Industrial relations & productivity

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.

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  1. Andrew,

    Does Glenn Stevens and his RBA Board have any credibility? Glenn Stevens told the inquiry yesterday that the RBA Board knew of the corruption scandal in 2007 with their currency printing business.

    They did not call the Police, and hid behind an ‘internal investigation’ . This is not the process when fraud and corruption takes place is it? It was not reported to Police for another two years, when a newspaper broke the story?

    I would be asking if the RBA Governor and Board needs replacing over this issue.

  2. I note that the 7.30 null under ulman ran with the oo’s version of events last night (29/8) as well, although they took it a step further and refused to even acknowledge that Stevens had clarified his remarks, and left the viewer with the impression that he also considered the new laws to be too restrictive. This was also amongst many other false claims in a story that has taken the 7.30 null to new lows

  3. I tend to agree with Andrew’s take on industrial relations issues and productivity.

    When workers don’t feel valued, they suffer from low morale and are more prone to be less productive. There may also be more conflicts in the workplace, possibly resulting in more mistakes being made.

    The teaching of “Me Syndrome” for over 30 years has also mitigated against workers co-operating as a team in the workplace to achieve the best results.

    The Productivity Commission’s recent report into Aged Care left a lot to be desired, without due consideration being given to increasing low wages and improving working conditions.

    My mother died in a corporate run aged care centre only 3 months ago. At that time, nurses and ancillary workers were suffering not only from Mondayitis, but Everydayitis, due to very heavy workloads and poor access to adequate remuneration.

    I asked a shop assistant at Woolworths for help in unionising the workplace. When she had completed the task and achieved 100% unionisation, the Shop Assistants’ Union still could not get anywhere with the Slave Labor Party on improvements to wages and conditions. This was because the ALP primarily cares about empowering big business over both workers and small business people.

    I think employers are used to having access to an exceedingly flexible workforce, many of whom have to sacrifice weekend time with family and friends to be on the job. With the demise of full-time jobs, lots of workers have had to accept grossly inferior working conditions.

    I would like to see teenagers remain at school until parents are available to supervise them at home. Keeping older students at school where they can go to sports or music practice sessions, study in the library or enjoy a coffee shop style arrangement should improve educational outcomes, reduce vandalism, drug/alcohol abuse and unplanned pregnancies, while increasing full-time job opportunities and better working conditions for people seeking full-time work.

  4. Lorikeet – I’m sorry to hear of your mother’s passing, and I can only begin to imagine how you must be feeling about the quality of her care under those circumstances. Best wishes.

  5. Thanks, Feral.

    I still feel certain that Kevin Rudd did a deal with The Macquarie Group to supply them with cheap slave labour from abroad to:

    1. hold wages down.
    2. enable them to progressively take over aged care using the profits.
    3. deliberately create religious and racial tensions.

  6. lorikeet
    sorry to here about your mother and i sympathize with you i watched my mother inlaw go in care for four years the care was good but you are correct most workers want to be appreciated as much as they need more money .
    a friend of mine works for a small cleaning company they say that most of the people applying for simple cleaning jobs now are not worth employing even on low wages . legacy of recent govts agenda to bring down the wage and standard of living in this country .

  7. Thanks, Red Crab.

    An 80-year-old man I met on Monday said he was once the President of the Australian Institute of Political Science. He said he had been a lifetime member of the ALP, and once ran for the seat of Macarthur in NSW.

    He thought the riotting, large scale vandalism and pillaging that occurred in London not long ago (e.g. Tottenham) was primarily caused by an unemployment rate of 30% in the under-25 age group. I think we can all easily understand why this might have been a big contributor.

    He said he agreed with Gough Whitlam signing the Lima Declaration (1975) and Paul Keating signing the General Agreement on Tariffs and Trade over to the UN in the 1990s.

    But when I asked him what he thought of nearly all of our manufacturing industries moving offshore and creating unemployment, and also foreign debt rising every year, this was his answer:

    “Throughout the world, human nature is very bad.”

    He said he was also upset by the social recidivism into which the Australian society has been slipping.

    I told him I thought international actions on the part of Whitlam and Keating had led to the ongoing “delegation of our national sovereignty” and concomitant economic decline.

    I applied the same concept to the UK and the horror that has recently happened there, also huge economic problems throughout the EEU and USA.

    I am told that the Australian government’s benchmark on unemployment is a person having access to less than 3 hours work a week.

