The politics of industrial relations

Politics is all about compromise and trade-offs. Sensible politicians target the median voter not the extremists on either side. On that test, Labors IR package seems to get it about right. Moreover the proposed changes are transparent for all to see and contain a lot more detail than Mr. Howard ever put to the people prior to the last election.

In my view, the revised IR package allows for considerable flexibility and its core is enterprise bargaining. It should ease the legitimate concerns of labour economists about potential job losses, inflation and interest rates. In fact, there is likely to be little economic impact from these reforms – even using the Econtech model much favoured by ACCI and the Government (see my earlier posting and addendum).

And the Rudd package reassures business that under Labor it will not be exposed to union bullies. In fact, trade unions will clearly be much less potent under Rudd than they were even under Keating.

Nonetheless, and not surprisingly, the announcement by Rudd and Gillard is being greeted with strong criticisms from both sides of the spectrum.

I glanced this morning at the Kevin07 web site and it is clear that the Rudd/Gillard IR package has been very badly received by left wing critics. They believe that Rudd has now swung the balance too far back to employers and betrayed workers. Many are threatening to vote for the Greens.

These critics forget that Rudd is offering a stronger worker protection safety net for low paid workers, more scope for collective bargaining, an independent arbiter and unfair dismissals laws. On the conventional Left wing views of fairness, it is surely a much fairer system than WorkChoices.

Critics on the Right who want to retain and even radicalize WorkChoices are adopting a different line of attack. They claim that Rudd has not gone far enough with his concessions and that trade unions will be sure to pressure a future Labor Government into giving them even more freedom. This may well happen but there is nothing in the recent history of Labor governments to suggest that a Rudd government will not be able to stand up to them on fundamentals.

Moreover the tables can be turned on these right-wing critics by pointing to comments by Peter Hendy (of the Australian Chamber of Commerce and Industry) on 29 May 2007 that “the new fairness test is unnecessary” and that the new system will have to be monitored” as “it definitely means more red tape for business (ACCI transcript). This suggests that the ACCI will be pressuring a re-elected Howard Government to retreat from the fairness test.

I doubt that business will succeed in getting its way under a Howard government but the risk is surely as great as the risk of a Rudd government succumbing to union pressure.

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cs
cs
14 years ago

I agree Fred. Rudd Labor’s IR policy may be less than ideal, but it remains a substantial step forward on WorkChoices. Moreover, I don’t think this election should be considered as, sort of, the last vote we will ever have on the matter – which seems to be the mindset of some critics. In the event of a Rudd victory, we can look forward to substantial ongoing IR debate, and the likelihood of another policy being formulated in the run-up to the following election.

If Howard is re-elected, on the other hand, who knows what will happen. Given the secrecy with which WorkChoices was smuggled past the last election, any draconian thing would be possible.

wilful
wilful
14 years ago

Many are threatening to vote for the Greens.

I love preferential voting.

Sacha
Sacha
14 years ago

I can’t see any such Green voter preferencing the Coalition ahead of Labor. The only impact such Green votes would have would be to increase the Greens senate vote at the expense of the Labor senate vote, which may help to bring about more “left” IR policy but only if the Coalition votes against the Labor IR policy.

Oz
Oz
14 years ago

You mean non-optional preferential voting wilful (though it’s fun to stuff up the Coalition when its optional preferencing).

I have to say though that I’m disappointed with right of entry. It should be allowed within reasonable limits. If it’s clear that there’s been disruption at a workplace without legitimate reasons then maybe right of entry at the site should be reviewed.

I don’t think anyone who had any sense thought that Labor was going to turn back the clock entirely. I thought they were going to dump unfair dismissal for small businesses entirely.

amused
amused
14 years ago

I wonder if Fred thinks the new policy on small business being able to dismiss employees with impunity (no access to any review) provided they have reported the employee to the police for alleged theft or workplace violence, is somehow ‘balanced’? Unless the report in today’s Government Gazette (p1) is completely wrong, I am utterly gobsmacked, and that’s saying something.

