Secure Work Act: Don’t expect a surge in wages too soon

Dec 15, 2022
Payday end of month date on calendar with red marker and circled salary day.

Will the new Secure Work Act lead to a resurgence of wages growth?

It makes a large number of changes to the laws governing industrial relations. Some will probably boost wages for some workers, at least in the medium term.

These changes include: prohibiting pay secrecy clauses; making it easier to obtain equal remuneration by gender, including by removing any need for a ‘male comparator’; introducing a limited scope for arbitration, after bargaining has become intractable; constraining employers’ capacity to terminate expired agreements as a bargaining tactic; banning job ads with sub-minimum wages; and ending ‘zombie’ agreements from the WorkChoices era.

The fact that business groups put so many resources into opposing the provisions for multi-employer bargaining, though, suggests that, of all the features of the Secure Work Act, this is the aspect with the greatest potential to raise wages. That implication is likely correct, especially for low-wage earners. That’s why, compared to single-employer bargaining, multi-employer bargaining (that is, bargaining that covers more than one employer) reduces inequality amongst wage-earners.

But if it has an impact on wages over the long run, don’t expect much in the next year or so. It will be a lot of effort for a union to get up a multi-employer agreement. For the most important stream of multi-employer bargaining, you’re not eligible if you’re in a workplace that has, or is bargaining for, an enterprise agreement.

It makes Australia’s new arrangements still a bit odd, internationally. In Denmark, for example, multi-employer and single-employer agreements are linked, with the former providing a framework for the latter.

Importantly, this exclusion means that Australian unions aiming for a multi-employer agreement will be trying to organise workplaces that don’t yet have an enterprise agreement and therefore are most commonly not unionised.

It’s not that easy to mobilise a large group of non-union workers unless there is a pretty significant common grievance. Sure, below-par wages are a significant grievance, but if that was enough to motivate those workers, wouldn’t they have been unionised already?

True, unions need to be able to demonstrate some power, in order to persuade people to join. The capacity for multi-employer bargaining does increase that power. But is that enough to persuade non-members that it’s now worth joining a union, or at least supporting action for a multi-employer agreement?

In the short to medium term, then, multi-employer agreements will not suddenly become the dominant form of wage fixing.

To enable that to happen, the complexity of Australia’s new multi-employer bargaining rules needs to be addressed. Having three streams with different, voluminous rules and conditions is unnecessarily complex and counter-productive.

Excluding most unionised workplaces from multi-employer bargaining means that the gains that the Organisation for Economic Cooperation and Development sees from multi-employer bargaining won’t occur. The OECD understands the main benefits of sectoral bargaining occur through the coordination of union aims, by enabling unions to take account of sectoral economic circumstances. That cannot happen if most unionised workplaces are excluded from this bargaining.

The rules on multi-employer bargaining are an example of how those who draft Australia’s industrial laws are wedded to complexity. The Fair Work Act is a very complex piece of legislation, with tortuous rules on things like the procedures for obtaining a secret ballot and the process for establishing legal industrial action.

Many of those complexities were deliberately introduced to stymie unions and help employers, who ironically call for awards to be simplified.

There are other things that also hold back wages growth. Many of the key areas waiting for some wages action are areas where the Commonwealth government itself has to be willing to spend a lot of money, because it effectively finances a large slab of these workers’ pay. Much of the care workforce is in this category, even though many carers are technically employed by the private sector.

Meanwhile state governments implement ‘salary caps’ that hold back the pay of nurses, teachers, and many other essential workers while lowering the norms for wages growth in the private sector. Even the Governor of the Reserve Bank thought that they were holding wage norms too low.

More broadly, labour markets have changed in recent decades. Unions and workers have much less power. Employers have more discretion to determine wages, and to keep them low. Often smaller employers feel they have to keep wages low, to satisfy the price demands of the larger corporations to whom they contract.

So, what would raise wages growth? Collective bargaining processes are too complex as it is. There is no need to add to complexity by differentiating between single-employer and multi-employer bargaining. Legislation that improves the capacity to engage in collective bargaining, the methods by which collective agreements are reached and implemented, the ability of employees to establish, join or be active within trade unions, and the rules surrounding taking of lawful industrial action would reduce the downward pressure the law exerts on wages — as would removing the separate conditions for multi-employer bargaining.

If wages are to increase significantly, reform needs to address a number of issues beyond the bargaining process itself. These include: the definitions of permanent and casual employees and contractors; entitlements for workers in the ‘gig economy’ and other contractors; the situations in which labour hire is permitted and the conditions under which it occurs; and the institutions that administer labour law themselves. And then there are matters that affect workers’ ability to obtain higher wages by moving jobs, including child care and problems with relocation and retraining assistance.

In the end, so much comes back to unions. As part of unions’ raison d’etre is to raise workers’ wages, stronger union organisation is a fairly obvious precondition for higher wages. Yet unions are numerically a pale shadow of the organisations that were prominent in the labour market in the 1960s and 1970s.

In the end, the Parliament cannot legislate for higher wages, and employers won’t dispense them from the kindness of their hearts. Unions have to fight for them. Nonetheless, the law matters a lot for wages.

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