Unemployment and Workchoices: Has Workchoices really contributed to the low unemployment rate?
There has been for some time now, considerable publicity and controversy about the Workchoices legislation in Australia.
What most people have no idea about is whether it is good or bad for employees and Australia. This confusion exists even though the legislation is over 12 months old. Interestingly, despite this lack of general knowledge, it seems that Industrial Relations could well be a major election issue for the forthcoming federal election.
Recently, Prime Minister John Howard claimed that having regard to 12 months employment statistics, Workchoices has directly influenced the unemployment rate, causing it to drop from 5.1% over a year ago to the present figures of between 4.4% and 4.3%. This represents a 32 year low in the unemployment rate. He also maintains that the Workchoices reforms and the removal of unfair dismissal provisions, are responsible for the creation of 276 000 new jobs, 96% of which were full time. The Prime Minister also claims that the changes have created greater incentives for small business to hire new staff, without the threat of unfair dismissal action.
On the other hand the Federal Opposition claims that Australia has had 15 years of unprecedented economic growth and is in the midst of an economic boom which is contributing an extra $55 billion into Australia’s economy each year. It also asserts that China is particularly keen to purchase Australian commodities and is prepared to pay record prices for them. This iswhat is driving the low unemployment rate in their view.
Prime Minister Howard says that this view and the animosity towards Workchoices is a result of an ongoing and well funded campaign by the unions specifically designed to unsettle voters.
The Australian Chamber of Commerce and Industry, has spoken out in favour of Workchoices. Its Chief Executive Peter Hendy (who is one of the principal architects of the legislation) claims that Workchoices has created a working environment where there is much less risk associated with the employment of more full-time permanent staff. Hence there is more incentive to hire, says Mr Hendy.
Federal Minister for Employment and Workplace Relations Joe Hockey. He too believes that the mining boom itself is not the cause of low unemployment (as the Opposition suggests). He told the Seven Network that “[t]he number one jobs growth was in construction over the last 12 months and that was followed by accommodation, cafes and restaurants – not mining,” He did not say how Workchoices affected construction.
It will be interesting to see when and if the mining and commodities boom subsides whether the Opposition’s claim is correct, namely, that finding a job will become more difficult and there will be a rise in the unemployment rate.
It will also be interesting to observe whether the opposition’s predictions on this topic will lead the Reserve bank to raise interest rates again at some point because of the supposed consequential inflationary spiral that low unemployment creates.
Readers may like to form their own views by reviewing our analysis of the 1 year anniversary of Workchoices, which was available in our last edition of the McArdle Legal Newsletter (the February/March edition).