My Blog

Tag: Unions & Collective Bargaining

  • Insecure work is a feature of our labour market. New laws can change that.

    Chris Wright is Associate Professor in the Discipline of Work and Organisational Studies at the University of Sydney, and a member of the Centre for Future Work’s Advisory Committee. This commentary is based on his submission to the Senate Education and Employment Legislation Committee’s inquiry into the Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, and originally appeared in the Sydney Morning Herald.

    * * * * *

    The Senate has started reviewing the Australian Government’s Closing Loopholes Bill. If passed, this legislation will allow minimum standards to be set for contract workers, provide stronger penalties against employers who commit wage theft and deter employers from outsourcing to circumvent enterprise bargaining.

    These measures will strengthen protections for workers who often face barriers to job security and career development.

    Australia’s current system of workplace laws was adopted at a time when enterprise bargaining and awards covered a larger share of the workforce than today. Enterprise bargaining and awards encourage employers to invest in their workers through “standard” employment arrangements underpinned by permanent contracts, decent wages and training.

    These arrangements promoting workforce investment benefit both workers and employers. Workers gain job and economic security and career progression opportunities. Employers gain loyal and satisfied workers who contribute to productivity and innovation. As the architects of the current system of workplace laws envisaged, workforce investment thus provides the basis for high-productivity business strategies, which help to make the Australian economy more internationally competitive.

    Recently, however, more businesses have opted for a different course. These businesses have tried to compete not through high-productivity strategies but instead by undercutting or evading workplace laws and by engaging workers via “non-standard” arrangements such as casual contracts or via gig economy platforms.

    The rising incidence of wage theft in which employers pay workers below their legal entitlements is evidence of this undercutting. The growing numbers of workers hired through labour hire arrangements, which some businesses have used to avoid their enterprise bargaining obligations, is evidence of evasion. So too is the emergence of gig platforms exempt from workplace laws.

    Wage theft, gig platforms and use of labour hire as an evasion tactic have become features of Australia’s modern labour market. None of these features existed when the foundations of the current system of workplace laws were first laid in the 1990s.

    As the nature of work and the labour market evolves, workplace laws must adapt in response. The Closing Loopholes Bill recognises this by allowing workers on casual contracts to convert more easily to permanent contracts, increasing protections for gig and labour hire workers and introducing new measures against employers who undercut wage laws.

    While non-standard workers have flexibility, they have little job and economic security under current laws. For instance, casual workers receive a higher hourly pay rate as compensation for this insecurity but are concentrated in the lowest-paid industries. Like their counterparts in the gig economy, casual workers are less likely to receive training than permanent workers.

    The proposed change to give casuals who work regular hours the right to convert to permanent employment will probably improve their access to good quality jobs and career development opportunities.

    Business groups have criticised the Closing Loopholes Bill for its supposedly negative impacts on productivity and innovation. They have not offered evidence supporting these claims. To the contrary, research evidence suggests that measures promoting standard employment are more likely to encourage businesses to compete through high-productivity and innovation-enhancing strategies rather than by undercutting or evading.

    Winston Churchill once said that without effective workplace laws, “the good employer is undercut by the bad and the bad by the worst… Where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration”.

    Workers in Australia are increasingly missing out on legal protections under current laws. The research evidence suggests the Closing Loopholes Bill’s provisions are necessary to avoid a situation like the one Churchill described.

    The post Insecure work is a feature of our labour market. New laws can change that. appeared first on The Australia Institute's Centre for Future Work.

  • New laws for employee-like gig workers are good but far from perfect

    The Workplace Relations Minister Tony Burke has described proposed new laws to regulate digital platform work as building a ramp with employees at the top, independent contractors at the bottom, and gig platform workers halfway up.

    The new laws will allow the Fair Work Commission to set minimum standards for ‘employee-like workers’ on digital platforms. They are a key part of reforms in the government’s Closing the Loopholes workplace relations bill introduced into parliament this week, and are part of a commitment made before the 2022 election.