Tell me Fred, is there ever going to be a limit to the absolute determination of employers (and the anxiety to smooth their paths by well meaning commentators), to the contemporary drive to extirpate any and every basic right and liberty a citizen has, once they enter a contract of service, and find themselves in the civil right free zone of the workplace? I mean, I would be genuinely interested in your take on this latest piece of unbelievable 18th century claptrap touted as ‘fair and reasonable’ that hapless employees of under capitalised and anxious ‘small and medium sized business’ will now have to endure. Already in some quite large organisations, communications between employees about employment matters are being treated as ‘breaches of codes of conduct’, not on the grounds of any abuse or untoward language, but simply on the grounds that employers apparently believe these days that they are entitled to censor (on grounds unrelated to impropriety of any kind) their employees lawful communications. I am over this authoritarianism masquerading as ‘concern’ for the property rights of employers, well and truly, and I suspect that many people feel the same way. I am also ‘over’ anxious small ‘l’ liberals finding excuse after excuse for the extermination of just about every liberal value worthy of the name, on the basis of some mythical notion of the ‘centre’.

Nicholas Gruen
Admin
14 years ago

Fred, based on comments you’ve made previously, I didn’t think you were much of a fan of unfair dismissals laws. Personally I think that considered on their own they’re an outrage – a bit like fault based divorce – but I guess you may need them as means of preventing rogue employers from avoiding other IR obligations for which one might believe there is a case.

amused
amused
14 years ago

Well by all means let’s get rid of unfair dismissal laws altogether, provided that employers are not permitted to inquire the reason a prospective employee left their previous employment, and provided that anyone dismissed has access to automatic, no questions asked, generous and immediate income support from Centrelink, upon presenting evidence of dismissal, eh? If you think this is all fanciful, then I am at a loss to know why you think one person should have the automatic right (that is, the right not to provide any reason at all) for removing a person’s income from them? I mean if a ‘job’ is a privelege extended at the ‘sole will’ of the employer, to be withdrawn at will, fair enough, but some means will have to be found to support people who find themselves (through no fault of their own) subject to that will, without lawful means of support as a result. Or do you subscribe to the view that a little bit of dismissal ‘fear stick’ is a necessary spur to the deference appropriate to the prevention of unseemly feelings of entitlement, and as a handy by product, would add to savings as people calculated and saved up against the likely time between gigs?

cs
cs
14 years ago

Unfair dismissal laws are a crucial restraint on pernicious employers. The Australian tradition is that you are employed to do the job, and how well you do the job is the basis of your continuing employment. You are not employed on the basis of whether you like the employer, with your continuing employment depending on how well you continue to suck up to the bosses’ indulgences, ego and ideology. It is the opposite to fault based divorce, for unfair dismissal protection presumes that you do not have to marry the boss in the first place. Unfair dismissal recognises that Jack and Jill are as good as their master and only the quality of their work counts, not the tyrannical master’s “workplace culture”.

Bingo Bango Boingo
Bingo Bango Boingo
14 years ago

“Unfair dismissal recognises that Jack and Jill are as good as their master and only the quality of their work counts, not the tyrannical masters workplace culture.

That’s fair enough, cs. But if the master’s fear that unfair dismissal laws will be abused by pernicious staff deters him or her from hiring in the first place, it doesn’t really help, does it? I like the marriage analogies, by the way. I’ve got another one: with unfair dismissal laws, you don’t have to marry the boss, but they have to marry you.

Cheers
BBB

Jc
Jc
14 years ago

“Unfair dismissal laws are a crucial restraint on pernicious employers. ”

Every employer does his best to get rid of his better employees. How else does one maintain losses and hope the stock goes to zero in record time. (Yes it’s bizarro world i am talking about)

“It is the opposite to fault based divorce….”

It may be, but at least under current divorce laws you don’t have to show cause.

“for unfair dismissal protection presumes that you do not have to marry the boss in the first place.”

Exacly. i agree don’t marry the boss, because under Labor’s proposals you’ll get far more protection than the marriage act.

“Unfair dismissal recognises that Jack and Jill are as good as their master and only the quality of their work counts, not the tyrannical masters workplace culture.”

