Tag: Wages & Entitlements

In this extended commentary, Senior Economist Alison Pennington explains the main components of the IR Omnibus Bill, assesses their impacts on workers’ wages and labour protections, and offers some strategic analysis on how labour advocates can work towards addressing insecure work.

This commentary was originally published in Jacobin. A shorter edited version was published in Michael West Media & John Menadue’s Pearls and Irritations.

Scott Morrison’s Industrial Relations Laws Are a Kick in the Teeth for Australian Workers

By Alison Pennington

The Morrison government has proposed sweeping changes to Australian labor laws intended to cut wages, entrench precarious work, and cripple unions. The proposed changes would sweep away the remnants of collective bargaining and hand dictatorial power to bosses.

Just a few months ago, Australia’s Coalition government was singing the tune of compromise and cooperation with unions. Now they’ve thrown away the songbook and taken the gloves off. Scott Morrison is giving Australian workers and unions class war — just in time for Christmas.

Thanks to pandemic stimulus spending, 2020 was already a Christmas-bonus year for big business. With company profits up nearly 19 percent since 2019, they have already benefited to the tune of billions.

But it’s never enough. So, industrial relations minister Christian Porter has introduced the Industrial Relations (IR) Omnibus bill. It’s a withering pro-business offensive aimed at slashing wages and resetting work conditions to boost profitability in the long term.

The core of Porter and Morrison’s plan will grant employers the power to expand insecure work freely and to hijack enterprise bargaining. If it goes ahead, it will inflict a double wound on the working class, by degrading the Awards system (that sets minimum wages and conditions across industries) and by weakening what little remains of unions’ collective bargaining power.

Never Let a Crisis Go to Waste

The idea that workers’ economic security should be subordinated to business demands is archaic. It’s a form of employment that unions have fought bitterly since the nineteenth century, winning historic victories to curtail piece-work or at-home work, and to end the dictatorial control of gang masters over who did and did not work, and under what conditions.

Some fruits of that multigenerational battle still remain embedded in today’s standard employment relationship, which guarantees rights to ongoing work and basic entitlements. However, neoliberalism’s decades-long onslaught has weakened unions. As a result, all of these abuses have returned, sometimes in new packaging — as is the case with the “gig economy.”

Today, 2.6 million Australian workers are defined as “casual.” This means that one in every four workers has no right to ongoing work, and no basic holiday or sick leave entitlements.

This is justified by the claim that casual workers receive “casual loadings” (extra pay) to compensate for forfeited conditions. But this is a myth. Far from being compensated for the value of lost entitlements, most casuals are in fact much worse off.

One third of all casuals receive no loadings at all, and most casuals are not paid more than permanent workers in the same jobs. In industries with high casual density, the premium is around 4-5 percent — far from the oft-cited figure of 25 percent.

Bosses love to praise the virtues of “flexibility,” claiming that casuals don’t want permanent work. But this mantra is also a lie — half of all casuals have worked regular shifts for one year or more.

Rather than simply allowing firms to employ a few extra workers on a seasonal basis, casual work is increasingly the way that Australian businesses meet their medium- and long-term labor needs. And, in the post-COVID era, they increasingly see casual labor as the foundation for boosting profits.

Accelerated Precarity

Two recent major court cases found that businesses which employ casuals on regular, stable, and predictable schedules are liable to pay leave entitlements. It was estimated that this would cost employers over $39 billion.

In response, business lobbyists unleashed campaigns to “resolve the definition issue” so as to avoid court-ordered repayments. This — as well as the growing importance of casual work to profits — explains why Morrison and Porter have made entrenching casual work the cornerstone of their IR Omnibus bill.

They want to define casual work in the broadest possible terms. Any job deemed casual by the employer will be, legally, a casual job. This means your job can look like a permanent job and smell like a permanent job — but employers will still be able to legally engage you as a casual and strip your legal entitlements at will. This is a body blow to the present system of legal protections.

The pandemic has highlighted the dangers of insecure work. But for the Coalition and their business allies, it changed nothing. Even while frontline, often insecure workers risked their lives, the government was keen to increase the number of workers trapped in precarious, low-wage jobs.

First, the Coalition excluded over one million casuals from the JobKeeper wage subsidy. Then, they reduced the Coronavirus Supplement, hoping to force the unemployed and vulnerable into insecure work while making it cheaper for businesses to rehire workers. Next, Liberal treasurer Josh Frydenberg announced JobMaker — a payment that directly subsidizes new, insecure youth jobs that will allow bosses to sack existing, more expensive and older workers.