    So, what will being halfway up the ramp mean for ‘employee-like’ platform workers? Under the changes, minimum standards can now be set for platform workers, including rideshare drivers, food delivery workers and care workers. Up until now, as independent contractors, digital platform workers have had very few rights, including no rights to minimum pay rates.

    With the changes, the Fair Work Commission will be able to set minimum standards for workers concerning payment terms, deductions, working time, record-keeping, insurance, consultation, representation, delegates’ rights and cost recovery and other matters.

    Other provisions in the legislation are designed to protect workers from being unfairly deactivated from platforms, which is equivalent to being unfairly dismissed, and allow collective agreements for platform workers where platform operators agree.

    The laws will apply only to ‘employee-like’ platform workers, meaning workers who are low-paid (compared to what they would be paid under an award), have low bargaining power and/or have low control over their work.

    There are some restrictions on the standards the Fair Work Commission can set for platform workers. Minimum standards cannot be set concerning overtime rates or rostering arrangements. Nor can the Commission use its standard-setting powers to turn a platform worker into an employee.

    So, ‘employee-like’ platform workers will not have all the minimum standards and rights that employees have. However, halfway up the ramp, they will be much better placed than they were with the minimal rights of independent contractors.

    Overall, these changes are very positive for platform workers and should prevent exploitation of vulnerable workers. However, the reforms stop short of responding to longstanding calls for platform workers, including rideshare, food delivery and care workers, to be treated as employees, and for platform operators to be treated as employers, an approach that has recently been agreed by the 32 member countries of the European Union.

    The proposed reforms in the Closing Loopholes bill don’t go as far as aiming to ensure that how a person is employed can’t leave them without the rights and standards most comparable workers enjoy at work. It leaves platform workers halfway up the ramp in a new worker category with lesser rights than employees.

    The creation of this new category of ‘employee-like’ worker does open up the possibility that some employers may seek to reform their workforces and business models to engage workers who are in the new cheaper worker category, in place of employees. Internationally, where a third category of worker has been created by governments in order to provide protections for low-paid independent contractors, there has been some substitution of employees for workers with less favourable conditions.

    The Closing the Loopholes approach to platform workers also suggests we need to think harder about how to support better flexibility at work.

    The platform work reforms appear to be built on an assumption it is ok for workers who need or want flexibility to have lesser standards and fewer rights at work because of this. Most platform workers value the flexibility they have in their jobs. But that does not mean they should have to trade off rights and standards. Flexibility is not a benefit that accrues only to workers. Consumers and platform operators want flexible services too.

    Originally published in The New Daily 8 September 2023

    The post New laws for ‘employee-like’ gig workers are good but far from perfect appeared first on The Australia Institute's Centre for Future Work.

  • Hollywood actors showing that unity is strength

    When workers are united and able to collectively bargain, they can win good outcomes.

  • The key legislation changes that will help workers get a better deal

    However, with recent changes to industrial relations laws, and with unemployment at record low levels, some workers are now in a better position to bargain for better pay and conditions.

    Slow wages growth, low bargaining coverage and high levels of insecure work are good indicators of how workplace power imbalances have stifled prospects for many employees.

    Over the last decade Australia’s wage growth has been at its weakest since the middle of the last century, coverage of workers by enterprise agreements has rapidly eroded, and over a third of workers are now in insecure casual, labour hire or fixed-term jobs.

    Bargaining hobbled

    Despite low unemployment – meaning there are fewer workers available to fill vacancies – employees have not been able to bargain for higher pay and the real value of wages has been declining.

    Industrial relations reforms passed by parliament in late 2022 are designed to restore some balance to the workplace.

    The changes don’t mean there is a massive shift of power to workers but, with the removal of some barriers to bargaining, there should be greater opportunity for employees to gain improvements at work.

    At the present time, the labour market is tight and employers are competing to find and retain workers so they may be prepared to offer higher wages and other benefits.

    Already, unions representing early childhood education and care workers have applied to use a new multi-employer bargaining option – which came into force last month – to seek a pay increase for these low-paid workers.

    While it will be some time before we see any outcomes, there is early evidence that other bargaining reforms are getting workplace bargaining moving after years of decline. Certainly some employers may now be more ready to negotiate enterprise agreements to avoid being roped into multi-employer agreements.