Of course the tyrant bosses only come out when the coalition is in power. The press has a front page story every day telling us how employers use whips and chains to beat their best employees. It’s slavery i tell you.

LOL

Hey, Cs have you ever worked in the private sector to shows the scars of all the beatings you sufferd?

I love the irony. Is the novel going to be a comedy or quasi biographical?

Jc
Jc
14 years ago

You beat me too it BBB. Darn.

I think CS, you would be better off trying a private sector job and see what actually does go on instead of picking up little “factoids” here and there that have no resemblance to reality. It could even be a waiters job for a while. You really have no idea.

Don’t be scared.

cs
cs
14 years ago

Hey JC, have you ever worked a day in your life or have you always been a bosses suckhole?

If the master wants to have the freedom to dismiss employees unfairly, he or she can just do the bloody work themself and everyone is happy.

Fred Argy
Fred Argy
14 years ago

This post is stirring some interesting debate on unfair dismissals. I look at all issues of labour market deregulation in terms of efficiency (including employment) and equity (including quality of life).

Often there is a trade-off between these two and decisions become value-based. On this occasion, the choice is fairly clear. The basic reason is that the efficiency and employment costs of modest hiring and firing regulations seem very small while the benefits for worker well-being seem high.

On the efficiency impact, four facts stand out:
– Unfair dismissals policies impact on inflows and outflows and a priori it is not evident which prevails;
– Australia was already among the three or four least restrictive countries on hiring and firing regulations EVEN BEFORE WORKCHOICES;
– When one deregulates from such a low base, the returns are far from obvious: the southern continental countries, as well as France and Germany, may benefit from some liberalization but once one gets down to the levels of regulation in the Scandinavian and smaller European countries, the economic benefits seem to become invisible;
– That may explain why there is no clear correlation between levels of employment protection regulation and aggregate employment (there is some effect on the composition of employment but not on aggregates); Derrida Derrider has written on this topic (I forget where).

As for the equity effects, I think there is plenty of evidence that, within a firm, perceived income and job security, predictable working hours and a degree of control over pace of work, tasks and working environment are all things valued highly by workers according to happiness surveys. [This perception could turn out to be wrong in practice if it led to a weaker job market overall but will it?]

In short, I believe unfair dismissals laws of the modest kind we had in Australia before WorkChoices do no damage to the economy and make vulnerable workers (those with little individual bargaining power) much happier. As it happens Labor is offering less protection on hiring and firing than existed before WorkChoices.

Mr Denmore
Mr Denmore
14 years ago

What annoys me about the IR debate is the presumption in some quarters that the bosses are entitled to have everything their way. There is a word for this. And it was abolished in the 19th century.

Politics is about compromise. The fact that neither the unions nor the employers are totally happy with his package suggests to me that he has got it pretty close to right. Howard, on the other hand, is on an ideological crusade against workers’ rights that will lead to his downfall.

People’s innate sense of justice has been aroused.

Jc
Jc
14 years ago

You’re right Jacques and no matter what laws you put in place you will always have those sorts of people. The proposed dogs breakfast of Labor’s IR laws will prove it to be the case anyway with the added insult that the labor market will narrow again.

—————

CS says:
“Hey JC, have you ever worked a day in your life or have you always been a bosses suckhole?”

I have worked all my adult life aftr uni, CS- including the present. I always teated fellow employees with respect and tried to pay them as much as I could and offer them a great working environment. It’s the only way you get the best out of people. I have cut cheques out of my own funds to pay end of year bonuses for admin staff who I thought deserved more.

I do think you’re projecting a little when suggesting I am a suckhole to bosses. Man, i thought that sort of attitude went of fashion in the 70’s and 80’s. You seem to still be hankering for those times Mr. Shop steward.

CS, I don’t mean in the wrong way, but I do suggest you ought to try a private sector job for a while and see what it is like to work in that environment.You seem to have develeped this attitude from living a closeted existence for so long. Try it, it could help you open some doors to the outside world.

IR laws:

The thing workers fear most is not being able to find another job. Free labor markets are the best possible outcome for workers as it has the effect of opening the door to increased opportunities. That’s the best possible protection for employees.

