The Australian newspaper has been running one of their not-very-subtle campaigns for ‘reform’ of industrial relations laws, blaming the current laws (which partially rolled back Workchoices) for declining productivity. Today’s they’ve made it the main front page story, with a headline saying – Lucky to lazy country: review industrial relations laws to stop decline, says Glenn Stevens – drawing from commentary to a Parliamentary Committee yesterday by the Reserve Bank Governor.
I haven’t seen the whole transcript from the Committee proceedings, but the quotes of Glenn Stevens in the article which follows don’t reflect the thrust of the headline. Stevens is reported as saying that
business people he spoke to believed that the government’s industrial relations reforms, imposed to replace the Howard government’s Work Choices regime, had reduced the flexibility of the workforce. “They might be wrong in their assessment of the system, but I think there are people who feel that. If they are wrong, then it would be good to get the heads together and show how the system is actually very flexible, because I think there are people whose instinct is that it has gone back the other way.”
the closest any reported comment of his comes to matching the headline is
that we should be giving careful consideration to these matters but, by all means, on as rigorous evidence as we can find.
The final eight words of Mr Stevens are the most crucial ones. Industrial relations is one the few areas where there is a discernible ideological divide, which obviously influences how people approach the debate, but it is still both possible and desirable to have that debate based on evidence. Any newspaper or any person is entitled to highlight an issue they believe is important, but it helps if there is evidence provided, rather than just repeated assertion.
It is the case that statistics showing a productivity decline, particular in certain industries. But I haven’t seen any evidence showing any causal link between this decline and any of the changes to industrial relations laws. In fact declining productivity also occurred during the period when Workchoices was in full operation. There is also a regular assertion that the changes the current government made to Workchoices actually completely removed it and took things back to the pre-Howard era, which is also not correct. A number of components of Workchoices were kept in place or only partially amended, without even taking the laws all the way back to the pre-Workchoices Howard era laws (which were predominantly based on the laws implemented via an agreement reached between Peter Reith and Cheryl Kernot in 1997.)
The issue is also often presented in a way which shows the new laws providing too much regulation and impeding flexibility. I always find this assertion particularly grating, as it promotes the myth that Workchoices reduced regulation. It actually significantly increased regulation, it’s just that most of it was targeted at restricting the activities of unions. It also explicitly constrained the right to negotiate, including what could be negotiated about – hardly a good example of increased flexibility.
Information from the Australian Bureau of Statistics show that average productivity over the period 1998-99 to 2008-09 was -0.1%, but with wide variances between different industries (with mining and electricity, gas, water and waste services the worst performers, and agriculture, fishing and forestry being the best). Even these measures have their limitations as not all industries, in particular the vital services industry, are difficult to measure in any meaningful sense.
But looking at statistics for just the final five years of the above period, it shows an average annual decline of -0.2%. This was for the years 2003-04 to 2007-08, which covers the period when Workchoices was operational.
Of course, productivity measures should never be the sole criteria in judging whether or not a proposal or policy is a good idea. Something I think should also be a key factor is the potential impact of a policy on the security of the wages and conditions especially of lower paid workers.
I have experienced plenty of instances where union officials and industry bodies have been able to work together constructively and reach at least partial agreement on acceptable changes, whether that be in legislation or in operations and practices. But every one of these instances have only worked when each side was working on a basis of credible information. When there is just sloganeering backed up by nothing but assertion, reaching agreement is virtually impossible. Which relates to what I thought was the most important part of Glenn Stevens’ reported comments, about the benefits of getting heads together.
In the current political climate, that is never going to happen, although no doubt in some areas unions and business are working together constructively on a day to day basis, outside the line of political fire.