Inquiry into the Workplace Relations Framework actu submission to the Productivity Commission

Labour Market Trends in the 21st Century: Australia and beyond

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Labour Market Trends in the 21st Century: Australia and beyond.

Modern industrial relations policy makers often try to maximise both economic efficiency and fairness, an impossible task. This is not to say that there is a zero-sum game here—the flawed logic of Okun’s ‘efficiency equity trade-off ’—but rather to say that compromises are always the order of the day in the real world. As the latter discussion will show, the achievement of greater flexibility in the labour market—providing employers with increased economic efficiencies—has been bought at considerable cost to the workforce, particularly those workers engaged in non-standard employment (NSE). Getting the balance right ultimately involves sticking to first principles while also setting rules to judge economic outcomes on the basis of both their efficiency and their fairness.

The single employer workplace has been the traditional locus of concern for industrial relations, and yet the modern labour market must grapple with problems that transcend single workplaces. Workers engaged in non-standard employment often span multiple employers over short periods of time and/or work side by side with workers in a single workplace employed by a different entity and on different conditions. There are other groups who may be formally covered by industrial relations regulations, but who in reality slip through the cracks all the time, such as the self-employed, dependent contractors, foreign workers on 457 visas and international students with working rights.

The workplace is also not the primary site for some of the major labour market issues in the 21st century which revolve around life cycle transitions. These include problems of youth unemployment, long-term unemployment, workers with young family responsibilities and others charged with caring for aged parents or relatives. Many of the 20th century assumptions about education and work have fallen apart in the 21st century: increased higher education participation has not seen a boom in enhanced productivity, but has left the labour market with high levels of overqualified workers. Large numbers of highly educated people in their twenties are still employed as casuals in retail or hospitality, or working for free on internships. Numbers of senior executives without significant levels of higher education have skewed income distribution deciles through receiving enormous salaries bearing no relationship with beneficial workplace outcomes.36 Pathways into permanent full-time employment for unskilled youth disappeared in the 1980s and 1990s; pathways into such jobs for skilled youth in the 21st century are now beginning to shrink as the growth in full-time employment stalls and as older highly educated workers stay longer in the workforce. Concepts of transitional labour markets have helped researchers think about the right kinds of policies to grapple with these problems, but there is scant evidence that policy makers have grappled with them. As for industrial relations policy, that lags a long way behind when it comes to addressing issues of life cycle transitions.37 Finally, if many problems cannot be solved at the level of the workplace, are there other locations—such as industry-based solutions—which are more appropriate? Portability of superannuation and long service leave in the building industry , long service leave in the building, community services, security and cleaning industry in the ACT38 and the long service leave scheme in QLD in the contract cleaning industry covering trainees ,casual, part-time or full-time employees operating as a sole trader subcontractor and employees employed by labour hire companies39.come to mind as examples of policy innovations which aim to transcend the workplace while group training schemes are another example of a multi-employer solution.

The traditional 20th century notion of the worker—embodied in male full-time permanent employment—no longer rings true in the 21st century as a universal touchstone for industrial relations regulation.40 Not only must it be updated to register the gender dimension, but the various forms of non-standard employment must also be accommodated. In a similar fashion, the 19th century notion of the employer—the ‘firm’ so routinely analysed in labour economics—is also obsolete in the 21st century as a definitive archetype. Many multinational companies now buy and sell within their own divisions; contract out their labour supply to related and unrelated companies; manage complex supply chains spanning multiple continents; lend and borrow from themselves for taxation purposes; and relocate not only their production, but their head offices to different countries at different times. If the industrial relations framework of the 20th century does not adjust to encompass these new realities, then the world of work in the 21st century will eventually slip beyond the grasp of policy makers. Further labour market deregulation, with a view to coping with globalisation, is likely to miss the boat altogether, disproportionally advantage capital and could only be accepted if first principles were abandoned. Solutions to the challenges posed by globalisation require industrial relations reforms to stay true to first principles, however other solutions lie outside the labour market and its industrial relations arrangements.

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