Consistent Effort Required to Save Jobs From Award Modernisation Threat

During the current recession it appears that not a day goes by without the Prime Minister and other senior ministers advocating bold measures to try to minimise the adverse impact of the recession on employment. The effectiveness of these measures will be rapidly undermined if the Government does not act quickly to stop the implementation of wage increases being considered by the Australian Fair Pay Commission and the Australian Industrial Relations Commission.

The Retail Sector is the largest industry of employment in Australia and it is currently under significant strain. It is self-defeating for the Government on the one hand to be implementing positive economic initiatives designed to stimulate demand and keep enterprises functioning if on the other hand the AFPC and AIRC issue decisions substantially increasing employers labour costs, therefore diminishing the viability of businesses and triggering a wave of job losses.

The AFPC, at least, is conveying the impression that it understands the consequences of its actions, with the AFPC Chairman expressing the conclusion that there is a direct and negative correlation between increased wages and employment.

The AIRC however, via its award modernisation process, appears intent on imposing unprecedented labour cost increases on many businesses, particularly small businesses, without any regard to the apparent consequences of these decisions. Under the award modernisation process the AIRC has not heard any evidence about the state of the economy or the consequences for jobs of a decision to award substantial pay increases. While many employers have tried to inform the AIRC of the gravity of these matters, the AIRC has issued no reasons for its decisions and no one knows the basis for the award of widespread pay increases or whether the economic consequences of such decisions were taken into account by the AIRC.

The reality is that most Australians that remain in work are better off today than they have been for decades with real incomes enhanced by tax cuts, wage increases, government hand-outs and interest rate reductions. The imperative is clearly jobs preservation, not pay increases. Labour cost increases will be felt particularly hard in the service sector due to the high ratio of labour required to provide services. This will have a negative effect on the efforts being made to foster career pathways in the service sector and will further erode the attraction and retention of skilled labour in the sector.

The greatest contribution the Australian Government can make to preserving jobs in the service sector will be to intervene immediately in the award modernisation process and direct the AIRC to hear substantial economic evidence on the current state of the economy and the consequences for jobs of the pay increases the AIRC is providing.

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