Minister for Employment Eric Abetz announced this week that the government will introduce legislation to limit union entry rights and striking abilities, as well as increase “flexibility” in the workplace.
The move comes as the Prime Minister has been seeking to build the longer-term case for scrapping penalty rates, bashing union agreements at Toyota and SPC, and asking the Productivity Commission to weigh in on the issue.
If passed, Abetz’s changes would make it easier for employers to reduce penalty rates for workers. But a brief look at the results of such workplace “flexibility” and the trading of penalty rates in Britain should serve as a warning to Australia.
Last year in Britain the extraordinary story broke that 200,000 home care workers had been placed on “zero hours” contracts — what we in Australia would call casual work.
Under the contracts they were paid a low flat rate for a short block of time, usually just 15 minutes, to look after each elderly or unwell patient.
Casual workers here typically get an extra 20 or 25 per in exchange for giving up key entitlements such as leave and job security. But in Britain these workers get no such thing. They also didn’t get paid for driving between their many jobs, nor if their clients needed extra care.
At the end of the day, many of them were taking home less than the minimum wage for caring after some of the most vulnerable people in society. Many were choosing to leave the career they loved rather than work in poverty or be forced to cut the quality of their care.
While their situation provoked a broad outcry, the story of life without penalty rates isn’t unique. I have also met production line workers doing the gruelling 10pm to 6am shift and only getting about $2 more than those doing the day shift, and delivery drivers earning barely above minimum wage for working all hours of the day or night.
The problem for these workers is that Britain doesn’t have the protection of an award-style safety net. Instead employees rely on union-negotiated workplace agreements with their employees. But such agreements now cover less than a third of private sector workplaces. When the financial crisis hit in 2008, the workplace safety net simply wasn’t there.
With penalty rates absent there has been little disincentive to stop employers transferring large sectors of the workforce on to “zero hours” contract. One employer — Sports Direct — moved 90 per cent of its staff on to them.
More generally, nearly all net job growth in Britain since the financial crisis has been in “non-permanent” forms of work — part time, labour hire or casual work. Some respond that it is better to have a bad job than no job — usually those not facing such a rotten choice.
But even cold economics doesn’t side with this argument. The rise of these insecure jobs has contributed to the British labour force effectively suffering a six per cent pay cut since 2008. This has taken $97 billion (£52 billion) out of the economy, according to my former employer, the Trades Union Congress (TUC).
This squeeze on wages hasn’t made Britain more competitive, but has accompanied what Martin Wolf at the Financial Times called a “collapse in productivity growth”. Weaker rights at work have helped make the British economy a car with flat tyres. The main thing growing instead has been betting shops and food banks — charities giving out food to the growing number of working poor unable to make ends meet.
Australia is not facing such a grim situation. But tough times likely lie ahead, with the mining boom now sounding more like a whimper, and the high dollar dragging our other exporters into the red.
Australia is particularly exposed. We are addicted to casual employment like no other place. At least one in five workers are casual. And not by choice: more than half of them would prefer a permanent job. Most casual workers are women earning low wages. Penalty rates are vital to help them make ends meet. Removing, or even weakening them, could be a social disaster.
The brief period of WorkChoices under the last Coalition government enabled employers to put forward Australian Workplace Agreements (AWAs) which gave employees weaker terms and conditions than the Award safety net. Accordingly to an ACTU analysis, the majority of AWAs scrapped penalty rates and loadings.
While the changes proposed on Thursday are not as far reaching as Work Choices, they are taking us in this direction. For example, they will prevent employees from collectively agreeing with their employers to stop individual employees trading off their penalty rates. This will make it easier for unscrupulous employers to divide and rule.
The government are again trying to sell the proposed changes as an issue of workplace choice. But Work Choices usually offered employees no real choice at all, especially when big employers, such as the Commonwealth Bank and Telstra, started to transfer them on to AWAs by the thousands.
Instead, the choice we should have is between political parties putting forward well thought out plans to create high skilled and high value adding jobs. And that plan shouldn’t meddle with penalty rates, the guarantees that help distinguish a decent job from an insecure and poorly paid one.
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