Centre for Future Work’s Opening Statement — Senate Inquiry — Fair Work Amendment Bill

This Fair Work Amendment Bill proposes sweeping changes to Australia’s labour laws, at a very fragile moment in Australia’s economic history.

In our judgment, several features of this legislation will enhance the power of employers to hire workers on a just-in-time basis, suppress wages, and undermine terms and conditions. Key measures proposed include:

· Allowing employers to hire workers on a casual basis in virtually any position ‘deemed’ to be casual, with weak and inaccessible permanency conversion rights enabling long-term casual labour use.

· Reduction in permanent part-time loadings and hours security, allowing employers to treat permanent workers as if they were casual (with the power to adjust hours up or down without penalty).

· Exempting enterprise agreements from the ‘Better Off Overall Test’ (BOOT) allowing them to contravene Modern Award standards. This will increase below-Award agreement-making and “repurpose” enterprise bargaining into a mechanism for lowering wages and standards — rather than raising them.

· Other measures aimed at the Fair Work Commission would accelerate the approval of low-quality enterprise agreements: including 21-day approval timelines, weakening of employer requirements to demonstrate that their staff have genuinely agreed to the EA, and restrictions on the participation of unions in the review process.

· Finally, employers will gain the ability to implement 8-year, wage-locked greenfield agreements at new projects or businesses without input or ratification by affected workers.

Together, these changes would constitute a significant weakening of institutional supports for improving wages and working conditions. Enterprise bargaining changes would create a situation reminiscent of the WorkChoices regime of the late 2000s, when employers were given considerably more unilateral power to determine terms and conditions. Wages will be locked in for very long periods of time and the scope for genuine workplace negotiations will be compressed even further.

Most concerning, this Bill has been introduced at a fragile moment in Australia’s history, when wages are already extraordinarily weak. Even before COVID, wage growth had decelerated to the slowest sustained pace since the 1930s — growing by less than 2% per year since 2015. Now, wages have fallen to an utter standstill: growing just 0.1 per cent in the September quarter.

Most economists agree Australia’s economy desperately needs stronger wage growth. Just last week the Governor of the RBA, Dr Philip Lowe, noted wage growth would have to be “materially higher” before normal economic and financial conditions can be re-established.

Deliberate efforts to boost wages are clearly required to support a sustainable and inclusive recovery, boost consumer spending, and strengthen confidence. But this Bill does exactly the opposite: expanding employer power to use insecure labour and low-wage enterprise agreements. This will put more downward pressure on wages.