Thursday, November 1, 2012

Macquarie University IR Panel Discussion

I want to make four points very quickly. First, I’m not convinced we have an economy-wide problem with productivity - I don’t think the statistical evidence bears that out.

Second, I don’t believe we have a nation-wide problem with unreasonable unions exploiting an IR system that a Labor government has stacked in their favour, if for no other reason than that the great majority of employers, and the great majority of employees, work in what is essentially the non-unionised sector. So let’s not kid ourselves, what’s represented here today is a quite small and unrepresentative part of the economy.

Third, I do believe we need a more flexible labour market. But we have to be clear what flexibility means. If it’s a euphemism for governments changing the IR system to allow employers to ride roughshod over their workers - that employers should have all the rights and employees should have next to none - then we don’t need it - because it’s not in the community’s overall interests - and, in any case, as the defeat of the Howard govt reaffirms, politicians are rarely stupid enough to imagine they could bias the system that far against voting employees (who account for almost 2/3rds of the adult population) and live to tell the tale.

No, the flexibility we need is willingness on the part of workers to accept the often painful changes in their arrangements necessitated by the economy’s changing circumstances - by changes in technology, changes in industry regulation and changes in the threats and opportunities created by the rest of the world. Unless we achieve that kind of flexibility - and I believe for the most part we are achieving it, even in the unionised sector - we will pay for it with declining productivity and profitability and consequently a decline in our material standard of living.

But, fourth, I don’t believe our IR law is the key obstacle to achieving that kind of flexibility, nor is changing the IR law the way to achieve it. The key obstacle is bad industrial relations - that is, bad relations between individual employers and their employees; lack of trust - and if you think the answer to bad relations with your workers is to get the IR law changed in your favour so you can force your will on your workers you’re revealing exactly why you have a problem. A bad worker blames his tools and bad employers blame the IR law. (People who work for employer groups blame IR law because that’s what justifies their continued employment).

In my experience, workers turn to unions, and allow their unions to behave unreasonably, because they don’t trust their employers. Because they believe they’ve been lied to in the past, because their employers refuse to consult, because they don’t give their workers ‘voice’ except via the union, because they refuse to explain in detail and over and over what the problem is and why their proposed solution is the best one and because they won’t assure their workers they’re not trying to pull a fast one, that they’ll do all they can to minimise the pain and disruption involved - or because such assurances aren’t believed.

Bad employers beget bad unions. Then bad employers conclude the only answer to unreasonable unions is unreasonable employers. And then bad employers campaign to have the IR laws biased in their favour. Smart employers don’t blame their problems on the government and don’t delude themselves governments can solve problems they themselves can’t solve on the ground.