Economy

Workplace relations system not dysfunctional

Core elements of the workplace relations system such as the centralised minimum wage, National Employment Standards, awards and enterprise-level agreements are not dysfunctional and require significant regulation, Productivity Commission Chairman, Peter Harris AO has told a CEDA event in Melbourne.

Discussing the release of the Productivity Commission’s draft report on workplace relations, Mr Harris said overall the labour market has performed well but it is clear that some aspects need reform. 

“The draft report…is meant to be a document on which to base a debate on how to improve the regulatory system in Australia,” he said.

Key tasks for dealing with the future include modernisation of wage awards, improvements to the minimum wage process and changes in the assessment of unfair dismissals and enterprise bargaining, he said.

“Our analysis of labour market economics establishes that a fundamental role of labour market regulation is to redress the imbalance between employer and employee,” he said.

On the topic of the minimum wage, Mr Harris said there is evidence that it is not well-targeted to the least well-off individuals.

“There is no better choice than to improve the current Minimum Wage process by ensuring that its growth does not outstrip the growth in median wages and productivity,” he said.

Mr Harris said the Fair Work Commission (FWC) should give greater weight to the risks of unemployment.

Discussing regulators, Mr Harris said long term improvement of the workplace relations system “requires a change in the nature and performance of the regulator”.

“The workplace relations system needs above all else a more robust, transparent process and the expertise to apply it comprehensively across the areas it regulates,” he said.

Mr Harris said the FWC should become more like the Reserve Bank of Australia.

“Our draft report sets out our expectations: for the FWC to become a high quality forecasting organisation with resources dedicated to that purpose,” he said.

“The FWC cannot rely on partisan analysis.”

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