Nicholas Gruen
Admin
14 years ago

Fred,

You’ve written

In short, I believe unfair dismissals laws of the modest kind we had in Australia before WorkChoices do no damage to the economy and make vulnerable workers (those with little individual bargaining power) much happier. As it happens Labor is offering less protection on hiring and firing than existed before WorkChoices.

I don’t think that the unfair dismissal laws were at least in spirit particularly odious – at least by comparison with other countries. And I can accept them if they are required to prevent rogue employers breaking other aspects of an IR regime I might support. But what practical experience I’ve had with them suggests that they mostly favour those who game the system.

But as I tried to outline in this column, simply trying to work out what their effect is in any single instance, one is left choosing the interests of the insider – the worker with the job – ahead of the worker who would get the job of the sacked worker. We dress it up with lots of fine thinking emotions, concern for the worker etc, but it’s really the concern for the worker you can see at the expense of the worker you can’t.

In that sense it’s not unlike supporting tariffs or any special assistance because one can see all the good it’s doing (leaving the harm pretty much invisible).

Jc
Jc
14 years ago

“In short, I believe unfair dismissals laws of the modest kind we had in Australia before WorkChoices do no damage to the economy and make vulnerable workers (those with little individual bargaining power) much happier.”

Fred:

You writing this with a straight keyboard , right? You’re serious?

“Australia was already among the three or four least restrictive countries on hiring and firing regulations EVEN BEFORE WORKCHOICES;”

Nice trick. Who does that take in? ALL of Western Euro and the US perhaps? How about including the nations firing on all pistons at the moment in Asia?

Bingo Bango Boingo
Bingo Bango Boingo
14 years ago

Oh dear, the s word. Mr Denmore, please provide some evidence for your claim that “some quarters” presume that bosses are entitled to hold slaves. Otherwise that line of yours is just rubbish. Emotive rubbish.

Cheers
BBB

James Farrell
14 years ago

Fred, based on comments youve made previously, I didnt think you were much of a fan of unfair dismissals laws.

AS I recall, Fred prefers active labour market programs to labour protection, but will settle for a degree of labour protection as second best.

…if the masters fear that unfair dismissal laws will be abused by pernicious staff deters him or her from hiring in the first place, it doesnt really help, does it?

No, but this principle doesn’t trump the principle that workers should have some protection against capricious employers. Given that we have two competing principles, the challenge is to find a workable compromise, based on as much evidence as possible — not to establish one or the other as plainly overriding on the basis of a priori reasoning.

The Democrats grasped this, and I think the ACTU did too. This briefing paper gets it right in my view.

Jc
Jc
14 years ago

Nick

You have a business. how important is it to treat good employees like they were valued in diamonds?

It seems there are lot’s of people who think good workers grow on trees.

Jc
Jc
14 years ago

“No, but this principle doesnt trump the principle that workers should have some protection against capricious employers.”

Can any of you offer evidence of how endemic this is in the private sector. How about some facts and figures to prove this quite astonishing assertion.

We also seem to hear about about, but we’re pretty short on good evidence that it is a rare oacassion than not.

Jc
Jc
14 years ago

“Otherwise that line of yours is just rubbish. Emotive rubbish.”

That’s not the half of it.

I bet that most people supporting these restrictive laws are either journalists or public sector employees for the most part who have never had any experience in the private market.

cs
cs
14 years ago

Your experience is so out of date JC, you must be a long-term dole bludger. Get a job.

Jc
Jc
14 years ago

“your experience is so out of date JC, you must be a long-term dole bludger.”

Cs, how could make such a insensitve comment in this day and age! I’m offended and feel you are creating a hostile work environment. Off to sensitivity training with you.

Get a job.

I don’t want one. I am very happy with what i do now. Notwithstanding that, why would I subject myself to periodic whippings and bashings that you allude goes on in the sweat shops of the private sector.

Jc
Jc
14 years ago

Cs:

You know the last comment makes you sound like the Homerster, don’t you?

