s 13 different starting dates for various measures over the next 15 months were creating confusion for businesses and staff, Mr Black said. Nor does it help that to some extent the legislation is retrospective. The anti-avoidance measures related to labour-hire agreements came into effect on September 4, the day the Closing Loopholes bill was tabled in parliament. Against the background of those challenges, Dr Chalmers is promising much from the white paper – nine new policy initiatives and 31 “broad reform directions”. He says it will also recommend 70 “specific actions” that have already been implemented by the government and another 80 it is in the process of implementing. How these will further the government’s “broader and bolder aspirations for full employment” than those of the RBA, and how they might impact on inflation, can only be assessed after the paper is released on Monday. The government’s aim is to reform the labour market so unemployment can trend lower without driving inflation and interest rates higher. Achieving that goal will be problematic alongside current workplace changes.

While the government’s goal is to drive unemployment even lower than its current 3.7 per cent, which is close to a 50-year low, it must also consider that many jobs are unfilled for months due to lack of skilled staff. Overcoming that gap will depend largely on striking the right immigration mix and in improving skills training. That is the aim of one of the nine initiatives in the bill, and will see the government commit an extra $41m in the next six years to the TAFE sector, aiming to train more workers in the green energy, care and digi­tisation sectors.

Improving skills training matters, with the recent OECD education snapshot showing Australian workers had much lower participation in vocational education qualifications than some strong European economies, especially Germany and Austria. As Skills Minister Brendan O’Connor says, many students and workers of the future will move between TAFE and university, updating skills and knowledge. That would boost their careers, their earning capacity and productivity. But achieving such aims requires IR policies that lift productivity, free of heavy-handed over-regulation.

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