New International Research Exposes Australia’s Missed Wage-boosting Opportunities

New research on international collective bargaining systems, released today in a special issue of the peer-reviewed journal, Labour and Industry, finds that Australia’s industrial relations system is rapidly losing its ability to support wages in the face of numerous challenges (now including the Omicron outbreak).

On the heels of new data showing further erosion of Australia’s collective bargaining system, researchers and practitioners from five countries have identified best practices from other countries that could strengthen collective bargaining and lift wages.

Key findings of the research include:

  • The Ardern government in New Zealand has implemented a new sector-wide bargaining system (called ‘Fair Pay Agreements’) that could be a model for similar changes in Australia. It would enhance workers’ ability to win more stable jobs and higher wages in highly fragmented industries (like security, cleaning or child care).
  • New Zealand-style reforms could also improve the effectiveness of Australia’s pay equity legislation. Recent changes in New Zealand’s pay equity system prove that wider scope for bargaining can address persistent gendered pay discrimination. One recent enterprise agreement in Australia (covering public sector workers in Victoria) has already applied that model here.
  • Nordic and continental European countries have used coordinated sectoral bargaining systems to enhance vocational training and technology adoption. Australia could learn from that experience to better integrate skills programs with secure job pathways.
  • In Germany, a combination of sector-wide bargaining over wages and other core compensation, combined with workplace-level consultations (under that country’s ‘works council’ system), produces employment outcomes that are both flexible and fair.

The final published versions of all articles in the Special Issue are available through Labour and Industry, or through your local library. Links to the following articles are available free access for 3 months (ends March 2022):

Introduction, by Alison Pennington and Jim Stanford

Sector-wide bargaining: problems and prospects in the Australian case, by Tom Roberts

Rebuilding worker power in Australia through multi-employer bargaining, by Tim Kennedy, Ben Redford, Renee Burns and Anthony Forsyth

Bargaining for pay equity: an NZ-inspired approach to gender equality in Australia, by Alison Pennington and Megan Wenlock

International approaches to solving the ‘free rider’ problem in industrial relations, by Jim Stanford

Collective bargaining’s contribution to employment skills and transitions: lessons from the Nordic countries, by Andrew Scott

The Ghent system of social insurance: a model for Australia?, by Russell Lansbury

Industry 4.0 in Germany and Australia: digital choices, human responses, by Andrew Dettmer

Unions and the evolution of trade and industry policy under the Ardern government, by Bill Rosenberg

Comment from authors:

“Australia’s workplace relations system is failing to address rising insecure work, record-low wages growth, and a persistent gender pay gap. Collective bargaining system retrenchment compounds risks in Australia’s uncoordinated, fragmented skills system. We’re failing to facilitate the millions of jobs pathways and transitions our economy needs now, and in the future,” said Alison Pennington, Senior Economist with the Australia Institute’s Centre for Future Work.

“The pandemic has deepened the structural drivers behind the gender pay gap in low-paid, insecure work. Australia has much to learn from the labour policy settings implemented in neighbouring New Zealand to meaningfully address the gender pay gap, including Fair Pay Agreements and pay equity bargaining.”

“Australian workers need an effective system of collective bargaining that goes beyond the legal entity that directly employs them. This is a vital mechanism to ensure workers have greater control over the safety of their work, across sectors, industries, franchises, labour hire arrangements, supply chains – or however work is configured,” said Tim Kennedy, Secretary of the United Workers Union.

“Australia is currently deprived of the skill formation benefits that arise from strong sectoral collective bargaining between social partners observed in Nordic nations. It’s exacerbating serious deficiencies in our skills training arrangements, evident in high rates of misalignment between jobs and skills. Australia can learn much from the Nordic countries’ superior economic and social policy outcomes that arise from well-integrated skills and collective bargaining systems,” said Andrew Scott, Professor of Politics and Policy at Deakin University and Convenor of The Australia Institute’s Nordic Policy Centre.