The end of WorkChoices

Today the Coalition’s Shadow Cabinet officially declared WorkChoices dead. With coincidental but good timing, my Policy article on the ugly WorkChoices polling went online this morning.

Polling published since I wrote the article confirms the findings I report. In the Weekend Australian last Saturday, George Megalogenis cited surveys by left-leaning pollster Essential Media Communications that anti-WorkChoices opinion was stable across 2006 and 2007. The huge sums of money spent by both sides on WorkChoices propaganda had little if any net effect on the basic yes/no question.

My reading is that the anti-WorkChoices campaign was able to tap into set public opinion that labour market institutions should protect low-paid and vulnerable workers, and so it all it had to do was convince people that WorkChoices was contrary to their beliefs. That was accomplished by the time polling started in mid-2005.

What we still can’t be entirely clear on is whether the Coalition’s backdown on AWAs and the introduction of a ‘fairness’ test – a major watering down of WorkChoices on a key aspect of public concern, rather than just an advertising campaign – made any difference to the basic yes/no question (Megalogenis’s article doesn’t say when in 2007 Essential Media polled).

A recent Sensis survey found the lowest proportion of their respondents, 26%, in 10 surveys since August 2005, saying that WorkChoices would have a negative personal impact. The highest negative personal effect was 45% in the first survey. The fact that fewer people were perceiving negative personal effects is probably not significant in itself; opponents of WorkChoices have always massively outnumbered those with personal fears about its consequences. The issue is whether the fairness test dealt with the concerns some members of the public had about WorkChoices sufficiently for them to drop their opposition to the reform package.

There is some indirect evidence that it might have changed the yes/no balance, in an improved Liberal ‘better to handle’ Newspoll result on industrial relations in October. I thought then that this was mainly Liberal-leaning voters coming back, and preferring Liberal to Labor is not the same as supporting WorkChoices. But it is possible that overall opinion on WorkChoices wasn’t quite as bad after the fairness test backflip as before.

The Coalition’s policy reversal on AWAs did not, however, deal with the unpopular abolition of unfair dismissal laws. As I show in my Policy article, support for repeal of unfair dismissal laws doubles when it is restricted to smaller employers – but only to about a quarter of the electorate. With the unfair dismissal aspect of WorkChoices still there, perhaps overall opinion did not change.

Unfair dismissal is the trickiest part of the Coalition backdown on IR reform. Many of the Coalition’s business supporters see ‘unfair’ dismissal laws as unjust and unreasonable. Business backing is necessary to the Coalition’s revival as a political force, so steering a path between business and public opinion will not be easy.

11 thoughts on “The end of WorkChoices

  1. Andrew, in my opinion the Coalition could have neutralised the issue after introducing its Fairness Test if it had argued that there was little or nothing between Howard and Rudd on industrial relations. It could easily have said “sorry, we made a mistake but we have now fixed the unfairness of the original legislation so the issue is a dead one”.

    Many like me thought the original WorkChoices was very unfair because the idea that some workers should be made worse off in the midst of unparalleled prosperity really rankled. However I felt the fairness test largely defused the issue and I said so in a piece I wrote for New Matilda in July.

    But what did the Coalition do instead? It sought to magnify the differences between the two IR policies by arguing (alongside hysterical Business groups and many right wing academics) that Rudd’s IR policies would wreck the country (which was a complete nonsense). That was a strategic mistake by Howard because it made voters think there was a huge difference between the two Parties in the treatment of workers when in fact there was not.

    I don’t deny that unfair dismissals also worried a few workers but it was not decisive as Rudd also made many concessions to employers in this area.

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  2. Kim Beazley was right. WorkChoices was a slow burner. While not many people were affected, a lot thought they might be, not to mention their children who work in the hospitality industry, where exploitative practices are worse than any other.

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  3. Interesting, Andrew, that you found the repeal of “unfair dismissal” laws was so unpopular. I have long thought that unfair dismissal laws were the most egregious element of the previous system, so clearly I will not be running for office any time soon. Perhaps the Coalition could have changed their name to the “Lazy and moronic workers’ protection law” prior to repealing them.

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  4. The Liberals really had no alternative but to kill off WorkChoices – had they not done so it would have hung over them for years, and the myth would have grown more virulent. I can just see Gillard: ‘So what if we’re in a recession, electricity costs have doubled and terrorists are attacking us every second day? If you vote for the Liberals, you get WorkChoices (boo, hiss)’.

    What the Liberals have to do is make the argument that a more highly regulated labor market locks people out, and that the worst affected are the unemployed and unskilled. An example is the way the French Conservatives argued against legislated 35 hour weeks using the case of cleaners who needed the extra hours to make ends meet. The Liberals ‘Union bosses will take over the country’ line was crude, unrealistic and appealed only to the rusted-on constituency anyway. I would love for somebody in politics to actually try to talk about economics beyond slogans.

