New Research Says Workchoices is Dangerously Flawed

special issue of the Journal of Australian Political Economy

By Frank Stilwell (editor)

How the WorkChoices industrial relations 'reforms' will affect future employment relations will depend on ongoing struggles between capital and labour, industrially and politically, as well as the state of the macroeconomy.

One possible scenario is that by 2010 some 50% of Australian employees might have signed AWAs, with another 20% still subject to informal individual arrangements; this would leave 20% regulated by union and non-union CAs and the remaining 10% on awards. In those circumstances union density might have fallen from the current 23% to the low teens. When the next recession occurs, with recorded unemployment rising to perhaps 10% (and with actual unemployment possibly twice as high as this), the twin processes of de-collectivisation and de-unionisation would presumably accelerate. All this would have substantive consequences. Hours of work will be further extended, at the employer's discretion; employment will become yet more precarious; managerial prerogatives will be greatly strengthened; and wage inequalities will increase.

Why are we facing this prospect? Is this indeed a likely scenario? And what could be done to steer a different course? The subsequent articles in this journal explore the issues. The first cluster of contributions looks at specific aspects of the current IR reforms. The scene is set in the opening paper by industrial relations researchers from the University of Sydney, reviewing all the evidence to show that, beyond the rhetoric, there is no sound foundation for the current 'reforms' in terms of improved labour market outcomes. The article by David Peetz then takes up the productivity issue in particular, providing a devastating critique of the claims that AWAs will produce a productivity surge. Benoit Freyens and Paul Oslington use neoclassical economic reasoning, in conjunction with the results of a direct survey of businessmen, to support their conclusion that the changes to unfair dismissal laws are unlikely to have the positive effect on employment that the government has claimed. Chris White explores the implications for the right to strike, showing that the 'reforms' significantly constrain the capacity of organised labour to protect and advance workers' interests.

The following cluster of contributions looks at minimum wages and fair pay. Mark Wooden argues that to push minimum wages down is unlikely to increase employment unless accompanied by major changes to the welfare system. Robyn May compares the Australia Fair Pay Commission with its British equivalent, drawing some deeply troubling inferences about the prospects for low-paid workers. The following paper by labour market and industrial relations researchers from the University of Newcastle focuses on the equally worrying implications of replacing the former 'no disadvantage test' in wage bargaining with the new Australian Fair Pay and Conditions Standard. Next come articles on particular sectors of the workforce, particular industries and particular state experiences.

Barbara Pocock and Helen Masterman Smith look at the 'reforms' from a gender perspective, arguing that women are likely to be particularly vulnerable to the

institutional changes and power relationships in the markets for labour. The vulnerability of young workers, many of whom are in casual and insecure employment, is explored by Richard Denniss, based on 'focus groups' held with young workers themselves. Andrew Mack's contribution takes a class perspective, situating the current 'reforms' in the historical context of capital-labour relations and the influence of 'economic rationalism'.

Then come two articles dealing with specific features of sectors of employment where particular problems are either already occurring or anticipated. Liz Ross looks at the building and construction sector, which the government has already singled out for punitive treatment of the workforce. Stuart Rosewarne looks at universities, where changing employment conditions for staff are also linked to radical changes in education policy and funding.

Two more articles draw from the experience of the different states. Margaret Lee writes about the attack on the State tribunals, which have been an integral part of the industrial relations system, and the implications for working life in Queensland. David Plowman and Alison Preston draw some important lessons from the Western Australian experience, which in certain respects has been a fore-runner of the national 'reforms', showing strong evidence of the tendency to generate greater wage disparities.

The focus then shifts to political responses and the all-important question of 'what is to be done?' ACTU General Secretary, Greg Combet's powerful address to the National Press Club is followed by other articles by Tom Bramble and Neale Towart, respectively criticising and defending the responses by trade unions to date. John King's contribution emphasises the important role that State governments can play as bulwarks against the class-motivated assault on labour. Then comes Shaun Wilson's review of how the public has responded to the 'reforms', marshalling the evidence from opinion polls to show their widespread unpopularity to date. These articles show that there is no shortage of support and strategies for charting a different direction, although much remains to be done in developing a vision of what alternative industrial relations arrangements are worth struggling for.

Finally, a wry 'endnote' to this journal is provided by two articles on the incomes of company executives and politicians. John Shields presents a wealth of evidence on the prodigious payments to senior executives, who do not 'practice what they preach' when it comes to wage restraint. Then Peter Lewer and John Waring document the institutional arrangements that politicians retain to protect their own incomes while stripping back comparable protections for the rest of the workforce.

What the 2005 industrial relations 'reforms' signal is an attempt to shift the balance of power between employers and employees. As economic journalist Ross Gittins put it, 'WorkChoices [is] more about class war than economics' (Sydney Morning Herald 21.11.05). The 'reforms' seem to have arrived like an avalanche, but their full impact will be felt for many years. Political economic analysis can usefully contribute to the development of strategic responses during this period. Indeed, This is a time when the application of political economic analysis to contemporary events is of particularly critical importance