Despite the hype about enterprise bargaining and the individualisation of employment arrangements since the early 1990s, the award system continues to play a significant role in Australia’s industrial relations. This is because awards serve as the basis for many non-award agreements.
An award – a legally enforceable document that sets out the minimum rates of pay and conditions of employment – typically applies to employees across an industry or an occupation. This one-size-fits-all approach does not take into account the particular circumstances of particular enterprises. For example, hospitality businesses in Sydney and Hobart, if covered by the same award, are obliged to pay their workers similar wages, regardless of the varying costs of running a business in those cities. Such an anomaly may be contributing to Tasmania’s relatively high jobless rate.
Some critics argue that the cumbersome and centralised award system should be replaced by a system that relies on the common law, but there is only limited support among employers for such a measure. Employers in certain industries, such as agriculture, generally see the award system as detrimental. Yet many others do not have a burning desire to abolish it.
They are concerned that upon the removal of the award system, politicians and unions would soon begin to fill the legal vacuum with new legislation, and things would change for the worse.
This is not to say that the award system should be left as it stands now. Surveys and interviews with employers reveal an enduring dissatisfaction with the current system.
Four reforms are proposed:
(i) reintroduce differential rates of pay for regional businesses;
(ii) make it easier for employers in extreme hardship to access exemption from certain award provisions;
(iii) ban pattern bargaining explicitly; and
(iv) provide employers with an option to opt out of the award system.
These reforms would aim to create a more decentralised, flexible system where working conditions and wages would better suit the nature and location of individual enterprises.
Productivity and job creation would be boosted as a consequence.
Kayoko Tsumori is a Policy Analyst at The Centre for Independent Studies. This report is the third in the 'Poor Laws' Issue Analysis series.
