Submission to Inquiry by Senate Employment,
Workplace Relations, Small Business and Education
Committee Examination of Workplace Relations
Legislation Amendment (More Jobs, Better Pay)
Bill 1999

NOTE: This paper reflects research undertaken over the past two years. The principal results are contained in a report presented to the Council of Federal and State Labour Ministers on 27 November 1998 entitled The Case for Further Deregulation of the Labour Market. Copies of that paper are available from the IPE at $6.00 (Phone/Fax 03 9867 1235). Along with other subsequent papers, it is also accessible via the IPE web site www.ipe.net.au

The Senate is now considering legislation which, although described as a "second wave" of regulatory reform of workplace relations, is not much more than fine tuning¹ and will not embrace the major deregulation that is needed to overcome Australia's relatively high level of unemployment and relatively low employment rate. Senate consideration will proceed against the background of a paucity of in-depth analysis by economists (and others) of the economic and social justifications for the existing institutional arrangements that regulate employer-employee relations. Indeed, the main focus of Australian economists has been on using existing institutional arrangements to reduce unemployment through a centrally directed cut in real wages.² Moreover, some have been specifically rejecting any notion that further reform of regulatory arrangements could have significant potential employment benefits. ³ By contrast, international organisations such as the IMF and OECD continue to press the Government to further deregulate.

Although this paper does not to address in detail the proposed legislative changes, a number of the specific issues being considered by the Senate are analysed in footnotes. Rather, the paper examines the arguments for and against further major deregulation - which should be the main basis for Senate decisions - and proposes an alternative to the Australian Industrial Relations Commission.

Those propounding interventionist "solutions" risk overlooking Hayek's observation that "the measurable drives out the important". They fail to take adequate account of four important points. First, about two-thirds of economic growth is unaccounted for statistically but is probably due mainly to technological change. ⁴ Second, the creation and maintenance of an environment that encourages technological change and innovation generally is increasingly seen as a major explanator of differences in economic and employment growth and has led to a growing emphasis on "institutional economics." ⁵ Third, the more interventionist are government institutional arrangements the less prepared will businesses be to innovate and capital markets to invest in risky projects. Fourth, it is undeniable that Australia's workplace relations have been and remain highly interventionist: ⁶ indeed they are probably unique in the world in the extent to which third party intervention can occur in management decision-making on employment. All this suggests a strong prima facie case that a major reduction in labour market interventionism would significantly reduce unemployment and increase employment. ⁷

Contrariwise, other analyses suggest that a high degree of centralised intervention in wage bargaining can produce good employment/unemployment outcomes and that Australia has had a mixture of national and sectoral bargaining which has been the worst of all worlds. ⁸ However, such analyses focus on the regulation of wage outcomes rather than of employment conditions generally. They also take no account of changes in the respective roles played by monetary and wage policies in controlling inflation. Since the 1980s the effective transfer to the Reserve Bank of responsibility for limiting wages growth has made redundant policies of centralised wage determination.

To many, the high-interventionist, employment-deterring nature of our regulatory arrangements should be sufficient in itself to justify moving to a less regulated labour market. However, strong opposition to deregulation remains. That opposition reflects three main lines of thinking, none of which has a sound basis.

First, deregulation opponents argue that government intervention is needed to correct an imbalance of bargaining power between employers and employees. ⁹ However, with over 900,000 businesses, ¹⁰ employers compete actively for the wide range of available labour services. Further, in our modern consumer-oriented society the natural distribution of bargaining power may even be tilted against employers. ¹¹ Also, that deregulation would not allow employers successfully to collude to fix wages and conditions is supported by the apparent upwards trend in the income share of labour in the less regulated US market and, taking both the corporate and unincorporated sectors together, in Australia also. ¹² It is a myth that free® labour markets would force down the general level of wages.

