Some myths surrounding WorkChoices

A fact sheet

Productivity
The claim: Individual contracts lead to higher productivity, so WC strengthens the economy.
The facts:
Labour productivity growth fell in New Zealand after the law changed in 1991 to promote individual contracts and abolish awards and tribunals.
Labour productivity growth under the Workplace Relations Act slowed to 2.2% in the most recent growth cycle, below the rate of 2.6%achieved under the traditional award system of the 1960s & 1970s.
Studies show that union collective bargaining leads to productivity at least as high as non-union individual contracting, sometimes higher.
Claims about productivity often refer to 'workplace agreements', treating individual contracts and collective bargaining as if they are the same thing, when in reality they are opposites.i
Wages and conditions - AWAs
The claim: Workers on AWAs earn 13% more than workers on certified agreements, and 100% more than workers on award rates.
The facts:
Those (weekly earnings) figures are distorted because they lump part-time and full-time workers together, and include high paid senior managers on AWAs
The same figures show the weekly earnings of people on AWAs falling by 11% between 2002 & 2004.
Hourly earnings of non-managerial employees give a much clearer indication of the impact of AWAs on ordinary workers. They show workers on AWAs earn 2% less than those on registered collective agreements. Women are 11% worse off under AWAs, casuals are 15% worse off and permanent-part-time workers are 25% worse off under AWAs than under registered collective agreements.ii
The only data since WC show that all AWAs excluded at least one ‘protected’ award condition; 16% excluded all ‘protected’ award conditions; 64% excluded leave loading; 63% excluded penalty rates; 52% excluded shiftwork loading; 31% modified overtime pay; 29% modified rest breaks; 27% modified public holiday payments.iii
Wages – average hourly earnings
The claim: Average earnings are growing by 4.1%, showing the success of WC
The facts:
With inflation at 4.0%, the 4.1% growth in the labour cost index is almost a real wage freeze iv
Out of 8 million employees, only 0.2% had signed non-union agreements or AWAs under WC by the time of the average earnings survey.v Most of the wage increase was due to arrangements that pre-dated WC, including union-negotiated collective agreements.
While skill shortages have led to real wages growth (according to the labour cost index) in some industries (mining, utilities, construction), half of workers are in industries where real hourly wages fell over the past 12 months (eg hospitality, retail, communications, cultural services, manufacturing) vi
Average weekly ordinary time earnings of full-time adult workers rose by only 3.5% in the year to May 2006, representing a fall in real wages. Average weekly total full-time earnings rose by only 2.8%.vii
Since WC, union collective agreements have delivered wages growth of 4.4%, but non-union agreements promoted by WC have only delivered 3.6% (a real wage fall).viii Some 22% of AWAs provide for no wage increase at all during the life of the agreement, which can last up to five years.ix
Employment
The claim: WC has led to over 100,000 new jobs, by abolishing job-destroying unfair dismissal laws.
The facts:
Employment growth from April-August 2006, of 1.69%, is barely higher than employment growth of 1.52% from April-August 1994, when the unfair dismissal laws were introduced.x

Last updated 29 September 2006. Irfactsheet@yahoo.com.au

SOURCES:
1.David Peetz, Brave New Workplace: How Individual Contracts are Changing Our Jobs, Allen & Unwin, Sydney, 2006, pp62-74; David Peetz, ‘Hollow shells: The alleged link between individual contracting and productivity’, Journal of Australian Political Economy, 56, December 2005, pp32-55.
2.ABS Cat. No. 6306.0, May 2004; Peetz, Brave New Workplace, pp98-102.
3.evidence by P McIlwain, Employment Advocate, to Senate Estimates Committee, Hansard, Employment Workplace Relations and Education Committee, 29 April 2006, pp98-99.
4.ABS Cat Nos 6345.0, June quarter 2006; 6401.0, June 2006.
5.Office of the Employment Advocate, Workplace agreements quarterly fact sheet, April-June 2006.
6.ABS Cat Nos 6345.0, June quarter 2006; 6401.0, June 2006; 6310.0, August 2005.
7.ABS Cat No 6302.0, May 2006.
8.Department of Employment and Workplace Relations, Wage Trends in Enterprise Bargaining, June quarter 2006.
9.evidence by P McIlwain, Employment Advocate, to Senate Estimates Committee, Hansard, Employment Workplace Relations and Education Committee, 29 April 2006, p100.
10.ABS Cat No 6203.0, August 2006.