Industrial relations reform shouldn’t become an obstacle to progress

It is no surprise that the biggest driving force behind legislation like this is the union movement. It is exactly the same here in Australia, where the unions and affected industries have campaigned on the evils of long-term casual work and strongly opposed the introduction of ride-sharing apps like Uber.

In particular, union leaders condemned the Fair Work Ombudsman’s decision in June that Uber Australia drivers were not employees – with the national secretary of the Transport Workers Union saying “these laws are hopelessly broken and the government must act urgently to put in place rights that protect all workers”.

After a decade of hiatus, industrial relations again looms large in public debate.

It’s important to understand that the push to impose strict IR regulations on these “gig work” businesses is as much about protecting old-tech incumbents from competition as it is about protecting workers from unscrupulous bosses.

As can be seen from the host of occupations that ended up being exempt from the Californian legislation (including hairdressing, freelance journalists and accountants among many other), restrictive industrial relations controls are often a quid pro quo for protectionism. And this was pretty much also Australia’s economic raison d’etre for 70 years.

Nor is it clear that all casual or gig workers are unhappy with their lot. For example, a survey of workers on the staffing platform Sidekicker in 2012 found that three out of four workers thought job flexibility and work life balance was more important than job security.

Many casual and gig workers are students or mothers re-entering the workforce; who neither want, nor have, the capacity to work a full-time job.

Arguably of equal importance are the longer term implications for workers and the economy. After all, Australia is no longer the closed island it once was. Australian businesses are competing on cost with overseas firms with far more flexible labour markets. Generous working conditions might satisfy union concerns in the short term, but at the cost of business viability.

There is no better example than Australia’s (now defunct) car industry.

Two other issues loom large: first, what impact will changes to the rules around contracting and casual work have on businesses’ willingness to take on new workers; and second, what about consumers?

The unions have had some success in changing the rules around contracting. A Federal Court decision last year significantly tightened the definition of casual worker, ruling that even if a supposed “casual” worker receives casual loading, this does not prohibit the worker from receiving benefits of full-time work (including annual leave).

Many businesses are not in a position to offer permanent positions – even if they wanted to – either because their work is inherently unsuited to it, or because they don’t have the financial security or stability to take on full-time staff.

Moreover, what’s wrong with businesses and staff being allowed to negotiate terms? The idea that employees have no other option but to take poor conditions seems anachronistic when most workers have multiple jobs and careers over their lifetime. That some businesses treat casuals poorly is no reason to upend the whole system.

For small businesses in particular, the decision to take on a staff member is a big deal. The more prescriptive the process is, the harder it is to terminate an employee who isn’t working out, the less likely they are to take someone on in the first place.

Far from ensuring that all workers get greater protection, strengthening the industrial relations system may result in some workers losing their jobs – and others not getting jobs at all.

An Australian Industry Group survey from 2016 found thousands of casual workers would lose their jobs if changes were made to give casual workers the absolute right to convert to permanent employment.

Such restrictions also drive businesses towards technology that can replace their workforce. After all, a robot will be happy to work casual shifts.

This is all leading to a theatre of the absurd. In Oregon, for example, unions that succeeded in a push to substantially raise the state’s minimum wage are now promoting legislation that would restrict grocery stores to two automatic checkouts. It is still illegal in large parts of Oregon to pump your own fuel at the bowser.

Supermarkets here in Australia, where the minimum wage is among the highest in the world, have been enthusiastic early adopters of automatic checkout technology. And the days of sitting in your car waiting for someone to come out and fill it up are well in the rear view mirror.

We should be wary of restricting the rights of workers to freely bargain with their employers, and completely averse to preventing businesses and consumers from connecting in the market.

Ultimately, consumers will be the ones who have to wear the additional costs of strict IR laws; either directly through higher prices, or indirectly by not being able to access new technology and services.

In the supposedly good old days, US television shows came to Australia half a year after they were shown in the rest of the world, and taxi drivers would shun you because your trip wasn’t long enough. Now consumers are eagerly flocking to tech such as Uber and Netflix.

Notwithstanding a recent intervention by backbench MPs, the government has been reluctant to fight for any gains in this area. Yet the failure of the union “change the rules” campaign at the last election should give them cause for hope.

Australians are unlikely to give up access to new consumer technology and return to the old way of doing and buying things.

The government should instead encourage the expansion of disruptive technology to larger regional centres where the current options are far more limited and the need for more flexible services far more acute.

Instead of changing the rules in pursuit of a supposedly perfect past, we should be open to the opportunities ahead.

Simon Cowan is research director at the Centre for Independent Studies