Second, deregulation opponents maintain the validity of the original justification for the establishment of existing arrangements, namely, the prevention and settlement of industrial disputes ¹³ and the provision of a "a fair go through the umpire." ¹⁴ However, for most of the period from the establishment of the Commission to the late 1970s the record shows a very large number of working days lost from industrial disputation. International comparative data since then shows that the rate of disputation has been consistently above the OECD average. Indeed, in arguing last year that the Workplace Relations Act 1996 had had little or no effect, one legal expert pointed out that industrial action was still "occurring on a widespread basis with little interference from Courts and tribunals charged to ensure that it stop or not occur". ¹⁵ There is ample evidence that the Commission been a one-sided umpire in favouring unions against employers - and against individual workers. ¹⁶ In short, the present system has been a failure in terms of the main justification for its establishment and it has not provided a "fair go" to many individual workers. ¹⁷

Third, supporters of the existing arrangements perceive them as an essential component of Australian egalitarianism. However, since the 1970s the Commission has "allowed" earnings dispersion to widen and real minimum wages to fall. Furthermore, there are at least eleven OECD countries with a more egalitarian earnings dispersion than Australia. In addition, while earnings dispersion is wider in the US and the UK, their larger proportion of adults with the lowest literacy and numeracy skills (see attached Chart) ¹⁸ probably explains the major part of that.

It is also a myth that, without the AIRC's wage awards, those at the bottom end would not get a "fair go". It is the social security system, not the workplace relations system, which ensures a reasonable living standard for low wage earners. It does this by, for example, providing households in the bottom quintile with more than half of their incomes. Indeed, as the majority of low paid are living in households in the upper half of the income scale it is surely farcical to have an institution charged with keeping wages up at the bottom end and pretending to ensure "social justice." ¹⁹

More generally, concern about the effects of reductions in wages at the bottom end fail to take account of the "dynamics" of poverty. A recent OECD study shows that the majority of people who are "touched" by poverty are affected for only a short period. ²⁰ This supports the view that it is much better to have working poor than unemployed poor.

Of course, as deregulation would result in a reduction in wage rates at the bottom end, means tested social security payments would tend to increase for those whose wage earnings fell. However, as there would be a net reduction in unemployment, there would be an offsetting reduction in benefit payments and increase in tax revenue from higher employment. ²¹ More generally, if the only potential "penalty" from deregulation was a net increase in budget expenditure, that penalty would surely be worth incurring given the likely increase in employment and reduction in unemployment. To the extent that other expenditure had to be cut, this could be accomplished by reducing some of the $20 billion plus in benefits that are presently provided to middle and upper income groups.

Other reasons advanced for opposing deregulation, such as that it would increase job insecurity and working hours/stress, also either fail to understand changes in society or misinterpret the data. ²²

It is important to recognise that the common law "system" is a coherent and viable alternative to the present regime. ²³ The key principle under common law is that the worker and employer should basically be free to decide on the content of their relationship because both parties expect to benefit from entering a contract.

However, the common law protects the processes involved so as to ensure that the principle of freedom of contract is not abused and that the rights of the parties to the contract are protected. Thus, contracts procured by the use of force, fraud or undue influence are not upheld by the courts and, nowadays, this may extend to contracts deemed to have been entered into in a manner which is "unconscionable."

Under the common law unions would not be accorded any privileged position as they have been under the existing regime in order to correct the (mis)perception of inequality of bargaining power. Voluntarily formed unions would thus be subject to the same treatment under the law as other voluntarily formed associations.

This means that during the period of a contract there would be no "right to strike" or withdraw labour unless contained in an agreement or implied by an agreement. Equally, in circumstances where unions had no privileged position, where union membership was voluntary, and there was no bar to disassociation, there would be no need for external intervention or supervision of union decision-making, other than to ensure that the rules applying to all such associations were being upheld.

In those same circumstances, a case could be made for allowing an employer to stipulate either that an employee will not join a union or that he wants a closed shop. However, labour transactions, like other transactions, should be subject to anti-trust law as a means of deterring the acquisition and abuse of monopoly power.

The main changes compared with the present regime would thus be the elimination of any privileged position for trade unions and of the capacity for third parties to undertake extensive intervention in certain important areas. Intervention would cease in the determination of minimum pay and conditions; in the dismissal of an employee when that is in accordance with the contract of employment; and in a dispute between employer and employees or unions over pay and conditions.

