Ideas@TheCentre
A watchful eye on workplace flexibility
Industrial relations policy has been at the forefront of the policy agenda in recent months, and the HR Nicholls Society’s annual conference in Melbourne this year provided a timely analysis of the workplace issues arising from the introduction of the Fair Work Act.
The conference, held by Australia’s leading think tank on industrial relations, drew together barristers, industrial relations lawyers, economists, unionists and past members of Australian Industrial Relations Commission (AIRC). Though the issues varied from speaker to speaker, the prevailing sentiment was that several problems needed urgent attention, and at the top of the list was workplace flexibility.
One quote from industrial relations consultant and ex-unionist Grace Collier captured the gravity of the issue: a workforce can either be high-cost and high-flexibility, or low cost and inflexible.
In a nutshell, this is the choice Australia is faced with in configuring its industrial relations framework. A low cost, low productivity, and low flexibility workforce can remain competitive in the global market by competing with workers in other countries on price, that is, lower wages. Conversely, a high-cost workforce must be both productive and flexible to carve out a competitive advantage in the global market.
It goes without saying which road is better. If Australians would like to maintain a rising standard of living, they need to continually increase their productivity and improve flexibility. Inflexible work practices hinder the workforce’s ability to be globally competitive.
It is here where workplace legislation is pivotal. Rules in awards or workplace agreements that specify task demarcation, minimum shift hours, and restrictions on contractors and outside labour – all decrease workplace flexibility.
A widened scope for reaching agreements means decisions usually reserved for management (such as whom to hire and whom to fire) are now subject to union negotiation, and hence, strike action.
These matters have little impact on the salaries of workers, but they do hinder business’s ability to respond to market pressures and frustrate attempts to remain competitive.
The feeling of many speakers, and indeed of the audience, was that the impact is being felt in businesses across the board, and will continue to, unless the Fair Work Act is reformed.
Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies. He attended the HR Nicholls Society’s annual conference in Melbourne on 12 June 2012.
