Labor’s ‘Secure Jobs, Better Pay’ Laws Give Too Much Power to Unions, Removes Flexibility: Think Tank

Office workers are seen at lunch break at Martin Place in Sydney, Australia Dec. 12, 2018. AAP Image/Mick Tsikas

By enforcing a centralised workplace agreements and removing individual ones, the Fair Work Act is locking Australia into decades of stagnant productivity, stifling innovation, and economic growth, H.R. Nicholls Society warns.

“The Fair Work Act has not been fair at all,” said Frank Parry KC, president of the industrial relations think tank.

The 2022 Secure Jobs, Better Pay legislation under the Fair Work Act aimed to improve job security and fairness, however, its implementation has received backlash from business groups and economists.

On Feb. 15, Parry submitted a formal recommendation to a review panel, calling for the legislation’s repeal and proposing a new “Employment Act” to safeguard Australia’s long-term economic interests.

“The fairest outcomes for the Australians will come from the job security and higher incomes that improved productivity delivers, based on a foundation of better organised, less rigid, and more relevant workplace laws,” he said.

A Missed Opportunity for Reform

In October 2024, the government called for a review of the Secure Jobs, Better Pay legislation.

This comes after the 2023 review was heavily criticised for not tackling core issues raised by employers, small businesses, and industry groups.

H.R. Nicholls Society, argues that while the review omits any mention of “productivity,” a central issue for business leaders, it made many repeated references to “gender.”

Parry said the review overemphasised union influence without addressing the real challenges businesses, especially small businesses, are facing.

He highlighted that over 85 percent of the work force is not a union member, yet the legislation forces onto businesses obligations towards unions, even in the absence of union members.

The Business Council of Australia (BCA) echoed similar concerns, describing the bill’s changes as “significant and complex,” with no clear benefits for businesses.

BCA’s report highlights that the Fair Work Act has ballooned in complexity, adding new avenues for dispute and arbitration, which have not achieved the intended outcomes.

The Problem with Centralised Bargaining

Critics argue that one of the most contentious aspects of the legislation is the move towards multi-employer bargaining.

This allows workers from different companies to collectively negotiate their terms and conditions, a policy that has drawn sharp criticism from employers. They argue it takes away the flexibility needed to negotiate tailored agreements with employees.

Parry warns that multi-employer bargaining undermines enterprise bargaining, diluting agreements between individual employers and their staff.

Instead of allowing for tailored solutions, the reforms push a one-size-fits-all framework that stifles innovation and operational agility.

“By shifting towards multi-employer bargaining, the government is effectively creating a uniform system that removes businesses’ ability to negotiate specific terms with their employees,” Parry said.

This shift has also empowered unions to exert greater influence, often to the detriment of both employers and employees.

The impact is especially profound for small businesses, which make up 42 percent of Australia’s private-sector workforce.

According to the BCA, small businesses now face increased compliance costs and complexity, making it harder for them to remain competitive in an already challenging economic environment.

The BCA’s submission calls for reforms that better reflect the unique needs of smaller enterprises.

Hindering Labour Mobility and Career Growth

Another major concern with the legislation is its impact on job mobility, particularly in sectors like construction, manufacturing, and resources.

Historically, these industries have relied on labour hire arrangements, where workers transition from temporary to permanent positions, upskilling along the way.

Parry points out that these changes create rigidity in the labour market and discourages businesses from hiring and training new employees, ultimately reducing job opportunities for workers.

“What we’re seeing is a situation where businesses have fewer options to hire and train new workers, and employees have fewer opportunities to move up the career ladder,” he said.

Worsening Australia’s Productivity Crisis

Australia’s declining productivity levels are a major concern, predating the legislation.

The Productivity Commission’s report shows that between 2010 and 2020, Australia’s average annual labour productivity growth dropped to just 1.1 percent, the slowest rate in six decades.

Parry argues that the reforms exacerbate this issue by making the system more centralised and rigid.

“By imposing uniform conditions across the board, we’re making it harder for businesses to innovate, adapt, and remain competitive in the global economy,” he said.

With Australia’s productivity growth already stagnating, critics fear that the new legislation will push it even lower, hindering long-term economic growth and reducing Australia’s global competitiveness.

A Call for Comprehensive Reform

In response to the ongoing concerns, the H.R. Nicholls Society has outlined a reform proposal designed to streamline Australia’s workplace relations system.

The proposed reforms focus on business growth, job creation, and innovation.

One key proposal is to eliminate multi-employer bargaining in favour of enterprise bargaining, allowing businesses to negotiate terms that best suit their needs.

Additionally, the society advocates for simplifying wage structures by replacing awards with a single, uniform minimum wage.

The society also calls for the reinstatement of the Australian Building and Construction Commission (ABCC) to ensure compliance within the construction sector.

The society’s proposal also seeks to raise the threshold for small businesses to 50 employees, making it easier for these businesses to comply with the Fair Work Act and reduce red tape.

BCA has also put forward recommendations to simplify and amend the Secure Jobs, Better Pay legislation.

These include adding a requirement for employer consent in multi-employer deals.

The BCA also advocates for changes to prevent bargaining without majority employee support.

Another important BCA recommendation is the removal of restrictions on fixed-term employment, giving employers the flexibility to meet operational needs more effectively.

Reforming the Gig Economy

The gig economy become another focal point in discussions.

The H.R. Nicholls Society argue that the legislation fails to address the unique needs of gig workers, many of whom prefer flexibility over the constraints of traditional employment.

It proposes minimal regulation for the gig economy, recognising the sector’s need for flexibility and adaptability.

In terms of dispute resolution, the society recommends creating an Employment Dispute Resolution Service (EDRS) to assist small businesses with workplace disputes.

Additionally, the Productivity Commission would take over minimum wage-setting responsibilities, allowing the government to adjust wage reviews based on economic conditions such as downturns or periods of uncertainty.