A major potential problem in returning to reliance on the common law would be the judicial activism that has developed under which courts have increasingly intervened in private relationships with the object of delivering what some judges perceive as "social justice". The simple repeal of the Workplace Relations Act 1996 or its successor would thus run a very real risk that, before long, the courts would adopt similar interventionist practices to the AIRC. In New Zealand, a strong tendency of this kind has emerged since the passage of the Employment Contracts Act in 1991.

One possible counter to such judicial activism would be to impose limits on the jurisdictional empire building of some courts. ²⁴ However, a more generalised and practical solution would be to change the whole basis of the Workplace Relations Act by substituting new Federal legislation that affirmed certain rights of employers and employees to contract without constraints, or subject only to specified constraints consistent with the common law. In short, the common law applicable to the employment relationship would be codified so as to limit the discretion of the courts in handling such cases.

Such Federal legislation would presumably need to be based on the corporations power. In principle, that would not be inconsistent with the idea elaborated recently by Minister Reith at the National Press Club that use of that power "would enable a coherent national framework of minimum standards to be established for the conduct of workplace relations in corporations". ²⁵ However, the minimum standards would mainly be concerned with the processes rather than the content of the employment contract. ²⁶

How would workers manage in such a situation?

In general, the market (including revamped trade unions) should be able to supply adequate information at a reasonable cost to enable workers and employers to conclude contracts without workers being placed under duress. The market should also be able to offer dispute settlement advice and services.

However, to meet concerns that would undoubtedly be raised, particularly in regard to affordability for those who are unskilled and less educated, the AIRC could be converted into a voluntary body to provide advisory/ mediation services to those on low incomes on a subsidised basis. Such services could include a range of standard employment contracts, with dispute resolution procedures included, and the provision of mediation and advisory services.

Such a body, the Advisory Conciliation and Arbitration Service (ACAS), has been operating in the United Kingdom for 25 years and it has succeeded in establishing a basically voluntaristic approach in relation to settling both collective and individual disputes. Thus, it now handles on an entirely voluntary basis, and settles, the great majority of collective disputes and nearly half of individual disputes. As it never seeks to judge the merits of any case or to impose solutions, that puts the onus to settle disputes where it should be, that is, entirely on the parties directly involved. Moreover, unlike our Commission, it has established universal acceptance of its impartiality. Although ACAS provides extensive advisory services to both employers and employees at no charge, its annual budget is only around 26 million pounds. ²⁷

The current legislation being considered by the Senate provides for formal recognition of voluntary mediation services in industrial disputes as an alternative or supplement to the quasi-legal processes of the Commission. A facility will be established to accredit mediators and promote the use of mediation. This provides a first step towards converting the AIRC into an advisor/ mediator

The basic principles of common law started to be displaced in the late 19^th century in response to the dominant intellectual trends of the time and, in particular, to the belief that the perceived bargaining imbalance between employers and employees needed to be redressed. ²⁸ In Australia the establishment of the Conciliation and Arbitration Commission early in this century followed a period of very considerable political, economic and industrial turmoil which included a series of major strikes and a period of economic stagnation that extended for twenty years from the early 1890s. This led many concerned people to look for "a better way" of preventing a repetition of the disputation and achieving more equitable outcomes.

The response was arguably understandable, if misguided, in the context of the times. But whatever validity it may have had then is certainly no longer applicable in modern times. Indeed, the system has not delivered, the premises on which it was founded were invalid, and its interventionist approach seriously inhibits risk-taking, with significant employment consequences for employment

1. Classifications of employees and skill based career paths;
2. Ordinary time hours of work and the times within which they are performed, rest breaks, notice periods and variation to working hours;
3. Rates of pay generally (such as hourly rates and annual salaries), rates of pay for juniors, trainees or apprentices, and rates of pay for employees under the supported wage system;
4. Piece rates, tallies and bonuses;


5. Annual leave and leave loadings;


6. Long service leave;


7. Personal/carer’s leave, including sick leave, family leave, bereavement leave, compassionate leave, cultural and other like forms of leave;


8. Parental leave, including maternity and adoption leave;


9. Public holidays;


10. Allowances;


11. Loadings for overtime or for casual or shift work;


12. Penalty rates;


13. Redundancy pay;


14. Notice of termination;


15. Stand down provisions;


16. Dispute settlement procedures;


17. Jury duty;


18. Type of employment, such as full time employment, casual employment, regular part time employment and shift work;


19. Superannuation;


20. Pay and conditions for outworkers, but only to the extent necessary to ensure that their overall pay and condition of employment are fair and reasonable in comparison with the pay and conditions of employment specified in a relevant award or awards for employees who perform the same kind of work at an employer’s business or commercial premises.

