Future of Collective Bargaining on the Brink

Collective bargaining in private sector workplaces could be almost extinct by 2030 under current rules, new research from the Centre for Future Work shows.

Australia’s enterprise bargaining system is rapidly crumbling in private sector workplaces, according to dramatic findings from a report released today by the Centre.

Key Findings

  • the number of current enterprise agreements in private Australian businesses has collapsed by 46% since the end of 2013
  • the number of private sector workers covered by enterprise agreements has plunged 34% in the same time
  • in 2017, just 12% of employed private sector workers were covered by an enterprise agreement – down from 19% in 2013
  • the report provides a forward simulation of enterprise agreement-making if current trends in renewals, new agreements, and terminations continue, indicating that the total number of private sector enterprise agreements would fall by half (to below 6000) by 2023, and the proportion of private sector workers covered by agreements would fall below 6%.
  • a number of simultaneous trends have put the future of private sector bargaining in jeopardy: the sharp drop-off of renewals of expired enterprise agreements, the virtual disappearance of newly negotiated agreements; and a surge in terminations of agreements.

“The dramatic downturn in collective bargaining in Australian workplaces reflects a number of simultaneous trends, creating a ‘perfect storm’ that jeopardises the future of private sector bargaining,” said Alison Pennington, economist at the Centre for Future Work.

“It is no exaggeration to conclude that collective bargaining in private businesses will go extinct in coming years if these devastating trends are not reversed.

“Our simulation shows that without a change in direction, the situation will only get worse. Less than 1700 agreements would survive to 2030, when only 2% of private sector workers would be covered by a collective agreement.

“The accelerated collapse of enterprise bargaining in the private sector has been a key cause of the unprecedented weakness in wage growth experienced in Australia since 2013.

“When workers have no collective voice or collective bargaining power, they have no chance of successfully negotiating better wage increases from their employers.

“The evidence is overwhelming that Australia’s current system of collective bargaining is completely inadequate for representing workers in our evolving economy, with an increasingly fragmented labour market.

“A viable collective bargaining system is essential to shared prosperity, but it will require far-reaching changes to the current rules to keep collective bargaining alive.”

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