Labors proposed amendment to the Fair Work Act (subtitled itsSecure Jobs, Better Pay bill) has drawn fire from Australias three leading employer groups:

• the Australian Chamber of Commerce and Industry, which says it will createmore strikes and unemployment
• the Australian Industry Group, which says it threatens decades of national prosperity and willturn workplaces into conflict zones
• and the Business Council of Australia, which says it risks tipping the economy over the edgewhile workers wait longer for pay increases.

The Senate has begun an inquiry, but it is already easy to see the worst of these fears are misplaced.

Along with banning pay secrecy clauses, putting gender equity at the heart of the Fair Work Commissions pay-setting process, and giving it new powers to resolve long-running disputes, the bill expands access tomulti-employerbargaining, something that withered away at the start of the 1990s.

While multi-employer bargaining is allowed under current laws, no such agreements have been made since2009, and few since the introduction of enterprise bargaining in1993.

Before enterprise bargaining, pay was set by hundreds of awards most covering more than one employer in a sector or occupation negotiated between employers and unions before being arbitrated by the Fair Work Commission.

Enterprise bargaining largely replaced that process with agreements individually negotiated in each workplace, and merely registered with the Commission, which checks whether they have passed a Better Off Overall Test and meet minimum standards.

A smaller number of awards continued, renamed modern awards, and used as a backup for enterprises in which agreements couldnt be reached.

Enterprise bargains are becoming rarer

It was thought enterprise bargaining would boost productivity, because workers would be able to suggest changes to the way their enterprise worked that would make things more efficient in return for more pay. However, the extent to which this happened isunclear.

Lately, enterprise bargaining has been declining, with the number of operational federally-registered enterprise agreeementsfalling by more than halffrom 23,500 to 10,000 between the ends of 2013 and 2021.

In part this has been because pay rises offered under enterprise bargains have been too low to represent value for workers in the enterprise or their union.

Under the current enterprise bargaining rules, introduced by the Rudd government in 2009, employers arenot legally obliged to offer higher payin return for demands such as longer working days.

TheAustralian Council of Trade Unionsbelieves bargaining with multiple employers will enable employers to offer more, knowing others can. It wants the government to be part of the process where it funds the pay rate set, as it effectively does for childcare and aged care.

Employer representatives say it would be a return to the1970s, or the1960s, when industrial action was common and prices and wages chased each other up.

Our researchon Denmark suggests these fears are misplaced.

Denmark shows whats possible

Denmark has enterprise agreements, similar to Australias, but they are linked to multi-employer sectoral agreements bargained between unions and employer associations representing workers and employers across a particular sector.

These sectoral agreements provide frameworks that can be varied at the level of each enterprise. Like Australias awards, the sectoral agreements are the default in enterprises that are unable to strike enterprise bargains.

The difference is that Denmarks sectoral agreements provide a stronger set of minimum conditions and protections than Australias awards, which are more limited by law in what they can cover.

Danish workers have the right to strike and employers have the right to lockout their workers by preventing them from working. Despite these powers, industrial action isrelatively rarein Denmark.

In recent yearsfewer dayshave been lost to industrial disputes in Denmark than in Australia. Taking into account the relative sizes of their workforces, Australia lost about 10 times as many days to industrial action as Denmark in 2021.

This is despite unions being much stronger in Denmark 65%of Danish workers are union members compared to only14%of Australian workers and industrial disputes in Australia falling tohistorically low levels.

And Denmark does not have out-of-control wages growth. In the past year average Denmark wages climbed2.5%compared to a similarly-calculated3%in Australia. In August, Denmarks unemployment rate was2.7%. Australias was3.5%

Multi-employer bargaining wont solve all of Australias workplace relations problems, but its unlikely to make many of them worse.

Chris F. Wright- Associate professor, University of Sydney, Russell Lansbury- Emeritus Professor in Work and Organisational Studies, University of Sydney, Sren Kaj Andersen- Associate Professor, University of Copenhagen

First published on Nov 01 2022 in THE CONVERSATION