WorkChoices is valid - now we can get back to work

To the surprise of not a single informed lawyer in the county, the High Court announced yesterday that the Howard Government’s WorkChoices legislation is constitutionally valid.

With that red herring out of the way, the government and the community can now better assess the merits of the legislation (which came into effect about six months ago). Their focus will be sharpened by next year’s Federal election which will largely turn on the merits of the most fundamental changes to Australia’s industrial relations system for over a century.

The legislation was passed against the backdrop of howls of protests by the union movement and other Australians who were concerned about the prospect of mass sackings.

In a pre-election pitch, Labor Federal leader Kim Beazley boldly declared that his first act as prime minister would be to rip up the legislation on the steps of Parliament. He was probably fuelled by the hundreds of thousands of people who protested around Australia against the supposedly worker-exploiting legislation.

Sometimes six months is a long time. The alarmist concerns peddled by the Union movement and Labor have not occurred. Australia has not become the land of mass sackings or the working poor.

In fact since the passing of the legislation, Australia’s unemployment rate has dropped to a 30-year low and wages have kept par with inflation. A teeny weeny unemployment rate of 4.6 per cent effectively means that nearly every person that wants a job can get one.

Despite this, the jury is still out on the wisdom of the legislation. The free market employment ideology that underpins the industrial relations changes is invoked by the United States, which is the most economically powerful nation of earth. Workers in the US get paid about 25 per cent more than Australians. At the same time, the US also enjoys healthy economic growth (about 3 per cent) and low unemployment (under 5 per cent).

At the other extreme is France, where government regulation of the employment relationship is so tight that even maximum working hours are regulated and it is virtually impossible to get sacked. France is an economic basket case. Unemployment is around 10 per cent and its GDP growth rate is a sluggish 2 per cent.

Ultimately, the economic well-being on a nation depends on a number of complex variables and employment conditions are only one aspect of the puzzle. There are a lot of economists in the US and France with big brains and they have been unable to determine where the “real” truth lies in relation to the best economic employment model.

US economists are probably confused by Sweden, which demonstrates that highly regulated labour conditions and economic prosperity can co-exist. The Swedes enjoy an unemployment rate of about 5 per cent and a healthy GDP growth rate of nearly 4 per cent.

Thus, from the ideology and economic management perspective, the desirability of the industrial relations changes remains unclear. There is no knock down argument for or against the Howard IR laws.

What is clear from the micro perspective, however, is that by giving bosses more power to hire and fire workers, employees will have less bargaining power to negotiate higher wages. It is assumed that the extra profitability and flexibility for employers will result in them hiring more people.