Work Choice: the Politics of Industrial Relations - Essay Example

Work choices are more about the politics of industrial relations than about productive workplaces. Current economic scenario such as liberalized and dynamic market, ever changing customer needs, new structure of production and work etc., has changed the employer/employee relationship drastically which leads to rethinking of the concepts like productivity and workplaces. Companies with strong employee relations benefit because their employees are highly motivated to expand their best efforts. In exchange the employees expect to be treated fairly and recognized for their achievements. The new concept of productivity needs a wider and broader set of indicators, which could reflect the new parameters and elements. High productivity not mere dependent on higher efficiency but nowadays more on its contribution towards good and satisfying experiences as well as opportunities for employees to learn new skills and competencies required for continuous innovations and improvements. So increase in participatory approaches, high performance workplaces and learning organization processes are to key to improve the productivity. Basically high performance workplaces or productive workplaces are the places where employees are able to continuously innovate, be flexible and agile, competent, skilled motivated and dedicated as well as working together in an atmosphere of mutual respect trust and confidence, partnership & collaboration. Sustained productivity improvements depends upon enterprise’s human capital i.e. skill, knowledge, competencies, attitude of employee and also its social capital such as trust and confidence, communication, cooperative working dynamics and interaction partnership, shared values, teamwork etc. To maintain higher level of productivity, organizations need to hire the right people; facilitate them through good work organization, work environment and management practices; build and enhance their knowledge and developed them as committed, motivated and engaged enterprises with good workplace policies and practices always creates productive workplaces. All productive workplaces practices are based on the principles of the involvement & participation; labor management partnership respect and recognition equality & non-discrimination, competency and skills development and providing good working conditions & sharing gains. So it has been obvious that concept of collectivism, equality & non-discriminatory relationship between employer & employee, trust and faith between the to were the rood causes for sustained productivity but the new legislation of work choices and intervention by the Govt. in Australian industrial relations changes the whole situation. Introduction of work choices legislation in Australia in April 2006, generated a new kind of discussion among various parties i.e. employer, employee union, national politics & labor policy makers analysts etc. It becomes more as a politics of industrial relations rather then tool to improve productivity at workplaces. There has been two clear cut blocks which developed during discussion i.e. one who supporting the workchocies legislation i.e. employers and the present government and the other block consists of workers union, social activists and labor market analysts, who are opposing the workchoices legislation in Australia. As far as the proponents or work choices made various claims about it positive impact that in would lead to ‘more job’s, higher wages [and] a stronger economy’ (Australian Govt., 2006) would enable workers to continue to enjoy the benefit of… low inflation and low, inflation rates (Australian Govt., 2006) and would generate productivity improvements…driven by the shift of workers reliant on awards to other methods of pay setting such a collective and individual agreements (Andrews, 2006) while employment growth will be stimulated by changes to the unfair dismissal laws which represented a barrier to employment’ (Andrew, 2006). The supporters of workchoice legislation argued that the new rules of unfair dismissals will give management more flexibility to manage its manpower and this should have a positive impact on productivity. It will help speed up the workers from low productivity to work and fire them at will if they prove unsatisfactory. Workchoices legislation should be seen as a fundamental break from the past. It does not back collective bargaining and greatly increase managerial autonomy, direct power under the control of executives. Howard’s Government claims that ‘work choices’ of fared the only way to achieve good employment outcomes for low educated low-skilled workers. The present work choices legislation is a clear-cut departure from collectivism to individualism. Proponents of the workchoices act. Including present Govt. in Australia is facing strong reactions & attacks especially from labor & trade unions. It has become more a political issues rather than productivity improvement issue. Despite Govt. claims that its policies are about simplifying the industrial relations but the present legislation is long, dense, complex and extremely prescriptive. New workchoices policies mark a fundamental shift in Industrial relations policy. The law aims to smash institutions, which have delivered a lot of working people. It has also posses a threat to unions and collective bargaining. The industrial relations tribunals are to be gutted. The tribunals immediately lose their defined roles i.e. the power to set minimum wages. By applying these laws, the low paid workers, who are at fringes to the labor force, will suffer the most and relative decline in their productivity and standard of life. Many legitimate unions will be made illegal. Organization/employer’s resort to individual contracts rather than well negotiated collective bargained contracts from unions. Even if employers want to restructure their businesses they can easily off-load the employees and the agreements and to take on new and cheaper staff. (Example: The Age “Business Section” Left 27th Oct. 2005). Employer green field agreement empowers them to negotiate an agreement with itself before starting up with no input from employees or unions. New work choices laws legalized individual contracts through which employers determine pay & employment conditions unilaterally. There are no negotiations. When all the members/employees will be on to individual Australian work place agreement (AWA’s), unions will be banned. This situation almost moves towards individualism and employers have the upper hand during work choices negotiations. The internet problem with AWA’s is that individual employees do not have equal bargaining power in comparison to their employers to balance the power of employer, collective bargaining has been recognized right internationally. It ensures fair treatment and facilitates fairer share of profits and benefits from productivity gains of employees. So it has been an established fact that collective bargaining improves the living standards as well as productivity of employees. But the new laws of work choices make a clear-cut departure from collective bargaining and in result hampers productivity. The government and its agencies invariably overstate AWA’s coverage. Overall employees under new union collective agreements (CA’s) represented the majority (56%) of work choice agreement covered employees. However this number was lower than the 81% of federal agreement covered employees working under union CA’s recorded in May 2004. Conversely, the share of work choices agreements employees accounted for by new AWA’s at 28% was higher than AWA’s share in May 2004 (9%). The share of non-union collective agreements was relatively stable rising from 10% in 2004 to 13% under work choices (Calculated from Australian bureau of statistics 6306.0; Employment Advocate 2006b; Peetz, 2006). In the collective system, with the active encouragement of a union to do and affect things that would lift the general productivity of a business but in the present circumstances where employer is dealing individually. As an individual worker, is unable to jointly offer up concessions in the company of his fellows, the scope for productivity getting becomes exceptionally limited. In the absence of new productivity, to keep costs down and products competitive employees will seek to exact reductions in real wages in lieu of productivity (Work Choices the enemy of productivity, Paul keating, The Australian Financial Review (63 the 28 Mar 2006)). So it has been clear that collective enterprise bargaining gives employers and employees the right incentives to work together to find ways to lift productivity and share the gain in profits and pay. But AWA’s give employers the wrong incentives. Cutting worker’s pay does not foster productive work places (AWA’s rejected; Kim Beazley – 13 June 2006, htpp://evatt.org.au). The next important point, which creates anxiety among employees, is about job security. Unfair dismissal provisions in the new workchoice laws and to abolish this protection for employees’ altogether is unwarranted and it will worsen job security. A Morgan survey showed small movements in perceived job security. The persons who thought their job was safe fell by 2% though most respondents remained in this category (Morgan, 2006). It has been perceived and suggested that the unfair dismissal changes may be having a broader effect on workplaces relations and might be leading to increased anxiety at the work places (Peetz, 2006). It has been clearly understandable that the increase in anxiety at work places hampers the productivity of the employee. So this clause of unfair dismissal provisions adversely affects the productivity part of employees. Now if we compare the annualized wage increase under new union collective agreements (CA’s) have averaged about 4.03% in the two quarter since work choices took effect. This is very slightly above the annual rate of inflation and also above the rate under non-union employee CA’s (Dept of employment and work places relations, 2006). No data has been published or possibly even collected on average wage increases under workchoices AWA’s. There are indications that a pattern for AWA’s to contain a reasonable wage increase up front but little or nothing afterwards. It is likely that loss of conditions in mainly non-union collective agreement under work choices and a reduction is wages growth in the formal sector as a result of the increased share of instruments that are encouraged by work choices and that provides for relatively low rates of wages increase (Peetz, 2006). The next important changes under new law is employers Greenfield Agreements (EGA’S) which provides unilateral power to employer solely determine pay and conditions before it establishes a new project or undertaking. Workers cannot take legally and action for 12 months after an EGA comes into force. Prior to new legislation EGA’s could only be made with unions for bonafide new businesses. Average wage increase under EGA’s (3.48%) are below those under work choices union Greenfield agreement (3.64) and indeed the lowest of any time of agreement for which data is available (Deptt. of employment and work places relations, 2006). The minimum wage fixing arrangement established under work choices have led to a real wages decline for most award dependent (low wage) workers. These circumstances clearly shows that new laws adversely affected the wages increase and bargaining capacity of the employees and therefore have negative impact on productivity and living standards. New workchoice laws results in reduction of real wages during the first six months of work choices. The most notable thing about the recent reduction in real wages is that it has occurred in the tightest labor market in three decades. Normally tight labor markets are associated with strong growth in real wages. Even stagnation of real wages would be unusual in such circumstance (Peetz, 2006). The situation itself speaks about the vulnerability of individual work agreements, which