Business Council of Australia Research Confirms Centre for Future Work Research

The Business Council of Australia (BCA) has today released a report which confirms trends described in earlier research by the Australia Institute’s Centre for Future Work.

However, the BCA’s expressed concern for ‘the future of bargaining’ contradicts its support for the Government’s omnibus bill which will further undermine genuine bargaining and suppress already record-low wage growth.

“The Business Council of Australia celebrates the benefits of enterprise agreement (EA) coverage by comparing higher average wage outcomes obtained under EAs with other pay-setting methods. Ironically, this endorsement is offered in their support for the Government’s omnibus IR Bill which will result in an enterprise bargaining system involving less union representation and reduced scrutiny of sub-par EAs by the regulator,” said Alison Pennington, senior economist at the Australia Institute’s Centre for Future Work.

“However, empirical data proves union representation is essential to achieving higher wage gains in EAs – the very advantage that the Business Council of Australia extolls.

“By weakening the ‘better off overall test’ (BOOT), watering down scrutiny and approval processes, and introducing 21-day approval deadlines, the government’s IR Bill will accelerate growth in non-union EAs. For the last 10 years, non-union EAs have delivered lower wage increases than union-covered EAs. Alarmingly, the majority of non-union EAs have not specified any wage increases at all.

“These sub-par EAs are what the business lobby want more of, but they will not ‘save’ enterprise bargaining. More non-union EAs will come at the expense of genuine collective bargaining, and would produce a decline in average wage increases for EA-covered workers.

“In fact, the BCA’s proposals would take the “bargaining” out of enterprise bargaining, and wage increases out of enterprise agreements.

“Do not be fooled by business lobbyist ‘complexity’ claims. The collapse of enterprise bargaining in the private sector is due to long-term structural factors including de-unionisation, employer resistance to genuine bargaining, full legal protection for free-riding, and failure of the Fair Work Act to support genuine bargaining in EA formation.

“The current EA system has produced a long-term decline in independent employee representation, especially in the private sector.

“Rebuilding collective bargaining and arresting wage stagnation will require a very different direction in reforming Australia’s IR laws, including the phase-out of non-union EAs, genuine review and approval processes, and multi-employer and sectoral bargaining.”

Key findings from Centre for Future Work research:

  • Omnibus IR Bill will accelerate non-union agreements and further reduce wage growth,  report here.
  • Employer proposals would take the bargaining out of collective bargaining, report here.
  • Australia’s enterprise bargaining system is crumbling rapidly in private sector workplaces, report here.

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