Bingo Bango Boingo
Bingo Bango Boingo
14 years ago

Here’s another issue: say you’ve got a small business owner, Sally. Her business is doing OK. She’s at capacity. Her competitor down the road is doing better though, and is taking customers. Sally’s got four employees, all of whom are highly-educated with in-demand skills that require extensive on-the-job training to acquire. One of her employees wakes up one day and says: “You know, I think its time for a change. I want to work for someone else. Sally’s a nice enough boss, but I want out.” Although Sally has done nothing wrong, the consequences for her business are dire. She cannot stretch her remaining staff of three out to do the work of four people. She will have to let some business go until she can find a replacement and train him or her up.

In these circumstances, is there a case for unfair dismissal laws? I mean, laws that prevent unfairly dismissing the boss? If the underlying rationale for IR protection is power imbalance, then shouldn’t our laws take full account of any power imbalance that favours an employee over an employer, however rare or unlikely? If the response is: no, because the worker will give notice and that notice should be enough to find a replacement, then doesn’t that equally apply to the dismissal of a worker, so long as notice is long enough to find alternative employment?

BBB

Mr Denmore
Mr Denmore
14 years ago

bet that most people supporting these restrictive laws are either journalists or public sector employees for the most part who have never had any experience in the private market.

Jeez, you really have a hard-on for the “private market” don’t you? As if it were some God-given state of nature. Have you forgotten that the market exists only because of man-made laws?

Look at all the market libertarians currently getting bailed out by central banks (those public servants you so despise) after their Frankenstein-like experiments in the derivatives market blew up in their faces.

What you and the other increasingly marginalised, frothing-at-the-mouth libertarians ideologues behind Howard really crave is no law at all. No protection. No rights for labour. Only for capitalists.

You’d be more at home in a jungle. But some of us prefer civilisation.

Bingo Bango Boingo
Bingo Bango Boingo
14 years ago

Mr Denmore, where are these libertarians who are in favour of central bank bailouts? Do you have a quote, a link? All the libertarians I know reckon it is a really bad idea. A massive exercise in moral hazard. Your pathetic stereotypes, which bear little resemblance to reality, are getting a little old.

Cheers
BBB

amused
amused
14 years ago

I love how good employees are so valued and loved that any form of regulation is unnecessary, or else an ‘insult’ to the inherently superior ‘knowledge’ of those who can confidently speak on behalf of all employers and employees.

I am getting to love deregulation so much I think we should abolish laws against general assault. I mean, the idea that unless there were laws people would just go around bashing each other just shows how out of touch with the way real people conduct their ordinary interpersonal relationships. I mean there has to be some trade offs between busybodying interference and the efficiency of unmediated personal relationships!

BTW, Fred, you haven’t said what you think about reporting allegations of theft or assault to coppers as a sufficient and adequate ground for immunity from review, irrespective of the actual truth of the allegation? What do you think? Fair enough in the circs? I guess the low paid and the generally unskilled would be used to having some contact with law enforcement, and on those grounds it wouldn’t matter much to the kind of people that work in bars and shops eh? After all, plenty of those kinds of jobs going round, thanks to the shift to the flexible exciting and infinitely varied world of mass service sector jobs. Not like Professors, IT professionals and of course all those fabulously lively, engaging and thoroughly efficient people who work in finance (high end of course) media advertising and PR? After all, if they can afford to spend a lazt ten thou in the District or Supreme Court, they are free to do so.

Jc
Jc
14 years ago

I agree Jacques

I think Cs needs some serious sensitivity training.

————————–

Denmore

I agree with BBB. Don’t bail the fuckers out. That’s fine with me and almost all libertarians I could tbink of. We wouldn’t have these problems if our monetary policy wasn’t run by a bunch of amateur public employees and we allowed free banking that would remove moral hazard. but that’s just by the by.

What you and the other increasingly marginalised, frothing-at-the-mouth libertarians ideologues behind Howard really crave is no law at all. No protection. No rights for labour. Only for capitalists.

Well I wouldn’t say libertarians are in support of Howard. He does as a semi-social democrat have his vices that most of us find troubling. But I do agree that most of us “frothers” would support no labor laws at all with the possible exception of safety standards. You don’t need them.

I m afraid you don’t seem to appreciate the dependent relationship both capital and labor have to each other. One can’t exist without the other as they are both two of the three production inputs.

