My Ssec Capstone Project Efficiency of the labour force is essential as ‘an efficient workplace promotes the preservation and creation of jobs in a competitive global economy’

Efficiency of the labour force is essential as ‘an efficient workplace promotes the preservation and creation of jobs in a competitive global economy’

Efficiency of the labour force is essential as ‘an efficient workplace promotes the preservation and creation of jobs in a competitive global economy’ (Befort and Budd, 2009), making it an important factor that governments and policymakers look to when assessing IR policies. As Befort and Budd explain, this objective sets the standard of economic and business performance, exemplified through competitiveness, productivity, and economic prosperity. It is precisely due to these standards that recent governments have paid major attention on union regulations, as each government has, through their respective reasoning, discussed the impact of union power and collective agreements on the efficiency and productivity of employees and business activities. Starting from the Howard government in the 1990s, we see a shift away from collective bargaining and the introduction of decentralisation and individual contracts. These resulted from the Howard government’s agreement with employers and business lobbyists, who believed union power and collective bargaining system interfered with business operations and flexibility, as well as loyalty of employees, thereby resulting in a decrease in productivity and a lack of efficiency. The government’s aim for an increased efficiency of the workforce, through heavily regulating union power and activities, argued specifically that productivity grew as award coverage declined, in which individual agreements as per Australian Workplace Agreements (AWA) would boost productivity, a logic of which employers agreed with. From this, we can see that due to Howard govt. regulations, managerial prerogative enhanced, but overall productivity and efficiency are arguable, as employees were “worse off than they otherwise would have been” (Cooper and Ellem, 2017), and there was a noticeable widening of the gender pay gap. The end to Work Choices prompted the succeeding Labor government to replace the employment regulations with the Fair Work Act (FWA) 2009, in which this new policy not only bought back collective bargaining but also argued, in a rather different manner to their predecessors, the Liberal-National government, that collective bargaining increases productivity, rather than abandoning collective bargaining for individual agreements. It should be noted, however, that the FWA has a greater impact on agreement-making than that of bargaining, and has demonstrated to be more of a ‘safety net’ for employees rather than a push to strengthen unionisation and union presence (Cooper and Ellem, 2017). From this, it is evident that despite returning to collective bargaining and suggesting the positive impacts of union presence in demonstrating productivity and efficiency in the labour force, the current government has made a clear regulation on the presence of union power through only providing unions a certain scope for bargaining influence. Therefore, the current government is still placing their focus on unions in their attempt to strengthen the overall efficiency of the workforce.
Although each respective government’s argument differs in regards to the capacity of power they permit unions to possess, as discussed above, all recent governments have agreed on placing priority on efficiency, and have emphasised and facilitated discussions based around the idea that IR policy change is central to achieving better productivity, by demonstrating labour costs, wages, and GDP as a measure of productivity. However, as Peetz (2015) critiques, viewing productivity solely as a pricing measure is irrational, as increases in productivity do not necessarily result in an increase in profit or production. Instead, productivity should be viewed as a significant foundation for the increases in living standards, whereby higher productivity is measured by greater output per employee, which then can be shared between other employees in the form of increased wages, as well as with the employer in the form of increased profits. It is only through the measure of the output of employees, that productivity can be associated with pricing measures. In this sense, governments looking to enhance efficiency of the overall workforce ought to shift their focus to policy matters that align with the goals of increasing productivity through employee motivation, as a means to increase wage growth and efficiency in the broader labour force. Employee motivation is heavily influenced by both employment relations and IR policies, whereby it can be argued that motivation has declined in the past year. Despite the Fair Work Commission’s decision to increase National Minimum Wage by 3.3% to $18.29 per hour, the lack of employee motivation has seen to stem from recent policy changes (Wright, 2017), in particular penalty rate reductions, as the overall wage growth has potentially decreased for workers in industries with penalty rate reductions, many of whom are considered low-income employees. In addition to individual employees, low-wage industries affected by wage reductions have seen a lack of employee motivation and a consequential decrease in productivity, to which the decision may marginally decrease aggregate income of these employees, which then has the potential to negatively impact the economy as a whole by not only affecting consumer spending but also business activity (Koukoulas et al., 2017), which would then also impact inflation rates. Thus, it is crucial that the government should not only consider policies for regulating unions’ bargaining stance, but also account for other matters impacting the productivity of employees, in order to achieve a more efficient labour force.
