Time for a rethink on regulation


Australian Financial Review

17th October 2007

Words in square brackets omitted by Editor


Striking features of the 28th HR Nicholls Society conference last week were the involvement of ex-unionists and the conclusion that a marked reduction in the regulation of employment relationships would be in the interests of businesses and workers. The imbalance of bargaining power between employers and employees argument was also portrayed as outdated [in modern competitive economies].


The WorkChoices fairness test was seen as a disaster, pushing employers away from individual agreements. And almost all speakers concluded that media analyses of Labor's plans are overlooking, as one speaker put it, a "disastrous u-turn".


Both major parties were seen as operating blindfold.Workplace Relations Minister Hockey's justification of the fairness test and the industrial police force established under WorkChoices [ as preventing employers from exploiting workers] concedes to Labor a rationale for proposing horrendous regulatory proposals.[ Its] promotion of the collective bargaining model would greatly increase the unions' role. 


How Opposition Leader Rudd can claim productivity benefits is a complete mystery: implementation of deputy leader Julia Gillard's philosophy could only act as a deterrent to employment.


Why is Australia moving further away from a market-based labour market when employees are already protected under the common law and ordinary contract and criminal legislation?


In today's competitive economy more than 800,000 businesses compete with each other for labour with, contrary to popular mythology, zero capacity to force wages and conditions down. More than 700,000 are small businesses, [obviously] subject to losses of staff and business if they attempt exploitation.


Further, individual employees in the labour market can readily quit jobs, and have been doing so. Australian Bureau of Statisics labour mobility data shows that, of the nearly two million of employees who left their jobs in 2005-06, over two thirds did so voluntarily and only about 11per cent were retrenched.


This shows we have developed a labour market with flexibility and have relatively few  fears of unemployment. In fact, [during the period of reduced regulation] in recent years, average hours of work and industrial disputation fell and real wages increased. Clearly, the need for special legislation regulating the labour market is gone and deregulation would not weaken employees' bargaining powers.


[Individual employees are also increasingly able to either bargain for themselves or obtain advice from the many employment services. But their decline in membership suggests unions' provision of such services has been inadequate].


The conference also heard about the moral justification for governments to regulate a minimum wage. But, as HR Nicholls President Ray Evans pointed out, this [catholic perspective seemingly misinterprets papal dicta. It also] overlooks that more than half of low wage earners are in households with combined  incomes that are above average, [ with no need for an income supplement], and that above-market minimum wages keep many with low capacities out of work and on social welfare.


In short, using the wages system as a vehicle of social welfare policy is both inequitable and inefficient, as is the iniquity of giving unions a privileged position.