Des Moore, former Deputy Secretary of the Federal Secretary, and member of the Society’s Board of Management, has prepared the following position paper for the Society discussing Problems with Existing Regulation of Workplace Relations. It has been emailed to all Federal Members of Parliament and Senators.
The HR Nicholls Society takes the view that there is no substantive imbalance of bargaining power between employers and employees and the relationship does not require detailed regulation. This view is based on the fact that there are over 800,000 employing businesses which operate with a workforce of over 12 million. These businesses compete actively with each other and employers as a group cannot force wages down or impose “unfair” conditions on employees as a group. In these circumstances it is virtually impossible for employers to impose “unfair” conditions on employees on any sustained basis.
If working conditions become unacceptable to either party, each side has alternatives that, while not necessarily the first best option for either, prevent businesses as a group from being imposers and workers as a group from being slackers. ABS data on Labour Mobility1 show that employees themselves are also active competitors in the labour market and have been readily able to change jobs. In the year ended February 2013, for example, about 2 million ceased existing jobs and nearly 61 per cent of those did so voluntarily.
But, while there are many causes of unemployment a highly regulated system will naturally act as a deterrent to employers and add to the rate of unemployed. Since the Fair Work legislation became operative in early 2010, the rate of unemployment has increased from 5.3 per cent in January 2010 to 5.8 per cent2 in October 2013, well above the lowest rate achieved under the legislation operated by the former Coalition government. And “disguised” unemployment has also increased.
Hence while published unemployment figures have risen by about 100,000 since September 20103, there has also been an increase in those who have dropped out of the work force. Over the same period, the employment to population ratio shows that employed persons as a percentage of the civilian population aged 15 years and over has decreased from 62.4 to 61.2 per cent. This means that there are now about 230,000 fewer employed (and not looking for work) than if the same proportion was employed as in 2010. Although some of those would have retired, it is evident that the real increase in unemployed since the Fair Work legislation became operative is much larger than the published data. Many of those who dropped out of the work force would have done so because they were less employable under the regulations.
The comments below highlight some of the problems that existing regulations create for employers and, as a result, their deterrence to employment. Assuming the Government is not prepared to effect a complete revision of the regulations, these comments indicate some possible specific amendments but they are not necessarily intended to be the most desirable. . Our analysis suggests that, unless revisions extend well beyond those proposed by the Government, increasing unemployment (as defined above) is likely to occur.
Click HERE to download the full paper (updated 23 December)