Excessive Powers of Unions Confirmed

Confirmation of the HR Nicholls Society’s view that  the existing workplace regulations are damaging productivity has emerged with yesterday’s revelation that crane lifts on wharves in the East Coast are about 20% higher than in Fremantle. The lower rate there reflects the go-slow tactics adopted by the Maritime Union of Australia in its attempt to obtain from the $52 bn LNG Chevron project in Western Australia a 26% wage increase over 4 years including a claim for personal toilets. It is little short of a disgrace that the MUA, one of Australia’s most powerful trade unions (which has  a long standing “history” of  creating low productivity working environments), is able to operate without fear of the Fair Work Commission imposing a penalty sufficient to force it to stop action that disrupts business activity and lowers productivity. Read more

Reduce Powers of Fair Work Australia

The HR Nicholls Society welcomes the undertaking given by Coalition Leader, Tony Abbott, that if elected he will restore workplace relations regulation to the “sensible centre”. However, to reach the sensible centre will involve major legislative changes requiring that decisions by the Fair Work Commission involving increases in wages and other improvements in working conditions provide for increases in productivity and that those increases are formally agreed by both employers and (where involved) unions. The Commission should also be required to make decisions consistent with the economic policies of the Government.

These changes should not simply involve the establishment of an appeal body: Fair Work’s role must itself have appropriate provisions.

The problem with existing arrangements was highlighted by the Fair Work Commission decision yesterday to award massive increases (18-30%) in wage rates for apprentices. This decision was by a full bench comprised of all ex-unionists. If implemented it would clearly have adverse effects on employment, particularly youth employment. HR Nicholls calls for the Coalition to announce that if elected it  will take steps to ensure the decision is reviewed.

However HR Nicholls welcomes the statement by the head of the ACTU, Dave Oliver, that a Coalition government should not “tear up agreements negotiated freely between workers and employers” in regard to new projects. Agreements negotiated freely between workers and employers should not be confined to new projects but should extend across the board, provided they are negotiated freely. Mr Abbott should remind Oliver that it is  the responsibility of the federal government to manage the economy.

Adam Bisits, President HR Nicholls Society (0438 405 527)
Publicity Officer: Des Moore (9867 1235)

An Important Lecture on Econ & Political Problems

We are in the midst of an election campaign where much concern is justifiably being expressed about the paucity of serious policy announcements by either major party – not to mention the paucity of most of those that have been announced. Perhaps the most important serious announcement has been by Abbott – if elected the Coalition will not increase the burden of taxation (that is, the proportion of tax to GDP) – but this has hardly been discussed.

Nor has much attention been given to the excellent Stan Kelly lecture given on 15 August by the former head of the Productivity Commission, Gary Banks. The occurrence of that during the election campaign is entirely coincidental. Even so it deserves much more attention because it identifies the need for major policy changes, both economic and political, to reverse the trend in recent years for government policies to become much more accommodative to special interest groups. Protective arrangements of various kinds now extend to a wide range of industries and these arrangements are reducing productivity and economic welfare generally. Just as importantly, it identifies a major problem with the political process now prevailing in Australia. Read more

Minimum Wage Increases: Unintended Consequences

Unions and other vested interests often push minimum wage laws to benefit their members – at the expense of those who are locked out of gaining employment.

Yet a recent example from the United States to increases in the minimum wage shows yet another consequence: increased mechanisation.

The fast food industry, which primarily relies upon minimum wage employees, is responding to such increased costs with … hamburger-creating robots!  Read more

Out with the old in Fair Work Act

Uncompetitive wage rates – whether imposed by modern awards, for instance after-school wage rates for a country hardware store, or imposed by muscle-in unions and hapless employers in the greenfields of the recent mining boom – cause unemployment, or send jobs overseas, as with the processing of Browse gas on a remote floating plant to avoid high Australian wages.

