Imbalances In The Industrial Relations System: A Case Study Of Australia

Political and Economic Factors Affecting the Industrial Relations System in Australia

Discuss about the Relationship Between Employee And The Management.

For every business organization, institution or a firm, the industrial relation is a very important topic. Majorly, this is a topic that discusses the relationship between employee and the management. In modern industrial society, the relationship between employer and the employees is becoming a complex problem thus maximizing production as a major business goal is very hard. This topic is very crucial political and also economically. Politically, government policies tend to affect how people wages are determined and the condition of the work place.

There should be a balance employee protection when it comes to wages and salaries as well as considering that business owners need to set a competitive environment so as to exploit the maximum profits in the ever-increasing global marketplace. On the other hand, economically, industrial relation helps in the growth of a country’s economy. Industrial relations aren’t just about pay and conditions, it is also about the manner in which all parties in the workplace i.e. business owners/managers and employees consult, negotiate and work together for common good. (Philips, 2015). This essay will attempt to show with examples the imbalances portrayed by the industrial relation system that end up affecting employer unions and their business.

Australia’s industrial relations strategy is intended to serve two Divine beings: work and social welfare. According to John Slater, this origination of wage-setting as a social welfare instrument has its underlying foundations in the most fundamental choice in Australia’s mechanical history, the Gatherer choice of 1907. The sole managing judge, Henry Bourne Higgins decided that businesses owners ought to an essential wage fit for meeting “the ordinary needs of a normal worker, viewed as an individual in an enlightened group, paying little heed to his ability to pay.” Over a century later, Higgins’ perspective remains at the core of Australia’s modern relations scene. The main target of the Reasonable Work Commission’s honor setting work set out in the Reasonable Work Act is the relative expectation for everyday comforts furthermore, necessities of the low paid. The same wording likewise includes as a key thought in setting least wages. Essentially, a protest of the Demonstration itself is guaranteeing that these enforceable essentials are most certainly not undermined by an individual or collective plans.

The government came up with rules and laws that would govern business activities. These laws were termed as the Fair work act 2009. Since the passing of the act in July 2009, employer associations and unions have been using the act for the provision of both advice and support to member employee. They also educated the members on their rights and obligation within their workplace. However, since the passage of that act, there has been a lot of challenges faced by the employer associations and the associations and unions remain frustrated and thereby are calling for bringing back balance within the industrial relation system to favor their business activities.

Challenges Faced by Employer Associations and Unions

Examples of employee associations and unions that are greatly fighting for this balance are (Australian government, 2017).

1. Australian Chamber of Commerce and Industry this association greatly calls for a balance of industrial relations that will end up leading to economic stability of Australia. The chamber fights for both employee and employer pay issues. For instance, the organization has recently turned down one of the employee union ACTU proposals on increasing the wages with a rate of 7.2. the union claims that this increase will be a way of creating job opportunities for job seekers and small business owners. The union, on the other hand, turns down the proposal with the ACCI James person claiming that “massive increase in wage costs will not create jobs – it will put at risk existing jobs, as businesses decide who they will have to let go in order to afford the huge pay rise, or whether or not they can afford to stay open,” (ACCI, 2018)
2. Business Council of Australia

The government argues that increase in wages increases the profits which in the long run will lead to the growth of the economy (Eslake, 2017). On the other hand, the employers who are the main source of the wages are not willing to increase wages to the workers and this leads to employee/ workers strikes and illegal pickets. The two employer associations have for a long time fought this challenge and claim and believe the source of this is not in the unions but the sovereign power who are the lawmakers.

It’s a question that every economist in Australia need to ask whether the Australian industrial system is ideal for each union, both employer and employee union. Naturally, the system should not have loopholes that give room for misuse of either union and at the same time, the system should not be biased. Currently, the system is already failing since its already having one of the partners complaining about balancing.

The system failure starts from the moments of wage fixing. It’s the elected board that dictates payment for different types of employees with different qualifications and skills. This is already a failure when it comes to balancing. The issue of wage fixing, for an intention of business prosperity and economic growth, should be left to handle by the employer. The government should only play a role when it comes to ensuring fairness, safety, and other minimum conditions and to act as an umpire when disputes occur. wage increments subjectively forced by an outsider council don’t change the iron law of business that specialists may be utilized if their esteem surpasses their cost.

