Productivity Commission Reviews Workplace Relations: Key Issues

Recently we posted an item on the release of the Productivity Commission’s five issues papers relating to Australia’s workplace relations framework and the debate likely to be ignited by the process leading to the report to be produced by the Productivity Commission on Workplace Relations in November 2015 (see our article "Review of Industrial Relation Laws Ignites Debate"). As anticipated, the report's announcement has driven much comment in the media. Generally the reaction from business has seen it as a positive measure designed to revamp industry and the economy while the unions and the Federal opposition claim that it will set the ground for a “return to WorkChoices”.

The key matters being discussed in relation to the five discussion Papers released as part of the Productivity Commissions Report process appear to be:

• The Minimum Wage
  
• Penalty Rates
  
• Unfair Dismissal

Following, is a brief overview on each of these matters as raised in the Papers.

The Minimum Wage

On this topic, the Productivity Commission takes the view that it needs to consider the achievement of high productivity while allocating labour to its best uses:

This recognises that ". . . No nation aspires to be a low-wage economy" (see Paper 1) but also raises the question of how to achieve high productivity so as to sustain higher incomes. To do this it seems from the Productivity Commissions Papers that there will be a fundamental reconsideration by the Productivity Commission of whether Australian minimum wages are appropriate and actually work (for example, do they fail in targeting poverty and inequality by lowering the level of employment). Further, the current process for setting the minimum wage employed by the Fair Work Commission will also be the subject of reinvestigation (see previous reviews in 2012).

Excluded from any deep analysis by the Productivity Commission are the National Employment Standards (the NES). The NES set minimum work conditions for all employees (for example, four weeks’ annual leave). However, the Productivity Commission does consider whether entitlements under the NES impose costs on employers exceeding the marginal benefits of hiring employees, which effects employment adversely.

Also in the Productivity Commission's brief, it appears from Paper 2, are Modern Awards which are the means for establishing more detailed employment standards at an industry or occupational level. Questions are raised by the Productivity Commission in Paper 2 as to the "efficiency and regulatory burden of awards". Further, whether awards “lock in” a "predetermined backdrop of minimum requirements for enterprise agreements". From Paper 2 it seems the Productivity Commission might be considering views on moving away from awards to relying instead on other safety nets in the Workplace Relations System.

Penalty Rates

All recognise "penalty rates" as the most debatable of all the matters to be investigated by the Productivity Commission, a major issue for employers, especially in relevant industries like hospitality, and for the union movement who defend existing penalty rate provisions as a major workplace entitlement. Generally however, the Productivity Commission's approach in its Papers seems reasonably moderate when compared to the reaction of employers and unions.

In Paper 2, consideration of a choice between accepting penalty rates as an inherent principle of employment regulation - or - regarding premiums for weekend and evening work as a matter of choice for individual enterprises and their employees, are raised.

Effectively, the Productivity Commission is asking if penalty rates should be determined by the market, and if determined by the market would it necessarily mean that wages would fall to the level of normal wages or would employers still have to pay a premium to attract labour to weekends and holiday work.

Unfair Dismissal

From the Papers it seems clear the current protections against unfair dismissal and other forms of adverse action against employees, and the interaction between anti-bullying provisions and workplace safety laws will be explored widely by the Productivity Commission.

This is supported in Paper 4 where the Productivity Commission states:

and then goes on to list questions such as:

Time Lines and Outcomes

As reported previously, the Productivity Commission is due for its final report in November 2015. Initial submissions are due Friday 13 March 2015 with a draft report due June/July 2015.

While the Productivity Commission appears in its Papers to have taken a measured and  equitable approach for the benefit of the entire community, as The Conversation reports:

Indeed the potential to challenge "long-standing tenets" may well prove to be a momentous occasion for this Federal Government if it goes to the next election, as it plans to, proposing industrial reforms which may in the end turn out to be as contentious as the Howard Government's "WorkChoices" reforms were. As The Conversation says, it:

In short, an interesting year ahead for those interested in Workplace Relations, even on just the key issues raised.

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• Workplace Relations Framework - Issues papers (PC Web Page)
• Workplace Relations Framework - Public inquiry (PC Web Page)
• Productivity Commission's workplace relations report made public a day before embargo lifted (ABC News)
• Workplace inquiry attempts to move beyond WorkChoices (The Conversation - 23 January 2015)
• Workplace reform discussion could leave big questions hanging (The Conversation - 23 January 2015)
• Productivity Commission review is an attack on workers that will weaken us all (SMH - 25 January 2015)