CHART 1 LITERACY AND NUMERACY SKILLS

¹The main provisions of the Workplace Relations Legislation Amendment(More Jobs, Better Pay) Bill 1999 are:

• Changing the name of the Commission to the Australian Workplace Relations Commission (AWRC), removing seniority as a basis for appointment to higher levels and limiting the tenure of new appointees to 7 years;
• Amendment of the objects of the legislation to make it clear that the primary role of awards is to act as a safety net for the low paid and to recognise the role of mediation as an option available for dispute resolution;
• Retention of the no disadvantage test but simplification of the approval processes for Australian Workplace Agreements (AWAs) and Certified Agreements (CAs) and a limiting of the Commission's role in approving CAs. Approval of all AWAs will be by the Employment Advocate;
• The reduction from 20 to 16 in the "allowable" matters that may be included in awards and the limiting of "incidental" matters that may be included;
• Limiting the Commisson's compulsory conciliation powers to disputes relating to allowable matters;
• Providing formal recognition of mediation as an alternative for dispute resolution, including an accreditation facility;
• Improving access to common law remedies for "unprotected" industrial action;
• Requiring protected industrial action to be preceded by longer notice and by a secret ballot process;
• Strengthening of the freedom of association provisions, including a prohibition on employers entering agreements to encourage union membership;
• Introducing further preliminary requirements for unions to obtain access to an employer's premises;
• Provisions designed to discourage "speculative" unfair dismissal claims and to tighten processes.

²Considerable attention has been given, for example, to the proposal by the five economists to reduce unemployment by attempting to persuade the AIRC to suspend "safety net" wage rises for a time while "

compensating" low wage earners in low income households for loss of earnings through tax credits. For a critique of this proposal, see Moore, Des, Labour Market Reform - Have We done Enough? Address to Economic Society of Australia (Qld) Inc 26 May 1999 available on www.ipe.net.au. This is not to deny that a reduction in real wages that was sustained would reduce unemployment. Rather, that deregulation is more employment effective and that any associated wage reductions are more sustainable.

³For example, "The Employment Minister seems to be under the misapprehension that further reform of the industrial relations (IR) system will reduce unemployment." (Mercer-Melbourne Institute, Quarterly Bulletin of Economic Trends, 1.99, Editorial, p.iii). Also, according to the Australian Financial Review of 24 September 1999, a new book by "a group of leading economists and academics", entitled Reshaping the Labour Market, argues that "further deregulation of the labour market will not solve the unemployment problem." The book is scheduled for release in October 1999.

⁴After allowing for inputs of capital and labour, about two-thirds of economic growth is unaccounted for statistically.

⁵For example, one of the world's leading analysts of historical growth differences between countries, Angus Maddison, has argued that

"If we are to explain why the economic growth experience of nations has been so diverse; and why income spreads are now so wide, it is necessary to go beyond proximate and measurable elements of causality and consider institutional or policy influences which may retard or encourage economic development." (A. Maddison, Monitoring The World Economy 1820-1992, OECD Development Centre Studies, OECD Paris 1995, p50).

The alternative view is that, because of market failure, government intervention is needed to subsidise technological change. However, a recent Productivity Commission report concluded that "other reviews of the capital market ….have generally not found significant evidence of failure, other than a lack of 'investment readiness' in small enterprises." (Industry Commission, Telecommunications Equipment, Systems and Services, Report No.61 Canberra, April 1998, pxxviii). Australia's main problem has been that our institutional arrangements have not been conducive to taking the risks of applying inventions and new technology rather than a "shortage" of venture capital or R and D per se.