In this sense, far-reaching pay increments are a limit instrument that by configuration can’t represent the conditions of individual organizations confront; a reality unassailably borne out by the Whitlam Government’s compensation analyze. In fact, it is the very idea of a focused market that efficiency upgrades estimated at a large scale level will never be precisely repeated by every last individual business contending in an industry. Consequently, to the degree that wage increments are ordered in view of apparent efficiency picks up in a specific industry – or more awful, changes totaled over the entirety economy organizations falling behind the normal will be compelled to lay, o? laborers, su?er lessened profitability, or leave the business. The same applies to wage climbs pegged to stay aware of in?ation, where aggressive weights in a few areas or organizations may render pay rises unsustainable, again costing employments and organizations.

Effect of the Industrial Relations System on Economic Growth

By a similar token, any material benefit accumulated from largescale wage increments commanded by a modern court hazard being dissolved by in?ation, particularly where the compensation rise isn’t bolstered by profitability upgrades. In a statement published after one of the senior council members of national workplace tribunal resigned, it clearly indicated that there was lack of the union balance in the fair work commission and stated that it was even politically compromised. As stated by (Patrick, 2017) ,Graeme Watson wrote to the governor of Fair work commission a letter explaining him the reasons for his resignation as follows “ I have made this decision because it is increasingly clear to me that the operation of the workplace relation system is actually undermining the objects of the fair work legislation.” He further wrote another letter to employment minister this, “I do not consider that the system provides a framework for cooperative and productive workplace relationships and I do not consider that it promotes economic prosperity or social inclusion. Nor do I consider it can be described balanced”

The system has led to poor economic growth. It has many traditional features that lead few almost to null notable rewards. Although among the Fair work act main objectives, one was to ensure that it’s a less complex national system to set a strong benchmark for the enterprise bargaining negotiations being the main way of determining wages conditions, it has failed to include and consider employer-union interests and thus its failure. Instead of increasing employment, it has led to high rate of unemployment. This happens since the set minimum wages to be paid for different skilled workers is very high and they end up being unemployment.

Moreover, the system adopts the idea and principle of “equal pay for equal work”. Generally, that is okay since every individual deserves such kind of compensation. But on the other end, in terms of the country’s economy, this industrial relation system is slowing economic growth since, for a fast economic growth, the work value measure should be attributed to the contribution that the employee makes the business or organization they are working. The employee can do the heavy task and keep all day busy but at the end of the day, no profit-oriented contribution he or she has brought about in the firm yet they are protected by the law to earn wages. The genuine estimation of work is, along these lines, an issue of reality that turns on a person’s abilities and, capacity and incidental variables like neighborhood economic situations also, the capital assets accessible to a laborer.

Lastly, considering the act, it gives room for fare work inspectors all the mandate to access anything and any document concerning any business, organization or firm. The fair work inspectors are only government official and no employer representation in the commission. This gives a true picture of unbalanced industrial relation system.

Conclusion

The Australian industrial relation system is not balanced. Change of the industrial relations system is woefully required for Australia to scale the coming difficulties and understand its financial potential. Be that as it may, the driving force for change won’t come unless there is a genuine test to the tried and true way of thinking that modern relations aren’t something that ought to be led by specialists and organizations, yet oversaw for them, by a semi-legal counsel, for their own great. Until that progressions, the profitable, scholarly and innovative energies of Australia’s working age populace will remain constantly underutilized. This will at the result of bringing back balance to the IR landscape in favor of business

ACCI, (2018). ACTU wage claim shirtfronts small business & slams the door on jobseekers. [Online] Available at: https://www.australianchamber.com.au/news/actu-wage-claim-shirtfronts-small-business-slams-door-jobseekers/[Accessed 26 April 2018].

The Australian government, (2017). Fair work. [Online] Available at: https://www.fairwork.gov.au/website-information[Accessed 26 April 2018].

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