Is enterprise bargaining really dead?
By Steve Champion…or just not feeling all that well?
Labor has seized on the relatively recent FWC decision to reduce penalty rates in many service sector awards (retail, fast food, hospitality etc) as adding to the problem of low wages growth. However, the fact that the penalty rates decision has yet to be substantially implemented (due to phasing) shows that this is not the cause of low wages growth, just another factor for consideration.
Bill Shorten recently just stopped short of giving unions licence to start industrial campaigns to force up wages, saying at a recent National Press Club luncheon - "The wages system is not delivering, and it's not just cuts to penalty rates, or the exploitation of labour hire. Enterprise bargaining is on life support....Labor would 'put the bargaining back into enterprise bargaining".
What other factors are at play in dampening enterprise bargaining?
Try googling the article heading (i.e. is enterprise bargaining dead?) and you will find a wealth of articles over the last 6 to 12 months asking this very question. Our own website traced a dismal spiral of decisions involving the Fair Work Commission's (FWC) application of the BOOT - the Better Off Overall Test. See our article list here for our recent commentary, including the observation that business efficiency was suffering due to the current BOOT and its application by the FWC.
The proportion of the population engaged in the services sector has grown to now be at least 61.1% of GDP and almost 80% of total industry output. So when services sneezes, the Australian economy gets pneumonia!
Our recent experience within areas of the services sector such as QSRs, is that the application of the BOOT continues to be a major impediment to new enterprise agreements, with more and more employers willing to revert to award conditions - or near to them (see recent Dominos Pizza vote to approve a new agreement(link is external)).
The less variation that can be made to award conditions in order to pass the BOOT, then the less motivated employers will be to go through all the hard work of doing an agreement to begin with.
The one major benefit of an enterprise agreement is that it prevents industrial action being taken during its life, but with low levels of industrial action in the Australian economy and particularly in QSR’s, retail and hospitality, that benefit has a significantly reduced value to employers.
Access to advanced, cost effective cloud-based payroll software programs already allows many QSR employers to avoid much of the administrative workload in ensuring they are paying employees correctly. Previously, this was achieved by enterprise agreements and 'loaded rate' agreements (i.e. where penalty rates were exchanged for higher weekly base rates).
The way forward?
With little likelihood of the current Federal Government wanting to take on an industrial relations agenda, the BOOT is unlikely to be changed, meaning more and more workers previously covered by enterprise agreements are likely to revert to award conditions. In an economy with reduced levels of industrial activity and union membership, industrial action is less likely to become an issue as a result of not having an unexpired enterprise agreement.
What is clear is that the current level of political debate, and the sort of thinking that got us to where we are at present, isn't going to solve Australia's current problems of economic and social uncertainty.