⁶A general idea can be obtained by considering the award "system" and by taking account also of its one-sided administration by the AIRC. According to the Business Council of Australia there are over 100,000 pages of documentation regulating workplaces. Prior to the Workplace Relations Act 1996 this included about 3,200 awards of which 1,760 were regarded as major. Under that Act the AIRC was supposed by June 1998 to have "simplified" these awards down to cover only 20 matters (see Attachment). Up to the end of July 1999 only 931 awards had been set aside. Of the remaining 2067, 1195 were in process of simplification. The Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 proposes to reduce the twenty allowable matters to "only" sixteen and to bar the Commission from varying a wage award unless it has been simplified. However, the real question is why there need be any awards/allowable matters. The resultant inhibition on the conclusion of innovative employment agreements was aptly summarised by the OECD in its 1998 Economic Survey of Australia:

"All this entails the risk that awards continue to constrain direct negotiations, dictate many working arrangements, limit wage dispersion and tend to make many registered enterprise agreements de facto ‘add-ons’ to existing awards rather than comprehensive agreements reflecting the reality of work."

⁷A recent analysis adds further weight to this conclusion. A survey of top and middle managers of about 1500 businesses in twenty one OECD countries which asked about their capacity to adjust "job security and compensation standards to economic reality" produced responses showing that Australia had the third lowest flexibility rating, with only Spain, Portugal and Greece lower. The analysis suggested that, if Australia had had the same degree of flexibility as the US, our employment rate would have been from 1.8 to 4.9 percentage points higher during the 1984 to 1990 period. (See, Di Tella.R & MacCulloch.R, The Consequences for Employment of Labour-market Flexibility, Australian Stock Exchange ASX Perspective, 3^rd Quarter 1999, pp10-15).

⁸Calmfors and Driffill argued in 1988 that a fully centralised national bargaining system or a fully decentralised system produce better employment/unemployment outcomes than an intermediate one involving a mix of national and sectoral bargaining (Calmfors, Lars and John Driffill, 1988, Bargaining Structure, Corporatism and Macroeconomic Performance, Economic Policy, Vol.3 (April), pp14-61). In its 1997 Employment Outlook, the OECD concluded, however, that there appear to be no statistically significant relationships between various systems of collective bargaining and unemployment. Moreover, using a different classification of bargaining systems to that adopted by the OECD, Wooden and Sloan reached more favourable conclusions about the performance of countries which have moved or are in the process of moving to decentralised arrangements (J.Sloan and M.Wooden, Industrial Relations Reform and Labour Market Outcomes: A Comparison of Australia, New Zealand and the United Kingdom, Proceedings of a Conference: Unemployment and the Australian Labour Market June 1998, Reserve Bank of Australia & Centre for Economic Policy Research Australian National University, Sydney, August 1998, pp.192-6).

⁹The Opposition Shadow Minister for Workplace Relations argued recently that the "threshold issue" in workplace relations is the inequality in bargaining power between employers and employees, stating that "there will always be a case for regulation, for laws that confer rights on trade unions and for an Industrial Relations Commission." (Bevis.A, Address to The Australian Industry Group PIR Conference, 5 March 1999).

¹⁰ These include "small" businesses accounting for over 50 per cent of employment.

¹¹The bargaining parameters have been fundamentally altered by the transformation in the economic and social structure over the past twenty five years. In modern capitalist societies, even under the current relatively high rates of unemployment, all employees (and job seekers) have alternative options for obtaining income and the great majority also have alternative options to obtain employment. The growth in the services sector, in educational qualifications and in shareholdings has dramatically changed the bargaining scene.

Employers also increasingly see employees more as partners and employees are increasingly accepting that there is a mutual interest in establishing a cooperative workplace. The old "them and us" attitude is disappearing, and the old style trade union has lost most of its appeal. Employee cooperation is increasingly seen today as an essential ingredient of business success and employers are obliged to pay close attention to the welfare of their workforces. Otherwise, they will experience high rates of voluntary turnover of employees, absenteeism and sick leave, along with declining customer satisfaction and profit.