    Other non-bargaining reforms introduced as part of the 2022 Secure Jobs, Better Pay package attracted much less attention than bargaining changes during last year’s debates over the new laws.

    However, these other changes are not insignificant for working conditions.

    The right to flexible work

    More than half of all employees now have new rights to request flexible work, including employees who are parents of children of school age or younger, carers and workers aged 55 or over, those with a disability or people experiencing or supporting someone experiencing family violence.

    Before the flexibility changes, which came into effect in June, some limited flexible work rights already existed. However, now there is much greater onus on employers to show there are reasonable business grounds if they wish to refuse employees’ requests for flexible work.

    While this is no guarantee that all employees can access the flexibility they need, it has potential to be a game-changer in some workplaces through pushing employers to find ways to organise work for greater employee-friendly flexibility.

    Research shows that Australians are some of the most stressed and overworked of all workers worldwide. We know we need better-work life balance.

    Post-pandemic, there is widespread experience of more flexible work arrangements and greater recognition of the benefits of flexible work.

    There is some impetus to lock in more employee-friendly flexibility, and workers are having some success in achieving these changes through collective bargaining.

    Working lives are longer than ever, including as the retirement age has just been increased to 67 years.

    Along with pay increases that stop the decline in the value of wages, bargaining for better work-life balance will continue to be important.

    The post The key legislation changes that will help workers get a better deal appeared first on The Australia Institute's Centre for Future Work.

  • Australian and Global Union Leader Sharan Burrow to Deliver Second Annual Carmichael Lecture

    Former ACTU president Sharan Burrow will deliver the second annual Carmichael Lecture.

  • Fair Work: 5.75% Award Wage Boost will not cause Wage-Price Spiral

    Today’s 5.75% award wage increase is a necessary boost for the lowest paid workers but does not keep pace with inflation.

    The Fair Work Commission (FWC) has today explicitly said this increase “will consequently not cause or contribute to any ‘wage price spiral’”.

    Key Points:

    • Award wage increase of 5.75% is less than inflation, which is running at 7%. (This covers approx. 20% of workers)
    • FWC Commission have said explicitly this will not cause or contribute to a so-called ‘wage-price spiral’
    • FWC acknowledges the increase “will not maintain the real value of modern award minimum wages nor reverse the reduction in real value which has occurred”
    • Australia Institute research shows excess corporate profits, not wages, are the major driver of inflation
    • Fair Work Commission also increased the national minimum wage by 8.65% (this covers approx 0.7% of workers)

    “This is a necessary boost, but insufficient to keep the lowest paid workers ahead of inflation,” said Dr. Greg Jericho, Policy Director at the Australia Institute’s Centre for Future Work.

    “It’s significant that the Fair Work Commission has explicitly said this will “not cause or contribute to any wage-price spiral”. At a time when companies are making record profits, our research shows profits, not wages, are the major driver of inflation.

    “The FWC notes it “will make only a modest contribution to total wages growth in 2023-24 and will consequently not cause or contribute to any wage-price spiral.

    “The FWC has made it clear the Reserve Bank can not blame low paid workers wages for driving inflation in the event they raise interest rates next week.”

    Excerpt from Fair Work Commission Decision:

    As the total wages of modern award-reliant workers constitute a limited proportion of the national wage bill, we are confident that the increase we have determined will make only a modest contribution to total wages growth in 2023-24 and will consequently not cause or contribute to any wage-price spiral.

    We acknowledge that this increase will not maintain the real value of modern award minimum wages nor reverse the reduction in real value which has occurred over recent years.

    The post Fair Work: 5.75% Award Wage Boost will not cause “Wage-Price Spiral” appeared first on The Australia Institute's Centre for Future Work.

  • Deal on IR Reforms Sets Stage for Faster Wage Growth

    A legislative consensus reached over the weekend to approve reforms to industrial relations laws sets the stage for rebuilding collective bargaining and a significant acceleration of wage growth, according to research from the Australia Institute’s Centre for Future Work.

