Workplace reform: inequity, more stress, less choice

The Howard Government’s industrial relations-workplace reforms commenced their progress as legislation through the Federal Parliament on Wednesday, November 2. Among the benefits claimed for them are more jobs, greater choice for employees and higher wages. And a multitude of workplace arrangements in the various states will be brought together, tidied up. More than $40 million of our money has been spent just in promoting these benefits and countering the seemingly effective union campaign against the changes.

But the evidence for benefits resulting from the changes is absent or at most weak and there is little doubt the costs will be high. Of most concern is that, in fact, investment in training and development, creative structuring of work, higher than average wages and opportunities for collective bargaining all produce higher productivity, attract business investment and generate employment: facts shown by two recent major reports.

Howard’s changes have been attacked by labour economists, industrial relations experts and distinguished members of the judiciary. “Market” economists and analysts point out the changes do not address major workplace issues. Church leaders oppose the changes as having potentially deleterious impact on families. Economic and general commentators have pointed out errors in the claims and how the reforms will inevitably trade off less recreation and family life for what will turn out to be small gains in wages. All Andrews, Howard and their supporters have done is repeat the mantra.

In more recent appearances Prime Minister Howard has seemed to suggest that the main aim of the reforms is to get  longer-term unemployed people into work. They will be prepared to accept minimum work conditions rather than lose their unemployment benefits, which they will do if they don’t accept the next job offer. Is this to say that tens of millions of dollars are being spent and critical changes made to industrial relations arrangements - some of which will not affect the small business target group unless they incorporate under federal law - mainly to reduce the outlay on social security?

Two recent reports are critical. Both show that equity and fairness in employment lead to prosperity.

The World Bank is hardly a socialist enterprise even though its mandate is to address poverty. Its 2006 Development Report (released September 18) titled “Equity and Development” says this:

Equity - the equal opportunity for individuals to pursue a life of their choosing and be spared from extreme deprivation in outcomes is complementary in some fundamental respects to the pursuit of long-term prosperity.

In other words where policies promote inequity (and they don’t have to produce extreme deprivation) then economic well being will decline.

Two broad labour market approaches are relevant for equity. First, interventions in the labour market should ensure effective application of the core labour standards across the whole market, implying no … discrimination. Workers should be free to assemble and form associations, and their unions should be free to have an active role in bargaining. Second, in all areas the policy mix needs to be assessed in ways that balance protection (for all workers) with allowances for the restructuring so central to dynamic growth and employment creation.

The report also emphasises the well-established fact that education and health in early childhood are essential determinants of later outcomes.

The University of Massachusetts Amherst has just released a report on relationships between the work environment and economic growth. “Decent Work in America” (pdf file 2.19MB), prepared by James Heintz, Jeannette Wicks-Lim and Robert Pollin, developed a “Work Environment Index” (WEI) made up of Job Opportunities (unemployment rates and involuntary part-time work), Job Quality (average wage, employee benefits) and Workplace Fairness (percentage of low-income workers, pay equity, ability of employees to unionise and engage in collective bargaining). This was then examined in relation to economic health.

There is a consistent correspondence between the quality of a state's environment for workers and its economic health: workplace conditions favourable to employees are clearly, though moderately, related to economic growth. States ranking positive for Workplace Fairness, like Delaware, New Hampshire, Minnesota and Vermont, generally have faster economic growth and lower poverty rates. At the bottom of the list are states like Texas and Louisiana. Remember those scenes of poor people in New Orleans unable to flee the oncoming hurricane? Anti-poverty strategies focused on creating decent jobs is not just viable but desirable.