Modern awards are centrally imposed wage terms divorced from any dispute or settlement between employer and employee. In their pervasiveness they continue the antiquated award system. To be really modern the awards should only apply if the parties want them. Greenfields agreements now involve negotiations with unions before even the first worker has appeared on site. However, the arriving workers should be allowed to decide how they will deal with the greenfields conditions offered them. If these changes were made, two significant obstacles to employment or to competitive wage rates would be removed. Read more

Voters Emphasise importnace of Jobs

As the Australian Financial Review notes that jobs is the number one concern of voters (see below), it is useful to remember that The Reserve Bank’s latest analysis in its August statement on monetary policy shows that under the present government “wages growth has dropped to its slowest pace since the early 2000’s” and that the “increase in the unemployment rate over the past year or so indicates that there are more people actively looking for work”. Indeed, this has occurred with “employment growth remaining below the growth of the working age population” ie people have been dropping out of the work force because of the difficulty of finding jobs and despite slower growth in wages.

The performance of (real) wages and employment growth is much worse than under the Howard government. Something wrong with the existing industrial relations policy?

 Des Moore is a member of the HR Nicholls Society Board of Management 

Media Reports: How Super Rules Limit Competition

The launch of our report yesterday on how changes under the Fair Work Act to superannuation requirements stifle competition and innovation, has attracted significant media interest.

Here are three pieces worth reading closely:

 The Australian (Paywall Protected) – Super rules limit competition, report says

COMPETITION to manage the super contributions of workers who don’t choose their own fund is being strangled by excessive, pro-union regulations, a new report argues.

 

The federal government’s decision to limit the number of funds that can be listed as default funds in modern awards to about 15 from 2015 — against the advice of the Productivity Commission — will bias the industry in favour of the status quo, says Barry Rafe, a former head of the Actuaries Institute.

Click HERE to keep reading Read more

Anti-Competitive Superannuation Requirements in Fair Work Act

Following changes to the Fair Work Act in December 2012 and June this year requiring awards to list default superannuation funds, after a two stage vetting by the Fair Work Commission, the HR Nicholls Society commissioned the superannuation expert and actuary Barry Rafe to review the changes.

The report finds that the changes entrench the industry funds (controlled jointly by unions and employer associations) and duplicate APRA’s oversight.  The new requirements are biased against new entrants, including retail funds, and against innovation.  The changes are anti-competitive and will create cost to employers as well as potentially disadvantaging superannuation fund members.

Report abstract and full report after the jump Read more

Union Activity During the Election Campaign

Although unions appear in this campaign to have less funding to help Labor (and themselves) than in 2007, union criticism of Coalition policies (or supposed policies) is increasing and there is precious little analysis in the media of such critiques. The AFR report (below) on union advertising is basically descriptive and, while my attempt to draw attention to the internal contradictions was published (see letter below), the editor chose to omit the important last sentence.

The acknowledgement in the PEFO that the economy may grow at a much lower rate than the official forecast adds weight to the need for structural reforms that would help lift investment, employment and productivity, such as IR and regulatory (particularly environmental) reforms. It almost takes us back to the early 1980s when Hawke called a meeting of business leaders and Wran ran with “a jobs, jobs, jobs first” agenda. Today, we don’t have the inflation problem that existed then but, with people dropping out of the work force, we need a reforming program to help/encourage business to create jobs. The steady downward trend in business confidence (the latest NAB survey is almost down to levels reached in the GFC) highlights the many regulatory problems faced by business, but which have so far received little attention in the election campaign. Important as the budget figuring is, the micro reforms are being overlooked.

It is of some importance that Holden workers appear to have accepted some kind of wage freeze. With our unit labour costs now being much higher than most other countries in the OECD, the case for changing out award system is very strong.

Des Moore is a member of the HR Nicholls Society Board of Management Read more

Aussie workers told to cut the slang

News.com.au reports:

AUSSIE workers have been urged to

soften their strine and avoid traditional slang, in a Federal Government push to make workplaces more migrant friendly.

Bosses should stop calling migrants “ethnic” because it might be discriminatory – and instead use the politically correct term “CALD”, or Culturally and Linguistically Diverse.

Casual swearing should also be avoided, as it may appear provocative or aggressive.

 

Despite Prime Minister Kevin Rudd’s penchant for obscure Aussie colloquialisms, the Immigration Department is frowning upon strine and slang in the workplace, in a new guide for employers.

 

Business groups have criticised the advice, one policy analyst dismissing it as political correctness “writ large” that would achieve nothing.