    “These reforms will lift wage growth and improve fairness in workplaces across Australia, big and small, in all sectors of the economy,” said Dr Jim Stanford, Economist and Director of the Centre for Future Work.

    “These measures will rebuild collective bargaining, enhance gender equity, ensure greater transparency, and equip workers with critical tools to pursue fair treatment,” Dr Stanford said.

    Research published by the Centre for Future Work suggests collective bargaining coverage will rebound under the new laws, which will allow for multi-employer collective bargaining in certain circumstances. Bargaining coverage in Australia has declined dramatically since 2013, with just 11% of private sector workers now covered by a current enterprise agreement. That fall in coverage has been the largest single cause of record-slow wage growth over the last decade.

    Based on the historical relationship between bargaining coverage and wage growth, rebuilding coverage toward pre-2013 levels will lift nominal wage growth by 1.6 percentage points per year. Additional wage growth of that magnitude would lift annual incomes for a typical worker by almost $1500 in just one year, and a cumulative total of almost $24,000 over five years.

    Another provision in the reform package is a new limit on the ability of employers to unilaterally terminate expired enterprise agreements during their renegotiation. Many employers have used this loophole to wipe out years of collective bargaining gains. A recent example was Qantas’s threat earlier this year to terminate its agreement for cabin crew. Centre for Future Work modeling shows that could have cost senior staff as much as $67,000 per year. This so-called ‘nuclear option’ in employers’ arsenal will be prohibited under the new laws.

    “With the post-pandemic acceleration of inflation, many years of wage stagnation have now tipped over into the fastest decline in real wages in Australian history,” said Dr Stanford.

    “This bill is a needed and timely response to an unprecedented crisis in workers’ living standards.

    “I congratulate the legislators, including Minister Tony Burke, Greens Leader Adam Bandt, and Senator David Pocock, for negotiating this package and working to approve it in Parliament,” Dr Stanford said.

    The post Deal on IR Reforms Sets Stage for Faster Wage Growth appeared first on The Australia Institute's Centre for Future Work.

  • Restoring Collective Bargaining Coverage Would Boost Wage Growth: Research Report

    Proposed reforms to Australia’s industrial relations laws are likely to support higher coverage for collective bargaining in the national labour market, and provide a boost to stagnant wage growth according to new research from the Centre for Future Work.

    The report reviews historical data on the erosion of collective bargaining in Australia, and its close correlation to the slowdown in wage growth visible after 2013. The authors find that the decline of collective bargaining coverage (which fell by almost half in the private sector since 2013) explains over 50% of the change in wage growth during that same time.

    “Restoring collective bargaining is vital to any strategy to get wages growing again in Australia,” said Dr. Jim Stanford, co-author of the report and Director of the Centre for Future Work.

    “International evidence indicates that requires the ability to undertake bargaining at a multi-employer level.”

    Key Points from Report:

    • Each one percentage point loss of bargaining coverage has been associated with a reduction in annual wage growth of 0.15 percentage points.
    • There is a clear and predictable relationship between countries which support broader multi-employer bargaining, and the level of bargaining coverage which they achieve.
    • The reforms contemplated in the Secure Jobs, Better Wages legislation would incrementally restore collective bargaining coverage in Australia: by relaxing current restrictions on multi-employer bargaining, and supporting bargaining through other measures (such as limitations on employer termination of enterprise agreements, stronger dispute settlement provisions, and streamlined processes for approving new agreements).
    • These reforms would elevate bargaining coverage in Australia toward a level typical of other countries where most bargaining still occurs at the enterprise level (as would be true under these reforms), but supplemented by some multi-employer bargaining and broader coordination. The OECD has identified a group of these countries, with an average bargaining coverage rate of 33%.
    • That would reverse most (but not all) of the loss in coverage experienced over the past decade.
    • Considering the observed correlation between bargaining coverage and wage growth, this would lead to an improvement in nominal wage growth of 1.6 percentage points per year.
    • Just one year of wage growth at this faster pace would boost annual earnings for a worker with average full-time wages by $1473. That increment would expand to $8300 by the fifth year of (compounded) faster wage growth. On a cumulative basis over the first five years alone, the average worker would receive additional income of almost $24,000.
    • The 1.6-percentage-point increment in annual wage growth would boost aggregate wage incomes by $15 billion in the first year, and $75 billion in the fifth year.

