Productivity and flexibility – a workplace view
Address by ACTU President Ged Kearney to Ai Group National Forum, Canberra

I would like to acknowledge the traditional owners of the land on which we meet today and pay my respects to elders past and present.

Thank you for the invitation to speak at your annual forum today.

We may not always see eye-to-eye, but the ACTU and the Ai Group have enjoyed a constructive working relationship over the past few years.

I also want to put on record the ACTU’s appreciation for the positive way in which Heather Ridout and the AiGroup have approached the introduction of a national paid parental leave scheme – truly a great win for working women which will benefit the economy as a whole.

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I only recently had the honour of becoming President of the ACTU and I have taken office at a new and exciting stage in Australia’s political history.

A minority government opens not just the possibility of new ideas inside parliament, but in the wider community as well.

This is also a great time to be working in a movement that speaks and acts directly for some two million Australians and their families.

We are proud of our achievements. That through our work, millions more Australians are better off because their workplace standards are set through collective bargaining and industrial awards.

And we know that the broad majority of the Australian community also recognise this and support the role of unions in collective bargaining and defending workers’ rights against the sort of attack we saw under WorkChoices.

The depth of community support on this issue is also not lost on the Liberal Party.

Earlier today, you heard from the Leader of the Opposition, Tony Abbott. And I note with interest his continued attempts to distance himself from the electoral poison of WorkChoices.

From day one of the federal election campaign, we saw Tony Abbott recant his previous public commitments to individual contracts, to cutting protections from unfair dismissal, and to winding back the award safety net.

But in recent weeks post the election, our suspicions seem to have been confirmed with a new round of Coalition MPs calling for the return of those policies.

Some business groups have also been fanning the flames of this new push for labour market deregulation.
I’m glad to say that the Ai Group – to date, at least – hasn’t been among them, and I hope that remains the case.

But if it comes to another battle, you can rest assured that Australian unions will vigorously campaign against any party that threatens workplace rights.

Radical labour market deregulation that puts absolute power in the hands of the employer is not the Australian way.

The ACTU’s polling before, during and after the 2010 federal election confirms this.

It shows concerns among soft voters about the potential reintroduction of WorkChoices was a key driver of votes against the Coalition.

It was not as strong as it was in 2007, but for the second election in a row, WorkChoices was a major factor in the outcome.

Immediately after the election, before the government was known, we found that 80% of Australians wanted the Coalition to keep its promise not to bring back WorkChoices by any means.

They said the Coalition should make sure there were no cuts to unfair dismissal protections and that it did not expand on the use of individual contracts.

So for people like Joe Hockey, Andrew Robb and Eric Abetz to be again talking about changing the Fair Work Act is not just a betrayal of Australian voters, it confirms that many key Liberals continue to misread public sentiment on this issue.

This brings me to the topic of today’s discussion: the workplace view of productivity and flexibility.

Two outwardly bland words, but in the workplace context, loaded with meaning.

And two words that have over time been hijacked by some to suit an agenda that has been to the detriment of workers and that is not linked to the real challenges of business.  Often I read the commentary pieces in newspapers about these issues that make grand claims about productivity and flexibility.

And I wonder who the authors are talking to –where they are getting their information – because they aren’t talking about the issues workers talk to me about, or the issues people who actually run real businesses talk to me about.

Unions welcome any form of national discussion about productivity and flexibility. We will come to the table armed with facts and the concerns of workers from the factories, shops and offices of Australia.

But it has to be a two-way discussion.

The way work is structured isn’t only a key to the level of personal and national prosperity.  

Work impacts on our social status and personal identity. It affects our families and our communities.  

It can cause anxiety and disempowerment, or be a source of security and immense personal satisfaction.

How the rewards of work are distributed, is critical to national productivity and our society. These are not abstract questions, in either economic or personal terms.

Many workers actually experience concepts like “reform”, “productivity” and “flexibility” as “insecurity”, specifically as temporary work and / or volatile income.  

They see “risk” as being progressively transferred from both Government and their employers to them – for example on skills and training, hours flexibility and contracting out.

Just last week, the Prime Minister declared that one of her aspirations in government was to rescale the productivity peaks of the Hawke-Keating era.

Now, unions share the government’s aspiration to lift productivity after it has languished as a result of the Howard years. But employees do expect to be fairly rewarded for their efforts.

Experience from the Hawke-Keating era shows that higher labour productivity will be encouraged when workers feel they will share fairly in the benefits of that growth.

Recently we have seen productivity rise faster than wages, resulting in real unit labour costs hitting an all-time low of more than 17% below what they were during the mid-1980s.

It is no coincidence that productivity growth has been more sluggish at a period when there has been strong downward pressure on wages from employers taking advantage of unfair IR laws.

So, how do we get back up to those productivity peaks of the 1990s?

Well, we have to accept from the start that union collective bargaining is far from an impediment to productivity.