Indeed, unless an employer treats his employees fairly, and provides employment conditions which are broadly comparable with other employers, he risks losing workers with profitable knowledge and skills. So employers have a self-interest in retaining ‘suitable’ employees by treating them decently. This is not to say that employees do not need to protect their interests through suitable employment agreements: a small minority of employers is ‘bastards’ who will take advantage of a situation if they can.

¹²See, Moore.D & McGinnes.J, "Are Profits "High"?, Institute for Private Enterprise, June 1996. This paper points out that it is misleading to assess only the profit share of the corporate sector because that has increased due to the increasing trend to incorporation.

¹³When introducing the Bill to establish the Conciliation and Arbitration Commission in 1903, Alfred Deakin emphasised that "The object of this measure is to prevent strikes" and he firmly rejected the idea that legislation should attempt to regulate industrial affairs generally because Parliament "would be incompetent to do so, because of the impossibility of drafting provisions, however well devised, so that they would meet all the contingencies, changes, and difficulties of different industries, which are subject in themselves to continuous alteration." If such words were applicable then, how much more are they applicable in today's rapidly changing world (Conciliation and Arbitration Bill in Committee, Hansard, 30 July 1903, pp2863-4).

¹⁴ Part of comments by Senator Brian Harradine on the (leaked) letter of 3 December 1998 from Mr Reith to the Prime Minister canvassing future reform options as quoted in Australian Financial Review, Answers Demanded on the Question of Jobs, 19 February 1999. Senator Harradine also described the threat posed by the options as "a fundamental attack on something that is ingrained into the culture of Australia", and whose implementation would leave "the most vulnerable employees unprotected, under-represented and exploited."

¹⁵G. Watson (Partner, Freehill Hollingdale and Page), A Practical Review of the Workplace Relations Act Compliance Issues, Australian Mines and Metals Association, 5 August 1998, pp13-14. Watson also pointed out that "Commission recommendations, directions and orders, requiring the cessation of industrial action are commonly ignored by unions and their members, who do not accept the authority of the Commission to determine whether or not industrial action should be continued….Many applications for the insertion of bans clauses into awards have been made but to my knowledge no case since the 1960s has resulted in penalties or fines being imposed… Except in one notable case concerning domestic airline pilots, there has been no recourse to applications to cancel awards. This reflects, at least in part, the feeling amongst employers that moving outside the system is not necessarily the best way to counter aberrant behaviour."

¹⁶The HR Nicholls Society has documented many instances of injustice, mostly ignored by the "popular" media.

¹⁷ In a keynote address to the Northern Territory Industrial Relations Society's Annual Convention on 27 August 1999, the Senior Deputy President of the AIRC, Mr Colin Polites, concluded that "the conciliation and arbitration system which we have known, despite its ups and downs throughout the century, owed its origins to what in large part could be described as either the excesses of or the breakdown of the labour market in the early 1890s and in particular the social costs associated with that breakdown. The architects of our present emerging system, whoever they be into the future, must always bear that in mind. If they don't and the market again fails by inducing unacceptable social costs then those architects will be guilty of having failed to learn the lessons of history." Apart from ignoring the failures of the Commission, this is a complete misreading of history. The underlying cause of the industrial disputation in the 1890s was the recession which continued for about 20 years, not any breakdown of the labour market. It is also pertinent that, during the next major recession in the 1930s, the existence of the Commission did not prevent a very large upsurge in industrial disputation.

¹⁸Given the same degree of regulation, Australian unemployment should be much lower, and employment much higher, than in the US, the UK and New Zealand, all of which have relatively high(er) unemployment rates among the much larger non-European ethnic minorities in those countries. In 1998, if Australia had had the same proportion of its working age population employed as those countries, we would have had the following additional numbers in employment: USA 755,00; UK 430,000; NZ 218,000.

¹⁹ This is made even more farcical once it is realised that the Commission's adjustments to the so-called "living wage" actually extend to those earning about $900 per week and cover about 25 per cent of employees.

