BCA chief executive Jennifer Westacott said “in the wake of this crisis we need to ask ourselves what kind of workplace relations system we will need to get people back to work and ensure we don’t experience another decade of stagnant wage growth”.
“Over the medium term we will need a system that delivers higher productivity, letting people work more effectively, produce more and find new and innovative ways to work,” she said.
“That should start by restoring faith in the enterprise bargaining system that sees workers paid more and simplifying the complex awards structure.”
Mr Banks, who was chairman of the commission for 15 years, named IR as one of the two policy areas critical for the recovery and, in an opinion article in The Australian Financial Review on Monday, argued that returning to the commission’s two-year 2014 inquiry into the issue would help “ameliorate the worst of the system’s flaws”.
The commission’s report proposed increasing flexibility through “enterprise contracts” as an alternative to resource-intensive enterprise agreements and recommended stripping the Fair Work Commission of its wage-setting functions.
‘Creature of different times’
Ms Westacott stressed recommendations to replace the better-off-overall test for approving agreements, which former Fair Work members have criticised as too rigid because it requires every single worker be better off than the award at all times.
“Enterprise bargaining gives workers and their employers the chance to come together and share the benefits of increased productivity, but the Productivity Commission’s 2014 review found that it is not working,” she said.
“As we enter an environment which sees circumstances changing rapidly we need to preserve a strong safety-net while giving businesses and workers the flexibility to adjust quickly.”
Australian Chamber of Commerce and Industry workplace policy director Scott Barklamb said “the Fair Work Act is a creature of different times and different concerns” and “the pandemic, restart and recovery simply amplify the need for change”.
“Australians are going to come out of this pandemic with new expectations on how they work, and businesses will need to find new markets and new ways of operating,” he said.
He argued the government needed to make it easier for small business to hire and manage staff and ensure the safety net, which includes awards, is “clearer, more easily explicable and more enforceable”.
However, the Australian Council of Trade Unions, which has negotiated temporary workplace flexibilities in awards during the crisis, has accused employers of pursuing “yesterday’s fights” rather than trying to save jobs.
‘No major efficiency gains from IR’
University of Melbourne labour economist Jeff Borland, who advised the workplace tribunal on the award changes, warned IR reform would not provide major efficiencies and that parties would be better off spending their time on other issues.
“I don’t see any basis for thinking that substantial efficiency gains can be realised from large‐scale IR reform,” he said in a paper on labour market challenges released on Monday.
He said claims the current system did not have sufficient flexibility “hold little water”, citing its adjustment to the end of the mining boom without rigidities in wage-setting or feared job losses.
He said unions’ temporary award variations during the crisis were designed to allow rapid adjustment to changed work circumstances in an exceptional situation.
“But adjustment is not usually required in response to events that occur with the speed of business closures due to COVID‐ 19,” he said.
“So while the costs of adjustment imposed on employees to preserve jobs may be justified in the present circumstances, at other times there is just the cost on employees.
“Arguing for a continuation of flexibility conditions introduced to meet the stresses created by COVID‐19 seems akin to claiming that it is a good idea to continue conscription into the armed services in peacetime because it worked so well during a war.”
Rather than arguing for a “phantom efficiency rationale”, he suggested employers and unions accept that reform will be primarily distributional and seek to justify changes based on whether they improve the welfare of society.
Specific “distributional‐based reform” should be considered, he said, including in relation to casuals, wage theft (“likely to be a bigger problem in current circumstances”), and providing minimum conditions for gig-economy workers.