Industrial relations in Australia are contentious, as highlighted by the recent stand-off between Qantas and its trade unions. The key issue is the flawed workplace bargaining system introduced by federal Labor, known as the Fair Work Act. This has widely impacted companies with unionised workforces, including airlines, miners and port operators.
Why is the new bargaining system so flawed? There are several reasons.
First, the system has moved statutory power from employers to unions, by emphasising union-run enterprise agreements. Non-union enterprise agreements are difficult to do and individual contracts are banned. This is quite a change to the previous system.
Second, bargaining has become less about conditions and more about rights. At its heart, the Qantas dispute is about control. The Qantas unions seek job security and restrictions on foreign employees and outside contractors. In the past, these have been issues solely for management in determining the best interests of the company.
Third, as corporates have attested, extracting real productivity gains under the new system is difficult, given the renewed empowerment of unions. Wage increases without corresponding gains in productivity are fuel for inflation, and ultimately higher unemployment.
Getting the industrial relations mix right is vital. With the continuing rise of the Asian economies, meeting the challenges of greater flexibility and higher productivity will be necessary.