The Morrison government has introduced a new industrial relations bill to parliament, with their hopes set on getting rid of barriers to job growth in the post COVID-19 economy. However, this bill is a trojan horse carrying a more inflexible labour market. It is the government’s attempt at micromanaging employer-employee relations, whereas the best thing for the economy would be for them to butt out.
So what is the essence of this bill? The reform mainly targets five aspects; greenfield agreements, casual employment, compliance and enforcement, enterprise bargaining and award flexibilities.
The greenfield agreement is a contract between a union and a new employer. The union generally seeks to improve employee benefits for potential workers. In this case, the federal government aims to enhance global interest in local projects by guaranteeing a maximum of eight-year-of-life contracts, including wage increases.
The government believes promising stability in its agreements is an attractive feature to foreign investors but has forgotten about employees’ rights to negotiate. The proposal fails to take into account the unpredictability of work environments, unexpected employee personal issues and downturns in the economy. The coronavirus pandemic leading to an economic recession is a good example.
If passed, this bill would discourage employers from hiring additional workers. It allows part-time workers to take on more work hours without overtime reimbursement. This means part-time employees can take on hours flexibility that casuals enjoy, but get paid at lower rates. The bill also allows employers to get their staff to “perform new types of work at new locations”, to help revive their businesses.
The government wants to help Australian enterprises get back on their feet so they want to enforce this regulation. However, this contradicts the very aim of the reform itself – to help increase job growth. The bill allows employers to revive their businesses, but at the expense of employee rights and creates barriers for potential workers to receive jobs.
The bill also mandates if a casual employee works consistent hours for the last 6 months and has worked at the company for a year, the employer is obligated to offer a full-time or part-time job to the employee. The employee can decide to reject the offer but is still entitled to it if they change their minds.
The IR reform was constructed with the intention of boosting the number of employed workers in Australia. However, this new regulation means some employers will not be able to keep their businesses afloat. On the off chance casual workers accept the offer to switch to a full-time or part-time arrangement, small and medium-sized enterprises (SME) may not be able to afford to pay them their law-mandated wage.
Businesses may have to resort to raising prices and risk losing customers, retrenching some staff members or even flouting the law and not paying their employees the minimum wage. They have no choice but to take these measures to survive. Those desperately in need of a job will surely not benefit from this regulation.
The government has taken on the task of rectifying employee underpayments. They have come up with a new four-year jail term for those who do not comply with the minimum wage law. However, this will only cause more businesses to close down and take away even more job opportunities for the rest of us.
If the government truly cares for its people, why is it forcing its people to a dead end? The government wants to lend a helping hand to local business owners, yet they forgot about workers’ rights. They want to boost job growth, yet their reforms achieve the opposite effect.
If anything, the IR reform shows us the real culprit behind low job opportunities and dismal entrepreneurship in Australia — the many regulations enforced upon us, such as the minimum wage.
The minimum wage law is a regulation that deters many aspiring entrepreneurs from opening businesses and forces many business owners to shut down their operation. Not only does this have a negative impact on foreign investment, it also shuts down job opportunities for Australian workers. We are the ones most affected by this law.
The regulation has also led to a higher cost of living in Australia. Businesses have no choice but to increase prices of goods and services to balance out the cost of hiring staff. This means minimum wage does not increase wages, as our buying power decreases when prices go up.
Australian people’s lives are not improved by unnecessary regulations, just as they are not improved by the minimum wage. These regulations have no place in Australian politics. If minimum wage is a fire started by the government, this reform is the fuel to the flames. To alleviate the pressures of high costs of living and rid ourselves of barriers to job growth, we need to remove the minimum wage law, not increase labour regulations.
Xin Yuan Quek is a Research Associate at the Australian Taxpayers’ Alliance.
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