A return to WorkChoices: Why is business trying to hammer it home?

Tony Abbott has tough decisions to make on workplace reform before the next election. AAP

In one of the most significant moments of the 2010 federal election campaign, Opposition Leader Tony Abbott declared the Coalition’s unpopular WorkChoices policy “dead, buried, cremated.”

In an interview with Neil Mitchell, Abbott was so emphatic about his claim he insisted on writing it down on a piece of paper, saying “I’ll sign it [and]… you can frame it.”

Yet, a little more than 12 months later, the debate over industrial relations reform has made something of a Lazarus-like recovery.

Employers and employer groups are becoming increasingly vocal in their opposition to the Fair Work Act, claiming it is impeding their efforts to improve productivity and is giving unions too much influence.

They are more willing to call for a return to individual agreements and provide employers with greater scope to determine employment arrangements unilaterally – key policy reforms associated with WorkChoices.

Coalition MPs are calling for Abbott to put workplace reform back on the table. Howard government minister Peter Reith last week warned that a Coalition policy that “does not reinstate individual agreements then it will not be good enough.”

It now looms as a defining point of difference between the major political parties.

How did all this happen in such a short period of time? And has the Fair Work Act really created obstacles for employers?

Problems with Fair Work

It is true that there are substantial concerns about a number of facets of the Fair Work system. Unfair dismissal remains an ongoing point of discontent for employers.

Added to this, there has been a growing sense of alarm around the “adverse action” provisions designed to protect workers against employers willing to infringe on established rights in the workplace.

The expansive view of these protections taken by the courts has meant some proceedings, such as the Barclay case (now under appeal), have put businesses on edge.

Fringe issues

In the scheme of things, however, these remain fringe issues for most businesses.

They do not explain the growing chorus of those seeking reforms which would shift the system back towards WorkChoices.

The available evidence simply does not validate the claim that the Fair Work Act has brought back the “bad old days.”

Where there were significant reforms, such as the “good faith bargaining” obligations, the case law suggests that unions have been just as constrained as employers.

Unions have been restricted in their use of aggressive bargaining strategies, many of which would have been perfectly legal under WorkChoices.

Nor is it clear that unions have increased their influence.

The proportion of the workforce that is unionised has not increased at all since Fair Work was introduced, nor has there been a spike in unionised agreement-making.

There have also been some important positives – most notably the introduction of modern awards, which have significantly reduced the complexity of workplace regulation.

Pressure on businesses

The fact is, Fair Work did not create a radical departure from WorkChoices, and it retained many elements introduced by the WorkChoices reforms.

To understand the growing animosity to the Fair Work Act, one needs to account for a number of factors that have placed increasing pressure on businesses to look to industrial relations as a way to reduce costs and remain competitive.

These factors have, in part, made Fair Work more daunting than it appeared just a year ago when the legislation first came into force.

The most immediate challenge has been the continuing sluggishness of the economy and weak consumer confidence.

The mining sector aside, most other sectors have struggled to return to the buoyant economic conditions they enjoyed before the GFC.

The “two-speed economy” remains a major constraint on business.

World conditions and the dollar

The growing concern about the state of the world economy also appears to be playing some role.

As many businesses look ahead to the future, the economic outlook remains uncertain. Rather than wait for any impending “correction” before making adjustments, many business are running a keen eye over their cost structure now to see how they can best prepare for the storm that may be heading our way.

More important than any of these factors, however, has been the rise of the Australian dollar – the curse of the resources boom.

Unexpectedly, this has made the Fair Work amendments appear more costly to business than even just a year ago.

At the time the Fair Work Act was passed into law, the Australian dollar stood at around 66 US cents

By the time it became fully effective in 2010, the value of the Australian dollar had risen sharply to around 90 US cents.

And for much of 2011 it has been above parity – reaching a high of more than US$1.10 in early August before dipping again.

New business models

The consequences for those businesses exporting their products or services, as well as those competing with imports, have been enormous.

For exporters, they have increasingly found it hard to compete in world markets. Businesses reliant on domestic customers have faced intensified price competition from cheaper imports, including online options.

All of this means that the business model that worked well for many firms is increasingly under pressure.

This has in turn prompted many businesses to look to new models that will allow them to remain productive and competitive.

New business models require new ways of organising work. New forms of work organisation require them to negotiate change with employees and unions.

Businesses that were once willing to negotiate their way to industrial peace are becoming increasingly impatient with the prospect of doing so.

The political battle

Looking up from all this gloom, it is perhaps not surprising that many businesses see the Fair Work Act looming as an impediment to their future survival.

With the Gillard Government on the ropes, the time certainly looks opportune to prosecute the case for reform.

But in reality, they would also have faced similar economic pressures to change under WorkChoices.

Although it may seem unlikely right now, it may present an opportunity for the Gillard government to win back political support that it so desperately needs to hold office.

Now we face a new political battle in which work and industrial relations define the difference between the major political parties.

The million-dollar question is what Tony Abbott will be able to do to keep his promise that WorkChoices is truly “dead, buried, cremated”. Only time will tell.

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