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The AFR has published my letter below at a time when the union movement claims that the Fair Work system (sic) should grant wage increases that reflect increased living costs due to the carbon tax unions supported and should reject any discounting of such claims to take account of increased super contributions required by employers and also supported by unions – but apparently not by the Minister for Workplace Relations. Separately there is a growing realisation that, despite what some economists say, productivity growth is adversely affected by the increasing industrial actions being used by unions and largely accepted by the FW tribunal.

Time for a change?


FWA Common Sense
letter published in The Australian Financial Review, 30 March 2012

You report that economist John Edwards, a panel member of the Fair Work Australia review, told a Committee for Economic Development event that it is “hard to find a link between the overall IR system and the actual rate of [economic] growth”.

This is a not unusual response by economists, derived from the undeniable fact that productivity growth is subject to many influences.

But this is where economics and common sense fail to come together. What happens if we move to a new workplace relations system that makes it more difficult for employers to dismiss unwanted employees, to refuse union entry to their premises, to tell unions that bargaining is finished, to act to prevent or deter work stoppages, and so on?

This is what Australia’s employers have faced under the Fair Work legislation.

Surely the answer is obvious. At the margin, which is what much of economics is about, there will be an adverse effect on productivity, the more so when a high proportion (about 50 per cent) of agreements repotedly make no provision for improved productivity.

Mr Edwards should resign from the review panel if he does not understand this.

Des Moore
Institute for Private Enterprise
South Yarra Vic

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