Let’s urgently untangle these labyrinthine industrial laws

JUDITH SLOAN

AUGUST 18, 2020

The Australian

I have a new best friend. Her name is TINA — there is no alternative.

The economic challenges generated by COVID-19 mean there is no choice but to ditch some of our arcane and inflexible institutional arrangements, particularly in respect of industrial relations.

If there is to be any hope of avoiding mass and persistent unemployment, an environment must be created in which it is easy for businesses to set up and expand. Employing staff must no longer be a costly, legal minefield.

What was barely acceptable in terms of imposing high costs and risks on employers last year is no longer reasonable. We need some sweeping changes — now.

Industrial relations regulation in Australia is a historical anomaly. It is overly complex and prescriptive. There is a strong presumption of collective outcomes over individual arrangements.

But the main beneficiaries of this complexity are not the workers but the trade unions, the employer associations and the vast advisory network that hangs off the regulations.

It is for this reason that changes have been so difficult to achieve. Simplify the system, strip away most of these extraordinarily over-engineered regulations and the insiders — the so-called IR club — won’t have much to do.

With only 14 per cent of workers belonging to trade unions and the majority of businesses having nothing to do with employer associations, both trade unions and employer associations would be mere bit-players.

Industrial Relations Minister Christian Porter has established five “reform committees” to consider aspects of the IR regulations — award simplification, enterprise agreements, compliance, greenfields agreements and casual and fixed-term employment. Such a high-level corporatist talkfest suits the club to a T.

There will be a bit of argy-bargy, some give-and-take, but the situation at the end will only be marginally different from today’s hotchpotch of anti-employment rules. In any case, it’s not clear that the Senate crossbenchers will be favourably disposed to pass any of the amendments to the Fair Work Act the government proposes.

And just in case you think the chief regulator, the Fair Work Commission, has been assisting workers to keep their jobs and improve their prospects of gaining new ones, think again. It has been akin to pulling teeth securing even the most modest changes.

The high costs for employers, the unforgivable delays and the legalistic, “evidence-based” approach adopted by the FWC have been proof of the drag that this institution imposes on the economy. A number of employer groups seeking award variations have simply given up.

As an illustration, take this doozy from the FWC when it denied the completely defensible submission put by construction employers to remove some penalty rates and reduce the length of casual shifts during these difficult times.

“The application was fundamentally misconceived. The JobKeeper scheme is the common­wealth’s policy response to the pandemic and the commission’s modern award variation powers are not to be used in a way that amounts to a redesign of that response.”

It continued: “The full bench did not agree with the economic rationale for the variations submitted by the applicants, finding the loss of employment in the construction industry as a whole to be less serious than most other sectors.”

And it ended with this ridiculous, pompous and completely unfounded assertion: “We are not satisfied that the variations proposed would promote flexible modern work practices or the efficient and productive performance of work.”

For an industry on its knees, this is a just a completely wacky thing to state.

Sadly, the Labor Party is as removed from economic reality as the FWC.

In relation to the confusion about the double-dipping issue for casual workers — workers can be entitled to both a casual premium and paid leave — federal opposition industrial relations spokesman Tony Burke declared “the original decision of the Federal Court should stand as a win for workers”.

He went on to say: “Companies that use casual contracts for jobs that are in fact permanent are dudding their workers. They are double dipping — taking advantage of the insecurity of casual work while getting permanent hours out of their workers. Why does the government support this kind of sham contracting by dodgy labour hire firms?”

The principal reason for Burke making this absurd claim is the trade unions’ dislike of labour hire firms and the reluctance of labour hire workers to join unions. The fact all companies, not just labour hire firms, that have employed casual workers on regular hours may be up for billions of dollars in backpay and redundancy pay seems not to concern Burke.

The total bill now looks likely to exceed $10bn, which in Labor’s fairytale world can be paid to workers without affecting the viability of businesses or the number of jobs or hours of work on offer.

Sadly, this economic ignorance is shared by Anthony Albanese. According to the Opposition Leader, “any industrial relations reform should heed the hard lessons of the pandemic and focus on creating more job security for Australians by recognising that casualisation has led to more insecurity”.

The idea that more job security can simply be imposed is, of course, economic nonsense. Casual employment as a proportion of total employment has not changed in more than two decades.

And by being paid a typical loading of 25 per cent, casual workers effectively have their leave prepaid rather than going without paid leave.

Were it not for the obligation imposed by many awards that permanent part-time workers must be paid overtime rates for working additional hours, there would be less casual work. Whether Albanese would be prepared to support the removal of this anomaly is uncertain.

This is where TINA comes in. In a paper prepared for the Centre for Independent Studies, I have outlined some of the options for recasting our industrial relations regulations in the context of such weak economic conditions and the possibility of unemployment rising above 10 per cent.

An urgent response is to streamline the rules and regulations employers face. It is surely ironic that some of the most complex and unworkable awards cover the industries worst-affected by the economic restrictions imposed in response to the pandemic.

The Hospitality Industry (General) Award is a collection of intricate regulations, including the insistence that some workers can remove plates from tables but not deliver them. There are 61 adult classifications and 14 potential hourly rates. The Restaurant Award has 36 clauses and 10 schedules, with 24 worker classifications.

One option is to create a simple award for small businesses that relies mainly on the National Employment Standards and provides for employment at the national minimum wage. Businesses with a workforce of fewer than 20 full-time-equivalent employees would be eligible to be covered.

There are other possibilities but the key is finally to get rid of our outdated and costly IR regulations and to accept that employers and workers are best-placed to judge what is in their mutual interests.

Judith Sloan is the author of the Centre for Independent Studies analysis paper Industrial Relations in a Post-COVID World.