IR’s Kodak moment

The rise of automation will see a sizeable chunk of today’s workforce replaced by robots, global employment giant Seek has warned.  And a recent McKinsey report found 75% of hospitality jobs and 60% in the resources sector are vulnerable to being edged out by machines.

This presents a clear imperative that our industrial relations framework is equipped to maximise employment, and has the flexibility to adapt to rapidly changing economic circumstances. Yet on both these measures, our current workplace framework falls desperately short.

A root cause of Australia’s underwhelming labour market is the award system — a hangover from compulsory arbitration that continues to see the wages and conditions of almost a third of the workforce largely determined by a quasi-legal industrial tribunal.

The idea that a café in Townsville’s anaemic local economy and record unemployment should by law pay the same wages as one in Surry Hills — where the cost of living is at least a third higher — is a throwback to Soviet-style central planning. It has no place in a modern and competitive economy.

The problem is that while unions enjoy decisive influence over the bargaining process, they bear none of the commercial risk of negotiating pay and conditions — in total defiance of what a competitive market would tolerate.

Ensuring Australians continue to reap the benefits of a specialised, high wage and internationally competitive workforce will require a workplace relations framework that stimulates job creation, rather than hindering it.

In the scope of the biggest challenges facing Australia’s labour force, the brouhaha over Sunday penalty rates is really squabbling over loose change.

After all, whether someone is paid $29 or $25 an hour to work at a fast food outlet on Sunday is really an academic question if automation sees burger-flipping go the way of Blockbuster, Kodak and the dodo.

John Slater is the author of the Centre for Independent Studies paper: Industrial Relations in Australia: A Handbrake on Prosperity.