In contrast to efficiency, equity sets the standard of justice, depicting fairness in the distribution of economic rewards and treatment, and it is here that the administration of employment policies and justice, and provision of employee security is set (Befort and Budd, 2009). Here, it is without a doubt that governments will pay close attention to union activities, as unions traditionally outlined and bargained for employee rights and standards. Although the current legislation allows for unions to participate in claims for seeking individual or collective employee rights, the extent to which union participation is permitted is much less than pre-Work Choices. Sally McManus, Secretary of the Australian Council of Trade Unions (ACTU), voiced her frustration with the current bargaining framework being “a joke” in her speech calling out for implementations of industry-wide bargaining, whereby she emphasised the need for a more effective mechanism to promote collective bargaining (Schneiders, 2017). She also explained that it is only through successful enterprise bargaining systems, that higher wage growths can occur, to which the Labor government agreed, suggesting they would change the system if they win office in the next election, signifying yet another potential change in union regulations. In the meantime, the current government is and will continue focusing on union campaigns, with McManus’ ambitious union movement “Change the Rules” being a significant movement in response to the equity issues faced by the decline in and lack of support given to union memberships and activities. Similarly, the union campaign advocating for the criminalisation of ‘wage theft’, used to describe the underpayment of wages, is another movement targeted at injustice of the labour force, and will inherently be an IR matter the government will be faced with in its regulation and focus on unions, as this campaign is also a reform intended to promote union power and collective bargaining (Gahan et al., 2017).
Whilst the balance of union power in handling equity issues of and about collective bargaining is important in IR policy, on the other hand, the government should also divert some attention to inherent issues relating to the equity framework within the workforce in the form of gender inequality and Paid Parental Leave (PPL). Despite increasing female participation rate in the labour market following the decline of the ‘male breadwinner’ system, the increasing inequity in gender pay gap are reflective of notions such as “sticky floors”, elucidating the difficulty women experience when endeavouring to move away from a poorly paid and lower status position to one of a higher paid and more respectable status. This is made harder when women leave their job for maternity leave, in which many women will come back to work finding their position and/or role is no longer available. Although the government has successfully administered PPL to encourage female labour market retention, it is worth noting that there are still many potential implementations within the policy that the government should reconsidered. These include extending paternal leave time past the current two weeks Paid Paternal Leave, to increase the time fathers spend at home with their newborn and family, as well as implementing particular measurement means to counteract women receiving both government PPL and employer based benefits, such as an Income Test similar to other welfare benefits. As such, there is a need for contemporary amendments to the underlying male perspective on employment, and in light of this, the government should consider policy matters that involve gender participation rates seriously and attempt to improve the increasing gender pay gap.
Voice portrays the meaningful participation in workplace decision-making, and the standard for employee involvement, characterised by collective bargaining and representation. From this, it is evident that governments endeavour to regulate unions and their activities, as this framework objective is essentially embodied by unions. As discussed above, governments have regulated union voice in attempts to decentralise employment relations, to which the current legislation performs a balancing act in both succeeding the ‘industrial acquiescence’, initiated by Howard government’s Work Choices, as well as providing stronger protection for unions, by encouraging collective bargaining agreements (Pekarek et al., 2017). Despite the balancing act, union powers ultimately remain very restricted, whereby the current government has regulated unions through limiting the amount of disputes and industrial actions, and with tedious processes in the FWA, such as the requirement to initiate industrial action as part of agreement-making (Coulthard, 2012). It can be argued however, that in place of tedious processes discouraging both unions and employees alike, the government should turn their attention onto the difficulties employees may be facing that are surfaced during disputes.
Of the many challenges to employment, issues surrounding female employees and inequality are important, hence governments should place their emphasis on issues such as female voice in the workplace. Perhaps most impactful on the overall debate of IR policy changes to have passed in the current government is the FWC’s decision to reduce penalty rates, which have significantly impacted female workers. Some have argued that the reduction decision depicts a fundamentally inherent power imbalance between the proletariat and the bourgeoisie present in society, whereby the decision of the FWC is underpinned by its support of the interests of the employers – in prioritising the lowering of business operating costs (Haynes, 2017), which highlights the state’s partiality in forgoing employee voice for increased business efficiency. Despite justifying these rationalisations in the context of an improvement in the overall labour force, the FWC’s decision has significant repercussions on female workers. In addition to the regulation of unions and the continued shift towards a more decentralised system, the absence of mediation mechanisms and collective bargaining has had an indirect impact on women, as many highly-feminised industries already have prevalent issues of low wages and benefits. This is particularly the case for the retail and hospitality industries as both are highly-feminised, in which over 54% of employees are women, hence signifying the gender criticisms of the state’s decision. The actions of the government will have a “disproportionate and negative” impact on women workers (Patty, 2017) by means of further contributing to the widening of the gender pay gap inequality, and consequently highlighting the inherent under-valuation of women’s struggles to balance employment and family life. Here, union voice would prove necessary to enhance female voice in the labour force, where growth potentials are evident in statistics – not only do women make up almost half the paid workforce, but women now more unionised than men, with 51% of workers holding trade union memberships in their primary job consisting of women (ABS, 2017). Additionally, many of the most unionised industries and occupations are feminised, furtherer contributing to growth potentials in female union activities. Therefore, the increasing trend in women’s membership, despite overall decline in unionisation, and the consequential need for governments to reconsider policies regarding female participation and voice through either union or similar bargaining agencies, rather than setting ‘voice’ aside, as a result of continued push for individual decentralised contracts.