Jc
Jc
14 years ago

I love how good employees are so valued and loved that any form of regulation is unnecessary, or else an insult to the inherently superior knowledge of those who can confidently speak on behalf of all employers and employees.

Well yes, good employees don’t need protection. Let me ask you why they would?

It’s not superior knowledge, it’s understanding that a free labor market provides the best outcome and no amount of obfuscating can make a dent in that premise. All else is emotive, economic and socials quackery.

Jc
Jc
14 years ago

sorry

Only the quotes should have been on bold script.

Ken Lovell
14 years ago

Any system that tries to prevent employers dismissing workers is just silly, and this unfortunately is what happened when tribunals could order reinstatement if they found that someone had been unfairly dismissed.

However it’s a different situation when a tribunal can award monetary compensation to an unfairly dismissed worker. It’s simply a form of alternative dispute resolution when there’s a disagreement about the way in which a contract was terminated. It recognises the intangible losses that a worker incurs upon dismissal, that they can’t recover even if they get another job straight away, and compensates the worker accordingly if the dismissal was without sufficient cause.

So there’s a good argument for the remedy, but if it’s going to work fairly and effectively it has to be implemented by tribunal members with appropriate skills and impartiality … something that was not always the case with the old Industrial Relations Commission.

Jc
Jc
14 years ago

KenL
And you think Julia will appoint “impartial” tribal err, tribunal members?

Fred Argy
Fred Argy
14 years ago

Amused, in principle I agree that employers should be able to sack free of regulation if they have evidence of theft or assault which they report to the police. I doubt very much that too many small business owners (much less listed public companies) will make idle charges to the coppers about one of their employees just to be able to sack them.

I notice that Peter Hendy, chief executive of the ACCI is arguing in todays Australian that small businesses should be able to address poor performance, poor sales, poor customer relations or inability to integrate into a small workplace without being liable to unfair dismissals charges. But in bona fide cases, employers had this power under the pre-WorkChoices rules and no doubt will continue to have it (note too that businesses will not be subject to the dismissals laws during the first twelve months of employment).

What is disgraceful in Peter Hendys article is the implication that all small business owners are persons of high integrity whereas there are many lying, wrongdoing employees who will abuse the system. This is simplistic and unfair (no wonder Hendy has been called a Liberal Party stooge by Keating). Both small employers and employees need protection and we will see if Labor has achieved this when one gets the details.

Jc
Jc
14 years ago

Come one Fred

Most terminations are not because of violent acts or theft. In most cases a person is not performing well.

In any event we’ve had Workchoices operating for about 18 months now and the number of unfair treatment is underwhelming at best.

“no wonder Hendy has been called a Liberal Party stooge by Keating”

Of course Mr. One Termer has always been a good judge poltical of bias or otherwise. Did he lace his criticisms with references to the guy’s look’s and appearance just to make the crticism more “valid”. He’s good at doing that.

amr
amr
14 years ago

Whether you think WorkChoices is best or the worst thing to happen to Industrial Relations in Australia, you have Kevin Andrews to blame/thank for the current state of affairs. Any half-competent politican should have had no trouble selling WorkChoices as what Australia needed to ensure maximum number of jobs for everyone, but instead he rolled it out with no attempt to smooth out the path first.

Sacha
Sacha
14 years ago

JC, may I ask how you earn a crust?

Jc
Jc
14 years ago

Hia Sacha

trade currencies , stocks and bonds.

Sacha
Sacha
14 years ago

Cheers JC.

Vee
Vee
14 years ago

Let us all not forget the way “small business” is currently defined in legislation is not actually a small business

After all the small business used as an anecdote above only had four employees.
I was a supporter of the first two variations of the reform to unfair dismissal laws but I am not a supporter of what is currently in place.

As for the separate but related topic of dismissing a person because they’re not performing – which I think is fair enough – but that may be the business fault for not providing adequate training too. Whilst in most cases I think that is unlikely, it is a possibility and should be considered.

As for the effects of the current laws, we wont know them for 10, 20 or 30 years and (if its bad) by then it will be too late.