A collapse in private sector enterprise bargaining risks undermining Australia’s industrial relations system and is likely to be a key factor in record low wages growth, a think tank has warned.
Recent figures from the Department of Employment showed a huge decline in the number of private sector employees covered by enterprise agreements during the September quarter.
Enterprise bargaining agreements, or EBAs, are collective agreements between employers and their staff, generally negotiated with trade unions.
By law, such agreements must leave workers better off overall than they would be if they remained on the modern award for their industry, which provides minimum employment conditions.
However, the Australia Institute’s Centre for Future Work said that the number of private sector workers covered by an EBA fell by 170,000 in the September quarter, one of the largest drops recorded.
The centre’s director, Dr Jim Stanford, said the latest figures are part of a longer term trend.
“The number of workers who have the benefit of an enterprise agreement in the private sector has declined by about 40 per cent in just the last four years,” he told the ABC’s RN Breakfast.
“About three-quarters of a million Australian workers who used to have wages and conditions determined by an enterprise agreement in the private sector no longer have that coverage.
“In most cases that means they’ll fall back onto the minimum terms specified in the modern award.For many of those workers that means a cut to pay, conditions or both.”
Dr Stanford said that leaves the collapse in enterprise bargaining as one of the main suspects in the mystery of why wages growth is so weak — at record lows around 2 per cent per annum — despite the strongest jobs growth in years.
“I don’t think people have connected the dots yet in terms of understanding the importance of collective bargaining and enterprise agreements to healthy wage growth,” he said.
“When you look at these figures that show the rapid disappearance of collective bargaining from the whole private sector of the Australian economy it’s no surprise at all that wages are not growing.”
Australia may have created a thousand jobs a day last year, but it needed to just to keep up with a rapidly growing population.
The Fair Work Act is built around enterprise bargaining, underpinned by the safety nets of the modern awards and national employment standards.
Dr Stanford has warned the collapse of enterprise bargaining in the private sector could completely undermine the current industrial relations framework.
“The rapid decline of collective bargaining coverage I think confirms that Australia’s industrial relations system is broken,” he said.
– ABC
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