Workplace follies: Labor regulations are driving businesses broke or offshore
As published in Spectator Australia - January 4, 2025
A reckoning in workplace relations is inevitable, and the $140 million financial hit Woolworths suffered in December from a near-three-week strike underscores just how harsh it could be.
The industrial action, which left supermarket shelves empty and disrupted supply chains ahead of the holiday season, demonstrates the damaging consequences of union-driven demands enabled by the Albanese government’s interventionist workplace relations legislation.
The United Workers Union demanded a 25 per cent wage increase over three years and changes to productivity frameworks at Woolworths. The dispute was eventually settled with an 11 per cent wage rise and framework revisions, but the damage was done. The strikes disrupted Woolworths’ operations and those of Endeavour Group, leaving the company with $60 million in lost earnings and weeks of recovery ahead as warehouses restock.
This is just one of several recent disputes that illustrate how Australia’s workplace relations policies are steering the economy toward disaster.
The rail union’s push for a 32 per cent wage increase over four years nearly shut down Sydney’s train network, while ongoing industrial action at Qube ports, driven by the Maritime Union, has increased shipping costs and delayed goods delivery. At Qube, a proposed 18 per cent pay increase over four years was deemed insufficient by the union, highlighting a widening disconnect between union demands and economic reality.
Union leaders, emboldened by a sympathetic government, are leveraging new, prescriptive legislation to flex their muscles. The Albanese government’s reforms—accompanied by slogans like “closing the loopholes” and “secure jobs”—may sound appealing, but their real intent is clear: to boost the influence of unions that helped the Labor Party win the 2022 election. These reforms include restrictions on casual and labour hire workers, new rights for union delegates, and access to industry bargaining, all of which strengthen union influence at the expense of employees, employers and the broader economy.
Unions have long been in decline, with membership now at just 13.1 per cent of Australian workers and a mere 7.9 per cent in the private sector. Despite this, unions continue to portray themselves as the unchallenged representatives of workers, a claim echoed by the Albanese Government. This blind allegiance ignores widespread public concerns about union corruption and fosters an environment where union leaders feel invincible.
Recent workplace disputes are merely the symptoms of deeper issues. The Maritime Union’s push for stronger shipping cabotage laws exemplifies how unions can champion outdated, counterproductive policies. Cabotage laws, which require foreign vessel owners to pay top-up wages to their crews when transporting goods between Australian ports, were introduced in 2012 under then-Transport Minister Anthony Albanese. Yet instead of revitalizing Australian shipping and ensuring competitiveness, the Australian fleet has further declined – from 55 vessels in 1996, to 21 in 2012, to just nine now. A Tasmanian paper mill reported that it costs 86 per cent more to ship goods from Melbourne to Brisbane than from Melbourne to China—a stark illustration of how these policies hurt domestic businesses.
Australia’s workplace relations system is burdened by hyper-regulation creating complexity and uncertainty that stifle investment and productivity. Businesses like Woolworths, Qube, and countless others must navigate a labyrinth of rules while fending off unreasonable demands that often leave consumers to foot the bill. Investors, deterred by these conditions, are quietly taking their funds elsewhere further limiting Australia’s growth potential.
The Albanese Government’s actions are contributing to Australia’s declining living standards and slipping competitiveness. A mindset has taken root among union leaders and Labor ministers that companies are endlessly profitable and can always accommodate higher wages and better conditions. This flawed view ignores the reality of rising costs, particularly for small and medium-sized businesses. Even in the public sector, where the government holds the purse strings, there’s little focus on improving productivity. Instead, recent reforms have emphasised more jobs, less outsourcing, and pay consistency—policies championed by the unions but disconnected from the pressing need for efficiency and value for taxpayers.
The ACTU, emboldened by its influence over the Albanese government, has proposed 41 additional changes to the Fair Work Act, many of which target small employers. These changes would make it easier to coerce smaller businesses into enterprise bargaining agreements, further increasing the regulatory burden and driving up costs.
Australia is a modern, trade-dependent economy, yet it is moving toward a hyper-regulated future that discourages investment and innovation. The complexity of workplace relations regulation is emblematic of the broader issue: a disproportionate regulatory burden that undermines economic growth and prosperity.
The Woolworths dispute offers a case study in the costs of this approach. The industrial action not only disrupted Woolworths’ operations but also benefitted its competitors, with analysts estimating that Coles’ earnings could rise by 2.3 per cent this financial year due to the supply disruptions. Woolworths’ chief executive acknowledged the challenge of restocking ahead of the busy holiday season and apologised to customers for the inconvenience, yet the broader lesson is clear: such disruptions will continue unless systemic change is made.
The path Australia is on is unsustainable. Living standards are falling, and the economic environment is becoming increasingly hostile to growth and innovation. The Albanese government must recognise the need for a balanced workplace relations system that supports both employers and employees. Reforms should focus on fostering positive employer-employee relations, increasing flexibility, and reducing the outsized influence of union leaders who represent only a small fraction of the workforce.
If action isn’t taken soon, the reckoning will come, and it will not be kind. The current system, driven by outdated union ideologies and short-sighted government policies, will collapse under the weight of its contradictions.
It is far better to act now, to chart a path toward a more balanced and prosperous future, than to wait for the inevitable and endure the harsh correction that will follow.
John Lloyd PSM is a senior research fellow at the H.R. Nicholls Society