adversely affected the employees, and employers are at the beneficial end. Reduction in real wages under work choices Act adversely affected or will affect the productivity of the employee in longer terms. This reduction in real wages especially in retail and hospitality, probably as a result of the loss of penalty rates in those industries, and in short term at least a drop in real and relative earnings for women, while profits are at record levels, continuing a trend established under the work place Relations Act (Peetz 2006). Some proponents of workchoices act., argue that partial abolition of the job destroying unfair dismissal laws, results in substantial growth in employment. Now if we compare employment growth in the period since work choices was introduced with employment growth in equivalent period after the unfair dismissal laws were introduced at the end of March 1994, we can find that employment growth of 2.39% under work choices was noticeably weaker than the 3.43% growth after the unfair dismissal laws were introduced in 1994. It clearly shows that abolition of unfair dismissal laws were not effective job creator. Strong growth in employment in 2006 is rather unrelated to abolition of unfair dismissal laws but related to strong economy. So after that much of discussion we can easily say that the present work choice legislation simply puts the employers at the upper hand. In a competitive commercial environment where productivity takes center stage, employers will take advantage of the dramatic reduction in safety net production to drive down cost wherever they can. The ability of employees resist the downward pressure on their pay and conditions will depend on their relative bargaining power to weak will be more vulnerable than ever (Industrial Relations Employee rights and the economy, Greg Combet, 6 July 2005). New laws make it difficult for unions to represent and help people, including new restriction on accessing work places. Through new laws basically government aims to rely upon the corporations power in the constitution to establish centralized control over industrial relations and knock out the state system. This simply concludes that there is no safe haven for workers right. Industrial relations changes are clearly biased towards business. The Govt. says that business can be trusted to do the right things with this new power. These laws basically designed by big business for big business. Its basic theme is to oppose or suppress democratic rights of the employees and downgrade living standard of workers, which ultimately affect the industrial relations environment in the country, and productivity of an employee. Now the politics of industrial relations takes centre stage rather than more discussion on the impact of workchoices on productivity. On one direction Australian labor party supporting compulsory unionism and on the other way, almost ban on unions propounded by recent govt. creates more political discussions on workchoices Act., rather than discussion on its impact on productivity. If work choices laws and industrial relations has to be rationalized, labor needs to urgently clarify and simplify its IR policies and make some concessions to business on individual agreements, without retreating on basics like unfair dismissal, the right to collective bargaining (union or non-union) if requested by a majority of workers and a broader safety net for workers (The politics of IR Policy, Fred Agry, Tuesday 22 May 2007). The recent laws basically hinder employee development, job enrichment, skill acquiring needs and abilities. Under these laws employer individually renegotiates individual employees and those having less skills and productivity are bound to work for less wages and employers never promote and provide skill enhancement, job enrichment, training and therefore employees having lesser education, skills or training will be at the receiving end. Their productivity must be decreasing with time. Similarly under investment in education skills, socio-economic infrastructure creates a resource crunch. So by implementing a backward looking laws only to cut labor costs and provide draconian power to employers work choices law attacks on fairness and democratic principles. A workplace culture that foster learning from experiences encourages creativity and independence making work more efficient and enhancing productivity in the process. On the other hand, a workplace culture that undervalues and frustrates employees can mean that workers and not giving of their best to firms. Through analyzing various aspect of present work choices legislation we came to the conclusions that it a more political in nature rather than devised for productivity enhancement. **************************************************** References: 1. Australian. (2006, 26 September). Young people losing fight against IR laws. 2. Andrews, K. (2006). Answer to Question 2611, (reply to question asked by Mr Murphy [Lowe], 9 November 2005). Canberra: House of Representatives Hansard. 3. The Age “Business Section” Left 27th Oct. 2005. 4. Australian Bureau of Statistics. Employee Earnings and Hours, Australia. 6306.0. Canberra. 5. Office of the Employment Advocate. (2006b). Workplace agreement statistics. Sydney. 6. Peetz, D. (2006). Brave New Workplace: How Individual Contracts are Changing our Jobs. Sydney: Allen & Unwin. 7. Work Choices the enemy of productivity, Paul keating, The Australian Financial Review, 63 the 28 Mar 2006. 8. AWA’s rejected; Kim Beazley – 13 June 2006, accessed from htpp://evatt.org.au on12th Oct. 2007. 9. Morgan Research Centre (2006) ‘Australians & New Zealanders Optimistic About Job Security - Majorities Say They Could Find A Job Quickly If Need Be’, Finding No. 4120, 22 December. 10. Department of Employment and Workplace Relations. (2006). Wage Trends in Enterprise Bargaining. Canberra: DEWR. 11. Industrial Relations Employee rights and the economy (2005) Greg Combet, 6 July. 12. The politics of IR Policy (2007), Fred Agry, Tuesday 22 May. Read More