    In his address to the NPC, Professor Michael Spence (Nobel Laureate Economist) supported the delegation of our national sovereignty, but said we might need to engage in trade protectionism once our unemployment rate hit 9%.

    Using the government’s benchmark, I think our actual unemployment rate would be higher than 9% already. Every year there also seem to be more and more people living on the streets and an increasing number of families struggling to feed their children.

  8. Likewise Lorikeet, lost my own mum from cancer a few years ago.
    Again this “flexible” b-llshit?
    Workers are human beings, not just flexible rubber Gumbies to be twisted,crumpled or bent to the will of greedy exploiters.
    How long before this country returns to the feudalist era, I wonder?

  9. so why are our elected leaders not studying what has happened there and not making the same mistakes here
    are they not intelligent enough to see what almost everyone elce can see
    we seem to be a nation of fools who are intent on prooving to the world that we can do better than them and we can make things work that have failed conclusively every where they have been tried .
    i think in Britain,s case the govt is doing the same thing here they are not just creating the unemployed they are creating a group of unemployable.
    people .
    if anyone thinks that it couldn’t happen here id say they take a good look at our history
    if it did happen here it would make the London riots look like childs play

  10. I think we all know that our government blindly (blithely) follows the USA in everything it does, no matter how stupid it is.

    I recently had access to the Australian trade union manifesto (whatever it is called) and it sounded very good. Then someone else said it bore little resemblance to what is actually happening in the workplace, where workers are assessed as if they are only useful (or broken down) productivity machines.

    He said employers are looking very carefully at Sick Leave Records and Workers’ Compensation Claims before employing anyone. This is probably a large part of the reason that over-50s are not wanted in the workplace.

    At the same time as the government has decided to collect a Disability Tax from pay packets and an Injury Tax as part of car running costs, they are also cutting off as many Disability Support Pensioners as possible, starting with the under-35s.

    To my knowledge, some doctors are putting older unemployed people on DSP because they cannot survive economically on unemployment benefits.

    Althought the DLP supports a National Disability Insurance Scheme, I now have to wonder where the money being collected will go with the Slave Labor Party in charge!

  11. Lorikeet the ABS definition of “employed” is one hour of work paid or unpaid per week. If you are studying, on a work program or unable to start work tomorrow you are not “unemployed”

  12. Billie:

    I know it used to be only 1 hour of work a week, but someone told me recently that it had changed to 3 hours.

  13. Keeping teenagers at school until adults are available at home would have another benefit. It would give young people extra time with the peer group to discuss their personal problems. I think we all know that teenagers are sometimes reluctant to discuss their problems with school counsellors.

    My youngest son (now 19) sometimes stayed back after school to support friends who had become suicidal due to relationship breakdowns (either their own or those of their parents).

    For 18 months, he has been studying Psychology/Law and recently switched to a degree in Counter-Terrorism which had almost all of the same subjects in the early part of the course. He seems to have developed this interest as a result of attending a number of funerals of young people who have died as a result of drug overdoses.

  14. Although there are some serious issues with the modern award system. For example many industries lost their industry specific award and are now under a generic award that may not suit the reality of their industry. Another problem being that Australian Workplace Agreements with a no disadvantage test are no longer available to negotiate appropriate arrangements between employer and employees. Australia’s stagnant productivity growth/slow decline is most like caused by skill shortages in our economy resulting less value per hour worked. Boom like conditions have meant that both business and workers have not been under the same pressure to be efficient and bring value to the marketplace as would have occurred in the 1990s. I believe the trend of the last decade maybe reversing as businesses are forced to bring increasing value to the marketplace to be competitive or even survive in these tough times. Equally workers in a tighter labour market are need to bring increasing value to their employers to justify their employment or to gain employment.

  15. Justin:

    I think Australians are very hard working. Some of the main problems lie with:

    1. competition from cheap imported goods made by people earning slave wages

    2. skilled workers moving offshore to countries to which our manufacturing industries have disappeared

    3. importation of foreign workers by corporates to hold wages down and keep competition for work up

    4. Kevin Rudd and Julia Gillard encouraging a Slave Labor Trade, including a Guest Worker program which uses people from Samoa, Solomon Islands, Nauru etc to work on the land. (The National Farmers Federation won the right NOT to pay penalty rates to workers in 2009.)

    5. an inferior education system which supports failure, rather than success

  16. While WorkChoices brought in by John Howard (Coalition) was a grossly inferior way of treating workers, I don’t think Labor has fixed all of the problems.

