PC report delivers timely truth on workplace reform

Employment and Workplace Relations Minister Tony Burke has a lot to digest in the Productivity Commission’s report into a more productive labour market, a parting gift from former treasurer Josh Frydenberg. Release of the report could not be timelier as the Albanese government considers what its legislative response will be to the Jobs and Skills Summit. Top of the list is how to respond to an ACTU demand for a return to industry-wide bargaining that has put employer groups on edge.

A concerted push is under way for the bargaining regime to be mandatory rather than voluntary and not confined to the lowest-paid sectors of the workforce, against the wishes of employer groups that have found themselves outplayed by organised labour. The Productivity Commission has a clear view on the issue. While it might provide some benefits for smaller operations unable to carry the cost and technical demands of negotiating workplace agreements individually, the potential for overall harm is great. The commission says removing restrictions on protected industrial action and bargaining orders would pose significant risks to productivity and real wages if it led to wider industrial action, with impacts on the broader economy. “In the extreme, multi-employer agreements could morph into industry-wide agreements, undermining competition across industries, weakening the growth prospects of the most productive enterprises in any industry, and creating wage pressures that cascade into other industries,” the commission report says.

In short, the sort of reforms being championed by the union movement would lead to more strike action and reduced output and productivity from businesses affected, which in turn would have flow-on effects across the economy. It is exactly the sort of wages and price spiral experienced during earlier periods of high inflation that the Reserve Bank is desperately seeking to avoid. Despite these concerns, ACTU secretary Sally McManus has confirmed the worst fears of employers that the ACTU will use the outcome of the Albanese government’s jobs summit to deal itself back into the heart of the nation’s workplaces. This includes support for a broad definition for the multi-workplace bargaining regime and the right to strike across industry. Influential national union leader Michael Kaine has backed the right of workers to legally strike in support of multi-employer bargaining claims, saying an inability to take protected industrial action would unfairly favour employers.

Also included in the Productivity Commission report is portability of qualifications and analysis of the gig economy, which has been a disrupter to traditional employment models. Platform-based business models present numerous positive contributions to productivity, including new and more efficiently delivered services. The gig economy has been a target for the Albanese government and ACTU, but the Productivity Commission says trying to force platform work into existing categories of employment could put those benefits at risk. The key message is that simplifying the award and enterprise bargaining systems could benefit all Australians. This would involve returning the focus of enterprise agreements to genuine productivity improvements as the system was originally intended.

Mr Burke has a big responsibility to ensure that any changes he plans will help the economy grow and protect the jobs of those who have them. The Productivity Commission report has shown that stepping back to strike-prone, industry-wide bargaining that deflates entrepreneurialism in the gig economy and loses sight of the need for productivity trade-offs for higher wages is not the way to go.