Rhetoric versus Reality: Diversity and Employment Relations under WorkChoices ___________________

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Rhetoric versus RealityDiversity and Employment
Relations under WorkChoices ___________________
Russell Lansbury Professor of Work
Organisational Studies School of
Business University of Sydney
Second Annual Conference on Diversity Diversity
Council of Australia, 26th October 2006
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The WorkChoices Act 2006

• Expands the role and coverage of individual
  employment contracts and AWAs.
• Restricts the federal industrial relations
  tribunals powers of conciliation and arbitration
  over awards and workplace agreements.
• Exempts businesses with less than 100 employees
  from unfair dismissal provisions of the
  Industrial Relations Act.
• Restricts collective bargaining and award making
  activities by unions.

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Legal Concerns about WorkChoices

• The new laws introduce more complex, lengthy and
  inefficient procedures which will not promote
  effective agreement making and dispute resolution
  between the parties.
• The increased legal expenses involved in IR
  processes will give considerable advantage to the
  larger and better resources parties.
• The reforms do not create a new unified national
  system but a more complex and fragmented hybrid
  system.

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Socio-Economic Concerns about WorkChoices

• Socio-economic equality will widen as a result of
  the loss of the safety net produced by the
  award system.
• The Standard provides fewer safeguards and sets
  lower minimum standards which will adversely
  impact on those engaged in precarious work.
• Key award provisions may be traded away in AWAs
  resulting in longer hours, inadequate holidays
  and less opportunity to switch between full and
  part-time work.
• Over time, the Federal Minimum Wage (FMW) is
  likely to further decline relative to average
  weekly ordinary time earnings.

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Does Low Pay and Wage Inequality Matter?

• There has been considerable discussion about the
  level of Australias minimum wage being too high
  (currently 484 per week).
• Australia has long been noted for its relative
  wage equality (most recently between men and
  women) and rather flat wage differentials
  between the high and low paid.
• But the minimum wage has declined from 61 of
  median earnings in 1996 to 58 in 2004.
• Some economists argue that high minimum wages may
  price the unemployment out of the labour market
  but others disagree with this view.

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Will WorkChoices Enhance Productivity?

• Productivity is influenced by a wide range of
  factors of which wages and bargaining
  structures play only a partial role.
• But a comparison of Australia and New Zealand,
  when Australia followed a more centralised and
  collective bargaining approach and New Zealand
  abolished awards and arbitration in favour of
  individual contracts, revealed Australia as
  having a higher level of sustained productivity.
• Comparisons of the links between individual
  contracts and productivity show a variety of
  outcomes, but recent Australian studies show that
  where union membership was high, firms were 5-7
  per cent more productive than in firms without a
  union presence.

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Conclusions

• While there are arguments for reforming
  Australias employment relations system, a
  compelling case has not been made by the federal
  government for the WorkChoices legislation.
• It is unlikely that the stated objectives of
  achieving a simplified and more efficient system
  of employment relations will be achieved.
• The main consequences of WorkChoices are likely
  to be increased inequality and a more complex and
  expensive system of industrial regulation.

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