    I share Justin’s concern about Generic Awards replacing a greater variety. While these may make administration somewhat easier, how are we to know that the number of Generic Awards will not diminish over time, further disadvantaging everyone in the workplace?

    This could be an excellent way for corporates to demand an even more versatile, flexible workforce, while paying everyone less money and expecting them to work longer hours.

    I have been concerned for some time with the idea of replacing doctors with Nurse Practitioners, and giving nurses with few qualifications responsibilities above their particular station. Since these ideas are being pushed in Aged Care, and The Macquarie Bank seems to be gradually taking over the sector, this can only have negative repercussions for the elderly and their carers.

    The Labor government seems quite happy for pensioners to have to put reverse mortgages on their homes to pay a High Care bond, while not requiring service providers to return any of the proceeds to workers.

  17. According to tonight’s news, medical clinics are now being opened and fully staffed by Nurse Practitioners. That’s right. When you’re sick, you will only get to see a nurse, not a doctor!

  18. I think Justin Campbell’s cautious summary of the specific involved is realistic.
    Just noted some where a story of unions and greens combining to block imports of shoddy products, I think sub grade metal or ores, the spectrum involving as far across as to Paul Howes.
    The free trade zealots may scream protection, but it’s time Gillards government took a more grain of salt approach to neoliberal theology and win Australia back from the Philistines.

  19. I think Julia Gillard has a snowball’s chance in hell of winning back anything. Even her Nobel Prize winning communist economist saw a place for protectionism where trade is concerned.

    I think a lot of the minor parties are seriously concerned that we are becoming little more than a quarry for China, and a warehouse for imported goods. In Victoria, Senator John Madigan has found former fruit processing plants that are now only used to store canned fruits imported from China, after an Australian label has been slapped on them.

    This is happening under a federal government which claims to support a clean environment, while raw materials and value added products are shipped back and forth on a continual basis. The Victorian state parliament is also solely comprised of major party politicians.

    I heard that China lent the USA money to remove cheap junk from its overloaded docks. Apparently the European countries purchase 22% of the goods manufactured in China, while the USA purchases 18%. Now an increasing number of these countries are going broke and I think the whole world will end up having to pay back the debt via some (no doubt) circuitous method.

  20. Lorikeet – I imagine you yourself have a Degree in Nursing, and added to that a Masters degree in Nursing? You will have undertaken studies in stand alone subjects such as Pharmacology for Advanced Practice and Advanced Health Assessment and Nursing Diagnostics —? No? Then how do you feel qualified to judge whether or not Nurse Practitioners are “poorly qualified ” or not?

    Nurses don’t just gain a degree and finish studying – they are required to work a certain number of hours, and to do approved study for a certain period of time, to merely keep their registration as a nurse up to date – same as doctors and many other professions. To be a nurse practitioner you have to have demonstrated the necessary skills to order diagnostic tests and prescribe some medications, among many other things.

    Today I have to go to the doctor so she can give me a piece of paper to have a routine blood test done for thyroid levels. What a waste of a doctor’s time, when I could, if we had one, go to a nurse practitioner who could order the same test while the doctor is in the next room giving more complex cases more attention.

    It seems from what I have seen here that you have plenty of opinions, Lorikeet, But light on facts. You might want to find out a bit more before you go bagging the hard-won professional qualifications of people you clearly have no idea about. I am not a nurse, but I have some in the family and I can assure you that they work hard for their qualifications. It wouldn’t have anything to do with the fact that most nurses/n ps are female, would it?

    Visiting someone in hospital, I’m glad to say, does not necessarily qualify you to sit on the Nurses registration Board.

  21. Appy:

    At one time, I worked in the Department of Medicine of a leading university, and I have also worked for a medical specialist in private practice.

    I had a mother living in Aged Care for 7 years before she died recently, and a lot of contact with nurses. I have also tried to help the Australian Nursing Federation achieve better wages and working conditions for nurses.

    While highly qualified nurses vigorously defend their “right” to do the work of doctors, they have a completely antagonistic attitude towards those with fewer qualifications doing their own traditional work.

    A medical clinic should always have doctors available to see the patients. The clinics I was discussing had NO DOCTORS AT ALL.

    I also disagree with the very aggressive nurses who want to encourage home births over hospital births. At the last federal election, I was thinking of putting an Independent second on my voting order, until I found out she supported putting the lives of both mothers and babies at risk by encouraging home births, despite the fact our ambulance services are grossly overstretched.

