Industrial relations: How controversial will 2017 be?

industrial relations
Girard Dorney


written on June 19, 2017

We take a closer look at what might be the underlying causes of industrial relations tensions of 2017.

This year has been particularly dramatic for industrial relations in Australia. The minimum wage rise satisfied nobody, the fight over penalty rates continues, and the Fair Work Ombudsman raided businesses to combat what some have called “Australia’s burgeoning world of underpayment”.

Here are two arguments for why Australian HR professionals should be preparing for more news from the world of industrial relations.

1. Wage stagnation

Even as Australia celebrated 26 years without a recession, there have been murmurs that the benefits of this have not been felt by everybody. If anything, Australia’s consistent economic performance has made the flatness of real wages more remarkable.

Australian wages grew by 0.5 per cent during the March quarter, leaving the year-on-year increase at 1.9 per cent. But with consumer price inflation currently running at 2.1 per cent, what this actually means is that real wage growth went backwards for the first time since 2014.

The signs that this trend will reverse in the near future aren’t hopeful. Earlier this year we reported on the 2017 Hays Salary guide, a major finding of which is that 11 per cent of employers surveyed said they were not expecting to increase salaries at all, while 65 per cent expected to offer less than a three per cent increase.

Even Treasurer Scott Morrison has said that, “The biggest challenge we have is to ensure what Australians are earning every week is increasing”.

In the Guardian, Greg Jericho argues that the problems with wage stagnation are compounded by the fact that Australian workers have managed impressive increases in productivity when compared to the employees of other economies. Which means even though they’re creating more wealth, Australian workers are not seeing a rise in their income. According to an OECD report, the gap between productivity and compensation is worse in Australia than it is in the US, andwe’re near the bottom for all advanced economies.

He finishes: “Such a situation might be enough to shake up the IR debate.”

It seems a safe prediction. Earlier this month, Tanya Plibersek, deputy leader of the Labour party, made an explicit connection between wage stagnation and the decline in union membership and influence, and called for a strengthening of union power.

Her confidence is bolstered by what she views as support from an unusual corner. “The International Monetary Fund, historically no great supporter of labour unions, has acknowledged the links between low levels of unionisation on the one hand and low wages, inequality and increasing income for those at the top on the other,” Plibersek said.

2. The changing nature of work

Fears of automation, a trend towards contract work, and the rise of the gig economy have all been cited as a reason to update Australia’s IR legislation.

HRM is not the only site that has published legal pieces on recent cases about what constitutes a contractor and an employee – and other stories about the gig economy, such as the work safety laws that apply to the men and women injured while riding for Deliveroo.

In June an administrative judge in New York ruled that three Uber drivers (plaintiffs in a case organised by the New York Taxi Workers Alliance) and “others similarly situated” should be considered employees for the purposes of unemployment benefits. Uber immediately appealed the decision – putting off the question of whether the gig economy’s biggest success story can survive in the US (and the world) if IR laws remain as they are.

As we’ve reported on previously, the deal struck between Unions NSW and gig economy job platform Airtasker in May could be a sign that there’s a space for organised workers in the future. On the other hand, there are questions about whether the gesture will end up being anything more than symbolic.

Regardless, with predictions that “Uber-style” employment will one day be the new nine-to-five getting louder – it has recently arisen in discussions about  aged care – at some point technology and its effect on the changing nature of work will demand legislative reckoning.

Don’t miss out on more great content like this.


One thought on “Industrial relations: How controversial will 2017 be?

  1. What must be remembered is that during the resources boom, and for a period after that, we saw ridiculous yearly pay increases – in both the private and public sectors. The wage increases were unrealistic and unsustainable. Our national minimum wage is one of the highest in the world. We got too greedy and now do not want to adjust to a lower standard of living. This was fuelled by unions, governmental departments, and weak large private sector employers. State and Federal ALP Govt’s spent money like drunken sailors, decimating our national surplus, and leaving us with a debt that will never be reigned in. Any attempt to reduce this debt is viciously opposed, especially by some of the morons in the Senate – look at what happened to Abbott when he attempted to reign in spending in the 2014 budget. We are on the way to becoming a basket-case like Greece

To comment on this article please provide your name and email address. Your email address will not be available publicly.