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Bosses not happy with Albo's wage world

Peter Switzer
28 November 2022

The Albanese Government has redefined how wages will be determined in Australia after the PM and Employment Minister Tony Burke copped a crunch tackle from former Wallaby and now Senator David Pocock on behalf of small business. But the pair also gave into the Greens, which will mean any worker will have the right to ask for, and get, unpaid parental leave.

For employees, who make up a lot of voters, this Labor-imposed new wage world looks better than the old one, provided you keep your job.

For employers and their representative bodies, they approved of the changes to make it easier for smaller businesses to cope with the Government’s Secure Jobs, Better Pay bill, but bosses fear that the new laws will lead to strikes and job cuts.

This is how the AFR reported the reaction of bosses: “Business slammed the government’s rushing of the workplace laws through the parliament and said the concessions Senator Pocock had extracted from the Labor government did not go far enough to protect employers from industrial action or getting roped into union deals.”

The Australian summed up the changes in this table:

And while Pocock is being criticized for giving in too much to the Government, small businesses with 20 or less workers have had a big win as they’ll be exempt from wage rises coming out of multi-employer bargaining. The original bill gave an exemption for businesses with 15 or less employees.

Another Pocock win was for businesses with 50 or less workers. Here the unions will have to convince the Fair Work Commission that many employers have similar businesses and a common interest test will mean they will “be roped into multi-employer deals.”

For a bigger business, the employers will have to prove that their businesses are not comparable.

Speaking to the AFR, the Business Council of Australia chief executive Jennifer Westacott said the “fundamentally flawed” workplace bill created a new unproven multi-employer bargaining model.

“This is a huge economic risk and there is no evidence multi-employer bargaining will lift wages,” she said.

How will the risks show up? Wage rises could be inflationary and might keep interest rates higher than they would’ve been under the current wage system. Businesses that can’t compete as well as the average business would cut back on staff to get into the exempt category for smaller businesses.

Some employers will sack staff and take on contractors, while other businesses will help escalate a trend to use offshore workers online, where possible.

This is a very worker-friendly piece of legislation that does help low paid workers but the Government could have looked after this group of workers in isolation, without giving the larger group of better paid workers access to bigger pay rises. However, this would’ve defeated what Albo and his team were trying to do — win over workers/voters to their cause.

In good economic times, this cost-increasing wage bill will be manageable but if the RBA’s interest rate rises leads to a recession then this Better Pay, Secure Jobs law will be a job-killer.

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