28 May 2015
Productivity Commission could loosen IR gridlock
When Australia's first national labour laws were passed in 1904, it left the wreckage of three ministries in its wake, embittered parliamentary relations and created intense commonwealth-state antagonism.
According to Henry Gyles Turner's contemporary account, the bill passed 'from sheer exhaustion'.
Pity those economists working on industrial relations reform at the Productivity Commission in 2015.
And pity the government that has to respond to recommendations the PC will make on the country's industrial relations system, because nothing has changed in the last 111 years. The country still doesn't have a shared view on the objectives and content of labour law.
This is because two of the key players – the Australian Council of Trade Unions and the Business Council of Australia – represent fundamentally different views of the world, with few points of agreement.
According to the ACTU, the fundamental objective of the IR system is that, "workers rights must be protected and there must be a policy intervention to alter the market distribution of incomes in their favour".
The ACTU claims this is a "broad and enduring social consensus", but it is not and never has been. For a start, the BCA doesn't appear to share it.
SHIFT IN MINDSET
Flip yourself 180 degrees, and you can see the BCA's view that the 'starting point for this [inquiry] has to be a shift in mindset to view the workplace relations system as part of the environment and culture that will create national wealth and the jobs of the future.'
It is unlikely the ACTU or the BCA intends to eschew each other's world view completely. Indeed, in generally accepting Australia's relatively high minimum wages, the BCA appears to give ground to the ACTU in practice if not in principle.
It is surprising, though, that the ACTU steadfastly and throughout its submission to the PC, refuses to concede any role for the market in labour relations, including wishing that the labour market were not a market at all.
Both the ACTU and the BCA are pessimistic about the current state of IR.
The ACTU thinks the capacity of the system to meet the union movement's objectives has deteriorated due to 'deliberate concessions' to business.
The BCA, on the other hand, claims a regulatory failure to keep pace with a more competitive global economy and a shift in global economic power.
So how far apart are the ACTU and the BCA on the impact of the system on Australian productivity performance?
The ACTU says "it is not possible to say that changes in the industrial relations" have affected national productivity one way or the other. Of course it is not possible to say: the way productivity is measured makes it impossible.
However, the ACTU does concede that industrial relations policies "may" affect productivity in individual workplaces.
Did the ACTU blink here? Its view resembles the BCA's, which is that not all enterprises are equally affected by the weaknesses of the system, though enterprises in manufacturing, transport, mining and retail tend to be.
Perhaps both the ACTU and the BCA could bring forward some research on enterprise productivity performance and what affects it; but not that junk research on national productivity that some industrial relations-club IR academics retail in order criticise all attempts at IR reform.
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