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Shorten’s job may forge new IR era
letter published in The Australian Financial Review, 14 December 2011

The appointment of a new Minister for Workplace Relations, Bill Shorten, opens up the possibility of changing the Fair Work Australia legislation to require that all workplace agreements give priority to increases in employment and productivity. Shorten is reported as saying that he favours collective agreements. But such agreements must accord this priority.

When in the 1980s it became apparent that productivity growth was running below comparable OECD countries the Labor government started to reduce labour market regulatory arrangements and encourage genuine enterprise agreements. Australia now faces a not dissimilar situation, with threats of an ongoing deterrent to both productivity and employment over the next two years.

By contrast, Treasurer Wayne Swan claimed recently that additions to employment of 300,000 will be achieved over the next two years despite his forecast of lower economic growth. His assertion is very difficult to reconcile not only with the official forecast of annual employment growth of 1 per cent in his Mid-Year Economic and Fiscal Outlook 2011-12 but also with the actual drop in annual growth in employment to 40,000, or only 0.4 per cent, in the year ended November.

Relevant too is the trend analysis published by the Australian Bureau of Statistics in the September quarter national accounts showing that real unit labour costs have increased in the non-farm sector by nearly 2 per cent since the June quarter of last year. Significantly, this comes after a fall of over 10 per cent since 1997.

This reversal of the downward trend in labour costs coincides with the increased implementation of Fair Work Australia provisions and the increase in union power allowed under that legislation at a time when existing workplace agreements under previous legislation have been expiring. The increasing move to collective agreements has clearly neglected the need to have regard to increasing productivity and employment.

Shorten helped save the miners trapped at Beconsfield: he could now save those who would otherwise end out of work.

Des Moore
Director, Institute for Private Enterprise
South Yarra Vic

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