Productivity Commission chairman Peter Harris has struck a conciliatory tone in discussing workplace relations issues at a recent Melbourne lunch.
Harris spoke at a lunch organised by the Committee for the Economic Development of Australia, held at Sofitel on Collins, Melbourne.
He was speaking at a sensitive time for industrial relations issues, with a waterfront dispute between Hutchison Port Holdings and the Maritime Union of Australia capturing widespread media coverage.
In the rail sector, threats of strikes from Melbourne’s rail and tram workers have grabbed headlines, and one of the nation’s biggest operators – Aurizon – has just endured a lengthy bargaining period with its Queensland workforce.
The Productivity Commission recently conducted a review of Australian workplace laws and Harris said although they found evidence of “idiosyncrasy, anachronism and misuse of the system,” but “we find no case… for the abolition of any central element of the system.
He also argued the workplace relations system was “not dysfunctional”.
“That is not to say we would start from here if we were designing a workplace relations system; we would not,” Harris told the gathering, noting that he felt some of the initial public comment might have been indicative of a misreading of the Commission’s research.
He discussed elements of regulation in the system and that although regulation was unpopular, it was necessary.
“We all dislike regulation, but most submissions from most parties called actually for more regulation.
“Flexibility mechanisms allow variation in that regulation either by a statute authorised under the Enterprise Bargaining or individual flexibility agreements or via Commonwealth contracts.”
He talked of the “fundamental basis for regulating” being to address the imbalance between the employer and the employee.
“The reasons for this are not about the character of employers.”
Reasons for the imbalance could be in terms of the high cost of switching jobs for individuals; employers often having better information on investment plans and growth opportunities than employees; or, employers controlling an employee’s future by way of references and legal resources.
There was also the “disproportionate size of the risks” for an employee who “bargained hard” with an employer.
These were the reasons for seeking to address a power imbalance, and “nothing to do with the character of employers”.
“There are contrary times in the economic cycle when circumstances in fact favour employees over employers and the ability for employees to organise as unions can also make a difference.”
Nonetheless, he noted how unionisation has changed over time.
“Unionisation in this country has fallen steeply, particularly in the private sector.
“All of this regulation is actually needed.”
In contrast, deregulation options can have “extreme consequences” for whichever party was not ascendant.
“Thus regulation should be judged for its ability to offset an excess of market power as efficiently as possible – that is the benchmark we used in the report.”
In conducting the review, the Productivity Commission examined some overseas models and alternatives to the current regulated system.
He noted the Commission had considered alternatives to the minimum wage, examining in close details both academic studies and submissions from industry groups.
But the research failed to show any case for significant change.
“The evidence is that studies (and submissions)….could not show that the current minimum wage process had delivered significant negative employment outcomes.
“The results from those analyses were often inconsistent and the breadth of studies was not great in Australia.”
He noted global media coverage regarding the minimum wage, suggesting the differing arguments had converged, with those arguing it caused small negative impacts and those who said it had no negative impact at all.
Substitutes for the minimum wage had considered as the original rationale for it had changed.
“‘Harvester man’, as we decided to call him, has long been overtaken by shifts in participation rates.
“We also know the minimum wage is not well targeted at the least well-off individuals.”
Nonetheless, there was still “no better choice than to improve the current minimum wage process” by ensuring that its growth “does not outstrip growth in median wages and productivity”.
“During downturns, the Fair Work Commission should give greater weight to the risks in unemployment.”
In terms of national employment standards, the Productivity Commission found there were no better alternatives offered around the world.
They also examined long service leave and awards (the latter being unique to Australia).
“We considered the New Zealand model of dissolving awards as they did two decades ago.
“But there appears to be neither support for that from the business community at large, nor is there a case from theory or data to illustrate that transition costs were likely to be outweighed by clear benefits.
“Moreover, awards are not the core of the system as they once were.”
This article originally appeared in Rail Express sister publication, Lloyd’s List Australia. Click here to view the original.