²⁰OECD, Poverty Dynamics in Four OECD Countries,Economics Department Working Papers No.212, Paris April 1999. The study shows that, in the US, only 4.6 per cent of the population were poor throughout the six year period 1988-93. It also concludes that "obtaining or losing employment is particularly important for transitions into and out of poverty."

²¹ While some of those in current employment would be exposed to the possibility of a fall in wages, leading to an attempt to move out of employment on to the dole, the numbers involved would likely be small. For one thing, if their employers were prepared to pay a certain wage beforehand, the extent of any post-deregulation reduction would depend on the extent of competition from potential new entrants. Also, many are prepared to start work on low wages because they recognise that job experience is the best way of increasing the prospect of higher earnings down the track.

²²One notable fallacy is that, while job security has diminished due to reductions in regulation since the 1980s, Australia's highly regulated system provides greater job security than in less regulated overseas markets. The facts are that there has been no significant change in the average duration of jobs in Australia since the early 1980s and our average duration is actually slightly lower than in less regulated labour markets such as the US and the UK. The media focus on "down-sizings", and on such phenomena as the heavily over-blown employment problems of the "baby boomers" (who have the lowest unemployment rate of any group and whose employment rate has actually increased since the 1960s), has created an unduly pessimistic view of job security and the chances of getting a job. This has encouraged the development of legislation to regulate "unfair" dismissals which, while it may offer some temporary security to those in jobs, reduces security for the outsiders without jobs.

It is important to note that the perception of increased job insecurity in a deregulated labour market derives importantly from media stories about "downsizings" in the US. However, a recent academic analysis of developments in the US labour market pointed out that "worker surveys do not reveal widespread insecurity, and the link between insecurity and job growth across regions is tenuous" (Katz.L.F & Krueger.A.B,The High-pressure US Labor Market of the 1990s, Revised May 1999).

The perception of increased job insecurity has been heightened by data showing that, between 1988 and 1998, "casual" employees have increased from 19 to 27 per cent of total employment (ABS Labour Force, July 1999, Cat No 6203.0). However, as the ABS notes, the definition of "casual" - those employees who do not not receive both sick and holiday leave - has a number of limitations. Nearly 40 per cent of casual employees in 1998 were in fact full time employees (up from 32 per cent in 1988) and their inclusion probably reflects the increase in cashing-out of leave entitlements and does not necessarily mean that they do not keep such entitlements.

There is also misplaced concern about increased working hours. Average hours worked per employee (about 10 per cent of whom are self-employed) have continued to decline gradually and are now down to about 35 hours a week compared with 38 hours twenty five years ago. True, although the AIRC prescribes a working week of 38 hours, over 20 per cent of employees are working more than 49 hours. From one perspective this can be viewed as another regulatory failure. However, in reality it largely reflects changing patterns of work and life and does not necessarily mean that work has become more stressful. Account needs to be taken of the major reduction in both physically demanding work and in the length of working lives.

In fact, the average working life has declined significantly over the past fifty years. People are now retiring much earlier (from around 45 years) and are starting work much later. The average working life is now approaching 35 years, compared with an average of 50 not so long ago. We now work more intensively during the working period but, as we move towards the leisured society, that comprises a shorter period of work during the prime of life (See, Des Moore, The Future is Bright, Australian Bulletin of Labour, National Institute of Labour Studies,Vol24,No4 ,December 1998).

Also, the very wide range of hours worked partly reflects changes in industry structure. Thus, while the proportion working over 49 hours a week has increased from around 14 per cent in 1978 to over 21 per cent and the proportion working less than 49 hours has declined commensurately to around 80 per cent, the majority of those working longer hours are in managerial or professional positions or self-employed. They would expect to work longer hours no matter what labour market regulations applied.

Employed Persons: Hours Worked, December 1997

Source: Australian Bureau of Statistics, Labour Force Australia, Canberra, December 1997, Cat. No. 6203.0

Also, with a much higher proportion of employment in the service sector (over 70 per cent), work tends to be less physically demanding than the predominantly production and labouring jobs of earlier times. It is quite a different scenario to be working 50 hours on a tough labouring job compared with 50 hours at a desk.

