IR reform key to recovery

For several weeks now, the government has clearly been floating balloons in the IR space in looking at paths to economic recovery. The government has already introduced some temporary changes to the Fair Work Act, early in the coronavirus crisis.

Although these changes are good ones (mostly focused on reducing restrictions on who can do what, when and where), more needs to be done.

As Judith Sloan pointed out in the CIS publication Industrial Relations in a Post-COVID World, our current system locks some workers out of the job market, and thereby keeps them in poverty.

This is especially true for young workers in regional areas, who face a far higher unemployment rate than more experienced and skilled workers.

The system disincentivises businesses from taking on staff, pushing them instead to invest in technology — with no better example than Australia’s accelerated take-up of automated checkouts.

There are also real issues that need to resolved in relation to the status of long-term casual workers and independent contractors engaged with technology companies like Uber.

As Sloan argues, one obvious priority must be to establish a firm definition of ‘casual worker’ in the Fair Work Act to avoid a situation where employers seeking to re-engage their workforce are hesitant to take on casuals, but lack the certainty necessary to take on permanent staff.

The prospect of casual staff being entitled to both leave entitlements and casual loading (which is paid in lieu of leave entitlements) needs to be resolved.

There should also be reform of the ‘better off overall test’ (or BOOT); currently interpreted as prohibiting an enterprise agreement unless every worker would be better off.

A better alternative may be, as Sloan argues, a no-disadvantage test averaged across the entire workforce. This would not only simplify matters for employers, it would also give unions something to bargain with.

Moreover, it would treat workers as people with agency, capable of making their own decisions and trade-offs on their working conditions.

While concerns over wage theft and exploitation are valid – and these actions should rightly be policed – that others are committing crimes is no excuse for preventing willing workers and honest employers from coming to their own agreements.

Instead of protecting existing vested interests in the system, trusting that workers can and will make choices in their own best interests must be the thought that guide our efforts of reform.

This is an edited excerpt of an opinion piece published in The Canberra Times as Does this government have the guts to take on IR reform?.