    One interesting thing about the demise of WorkChoices is that in a few years we may be able to look back on the data and see what the actual effect of the legislation was on unemployment, wages, participation etc. It would probably take a pretty good labour economist to isolate the effects of WorkChoices, but with a definite start and end date, it may be possible to get a hard number. Such a natural experiment is rare, but could provide an empirical test of the true benefits of labour market deregulation.

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  5. Steven Kennedy of Federal Treasury has already done some of this using census data, http://www.treasury.gov.au/contentitem.asp?NavId=&ContentID=1328 and among other interesting findings notes that:

    “Australia has a relatively high minimum wage as a proportion of median earnings (58 per cent, see OECD, 2006) compared with the OECD average. On the other hand, the US minimum wage is quite low. To argue that a relatively high minimum wage in Australia is leading to high unemployment rates for the less skilled, one needs also to explain why the unemployment rates of the less skilled in the US are around the same as in Australia. This is not to suggest that minimum wages and their interaction with the welfare system have no consequences for unemployment, especially for the less skilled, merely that the effects may be relatively small.”

    Thus to the extent that WorkChoices was intended to increase employment among the least skilled by allowing minimum wages to drop, it was unlikely to be very effective. At the same time, it was clearly politically expensive.

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  6. STT

    We did some work on the Workplace Relations Act as a natural experiment to look at the connection between unionization and productivity – which you can see here:

    http://www.latrobe.edu.au/business/abstracts_2007.html#A07.04

    We are currently revising this paper – if interested contact the authors or a revised version will go up at

    http://www.business.latrobe.edu.au/public/staffhp/dphp/index.htm

    It has some contemporary interest as some of the changes in the air will take us back pre-WRA (as Julie Bishop, amongst others, has pointed out)

    Thanks MikeM for the reference too.

    cheers

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  7. Andrew,

    Did the LN/Ps IR policies – ie WC & UD – help it or hurt it at the election? Obviously right wing IR will help the LN/P amongst its base. But these tend to be rusted on voters in safe seats.

    What is the exit polling evidence on IR policies vote-changing and seat changing effects ie for swinging voters in marginal seats?

    My gut feeling is that IR hurt the LN/P and may have cost it up to 1% in the 2PP vote. The Newspoll put concern about IR up very high (72%). I suspect that high-feeling ran in voters who might ordinarily be considered reasonable LN/P prospects.

    The fact that the LN/P spent so much (tax-payers!) money and political capital trying to defuse concerns about IR suggests to me that its electoral advisors perceived this to be a big problem.

    Any hard evidence?

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  8. Jack – Loughnane says it was a factor, but doesn’t put a number on it. I think we can rule out it helping the Coalition, but given the forced bundling of political opinions cannot say what it was worth to Labor.

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  9. Proponents of the changes WorkChoices sought to introduce should have made their case and built a political constituency before it was introduced. The legislation was unwieldy and forbidding for employers without in-house legal and specialised HR functions (i.e. the very employers in whose name the legislation was introduced). The government introduced a law whose enemies were many and friends few – when Howard begged business for explicit support and too little came, too late, it was a(nother) sign of political failure by the former government.

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  10. Greetings and Merry Christmas.

    I hadn’t read Andrew Norton’s CIS/Policy article “The End of Industrial Relations Reform?” until today.

    A very interesting and valuable review and analysis.

    I wonder whether the introduction of the WorkChoices “Fairness Test” might have be seen by the public as a sort of “admission” by the previous government that WorkChoices was (at least potentially) unfair, thereby reinforcing the message presented by the Union movement.

    It’s a great shame for Australia that Brendan Nelson has RETREATED from labour market reform, instead of determining to better explain it and push for it.

    If the Liberal Party can’t (or is too scared or too economically incompetent to) even sell labour market flexibility, how can it hope to sell its liberal ideals? How can it ever hope to beat Labour?

    Andrew Norton’s “The End of Industrial Relations Reform?” provides many good starting points which the Libs would benefit from studying.

    For instance:

    The myth of unequal bargaining power between employer and employee.

    The myth that unions or collective bargaining can (or ever have) raised real wages across the board (versus raising wages for some at the expense of others)

    The fact that the public does try to take a “big picture” perspective on policies and proposed reforms – by doing its best to take into account the effects upon fellow Australians as much as upon themselves. Although they got it wrong with regards to WorkChoices, this is a very powerful factor to keep in mind.

    And there is plenty more good meat that I was able to identify in Andrew Norton’s article.

    Best Wishes,

    PRODOS

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