This is not to suggest that none of those working long hours experience stress. But is this greater than the stress that the physical labourer experienced 50 years ago? The reduction in most illnesses and the large increases in life expectancy suggest not (See also, Gittins. R, We're all working harder, right? Wrong, The Age 8 September 1999).

Nor does the increase in unpaid overtime necessarily imply "exploitation." In part it reflects the substitution of higher up front-pay as a result of cashing out of overtime provisions in awards. Further, over 70 per cent of unpaid overtime is worked by those in managerial and professional positions. A recent ABS survey showed that about 63 per cent of employees who work more than nine hours overtime per week were in managerial or professional positions and that very few of those in production or labouring jobs worked that amount of overtime. The survey also showed that nearly 40 per cent of employees now have flexible start and finish times and/or are able to work extra hours in order to take time off; and the proportion working Monday to Friday is now down to 60 per cent. (Australian Bureau of Statistics, Working Arrangements, Canberra, August 1997, Cat No. 6342.0).

Finally, attempts to reduce unemployment by requiring work-sharing and restricting hours of work (as some European countries are doing) are more likely to increase unemployment than decrease it, assuming that requirements could be enforced. Such attempts imply that there is a perfect exchangeability between those who are employed and those who are not, which is clearly not so in the majority of cases. The majority of the unemployed are unskilled and/or inexperienced and would not therefore have the capacity to perform in a considerable proportion of existing jobs, particularly in those where long hours are worked (and where a substantial proportion of the hours would be unpaid). Moreover, even if the limit on hours were to be confined to certain types of jobs, and even if substituting employees could be exactly matched to existing employees, total wage costs would increase unless the wages paid to existing employees were to be reduced. One academic study has concluded that restrictions on working hours would in practice ‘lead to large efficiency losses which could ultimately cause the unemployment problem to worsen’. (M Wooden, Overemployment, Unemployment, and the Work Sharing Debate, Australian Bulletin of Labour, National Institute of Labour Studies, Vol19, 1993 pp 315-23).

²³Indeed, one distinguished jurist has argued that there is an "abiding intellectual unity" between the basic common law concepts of property, contract and tort, viz: "Property law governs acquisitions of the rights persons have in external things and even in themselves. Torts governs protection of the things reduced to private ownership. Contracts governs transfer of the rights so acquired and protected. This trinity -acquisition, protection and transfer - exhausts the range of legal relationships between persons. It is just this universality which lends coherence and power to the legal achievements of the classical common law". (Epstein, R.A. Takings: Private Property and the Power of Eminent Domain, Cambridge (Mass), Harvard University Press 1985 p.vii).

²⁴ The previous Federal Government was forced to restrict the jurisdiction of the Federal Court on certain immigration matters where that court's judicial activism had outworn the patience even of the Government which had appointed most of its members.

²⁵Reith.P, Speaking Notes, Address to the National Press Club, Canberra, 24 March 1999 p4. Of course, such a national framework of minimum standards would not then apply to unincorporated businesses. But that area already operates to a significant extent outside the regulatory framework.

²⁶A more radical alternative would be for the Commonwealth to opt out of the regulation of employer- employee relationships, leaving the field to the States. There is certainly no constitutional obligation on the Commonwealth to legislate under Section 51 (xxxv). However, while that approach has some attractions, it seems unlikely to achieve the same extent of deregulation. My sense is that, if a Federal Government succeeded in a codified common law approach, there would be a good chance of that sticking.

²⁷ ACAS was established under the Employment Protection Act 1975. A customer evaluation survey of the ACAS Public Enquiry Points (a free national telephone help line foe employers and employees) published in 1996 reported that over 525,000 inquiries had been received in 1994 and the survey recorded very high levels of satisfaction with the service. In 1998, ACAS handled 1313 collective conciliations (with a success rate of over 90 per cent), 114,000 individual conciliations, and 530 advisory projects (mainly covering improvements in dispute settling procedures). However, ACAS' primary emphasis is on encouraging internal resolution of disputes by having appropriate dispute settling procedures at the enterprise level.

²⁸Epstein. Richard A, Liberating Labour The Case for Freedom of Contract in Labour Relations, Centre for Independent Studies, Occasional Papers 36 1991.