Media & Speeches

Right Approach and Facts Needed for Workplace Relations Reform: Article by Jennifer Westacott

This opinion article by Jennifer Westacott, Chief Executive of the Business Council of Australia was published in The Australian on 24 October 2015 under the titile '24/7 economy needs workplace reform'.

The federal government has started an important conversation about how we make our workplace relations system fit-for-purpose for a modern, globally-connected world. It is an opportunity to move beyond the tired old debates on this topic which just look in the rear view mirror.

The government has also taken first steps to improve the system by working with the cross benchers to pass amendments in the Senate to remove unproductive restrictions on enterprises trying to start major greenfields projects.

But much more is to be done and how we approach the next wave of reform is crucial.

Workplace relations can be an emotive and controversial area of public policy. It is about the income of many Australians, the conditions of their daily work life, and in some cases whether workers have jobs. This is why proposed change is often ripe for misinformation and scare campaigns.

The challenge is to build trust together on this topic, which requires honest and respectful conversations, and facts on the table so people can make their own judgements.

From the Business Council’s point of view a clear, defined safety net remains essential.

The Business Council supports the minimum wage, premium rates, the National Employment Standards, and awards as integral parts of a workplace system of the future.

But that doesn’t mean we support all of these elements in their current form, because it is clear in our highly competitive, globally-connected world enterprises large and small need greater agility to be able to innovate and adapt so they create more jobs and be more successful.

These are not mutually exclusive. Elements of the safety net can be changed to provide greater agility without destroying the safety net role.

As it is the most talked about issue, let’s put penalty, or premium rates of pay, on the table for scrutiny and establish some of the facts on this topic.

First, penalty or premium rates are not consistent across industries, and they are not consistent across the hours worked. Moreover, there is no rationale for the differentiation.

As the Productivity Commission illustrated, workers on night shift get paid less than workers on Sundays, despite the wealth of evidence that consistent night work can impact on a worker’s health.

Let’s take some real world examples. Level 1 aged care workers are paid $21.14 per hour to work a night shift. They are paid $27.57 per hour to work Saturday and $32.16 per hour to work Sunday.

A night shift would be any shift that started at 4.00pm or before 4.00am. I’m sure many in the community would agree that working overnight is much more unsociable than working on Saturday or Sunday. Yet, aged care workers are paid more than an extra $10 an hour to work on a Sunday than they are paid to work overnight.

Now let’s compare rates across industries – aged care compared to fast food. A level 1 fast food casual worker is paid $26.58 per hour for working after midnight, $28.48 per hour for working on Saturday, and $33.22 per hour for working on Sunday.

Casual fast food workers get paid $5, or 18 per cent, more an hour than level 1 aged care workers for a night shift.

A Student Ambulance Officer or Level 1 Paramedic worker is paid $31.81 per hour on Sunday. Again, this is less than a casual fast food worker.

A level 1 Registered Nurse is paid slightly less than a fast food worker for a night shift - $25.22 per hour, compared to $26.58 an hour – but is paid slightly more for Sunday work - $38.38 per hour, compared to $37.95 per hour.

When we talk about making common sense changes to penalty rates to reflect our modern economy and society, addressing these kind of disparities and nonsensical rates of pay is what we’re talking about.

The second fact to get on the table is there is no credible estimate of how many workers receive penalty rates, let alone how many would say they rely on premium rates of pay.

The figure of four million workers is often quoted, but not substantiated. But, even if there were four million workers relying on penalty rates, it does not mean we should remain locked in the current, nonsensical system. The way the current system is configured penalty rates can result in businesses not opening on weekends, or not employing more workers. That’s not good for anyone.

The third fact is penalty rates were never designed to compensate for inadequate pay. They were designed to pay a premium for opening at unsociable hours and to make the unsociable hours attractive enough for there to be enough workers who want to work those hours.

What’s clear from the widening discussion about these issues now is that there is a different view about what are unsociable hours than when penalty rates were introduced.

If it is indeed true that four million workers rely on penalty rates as they are currently configured, then as part of this discussion we have to consider transition arrangements for those impacted. Our fundamental point is we have to be willing to put the facts on the table and ask honestly if the current regime is fit for a modern, 24-7 economy. Deciding how we set penalty rates in the 21st century, given the costs they add to business and their impact on discouraging job creation, must be based on such facts and honest scrutiny.

The Business Council has proposed that penalty rates be decided by the Fair Work Commission as part of its Minimum Wage Order determinations – they contribute to the minimum cost of labour and shouldn’t be hidden in awards.

We’ve proposed a single economy-wide rate for each kind of premium rate – casual, overtime, shift work and unsocial hours. This would deliver consistency and transparency.

The rate would then be triggered by each award, which would specify what constitutes an unsociable hour or shift work for an industry. Anything beyond that would be subject to an enterprise agreement. For example, normal hours for a baker will start early morning, whereas other industries aren’t the same.

These are challenging issues to confront, but we can’t ignore these challenges because of the complexity of their impact. We need to embrace the challenge, make good policy decisions, and design a workplace relations system that is fit for a modern economy, and importantly, creates jobs for the future.