Oh what a time to be in business in Australia. The economy is going gang-busters. The Aussie dollars, despite its recent rise, is still one of the most undervalued currencies in the world. Exports are growing strongly. Capital investment is rising as is labour and capital productivity. Unemployment is in the decline. And the world economy appears to be improving with even the moribund giant -- Japan -- showing signs of life.
The challenge is to take advantage of these opportunities and consolidate Australia's future.
The biggest impediment to this lies in the area of workplace reform. While advances have been made in some workplaces, much remains to be done. The latest edition of the World Competitiveness Index shows that industrial relations remain the weak link in Australia's outlook. Australian workplace regulations rate some twenty percentage points below US and the UK.
The improvement we have made in recent years has come about by firms and workers avoiding the regulatory net altogether rather than by better regulation. Over the last two decades the great bulk of new jobs have come in the non-unionised services sector. In addition manufacturers and miners have significantly, contracted-out work and where feasible adopted individual contract. These trends have resulted in large productivity gains. They have also contributed to a less regulated workforce, with private contractors now exceeding the unionised workforce.
The regulatory regimes however have not improved significantly and the states are now winding back past reforms and widen the net to entrap contractors and service workers. While companies under federal jurisdiction do have the option of individual agreement via Australian Workplace Agreements, these have proven to be very costly and have been strongly resisted by unions. Individual agreements have now been outlawed at the state level in all states. Enterprise Agreements do offer scope for greater flexibility but this has seldom been exploited with most EB's simply mirroring industry awards. They also characteristically impose bureaucratic decision making processes which greatly limits the ability of management and workers to make decisions and optimise their work places.
The unions also have their sights on fast growing service industries such as call centres, IT services and house construction. Awards have been drafted and campaigns are underway to pull these non-unionised and high competitive activities into the IR net.
What is worse, sections of the union movement have in response to declining membership become more militant and destructive as witnessed by the recent strike at BHP's Western Port steel plant that threatens to shutdown the car industry. While the number of days lost to strikes is not rising, the overall cost of union action is increasing. The unions are picking their targets more carefully to maximise collateral damage and firms are more exposed than every to strategic attacks.
Thus while the times may be good, unless we make a concerted effort to reform our workplaces they will not last and opportunities will be lost.
PS On the 18 May I stated that Greenpeace broke into the Caltex refinery. While they did break into a refinery it was the SPP refinery not Caltex's.
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