PC’s strike warning over bargaining changes

Labor’s new multi-employer bargaining regime could also reduce the scope for “enduring real wages”, the commission says.

Treasurer Jim Chalmers. Picture: NCA NewsWire/Glenn Campbell

Labor’s new multi-employer bargaining regime could cause more strikes, reduce the scope for ­“enduring real wages” and lessen competition by causing “de facto collusion”, the Productivity Commission has warned.

The commission’s five-year inquiry proposes a range of changes unlikely to be supported by the ­Albanese government, including a weakening of the legal test used to approve pay deals and more “management prerogative” over employment conditions.

Analysing the potential impact of the government’s bargaining changes, the commission says multi-enterprise bargaining may produce “some benefits”, including reduced transaction costs for some smaller enterprises that do not have the capacity to negotiate agreements and navigate the complexities of the bargaining system.

It says the new provisions may also improve the overall bargaining position of employees, allowing them to achieve more favourable conditions and wages “at least in the short run”.

But the inquiry says the new ­arrangements “pose some risks that could constrain productivity growth and hence the scope for enduring real wage rises over time”.

“Given that industrial action is the most important source of leverage for employee bargaining, the overall level of industrial disruption may also increase,” it says.

“Stoppages reduce the output and productivity of the businesses affected and have flow-on effects through disrupted supply chains.”

The commission says the biggest concern would be if multi-­enterprise agreements became industry-wide agreements with the rigidities and risks to productivity and competition that these could entail.

The report says one purpose for removing restrictions on multi-­enterprise bargaining is to increase wages above the level delivered by labour market competition.

“All else given, higher wages will tend to increase costs and consumer prices and possibly reduce employment in affected firms,” it says. “The expansion of multi-­enterprise bargaining will present new risks for competition. A multi-enterprise agreement may act as a de facto source of collusion, ­depending on the details of the agreement.”

On broader workplace policy, the report says the Fair Work Commission should be allowed to approve agreements that do not pass the better-off-overall test if they have employee support and a range of other tests are met.  Reduce consultation requirements in enterprise agreements as they “restrict productivity enhancing changes to technology or workplace practices that are best left to managerial prerogative”.

Treasurer Jim Chalmers said the government did not believe “productivity gains come from scorched-earth industrial relations”.

ACTU secretary Sally McManu. Picture: NCA NewsWire/Gary Ramage

ACTU secretary Sally McManus called for the commission to be scrapped, saying the recommendations by the “myopic and narrowly ideological body” showed it was outdated and irrelevant.

“The Productivity Commission is one of the least productive and inflexible institutions in our country. It has damaged the very cause of increasing productivity as a shared national ambition by equating ‘productivity’ with lower wages and less rights for workers,” she said.

“The Productivity Commission can shoulder much of the blame for the fact that since it was established working people hear calls for ‘increasing productivity’ to mean less pay for more work.”