    Midwives also want to attend mothers giving birth in hospitals themselves, but I consider a doctor should also be available in case of a medical emergency.

    You will never win an argument by making false assumptions about other people when you don’t know them or their knowledge base. I haven’t said that nurses are “poorly qualified”. That’s a negative construction placed on my comments by you.

    I am a woman and believe in equality between men and women. I consider you owe me an apology for expressing such sarcastic, insulting attitudes.

  22. Yeah, from what data I have seen, the current decline in productivity (starting from aeround 2001-2003) has been mostly mediated by the growth in Australia’s mining sector. Even then, the causes of this seems to be oriented toward diminishing returns, as the easier-to-get minerals are extracted, and the fact that such large profit margins are being made on the resources we are selling. Thus, this renders microeconomic reform with regards to Labour market flexibility as a bit redundant.

    The Australian (and Michael Stutchbury in particular, on this issue) has been arguing tendentiously, to say the least. But hey, what else can one expect?

  23. not to worry when the minerals run out and we have nothing left because of govts stupidity we will be left with a few big holes and most people would know that holes in the ground are worth more than you think they can be filled with other country’s rubbish and worse .
    just how dum is this country they are inflicting a carbon tax on the country while selling all our coal to other country’s for coal fired power stations .
    and on top of that they are allowing other country’s to gain full control of coal production and transport on our soil .

  24. Red Crab:

    Don’t worry, mate. Lots of people are onto the problem and at the next election, the ALP will become a minority group in the parliament.

  25. got that in one lorikeet but unfortunately the other mob is also intent in selling off everything in oz as fast as they can to.

  26. Yes, Red Crab, we all know that Liberals mostly wait for Labor to do the dirty work, and then continue on with it, generally making life harder for the poor and average in the community.

    This week’s Taxation Summit seemed to be mostly a Sleepfest, with most of the meatier issues (such as Carbon Tax and GST) left off the agenda.

    I was interested to see Professor Judith Sloan, Chairman of the National Seniors of Australia, pushing for an increase in Newstart Allowance, which has remained stagnant in dollar terms for years. She said it’s not enough for the over-50s (or anyone) to survive on.

    My guess is the government will increase Newstart Allowance and then move all of the over-50s back from Disability Support Pensions onto what will still be the lesser payment.

    I think the future under both Labor and Liberals will hold one generic allowance for everyone who cannot work, whether they are elderly, disabled or simply unemployed. A little later they will make everyone who isn’t working live off reverse mortgages on their homes (if they even own one).

    Tonight I saw past employees of Pacific Brands (who took their work offshore to Asia) and other manufacturing industries crying on national television over the demise of 52,000 jobs in the manufacturing industries in the last year alone. Two women said there is no full-time work available.

  27. I have discovered another problem with importing canned fruits from the third world. The acids in the juice can eat/leach through the can (must be an inferior steel product), leaving a really horrible black goo on your pantry shelf. Then paper lice can start breeding in it and then help themselves en masse to the breakfast cereal!

    No money is saved if you have to throw food out.

  28. Heartening to read of Judith Sloane advocating this, she tends to be regarded as to the conservative side of politics, although obviously very well read on/in some subjects.
    No, Lorikeet. Won’t leave the site without echoing your comment about some of the better stuff off the shelves and some of the crapulous guff sold for the same price, hence likely at exhorbitant mark ups.
    Do people remember the time when an Arnotts bikkie was actually a real treat?

  29. That’s right, Paul. One of my aunts used to be a part-time receptionist at the Arnott’s biscuit factory in the Brisbane CBD. I’m tired of everything being sold off to foreign ownership, and inferior products arriving from overseas.

    But how about this astounding revelation from Julia Gillard in the parliament this afternoon?

    She said she wanted to financially empower the Chinese middle class, so they could do things such as buy our wine and purchase an Australian education.

    Question: What makes her think that the Chinese (thus empowered) couldn’t grow an excellent grape, manufacture an excellent wine, and use textbooks to give their own children an excellent education???

    I’m sure no middle class Chinese parent would want a child educated in Queensland’s second rate schools. In the latest NAPLAN tests, we came 6th, beating only the Northern Territory, where people are forced to live in hovels, with no electricity or running water.

    Indian students have left our universities in droves, citing exorbitant fees, which they cannot pay due to excessive work restrictions and racial discrimination being practised by corporates.

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