Australia’s New Workplace Laws Will Not Improve Wages

The Australian Labor government’s new industrial relations bill promises to boost wage growth. But the legislation’s key components work to undermine that goal.

Australian prime minister Anthony Albanese addresses the Jobs and Skills summit at Parliament House. (James Brickwood / Sydney Morning Herald via Getty Images)

The Australian Labor government’s Secure Jobs, Better Pay Bill has passed the Senate after a series of changes. It is now set to become law. In light of a dramatic fall in real wages, the legislation has been promoted by Employment and Workplace Relations Minister Tony Burke as the best way “to get wages moving.” Labor Party prime minister Anthony Albanese spun his win in heroic terms on Friday, declaring that “today is a win for the heroes of the pandemic, the cleaners, the disability workers, the aged care workers, the early childhood educators.”

For months, big and small businesses alike attacked aspects of the bill as a return to the days of worker militancy. Over the past few days, a cast of far-right characters lined up to delay its passage in the Senate. With enemies likes these, it would be easy to take Burke and Albanese’s description of the bill at face value.

While the public debate has occasionally become heated, it’s far more accurate to say it’s been confusing. The Australian Industry Group (AIG) and Business Council of Australia (BCA) spoke passionately in favor of parts of the bill, and angrily against others. The Australian Council of Trade Unions (ACTU) claimed the legislation “will help ease the cost-of-living crisis by enabling workers to bargain for decent wage increases” but also admitted that such an outcome was impossible within the terms of the bill.

Determining the truth of the matter has been difficult. One reason for this is contextual. Australians have the fewest rights and the most restrictions at work of any advanced economy in the world. Any discussion of improving workers’ lives takes place against this dismal backdrop. Another is technical. The new bill is actually a series of amendments to another piece of legislation, the Fair Work Act. This ill-named act is a long and complicated list of things Australian workers are prohibited from doing. The fact that the new bill both adds and removes prohibitions on workers can make its overall impact hard to decipher.

While the bill is long and complicated, it’s worth taking a sober look at its key planks to determine just what changes they might bring to workers’ lives.

The BOOT of All Evil

A key claim of government and business was that changes to the Better Off Overall Test (the BOOT) would result in wage increases. This campaign built to a fever pitch at the Albanese government’s Jobs and Skills Summit in September. Government, union, and employer group leaders stood side by side and declared that the BOOT was too inflexible and had lost sight of its intended operation. Something must be done, they sang in unison, to make it “fit for purpose.”

The BOOT is a requirement that the industrial umpire must reject a proposed agreement if it will result in workers getting paid less than industry minimum wages and conditions. These minimum standards are outlined in legislation called Awards.

Unsurprisingly, business has claimed that the BOOT is unfair. Their disingenuous argument is that the BOOT has resulted in enterprise agreements being rejected by the umpire, which means that workers sadly miss out on the higher wages of union-negotiated agreements. But this is a sneaky sleight of hand. A series of large-scale enterprise agreements in retail and fast food were indeed canceled by the umpire in the past few years, with hundreds of thousands of workers subsequently moved onto the Award. But this was because these dodgy deals were designed by big business and the Shop, Distributive and Allied Employees’ Association (the SDA) to cut workers’ pay. These workers collectively made AUD$1 billion more per year on the minimum standard.

Employers big and small have also long maintained that the BOOT is complex because they are forced to consider “hypothetical workers.” This sounds strange out of context. In practice it prevents businesses from drafting agreements which, for example, don’t include extra pay for casual workers simply because the business currently employs no casuals. If businesses were allowed to do this, they could simply exclusively hire casuals once the agreement was written into law and make a killing at workers’ expense.

So, when employers claim that the BOOT is unfair and complex, they mean that it is making them pay workers more than the bare minimum. For that reason, it should never have been touched.

When drafting the new bill, businesses were insistent that “prospective employees” not be considered when applying the BOOT. Had this change gone through, it is clear what the result would have been: the near-instant reversal of fortune for retail and fast-food workers, the return of those dodgy deals, and the transfer of billions of dollars back to big business. Shamefully, it was the Labor Party that drafted these proposals.

