Talkfest likely to fail the better off overall test

Employment and Workplace Relations Minister Tony Burke. Picture: NCA NewsWire / Gary Ramage

The upcoming Jobs and Skills Summit, unsurprisingly, has led to various interest groups publicly putting in their ambit bids on a wide range of issues.

At this stage the two-day event looks set to be dominated by two topics, leaving aside the soaring rhetoric from most of the participants about the serious challenges we all face. These topics are migration and the framework for enterprise bargaining.

The business lobbies are pushing hard for a higher permanent migrant intake as well as an easing of visa restrictions on temporary migrants. (The intake of temporary migrants is uncapped.)

Australian Industry Group, for instance, wants to see 190,000 rather than 160,000 permanent migrants allowed in annually, with three-quarters of them entering under skill visas.

In addition to clearing the backlog of visa applications, the employer association is asking for temporary workers to be able to stay longer and to be given a pathway to permanent residence. Any work restrictions on international students should be lifted.

Any substantial increase to the mandated minimum salary payable to sponsored temporary workers is being opposed by Ai Group. It is only $53,900 a year, that figure having been established in 2013. The ACTU is seeking a figure of $91,000 that would knock out most temporary workers in hospitality as well as nurses.

We should expect some middle ground from the government in terms of altered migration settings. But it should be noted that increasing the permanent intake will do little in the short term because most of the applicants are working temporary migrants and already here.

When it comes to enterprise bargaining, the unions are keen to achieve the changes they deem necessary to restart the whole process. Bear in mind the legislation that governs the making and certification of enterprise agreements is Labor’s Fair Work Act. That the number of enterprise agreements has declined so dramatically – the annual number of agreements being submitted to the Fair Work Commission has more than halved and only 15 per cent of private sector workers are covered by current enterprise agreements – can be attributed to the overzealous attitudes of members of the FWC as well as the behaviour of trade union officials.

Employers have come to realise the enterprise bargaining process is too complex, costly and lengthy and, in most instances, there are no productivity gains.

One recent example is the enterprise agreement covering Bunnings in which 98 per cent of the workers would be better off. The company agreed to compensate the 2 per cent who would not be but the FWC declined to certify the agreement because it failed the “better off overall” test.

A major impediment to any alteration to the enterprise bargaining rules is the difficulty for the unions to agree to any watering down of the BOOT, although removing its application to hypothetical workers and future workers probably would be acceptable.

The bigger obstacle is the unions’ basic objection to non-union agreements even though unions represent less than 10 per cent of the private sector workforce.

The point to make here is that enterprise agreements offer a range of benefits to unions that are not necessarily available if workers simply are covered by award conditions or are employed under individual arrangements.

Gains for unions include specification in agreements of a union-related superannuation fund, a union-related income protection insurance company, union-provided training, mandatory consultation with unions, benefits for on-site union representatives and the like.

There is a lot at stake for the unions, which arguably would be facing an existential threat were it not for their links with industry super funds.

Into this mix comes the unhelpful suggestion from the ACTU that the legislation should provide for multi-employer bargaining, thereby eliminating one of the core features of enterprise bargaining – the enterprise.

In point of fact, the current act allows multi-employer bargaining for low-paid workers but this provision rarely has been used.

The idea is that identical agreements should apply to all firms in an industry whether or not they participate in any bargaining and that workers should be permitted to take part in legal industrial action in pursuit of such agreements. Let’s be clear here: such arrangements are deeply anti-competitive, imposing conditions and costs on firms large and small.

It’s why some large firms may be happy enough to go along with multi-employer bargaining because the likely outcome is the exit of small competitors. It’s also why the German system of multi-employer agreements provides scope for small firms to opt out of national agreements, a development that led to better national outcomes on both productivity and employment.

In any case, overseas examples are unhelpful because of our unique award system, which applies to most employees as well as providing a thicket of complicated provisions related to pay and conditions – and a few other topics to boot. There is little doubt that our award system remains a drag on the economy but, after decades of award “simplification”, the likelihood of any progress being made on this front is close to zero.

That Employment and Workplace Relations Minister Tony Burke could liken, with a straight face, the gig economy to cancer points to his remoteness from the real world.

The fact is that the gig economy is an exciting technology development that links buyers with sellers, cutting out the intermediary of an employing firm. Very many workers stand to gain because of the flexibility inherent in the arrangement.

Many lower-paid gig workers have other jobs – something that clearly is not appreciated by Burke. He might be wise to speak to recently elected member for Parramatta Andrew Charlton, who undertook work demonstrating that gig economy workers were not only happy with their work arrangements but also earned reasonable rates of pay on average. What Burke thinks would be achieved by cutting out this “cancer” – assuming this is even possible – is unclear other than to make union officials happy. (Gig workers are unlikely to join unions.)

The bottom line is that the real purpose of the summit is to provide cover for the Labor government to implement a range of policies it has already settled on while giving the impression that it has listened and consulted widely.

Big Union and Big Business, at least, are likely to go away feeling satisfied.

A key result of a recent survey confirming the public’s dislike of large migrant intakes – a widely held opinion – will be overlooked and the government will commit to bring in more migrants as soon as possible and to expand the permanent intake. The unions also will come away with firm commitments to restart enterprise bargaining.

Re-regulating the labour market is clearly in Labor’s DNA. Whether it will actually achieve anything in terms of higher real wages, protecting vulnerable workers or reducing cost-of-living pressures is highly uncertain. Indeed, it is much more likely to impose economic damage that will make us all worse off.