The JobKeeper subsidy is set to end in March, exactly when Porter’s sharpened wage-cutting tools are due to kick in. Employers will go on the offensive, recouping lost public subsidies by taking even more from their workers.

The bill’s supposed sweetener is a measure that will require employers to offer casuals permanent work if they have been employed for twelve months, with six months of continuous regular hours scheduling. Not only will it be easy for employers to vary hours and schedules to avoid meeting that high benchmark, they will also be allowed to refuse to make an offer on so-called “reasonable grounds.”

The government was sure to define “reasonable” in incredibly broad terms and to deny workers the right to appeal a decision through the Fair Work Commission (FWC). Got a problem with your employer’s decision? The Federal Court will hear your case — but only if you have a spare ten or twenty thousand dollars lying around.

Deregulating Permanent Work

Accelerating the growth of insecure work is also about cannibalizing protections for the permanent workforce, by making permanent jobs resemble casual ones. New so-called “part-time flexi” reforms will let bosses employ permanent part-time workers as though they were casuals.

Only sixteen hours will have to be paid according to normal permanent rates and entitlements, while an additional twenty-two hours (comprising a total work week of up to thirty-eight hours) will be free of overtime loading. With the stroke of a pen, this threatens to dissolve hard-won rights that deliver predictable and stable schedules for permanent part-time workers.

With a flexible twenty-two hours of ordinary-time labor up for grabs, employers will be able to work these “part-time” workers like full-timers on a regular basis — as supervisors and managers, for example. But they won’t have the security of regular hours or receive overtime compensation for being at the employer’s beck-and-call. The flexibility will be blissful — for bosses.

For all the Coalition rhetoric about “job creation,” this wholesale deregulation of working hours really means that bosses will be able to cheaply increase hours for existing workers in line with fluctuations in demand. That will free them from having to hire more people. It’s galling that the government would present the creation of a “part-time flexi” employment category as a solution to record-high and growing underemployment.

There’s no shortage of glossy marketing. For example, low-wage work will be expanded under the guise of “roads to permanency.” But when you cut through the spin, the Coalition’s agenda is to reduce the incomes of millions and to deny millions more decent jobs. During a recession, with labor-force utilization already low, they’re arming employers with powerful weapons to cut wages and conditions in the jobs that remain. These moves will generalize despair and desperation across the entire workforce.

Hijacking Collective Bargaining

Worst of all, the IR Omnibus bill contains a trifecta of changes to the laws governing enterprise agreement (EA) making. These changes will allow businesses to draw up workplace agreements by themselves more easily — that is, without a union. They will be allowed to undercut the minimum rates and conditions outlined in industry Awards with these nonunion agreements. Additional changes will let employers lock in wages stipulated by an enterprise agreement for eight years at a time.

This is nothing less than a hijacking of what’s left of collective bargaining. In fact, handing employers unilateral power over enterprise agreement wage-setting was the cornerstone of former Liberal PM John Howard’s infamous WorkChoices legislation.

The Coalition’s plan will allow employers to bypass the Better Off Overall Test (BOOT) for two years. As it is, the BOOT ensures that new agreements do not leave workers worse off than under minimum Award conditions. The suspension of the BOOT coincides with new measures that will weaken scrutiny of subpar nonunion agreements by the FWC, unions, and employees.

The move has been taken straight from the wish list of business lobbyists. It will open a floodgate of nonunion below-Award agreements that will permanently damage living standards.

There’s a precedent for this. Under Howard’s WorkChoices, the “No Disadvantage Test” was abolished and unions were denied the right to contest agreements, leading to an explosion of nonunion agreements. Between 2004 and 2009, the proportion of nonunion agreements approved in the private sector rose from 20 to 60 percent.

After 2009, when WorkChoices was partly rolled back, the number of dodgy agreements dramatically declined to pre-Howard levels. Why? Because as part of the Fair Work Act, the Better Off Overall Test was introduced.

Even so, the WorkChoices-era surge in nonunion, low-wage agreements had a lasting, negative impact on wage growth. “Zombie Enterprise Agreements” persisted for years. For example, Merivale, a Sydney hospitality empire, paid over three thousand staff up to 20 percent below Award wages on an expired nonunion EA set in 2007 for over ten years.

This is possible because EAs live on, sometimes for years, until they’re replaced or terminated — usually on request by unionized employees. Today, tens of thousands of workers are still languishing on Howard-era below-Award enterprise agreements.

