They can talk all they want, but complex awards are costing jobs

’An aim of many big businesses is to make life difficult for small businesses that might become annoying competitors’.
’An aim of many big businesses is to make life difficult for small businesses that might become annoying competitors’

It’s a pity no one let Industrial Relations Minister Christian Porter in on the fact that tripartite, top-down talkfests are so last century. What was he thinking with the ludicrously named Reform Committees – on enterprise bargaining, casual work, award simplification, compliance and greenfields agreements – to seek consensus on this range of contentious industrial relations matters?

You can just imagine the endless Zoom meetings attended by jumped-up officials of organisations that represent minor slivers of Australian workers and employers. With only 14 per cent of workers belonging to trade unions – and less than 10 per cent in the private sector – what justification is there for trade unions, led by the secretary of the Australian Council of Trade Unions, Sally McManus, to be given a lead role at this argy-bargy jamboree?

The same can be said of the employer bodies that are very coy about how many members they really have and the representativeness of their membership.

We know who belongs to the Business Council of Australia – they are the big boys, including the woke, ticket-clipping professional service firms. But no one thinks the BCA represents the interests of most employers. Indeed, an aim of many big businesses is to make life difficult for small businesses that might become annoying competitors. News that the BCA had been trying to cut a side-deal with the ACTU didn’t come as a surprise. The idea was that union-backed enterprise agreements should be given preference in terms of rapid, light-handed certification relative to other agreements in exchange for minor modification to the better-off-overall test – the BOOT. That the other employer bodies went nuts also should not surprise.

Apart from the fact union agreements have always been preferentially treated by the Fair Work Commission – they tend to be just waved through compared with the scrutiny applied to non-union agreements – it’s impossible to see anything in this for the economy apart from benefits for big business and the unions.

But it illustrates the profound contradictions in our one-size-fits-all national regulation of industrial relations. What might work for highly capital-intensive operations where the award rates of pay are set far below the market rates can’t work for labour-intensive firms with award rates at, or above, market rates, particularly after taking into account conditions such as penalty rates.

It’s a reason why enterprise bargaining has ground to a halt. The BOOT – interpreted as a situation in which every worker now and in the future cannot be worse off relative to the award under any circumstance – undercuts any appeal enterprise bargaining might have for most employers. And that’s before considering the drawn-out, expensive steps for FWC certification.

There’s little reason, from an economic and business view, to save this system. It would displease the unions: many provisions in agreements confer upon them power and money, including the nomination of union-related super funds, income protection sourced from union-related companies, encouragement of union membership and insistence on union consultation.

Post-pandemic, the bigger issue is the rigidly complex award system that will impede the re-emergence of businesses and jobs growth. Ironically, the most convoluted and intrusive awards cover the labour-intensive services sector, where agreements are rare. (This is not just a coincidence: what the unions couldn’t achieve through agreements, they attained through award conditions, courtesy of a compliant FWC.)

Industrial relations lawyer Steven Amendola has written extensively on this. He cites the example of someone wishing to set up a wine bar where food is served. Initially, there are three possible awards, all very complex.

Under the Hospitality Award the business will need to comply with 61 pay points with 14 permutations of each. All up, there are 854 possible legally binding rates of pay – and it is a simplified award!

It’s why the Award Simplification Reform Committee is arguably the most important of the five, although removing the double-dipping (casual premium and paid leave) by casual workers needs to be quickly sorted. Award simplification has been going about 30 years, yet awards have become more labyrinthine even if some of the arcane language has been removed. Collapsing awards at both the state and industry/occupation level was, on balance, a retrograde step. Fewer awards is not the same as better awards.

Indeed, those state awards provided an element of flexibility that’s been lost. Does anyone think it sensible for a shop assistant in Stanthorpe to be paid the same as a one in South Yarra? Moreover, some of those state awards provided for intrastate flexibility with lower rates of pay for workers outside the capital.

When they were collapsed, the principle of highest common denominator was applied, thereby harming less prosperous states. It’s still possible to discern the remnant impact of centralised wage fixation in which the C9 rate for tradespersons in the Metal Industry Award drove relative wages. It makes no sense for a service-dominated economy.

If you think the FWC has been assisting in the response to the pandemic, it’s been the equivalent of pulling teeth. On the face of it, some awards have been modified to allow working from home and widen the scope of employers to direct workers to other tasks and work different hours. But if a worker objects, they can take it to the FWC for an arbitrated outcome.

Even the seemingly uncontroversial issue of allowing greenfields agreements for large projects to run for the full duration of these projects looks destined for disagreement as the unions refuse to forgo the option to hold up a project down the track in order to secure over-the-top pay and conditions.

The federal government has wasted valuable time with this series of pointless Zoom meetings attended by representatives of organisations without any right to speak on behalf of workers, the unemployed and businesses. The national interest has never been the industrial relations club’s concern; it’s been fixated about its continued existence and the benefits it receives from the system’s complexity.

Porter must change course and in particular assist small businesses to survive and grow. If a highly simplified award for small businesses cannot be achieved, another possibility would be to free firms of a certain size or below of award coverage altogether and require them only to comply with the National Employment Standards. Now that would be a game-changer.