Plus ça change, plus c’est la même chose. A French expression, meaning the more things change the more they stay the same, a phrase that seems to sum up Australia’s productivity problem. However, it is hard to be productive when you’re overregulated, constrained, and floating in a sea of paperwork.
In parliament’s first week of sitting for 2024, the Senate wasted no time passing the second tranche of amendments to the Fair Work Act 2009 under the Albanese Government’s Fair Work Legislation Amendment (Closing Loopholes) Bill 2023. Some of these include changes to casual employment, a right to disconnect, regulating the gig economy, union right of entry, and enterprise bargaining.
After 13 interest rate rises, high inflation and increased wages, the industry has seen spending and retail growth fall in real terms despite Australia’s booming population. And while our business owners usually find new and innovative ways to thrive in parched economic landscapes, the Closing Loopholes Bill will make that trek a lot harder.
If there’s anything our members are dreading, it’s the prospect of another hike in interest rates. While interest rates were held for the month, Reserve Bank Governor Michele Bullock emerged from the first 2-day monetary policy meeting of the year less than optimistic about cutting rates any time soon, citing Australia’s declining productivity.
In the February Statement on Monetary Policy, she said “growth in broad measures of labour costs is high because recent labour productivity outcomes have been weak”. In fact, while trying to downplay Australia’s productivity issues, the Reserve Bank conceded that productivity growth was difficult to forecast.
The reality is, it would be next to impossible to predict Australia’s future productivity outcomes when much of the Closing Loopholes legislation is a step back for the promotion of productivity in Australian workplaces.
The Government has essentially made itself the elephant in the room for workplaces across the country. The changes to casual conversion, a confusing new right to disconnect and enterprise bargaining will crackdown on existing workplace flexibility. Flexibility that helps employers and employees in their pursuit of a productive workplace.
The Productivity Commission previously warned the enterprise bargaining laws would be anti-competitive and would only seek to disincentivise Australian retailers, specifically quick service brands. Although these laws were rammed through Parliament in an effort to push up wages, businesses experiencing low levels of growth, unable to keep up with the industry mandate will likely have to shed employees to keep their businesses anyway. This is the paradox most retailers now find themselves in.
A flexible economy is crucial for business investment, but more so important for business growth. The ‘right to disconnect’ may be well intended for employees, but the reality is that drafting of the legislation was botched in the rush to get it through parliament and significantly adds to the confusion and complexity employers are grappling with as a result of the changes.
According to the Productivity Commission, if Australia’s productivity was on an increase, the natural growth in wages would outpace inflation. The danger of the Closing Loopholes Bill is that, if productivity continues to decline, businesses could find themselves facing continued increases in labour costs, putting upward pressure on prices paid by consumers.
Unless the Government switches its focus to increasing the productivity of Australia’s workforce, our current problems will remain as they are as retailers continue to hop, skip, and jump across red tape to get a day’s work done.