    The post Restoring Collective Bargaining Coverage Would Boost Wage Growth: Research Report appeared first on The Australia Institute's Centre for Future Work.

  • Multi-Employer Bargaining Necessary for Fixing Wages Crisis

    But as our Policy Director Fiona Macdonald argues in this new commentary for The Conversation, multi-employer bargaining is already allowed under various existing provisions of the Fair Work Act. The problem is that those provisions do not work. For example, the low-paid bargaining stream in the Fair Work Act has yet to result in a single multi-employer agreement, due to its stringent conditions and inconsistent application by the Fair Work Commission.

    Dr Macdonald argues that reforming these multi-employer bargaining streams so they can actually work will be an important part of any strategy to revitalise stagnant wages in Australia.

    For more details on the failure of existing multi-employer bargaining streams, and core principles for a stronger bargaining system, please also see the Centre for Future Work’s submission to the Senate inquiry on the Secure Jobs, Better Wages reform package (co-authord by Dr Macdonald, Jim Stanford, and Lily Raynes).

    The post Multi-Employer Bargaining Necessary for Fixing Wages Crisis appeared first on The Australia Institute's Centre for Future Work.

  • IR Reforms To Close Off The Nuclear Option Will Protect Wages and Entitlements

    The paper reviews one dramatic example of this termination threat – dubbed the ‘nuclear option’ by labour law experts (because it ‘blows up’ years of collective bargaining embodied in existing enterprise agreements). Earlier this year, Qantas threatened termination of the EA covering its international cabin crew unless they accepted significant contract concessions.

    The new report confirms that losses from termination, if it had gone ahead, would have been enormous for the affected workers:

    • Hourly wage cuts between 25% and 70%
    • Annual income losses up to $67,000 for the most senior staff
    • Loss of superannuation contributions and investment income, totalling as much as $130,000 and dramatically reducing retirement incomes
    • Painful retrenchment of many working conditions issues (including rest periods and accommodation)

    From the company’s perspective, termination of the EA for just this group of its staff would save $63 million per year, and up to $1 billion over 15 years.

    This threat, backed up by an application for termination lodged with the Fair Work Commission, was sufficient to convince cabin crew staff to accept a new EA containing a two-year wage freeze, real wage cuts, and other compensation and conditions reductions. Staff had earlier voted 97% to reject that agreement. This reversal confirms the termination threat is a very powerful bargaining lever for employers.

    “The scale of the losses experienced by Qantas staff as a result of termination would have been catastrophic,” said Lily Raynes of the Centre for Future Work, co-author of the report.

    “It would undermine their quality of life for the rest of their careers, and indeed right through their retirement,” Ms Raynes said.

    “The ability to credibly threaten termination, even as workers are trying to negotiate a replacement EA, provides a powerful advantage to employers,” said Jim Stanford, Director of the Centre for Future Work and the other co-author.

    “It shifts the playing field decisively in employers’ favour and has been a major factor in the rapid erosion of collective agreement coverage over the past decade,” Dr Stanford said.

    “Qantas ruthlessly took advantage of this loophole in labour law to threaten cabin crew staff and impose terms and conditions that are blatantly unfair, given this company’s power and profits,” said Teri O’Toole, Federal Secretary of the Flight Attendants’ Association of Australia (one of the unions representing cabin crew at the airline).

    “Qantas, and other greedy companies, will keep doing this unless the legislation is changed,” Ms O’Toole said.

    The report recommends reforms to the Fair Work Act to limit employers’ ability to apply for unilateral termination during renegotiations. Current legislation in Parliament (the Secure Jobs, Better Pay Bill) would put new restrictions on employers’ ability to terminate EAs during renegotiation.

    The post IR Reforms To Close Off The ‘Nuclear Option’ Will Protect Wages and Entitlements appeared first on The Australia Institute's Centre for Future Work.