Collective agreements typically incorporate skill-based progression mechanisms and commitments about worker training, as well as ensuring that workers receive their fair share of productivity improvements.

The WorkChoices approach of fragmenting and isolating individual workers and cutting them off from unions has been proven not to work.

To lift national productivity over the long term will also require strategic thinking about investment in skills, education, training and infrastructure, along with an incentive of higher real wages delivered through collective bargaining.

And we need a combined effort to lift workforce participation, particularly in the face of an ageing population.

One of the key ways to boost workforce participation is not through the ‘stick’ of reducing welfare benefits, but rather through the ‘carrot’ of making work pay.

One of the barriers to higher participation is an inequitable tax system that acts as a disincentive for low income people to work more hours.

For workers on lower incomes, the effective marginal tax rate (EMTR) means that individuals can lose 70% or more of an additional dollar they earn through a combination of tax and welfare.  This provides a strong disincentive to work.  Once costs like transport, childcare and clothing are taken into account, work just doesn’t pay for some low income earners.

Second, women in particular face barriers to more fruitful and productive workforce participation.

One of the keys to unlocking higher female participation is to overcome the shocking 17% gender pay gap in Australia.

So-called ‘women’s’ work needs to be properly valued – it is an unfortunate historical throwback that ‘men’s’ jobs such as construction, mining and manufacturing have traditionally been better paid than ‘women’s’ jobs such as community care, health and retail.

As you’d be aware, the ACTU is supporting a test case by five unions in Fair Work Australia using pay equity provisions in the Act to lift the pay of workers in Social and Community Care Sector.

But we do also need to address barriers to women’s full participation in the workforce, by making workplaces and jobs family friendly through flexible working hours and part-time work so more women can participate in these jobs.

This requires cultural and workplace change by employers along with legislative support.

There are of course other ways to improve participation and productivity, but these two will be priorities for unions in coming months.

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Flexibility is another much abused term.

It has been co-opted by some employer groups and businesses as shorthand for “flexibility to lower wages and conditions”. That’s what workers understand when they hear employers calling for more flexibility in the workplace. And given that mistrust, it is no wonder that workers and unions are often resistant to genuine calls for more flexibility from employers.

Unions do not have any opposition to increasing workplace flexibility, per se. But we will not stand by and allow employers to undermine rights and safety net standards in the name of “flexibility”.

A current example is the push by employers in the retail sector to vary the modern retail award to reduce the minimum engagement from three hours to two. They say this is too inflexible, and is hindering greater employment, particularly of young people.

Never let the facts get in the way of a good story. Minimum shifts are an important condition that make sure people get a fair wage for coming to work and that it’s actually worth it.  They ensure a workers’ wage isn’t subsumed in the costs and time of travelling to work, childcare etc.

Only in Victoria has the minimum shift in the modern retail award increased from 2 hours to 3.  

Why is it that employers in every other state other than Victoria has managed to pay workers for at least 3 hours work, but suddenly minimum shift lengths are a threat to jobs?

Remember, this is a safety net that not only students rely, but that adult workers, who may have families to care for, rely on too.

So, if we are going to talk about flexibility, it should not be at the expense of rights, fairness and proper workplace protections.

Nor should it be a code word for more outsourcing, more use of labour hire companies, more casual work.
Precarious work and job and income insecurity in Australia is approaching crisis point, and this type of “flexibility” is not good for workers nor for the economy.

Nor do we need to undergo another round of industrial relations changes to achieve this goal of flexibility.
The reality is there is more than sufficient flexibility in our system.

Awards have been modernised and consolidated in a merits based process.

There is enterprise bargaining with the public interest protection of the safety net via the Better Off Overall Test which allows for arrangements to be tailored for the workplace and for individuals — but with procedural and substantive protections for workers in the process.

And flexibility is a two-way street. Workers also need flexibility, so they can balance their job with their commitments outside of work. Getting this balance right will open the door to better productivity.

For the first time, the National Employment Standards contain provisions for workers to request family flexible arrangements, such as working from home or unusual start or finish times.

This right to request is welcome, but it needs to be strengthened by both broadening the scope of the family needs it can cover to include children older than five and ageing parents, and to provide a robust right of appeal when a request is refused.

Indeed, if there is one area where we need more flexibility in workplace relations, it is around bargaining.
The Act currently restricts bargaining to a limited range of matters. This prevents workers from bargaining on a range of issues that are vital to their interests.

We want restrictions removed on bargaining about arrangements that enhance job security, consultation rights, access to union help, and the rights of workplace representatives.  

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To this end, calls by some big businesses and employer groups for a wind back of the Fair Work Act in the name of greater flexibility or productivity are both premature and motivated more out of ideology and self-interest than any genuine interest in economic reform.

If we are going to have discussion about these issues, let us do it maturely and based on facts.

And let us continue this open and honest dialogue as we work towards a more productive, flexible and equitable workplace.

Thank you for your time.