By Ana Kailis
A report commissioned by treasurer John Dawkins has called on the Federal Government to abolish the award system and to end trade union monopoly rights in enterprise bargaining. Written by the Industry Commission (the federal government's chief micro-economic reform adviser), the report, entitled "Impediments to Regional Industry Adjustment", claims that such a move will tackle high rates of unemployment and will even out economic development across regional areas.
The report's findings have been hailed by business leaders as the key to greater labour market flexibility. However, if the recommendations are implemented, it will mean wage cuts, a deterioration in working conditions and a tightening up on Social Security payments for the majority of workers.
The original intention of the report was to identify factors impeding the development of industry in economically depressed regions. The report foreshadows a federal government white paper on unemployment early next year.
The recommendations include:
- abolition of awards and an end to the compulsory role of unions in employer-employee negotiations;
- changes to Social Security payments for those in "areas of low employment", such as differential rates of pay, extended waiting periods for unemployed workers moving to these areas and a time limit on benefits;
- further deregulation of the transport industry;
- a reduction in the number of local councils;
- different environmental standards for different regions.
The report also raises concerns about uncertainty following the High Court's Mabo ruling and the cost of the superannuation guarantee charge on employers.
Cost cutting
The IC report's recommendations are based on the argument that cutting costs for business (such as wages and working conditions), and delivering incentives to invest, will produce a subsequent boost in the economy which will create employment.
Many of the recommendations are aimed at generating growth in areas outside of major cities. The "removal of institutional impediments to greater flexibility ... [will] allow regional workplaces to agree on working conditions that fit their needs, thereby enhancing regional productivity ... Increased scope for wage outcomes to differ between regions over time would allow regions experiencing lower growth or adverse shocks to maintain competitiveness and employment."
"This argument is simplistic", Dick Nichols, editor of the new trade union journal Solidarity, told Green Left Weekly. "Over the last 10 years, real wages have declined significantly for Australian workers, yet at the same time unemployment has risen. During the 1980s, corporate profit (partly made possible by the wage restraint imposed by the Accord) went largely into speculation and commercial real estate rather than investment in productive plant and equipment. If anything, the 1980s did much to debunk the myth that profits for business automatically equal employment."
Company profits have risen by 145% in the last financial year. The Australian reported on September 22 that "Australia's 630 listed companies are enjoying their most profitable conditions for a decade". In response to the IC report, John Halfpenny, secretary of the Victorian Trades Hall Council was quick to point out that if implementing low wages to generate employment were correct, India would have the most advanced economy in the world.
The current centralised wage-fixing system sets minimum wages and conditions for more than 5000 federal and state awards. The award system has underpinned wages policy for almost a century.
Eradication of the award system will do little to create employment but will dramatically affect the living conditions of working people. The Australian cites three areas where wage cuts would be imminent if the report recommendations are implemented: workplaces with a high pool of unskilled workers, companies setting up in "depressed areas" and existing firms in "crisis".
Threat to all wages
This reveals only part of the report's implications. "An end to awards will undercut wages and conditions for all workers", Nichols said. "Employers will be able to bargain down wages and conditions. In the context of today's high levels of unemployment, employers have an upper hand in the wage market. If unions do not have a role in this bargaining, workers, particularly those in un-unionised sectors, will be even further disadvantaged."
Since the implementation of enterprise bargaining, the pay gap between men and women has widened. Figures from the Australian Bureau of Statistics presented at an Equal Employment Opportunities Conference in Sydney on September 21 reveal that in the past two years women's pay has fallen from 84.6% of men's full-time adult ordinary time earnings to 83.8%. If the fact that women make up the bulk of part-time and casual workers were taken into account, this differential would be far wider.
According to Dr Meredith Burgmann, NSW Labor MLC and member of the National Pay Equity Coalition, "The safety net systems that are in place cannot change the fact that decentralised bargaining is very bad for women. They are not in industries where they have the same bargaining power as men. They are concentrated in the low-status, low-paid areas like retail, clerical and personalised services. They are much more likely than men to be casual or part-time, they are not unionised and don't have the bargaining power that men do in strategically important areas such as manufacturing and transport." An abolition of awards will pull down even these inadequate safety nets, Burgmann says.
Unemployed
The flip side of the abolition of the award system is a further erosion of conditions for the unemployed. The IC report claims that the current state of the Social Security system encourages people to remain unemployed. It attempts to find solutions to what it refers to as the "warm poor drift" — the tendency for some unemployed people and sole parents to move from cities to warmer and cheaper localities. The report cites northern NSW and southern Queensland as major "problem" areas in this regard.
The Australian Council for Social Services attacked the IC report as unrealistic and dangerous. "The Industry Commission need to get in touch with the real world. Unemployed Australians are already the main victims of the current recession and are facing great hardship. It is bizarre to expect unemployed people, the low paid and marginal workers, already struggling just above poverty levels, to pay even more for the cost of economic adjustment, through cuts to unemployment benefits and lower wages. We should be looking to improve, not undermine, the social safety net", ACOSS President Merle Mitchell said.
"Unfortunately, the Industry Commission itself seems trapped in a time warp of the failed policies of the 1980s ... Tax distortions which mainly benefit wealthy home owners have been identified by the IC in previous reports, but it appears that measures which would lead to higher taxes on the wealthy do not feature prominently in the report."
Sue Bull, youth services coordinator of the Fairfield Community Resource Centre, told Green Left Weekly, "These changes will have a dramatic effect on unemployed people, especially for young people and people from non-English speaking backgrounds. At present, youth unemployment in the Fairfield region is over 30%. The Industry Commission's recommendations will further disadvantage these young people without improving their prospects of finding employment."
ALP national president Barry Jones has raised objections to the IC proposals, but no official statement has been made by the federal government so far. It is clear, however, that employers will be advocating inclusion of the recommendations in the white paper on unemployment due early next year.
"Inclusion of any of the recommendations will be a step backwards for Australian workers and the labour movement", Nichols said. "For employers, it will raise their profit margins even further. Instead of bribing employers to (maybe) take on more workers, the government needs to intervene directly in the economy with its own program of job creation."