Attacks on the Fair Work Act Are Nothing to do With Productivity

There was an interesting piece in the Financial Review yesterday from Ian Hanke, communications director of the HR Nicholls Society.

I would link to it but it is currently hidden behind the AFR’s paywall and the Society themselves do not have a copy of the text on their amusingly antiquated website (it seems appropriate that the cyberspace presence of an organisation dedicated to taking industrial relations back to the nineteenth century should be so fogeyish).

Hanke discuss the background paper for the government’s upcoming review of the Fair Work Act and pre-empts the findings of the review by attacking it’s effect on productivity. Despite claiming that the paper features a “paucity and cherry-picking of data” he seems to find enough to justify a belief that the Act is responsible for a decline in productivity. He contrasts this with the Howard years and claims “(the paper) confirms that after a slump in the mid-2000s, productivity grew by 1.8 per cent for the whole of the Howard era.” 


Ah yes, and what of that slump in the mid-2000s? What IR policies were in place then? The answer is Workchoices, the most individualistic, employer-friendly industrial relations regime in Australia since the introduction of the Conciliation and Arbitration Act in 1904. Who’s cherry picking now, Ian?

It has been established many time around the world that the relationship between productivity and union membership levels is not significant, and that the relationship between productivity and industrial relations laws is complex. Productivity is not the same as profitability, it is about inputs versus outputs. To indulge in a cliché, improving productivity is about working smarter not harder. Workchoices undermined this by allowing employees to be overworked and underpaid, and enabling bad management practices to go unchallenged. 


A workforce that works longer hours for less pay is able to generate more profit for their employer, but it is not more productive and this is indicated by the Workchoices era productivity crash.

But it would be playing the game of the business lobby to pretend that IR laws are the primary driver of productivity. The real driver of the productivity crash that began under the Coalition and has continued under Labor is the chronic skills shortage that Australia faces; a legacy of underinvestment in education by the Howard government and the decline of research and development. 


The Financial Review, which purports to want to solve the productivity issue, has recently attacked the Gillard government’s decision to invest in vehicle manufacturing, a sector which provides Australia with vital R&D skills and resources, meanwhile it continues to publish attacks on the Fair Work Act and the basic entitlement of workers which help to undermine the nation’s productivity.

It is in the interests of everyone to improve Australia’s productivity, but if we are to do so the vested interests of business organisations and right-wing pressure groups must stop using it as a vehicle to launch ideological attacks on Australian workers.