Kingsley Laffer Memorial Lecture

Abstract

Despite rising levels of prosperity in Australia in recent decades, there is growing economic and social inequality. Many people are working longer hours and more intensively in insecure jobs. Australia has one of the highest levels of casual employment in the industrialised world. Stress at work is one of the major causes of occupational illness. A more decentralised system of industrial relations has contributed to this situation by removing many of the previous safeguards that workers had under awards and agreements. This is exemplified by a number of award-based employment arrangements related to various forms of leave (e.g. sick leave and maternity leave) which have been ‘traded off’ in enterprise agreements, often without union involvement or worker representation. This process has been assisted by the federal government’s legislative reforms which have been hostile to unions and have contributed to a decline in unionisation. The government has also weakened the powers of the Australian Industrial Relations Commission to protect workers whose bargaining power is weak. Many of those who advocate an even more deregulated and individualised form of industrial relations for Australia argue that the forces of globalisation provide no alternative. Yet other countries, particularly in northern Europe, have retained strong labour market institutions to provide adequate social protection while competing effectively in the international economy. Indeed, rather than seeing globalisation as a threat, Australia should be supporting the efforts of international agencies, such as the International Labour Organisation, to assist other small nations to strengthen the rights of their citizens in the workplace and labour market. To ensure that Australia remains both a prosperous and an equitable society, we need a new social contract or partnership between employers, workers, unions, community, organisations and government. The three pillars of a new social contract comprisepolicies that are well established in many of the advanced industrialised societies. The first pillar is an active labour market policy that has been long advocated by the Organisation for Economic Cooperation and Development (OECD) and would see resources invested in job creation rather than job reduction. The second pillar is the rebuilding of Australia’s skills and intellectual capital by encouraging greater investment in training and development of the workforce. The third pillar is the establishment of a national superannuation system to ensure both universal coverage and secure entitlements. To achieve these goals, the federal government must develop a comprehensive industrial relations policy that involves greater regulation of the labour market and restoration of labour market institutions to ensure more equitable wages and working conditions. These measures are required to ensure that economic efficiency is achieved without undermining social equity, which is the basis of democratic society.