Does this government have the guts to take on IR reform?

Nothing specific, mind you – specific details are liable to rouse opposition – just the flexibility vibe.

The government does deserve some credit for the temporary changes to the Fair Work Act, introduced early in the crisis. Not only are the changes themselves good ones (mostly focused on reducing restrictions on who can do what, when and where), but they also show change is in fact possible in industrial relations.

This is important because, as Judith Sloan pointed out in the CIS publication Industrial Relations in a Post-COVID World, our current system locks some workers out of the job market, and thereby keeps them in poverty.

This is especially true for young workers in regional areas, who face a far higher unemployment rate than more experienced and skilled workers.

The system also disincentivises businesses from taking on staff, pushing them instead to invest in technology – with no better example than Australia’s accelerated take-up of automated checkouts.

There are also real issues that need to be resolved, particularly in relation to the status of long-term casual workers and independent contractors engaged with technology companies like Uber.

However, the government will find permanent change a far harder task; one it’s not at all clear it is equipped for.

Tough reforms (and workplace reforms are among the toughest) are typically unpopular. They generate winners and losers. The losers complain, vociferously, and the government’s opponents in the media will amplify those voices.

Will a government increasingly believing the dangerous myth it can be liked by everyone, all the time, take on something so unpopular?

Australia’s industrial relations system has long been predicated on the idea that any flexibility in the system will result in workers being coerced into giving away their rights for little in return.

Indeed, aversion to unpopular reform – and the desperate desire for everyone to somehow agree to change – has bedevilled attempts at industrial relations reform since WorkChoices. Business groups have repeatedly attempted to bargain for agreed changes with unions, rather than push potentially unpopular options in public.

This strategy has clearly failed and should be abandoned. Regardless of the merits of reform, in many respects unions are far weaker than they were during the Accord era. It is hard to see how they could afford to surrender their privileged legislative position without weakening themselves further still.

Moreover, while the severe economic effects of coronavirus sharpen the need for prompt government action, they also up the consequences for those who lose out.

It is one thing to lose your job when the unemployment rate is 4 per cent, it’s quite another when, in reality, unemployment is somewhere approaching 13 per cent!

Beyond this, it is not merely unions pushing for more, rather than less, regulation in relation to the crisis. Many believe the only way things will improve is if employers are forced by law to offer higher wages and enhanced employee benefits.

The impact of these changes could be significant, and unexpected. For example, a number of left-leaning jurisdictions are passing legislation deeming contractors, who are largely outside the industrial relations maze, to be employees.

While the intention is to force companies like Uber to provide ancillary benefits to employees (and to force them to deal with unions), it has produced some perverse results. California’s law, for example, had the effect of driving some media companies to announce they were going to basically stop using freelancers altogether.

The problem, of course, is that one of the main appeals of using apps like Uber, in addition to the ease of use of the technology and the safety of community ratings on drivers, is that it is cheaper precisely because it doesn’t have to deal with expensive regulations and unions.

Another way of phrasing this is that Uber is a more economically efficient use of resources. In a recession, this must be one of the primary goals of the government, as this is the only way to create real, sustainable jobs in the medium term. It cannot make the economy less efficient through additional regulation aimed at “protecting” jobs.

In this context, what then should the federal government focus on?

As Sloan argues, one obvious priority must be to establish a firm definition of “casual worker” in the Fair Work Act to avoid a situation where employers seeking to re-engage their workforce are hesitant to take on casuals, but lack the certainty necessary to take on permanent staff.

The prospect of casual staff being entitled to both leave entitlements and casual loading (which is paid in lieu of leave entitlements) needs to be resolved.

Another area where reform would be welcome, though harder to achieve, would be a relaxation of the “better off overall test” (or BOOT). Currently the BOOT is interpreted as prohibiting an enterprise agreement unless every worker would be better off under the agreement than the relevant award, making enterprise agreements far less attractive to employers.

A better alternative may be, as Sloan argues, a no-disadvantage test averaged across the entire workforce. While this would obviously simplify matters for employers, it would also give unions something to bargain with.

It would also treat workers as people with agency, capable of making their own decisions and trade-offs on their working conditions.

While this seems simple, Australia’s industrial relations system has long been predicated on the idea that any flexibility in the system will result in workers being coerced into giving away their rights for little in return. Seemingly workers must be protected, not merely from the illegal activity of bosses, but from having too great a say in their own working conditions.

Wage theft and exploitation should rightly be policed – perhaps more strongly than it is now – and some minimum conditions perhaps should be retained; but otherwise what is the rationale for preventing willing workers and employers from coming to their own agreement?

Instead of protecting existing vested interests in the system, trusting that workers can and will make choices in their own best interests must be the thought that guide our reform efforts.