australias wage determination system

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Australia has gone from a highly centralized wage determination system to a mainly decentralized one. There has been a move away from accords and awards to enterprise bargaining, through the 96 Workplace Relations Act. Recent policies include changes to unfair dismissal claims and the 2005 workplace reforms package.
Throughout the 20th century, Australia has maintained a system of tribunals to make decisions about wage and non wage outcomes and to help resolve industrial disputes. Institutional forces affect the operation of the free market in order to improve labour market outcomes, such as guaranteeing minimum wages and conditions. The four institutional forces that affect labour markets are Governments, Trade Unions, Employer associations and Industrial Relations tribunal.

Trade unions represent groups of workers on a collective basis. The most important trade union is the Australian Council of Trade Unions (ACTU), which is the peak union body to which most unions are affiliated. Trade unions membership has declined substantially from the 1970’s with an average membership of 55% to just 23% in 2003. This is caused by the increase in casual and part time employment, growth in industries with low union membership such as retail and the decentralization of wage determination.

Employer associations represent business groups in similar industries in industrial relations matters. They seek wage moderation to maintain profitability. The head employer association is the Australian Chamber of Commerce and Industry.

At the federal level is the independently run Australian Industrial Relations Commission (AIRC). They establish and maintain the fair minimum rates of pay and conditions (award safety net system) for all workers. Award wage increases are determined by the AIRC annually after hearing submissions from the government, ACTU and unions. They apply the no disadvantage test to CA’s and AWA’s to make sure workers are better off than the underpinning award. They also help settle industrial disputes through conciliation and arbitration.

Move Away from centralized
The Accords (1983-1995), were a social contract negotiated between the Federal Government and ACTU on minimum wages and specified working conditions for a number of occupations under Federal awards. This centralised wage system reduced the levels of inflation, industrial disputation and un...

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...ver the wage determination role of the Australian Industrial Relations Commission (AIRC). It is meant to boost productivity by increasing workplace flexibility and placing new constraints on unions. The change is aimed at having workers covered by individual employment agreements rather than collective awards.
Its creation is a big win for employer groups, who have campaigned for decades to strip back the powers of the industrial relations umpire to determine workplace arrangements. However, many believe it will lead to a reduction in pay and conditions.
New legislation will also strip back minimum employment conditions. The current 20 "allowable matters" will be cut to about 16.
The wage determination system has moved from centralised determination through National Wage Cases towardst an enterprise bargaining framework. Safety nets are there mainly for low paid workers who are unable to secure wage increases under enterprise bargaining. There has been sustained moderate wage increases, low inflation, strong productivity growth and employment growth. This system appears to generate the best of both enterprise agreements and centralised wage determination.

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