Wayne Swan today claimed in the Financial Review that there is no evidence that industrial relations reform will lead to higher productivity. He says that “the industrial relations well is dry.”
Mr Swan blithely ignores the advice of every reputable source of advice on economic management. For example:-
1. Reserve Bank of Australia
In his latest Testimony to the House Standing Committee (February 2005), the Governor of the Reserve Bank stated on the topic of how to boost Australia’s productivity performance that:
“The biggest thing in this area is industrial relations reform. There must be a lot of things that still can be done.”
“From my own experience in the Reserve Bank, as we have changed things and reduced our size and, I think, increased our productivity enormously, one of the things that stood out was that there were a lot of benefits and rules which were of some benefit to employees—but a very small benefit—but were extremely costly to the employer, which means that there is a classic opportunity for a win-win situation as these things are resolved.”
2. OECD
Under the heading “Further reforms to labour market legislation would also encourage employment”, the OECD state in their latest Economic Survey on Australia (February 2005) that:
“To further encourage participation and favour employment, the industrial relations system also needs to be reformed so as to increase the flexibility of the labour market, reduce employment transactions costs and achieve a closer link between wages and productivity.”
“The Government is now in a position to address these issues and should proceed as soon as practicable.”
3. IMF
In its latest Article IV report on Australia (November 2004), the IMF stated that:
“The government agenda of proposed amendments to the Workplace Relations Act continues to simplify procedures, increase labor market flexibility, and link wages and work conditions to productivity.”
“However, the wage bargaining system needs further simplification, including a reduction in the overlap of the federal and state award systems and a diminished role of the award system in setting the minimum wage, which has contributed to a relatively high unemployment rate for low-skilled workers.”
4. Access Economics
In an Access Economics report titled ‘Workplace Relations – The Way Forward’ (February 2005), Labor’s economic modellers of choice state that:
“Flexible labour markets… provide job opportunities for more people, ensuring that the best worker is found for each job. Productivity rises, as do wages and output.”
“…we can do better in the future – better structured workplace relations policies can support productivity and business competitiveness, boost job growth, lower unemployment, as well as raise average incomes and help clamp down on the black economy.”
“…the sectors with the most flexible workforce arrangements have seen the fastest productivity gains. More flexibility equals faster productivity growth, both directly and by strengthening the positive interaction with other reforms.”