Report on Austrlian Workplace Relations

Through industrial relations these characteristics are regulated through a number of laws and processes. Workplace relations incorporate all of these issues while attempting to solve other issues of employee and employer relations. However there is debate on issues of unfair dismissals and employees forced to resign. This has caused many recent changes making policies less stringent in lead up of political elections

Impacts on the Economy

The economy of Australia is directly affected by Workplace Relations. Productivity and economic growth have been positively affected by these relations.  Economic growth is evident once analysing Australia’s GDP. In Australia’s GDP per capita in relation to the US as it has risen from 75% in the year 1983 to 79% in 2003. Since 1990 our GDP per capita has increased by more than ½ a percentage point per annum faster than that of the United States or the OECD area, this can be seen in Appendix C.

Chart 2: Per capita GDP growth comparisons

There are various Diseconomies of scale which come from workplace relations, such as increased costs to deal with any problems that arise between employees and employers, and increased costs that come from a high minimal wage.  However with the recent weakening of some policies of workplace, output has increased and costs have decreased creating an increase in productivity.

Appendix D again compares the labour productivity of Australia and the United States of America.

 

From this diagram the productivity of Australia has in fact risen from 1.7% p.a. to 2.5% p.a. This again supports the faster GDP growth of Australia to the United States.

In Appendix A we see inflation is also vulnerable due to workplace relations. Essentially if the wage level increases from wage setting, spending will increase which would theoretically lead to higher inflation. This newspaper article from the Financial Review “Union Wage Claim Threat to Employers” discusses the important issue of rasing the minimal wage against then pressure of inflation. According to Peter Anderson (Australian Chamber of Commerce and Industries’ director), “inflation had moderated and if the commission is inclined to award an increase, then it should be moderate and it should not apply within 12 months of the precious increase.” However not all Australians are on AWAs.

These graphs of Appendix D depict a comparison of some sorts between wage rates and inflation. These Wage price and CPI graphs in recent trends tend to fluctuate around the same quarters of growth. This is evidence of a link between the price of wages and inflationary pressures. However wages are not the only issue which affects inflation. Therefore the government must manage industrial relations to control the effects on inflation.

 

Recent Changes

With the election of the Liberal Party there have been drastic changes to the Labour market. Due to the Liberals support of businesses in Australia many changes have been made to more directly benefit the employers and business owners in Australia.

Labour’s policies on Workplace

The Labour Party which was elected before the Howard Government implemented strong polices to protect employees from issues such as unfair dismissal. Their policies of the Workplace Relations Act 1996 increased productivity and the GDP as seen in Appendix

There three main aims were (Appendix B):

• “Awards were [to] be retained as the benchmark against which employment contracts will be judged.”

• Introduction of Australian Workplace Agreements (AWA). These contracts meant that they could have a “formalised individual agreement” and as seen in the extract from Appendix E allows for bargaining agents.

• Reduce Union Power by removing unionist preferences and allow for more competing unions to enter the Labour Market.

The Liberals have altered Workplace Agreements to only 20 enforceable matters. These include the minimum wage, sick leave, maternity leave etc.

These changes brought greater productivity, as seen in the diagram from Appendix C on labour productivity where productivity has been climbing steeper since 1996 thus increasing living standards. It has also increased overseas competition of our products and thus greater wage outcomes and employment friendly environment.

Liberal’s Policies on Workplace

Workplace Relations Amendment (Work Choices) Bill 2005

https://www.workchoices.gov.au/

Work Choices was established to hand greater control of industrial relations to the federal government. It has seen many changes from the original Workplace Relations Bill. A more in-depth analysis of Work Choices can be found in Appendix B and D. As seen in Appendix D, Work Choices aims to:

• Abolish state Industrial Relations systems
• Exempt employers with under 100 employees from unfair dismissal
• Diminish the power of the AIRC with the AFPC
• Enable employers to undercut Collective Enterprise Agreements with AWA’s.

The reason for the amendment was to create a more efficient labour market. As seen in Appendix C, with unemployment as low as 4.4% seasonally adjusted in April 2007 a more efficient distribution of resources (especially labour) is needed to increase productivity. The increase of productivity and living standards is another long-term goal of Work Choices. On the short-term, though, Work Choices looks at smoothing out the fluctuations of the business cycle especially by controlling key economic indictors such as inflation. One such way of doing this is through the AFPC.

The Australian Fair Pay Commission (AFPC) sets and adjusts the minimal wages and casual loadings for employees. As seen in Appendix C, it is an independent, statutory body “established under the ‘Workplace Relations Amendment (Work Choices) Act 2005’ on the 14th December.” This commission replaced the Australian Industrial Relations Commission (AIRC) Safety Net, though the AIRC still retains the role of dealing with employment disputes.

The AIRC safety net did not immediately apply to all awards, first needing the confirmation of the trade unions before they were applied. The APFC on the other hand does not need this approval, and their decision is immediately effective across the board. Also with the AFPC, minimal pay can be set that would benefit the economy in general, looking at figures such as inflation and unemployment, rather than just benefiting the workers and looking at employee/employer relations. It is through the APFC that the government are trying to smooth out the fluctuations of the business cycle that were not addressed by the old system.

Conclusion

In conclusion it can be seen that Workplace Relations affect the economy as a whole.

Workplace Relations is a contemporary issue which affects the relations between employers and employees as well as wage levels which have can effect on the Economy of Australian.

Bibliography

• Bulmer, J. (2007). Update Economics B. Nahroonga NSW:Bulmer Chapman & Co Pty Ltd

• McConnel, J. Nailon, K. Johnston, C. (1996).  Economic Activity Book 2.

• Skulley, M. Rollins, A. (2007). “Union Wage Claims Threat to Employers.” Australian Financial Review. 30th March

Appendix A

Skulley, M. Rollins, A. (2007). Union Wage Claims Threat to Employers. Australian Financial Review. 30th March, pg 18

Appendix B

Bulmer, J. (2007). Update Economics B. Nahroonga NSW:Bulmer Chapman & Co Pty Ltd

Appendix C

Chart 2: Per capita GDP growth comparisons

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