Unfair Work

The FWC has the power to change and approve agreements so long as employees remain better off overall, compared to the relevant Award. On top of this, there already exists a relatively untested provision whereby the FWC may approve agreements with below-Award conditions in so-called “exceptional circumstances,” provided they meet the overall public interest.

The IR Omnibus bill will weaponize the “public interest test” governing this power, enabling business to push even further. The Coalition’s hand-picked business leaders in the FWC will surely oblige.

Australian business and their allies in the Coalition have dedicated enormous resources to crushing what remains of collective bargaining. Their goal is to corrode the infrastructure of the labor movement’s past victories.

This is why the Coalition also wants to introduce eight-year agreements on new projects valued at over $500 million or $250 million, if the project is of national significance. Existing laws mean that employers can only seek FWC approval on agreements for new projects (called “greenfields” agreements) after six months of bargaining with the relevant union.

However, if the BOOT is scrapped, employers could feasibly draw up greenfields agreements undercutting Award conditions for up to eight years, circumventing unions and simply hiring a new workforce under the new agreement.

Since Australia’s draconian anti-union laws prohibit industrial action at any time outside an EA bargaining period, eight-year agreements give employers the power to block strikes as well as to cut wages. There is also a political logic to it: it’s a cost and risk reduction strategy, guarding against any future joint campaigns that link unions with other elements of civil society. For example, unions will face crippling fines for striking at any time during the eight-year period to support campaigns against inappropriate development, or against new mining projects.

As if this weren’t enough, the Coalition is bolstering the power of the courts and the anti-union Australian Building and Construction Commission to inflict millions of dollars’ worth of fines on unions for activities which are entirely normal and legal in other democratic countries.

It couldn’t be clearer. Just as the Coalition’s 2020 budget gifted business with billions in subsidies, tax cuts, and other handouts, this, too, is a vast gift to capital, purchased at our expense.

A Common Enemy

The union movement has a good chance of stopping the BOOT changes in the Senate, where minor parties hold the balance of power. But everything else is up for grabs thanks to the Coalition’s Christmas “spirit of compromise.”

Insecure work is the enemy of unionization. Workers living in permanent precarity and intermittent poverty are less likely to join unions. Only 8 percent of union members are casuals. And when the bargaining power of unions declines, all workers suffer.

By expanding casual work, the IR Omnibus bill will strike the harshest and most comprehensive blow to wages and living standards in many years, both now and in the future. This is why the union movement must resist insecure work everywhere it rears its head.

We need unions that are willing to build power among existing, permanent workers who are in a better position to endure the risks of industrial action. It’s still harder and more expensive to sack permanent, more senior workers. But without a fight back, this will change too — the growth of precarity means that even secure workers are on increasingly unsteady ground.

Permanent conversion rights for casuals don’t work without workplace union power. Unions must unleash aggressive collective bargaining campaigns aimed at bringing all workers under the same agreement “roof” and into permanent work. This would have to include bringing contracted-out and labor-hire work back in-house.

Since the most precarious sectors of the workforce have lower union power and no access to collective bargaining, we also need a united union movement willing to mobilize all of our 1.5 million members, linking the pockets of union power in the private sector (including construction, ports, and logistics) to our largest public sector bases in health care, education, and social services. We must weave good jobs back into the fabric of Australia’s social contract — this means fighting for jobs that offer rights to ongoing employment and basic entitlements like holiday pay, sick leave, and superannuation.

Most importantly, reviving unions after years of decline will require determined efforts to rebuild a modern workers’ movement with deep support and social roots. This will mean working with climate action, anti-poverty, welfare rights, and other social justice and community organizations.

Unions and their allies have to push for working-class politics at every level of government, from local to federal, and build a broad coalition that will put decent jobs and economic democracy at the center of a progressive vision for Australia.

Public institutions like Medicare, public education, TAFEs, superannuation, and corporate taxation are widely popular. Australians broadly agree with the need to rebuild a domestic manufacturing sector and to refund the arts and tertiary education. The union movement could be the vehicle that makes these aspirations real.

This project can be popular. This year, the profit-hungry zealots of Australian business and the Coalition’s conservative apparatchiks told us that “we must learn to live with the virus.” But Australians overwhelmingly disagreed, and instead supported the subordination of short-term business interests to the public good. Despite a well-funded conservative campaign, large majorities overwhelmingly supported shutting down the economy to save lives.

Now we must protect ourselves against another virus that would irreparably damage the quality of workers’ lives in the name of higher corporate profits. That virus is insecure work. It’s lived among us too long — it’s high time we shut it down.

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