Allegra Spender, The Financial Review -
Reforming the ‘better off overall test’ won’t be enough to unlock the productivity and wage gains of enterprise bargaining.
The Jobs and Skills Summit came at a critical time for Australia.
We have economic indicators pointing in two different directions: on the one hand, full employment, strong growth, and record terms of trade.
On the other: high inflation, structural deficits, persistent skills shortages, and real wages going backwards.
Falling real wages are a concern right across the country.
In my electorate, many people are particularly worried about how this will exacerbate the housing crisis, especially for young people. Will our children be able to enjoy the same standard of living as their parents?
Some of that is a consequence our dysfunctional housing market (a topic for another day), but a big part of low wage growth is stagnant productivity.
The government is right to focus on this. Productivity is the only way to grow the pie and leave everybody better off.
I haven’t met any small businesses that want to have the same agreement as every other or even many other companies in their sector.
The best of the summit was bringing businesses, unions, the community sector and government together. Migration, participation, skills and training, enterprise bargaining – these are all crucial issues for our economy, and it is exciting to see constructive debate around them.
I agree with the Business Council of Australia and the Australian Council of Trade Unions that enterprise bargaining could be simpler, without leaving workers worse off.
There is strong evidence that people under enterprise bargaining agreements have higher wage growth, but the number of workers covered by these agreements has fallen by 2 million since 2010.
To really unlock the opportunity of enterprise bargaining, we need to reform EBAs themselves and simplify the awards that underpin them.
Some larger businesses I speak to will not consider an EBA because the awards’ complexity means they have no faith they can construct one that will hold.
Reform of the “better off overall test” (BOOT) is critical, and I am glad to see movement on this.
Clear, simple expectations
We haven’t had much detail yet from the ACTU regarding its proposed multi-employer approach, but there is real concern among businesses in my community that it won’t work for them, and that it creates the potential for sector-wide industrial action.
And while academics at the summit talked of how multi-party or sector-wide bargaining worked overseas, they did not address the fact that Australia already has sector-wide awards, and other countries do not.
Small and medium enterprises need simplicity in dealing with government and bureaucracy.
The best of the SME sector is innovative and close to their customers, whether it is a café that pivoted during the COVID-19 pandemic to keep serving their customers, or a tech start-up seeking to disrupt established players.
They want clear, simple expectations from government, which they can meet and then focus on serving their customers, their suppliers and, most crucially, their people.
Like big business, SMEs are concerned with the current complexity of the award system and whether they are inadvertently paying staff the wrong amount. They want to see problems with the system recognised and fixed as a priority.
This needs much greater focus than the summit provided.
When they are working as intended, EBAs can drive productivity gains. One option might be for SMEs to have the opportunity to access modular, templated EBAs which they can adjust for their purposes.
However, this will only be realistic if the awards themselves are simplified, so businesses know they are compliant. Otherwise, the danger is complexity on top of complexity.
Doing things differently
However, I haven’t met any small businesses that want to have the same agreement as every other company – or even many other companies – in their sector.
SMEs compete and thrive by working out how to do things differently – by meeting the different needs of their customers in unique ways; by seeing opportunities that others in the same space do not.
This kind of experimentation and entrepreneurship is the beating heart of a modern economy.
Some argue for sector-wide bargaining to close the gender pay gap by revaluing the care economy. This is a priority for me as well, but the clearest path to doing this is through reviewing the awards with the Fair Work Commission, which is considering exactly this in the aged care sector.
Finally, businesses are looking for the government to drive a red-tape reduction agenda. By removing the dead hand of government, we can stop making people do things which create no value, and we can unlock real productivity gains.
I have spoken to aged care providers, medical researchers, nurses, teachers and restaurant owners, and the message is the same: make government easy to deal with, make doing the right thing simple, and you will truly unlock productivity in the economy.
My time in Canberra has been brief so far, but the description of the bubble is right.
We need the authentic voices of businesses, individuals and community groups – not only their peak bodies – to pop that bubble to ensure that every law that is passed, every hoop we are asking others to jump through, truly furthers our community’s joint aims.