Thanks to public pressure by the Retail and Fast Food Workers Union (RAFFWU), the Greens maneuvered in the Senate to save parts of this clause. But the win was only partial. The new bill now states that the BOOT will consider “reasonably foreseeable employees.” While the Greens claimed that the BOOT had been saved, the government simultaneously declared that the “complexity” had been successfully removed. Pro-business head kicker Liberal senator Michaelia Cash demanded to know on Thursday whose version was correct. She recognized that Labor’s original proposed changes to the BOOT were “the biggest win that employers had.”

While the worst-case scenario has not eventuated, it is undeniable that the BOOT has been altered, and for the worse. Not only is the new designation for prospective employees unclear, but other new amendments insist that the BOOT be “applied flexibly as a global assessment, not a line-by-line comparison.” This spells danger. The line-by-line comparison is what ensures that safeguards remain in new agreements and minimums cannot be undermined.

“100 Hoops”

Key union figures sometimes sheepishly downplay the proposed changes to the BOOT. What they enthusiastically champion, however, is the amendment of multiemployer bargaining. Now enshrined in the bill, this means that industrial agreements can (in theory) be negotiated across entire sectors, rather than between one employer and a group of employees. Union leaders argue that multiemployer bargaining will drive wage growth by boosting incomes for all low-paid workers in certain feminized industries.

There is some precedent for this. But industry-wide bargaining has only achieved Australian wage growth in the past alongside worker militancy and mobilization. This new bill explicitly makes protected industrial action more difficult, and brands unprotected industrial action as criminal coercion.

Just days before the bill’s passing, the messaging shifted. Multiemployer bargaining, ACTU secretary Sally McManus conceded, was really just a stick to scare employers into negotiating single enterprise agreements. The idea of it actually happening, she clarified, was unrealistic because,

There’s 100 hoops. Any idea that unions could somehow jump all those hoops and get all of those employees across a whole industry to vote for something is ridiculous. It’s just not possible. We have got finite resources. It’s always the case [that] you’re not going to have effective outcomes in bargains where there’s low union membership, that’s there to be seen in all of the stats.

What’s more, by the time of the bill’s final reading, many exemptions from multiemployer bargaining had been granted to businesses. Absurd levels of consent became required from eligible employers — and most had declared their intention never to cooperate with the idea anyway. As economist Andrew Stewart explained, and McManus conceded, the most realistic prospect for any employers to agree to multiemployer bargaining is if government funding bodies also come to the bargaining table.

So ultimately the strategy suggested by the bill is for unions to scare employers into single enterprise agreements with the threat of multiemployer bargaining (but also let them know that’s what they’re doing), and for the government to then subsidize wage growth on behalf of social-service employers. Both the ACTU and leading economists have said that they cannot say with confidence when wages will rise as a result of this strategy.

A House Divided

Workers were promised a wage hike and got a hodgepodge of half measures. The ACTU seems to have given up on multiemployer bargaining before it’s even begun. The BOOT changes guarantee that at some point in the future — though perhaps not as quickly as business and the SDA had hoped — a substantial group of workers will be worse off overall. And while some workers have gained a little, even the bill’s biggest champions admit wages will not grow anytime soon.

The bill does contain some positive measures. One such inclusion is the long-awaited abolition of the Australian Building and Construction Commission (ABCC). This draconian government body was designed to halt strikes and suppress wages in the construction sector. Somewhat uniquely, this sector in Australia is highly paid due to the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU)’s industrial militancy.

But even this positive step highlights a bigger problem: Australia’s dwindling labor movement is tiered into wildly different levels of power, organization, and pay. Their respective fights can seem so different that it would be unsurprising if members saw little connection between them.

Occasionally we get a glimpse of what a different labor movement could look like, as when the three most militant unions in the country — the Australian Nursing and Midwifery Federation (ANMF), CFMEU, and RAFFWU — each denounced the SDA as living in the pockets of big business. But these moments are too few and far between to have built any lasting sense of common purpose. They do, however, point to a hard truth. It’s only workers organizing and fighting together, not games in the Senate, that can end this era of wage suppression.