AIG pressures Government for Fair Work overhaul, continues calls for more flexible agreements

The head of the Australian Industry Group has today called on the Government to introduce greater flexibility within the Fair Work system, saying that more scope should be included for businesses to amend individual agreements.

The call is just the latest public pressure put on the Government to overhaul the Fair Work system, with employment groups and legal experts saying productivity has been affected by the restrictive employment agreements.

“The small and medium business community has incurred significant new costs with employing people in the Fair Work system,” says Australian Chamber of Commerce and Industry chief Peter Anderson. “The case for sensible changes to the Fair Work system exists.”

AIG chief executive Heather Ridout has today called on the Government to amend a number of flexibility provisions, citing a study which shows 69% of 250 members support reinstating some individual agreement arrangements.

Some provisions put forward include giving businesses the ability to eliminate arrangements without four weeks’ notice, and that agreements could be designed in order to last for up to four years. Other examples of possible provisions include the ability to cash out annual leave.

Ridout also said 80% of those companies surveyed by AIG which have experienced a drop-off in productivity said Fair Work laws were an important factor in losing productivity.

“These results point to two things,” Ridout said in the speech. “Firstly, in itself the Fair Work Act has not delivered increased productivity or flexibility to Australian employers. Secondly, the Act has introduced barriers to productivity growth and labour flexibility which need to be addressed.”

While Ridout touched on a number of topics including softening consumer demand and the pain of a higher dollar, she also identified a number of other recommendations including scrapping provisions which restrict the engagement of contractors and on-hire labour.

The AIG’s proposals echo those of the Coalition, which has said over the past few weeks it favours a return to more individual agreements. The calls come as the Government prepares to launch an inquiry next year on the effectiveness of the Fair Work system.

Peter Anderson from ACCI says he agrees with the AIG and says businesses are having to deal with these problems at the same time they are dealing with a loss of demand and volatile markets.

“These new costs are making it harder for people trying to keep up their hours of work. There is no doubt the Fair Work system for most business operators has brought more headaches rather than benefits.”

“After two years we are in a position to be able to identify sensible changes to be made. Unless we achieve some greater flexibility in the system, we are going to see the labour market continue to soften.”

Despite the growing momentum for individual agreements, trade minister Craig Emerson told ABC radio this morning that “Labor won’t be going back to AWAs”.

“AWAs were actually used to strip away penalty rates, pay and conditions for working Australians.”

“So what’s the proposition? That Australians aren’t working enough hours or that there’s featherbedding, there’s too much staff in shops and in factories?”

But some legal experts also believe the Fair Work system needs a touch-up. Peter Vitale says one issue is that while current flexibility agreements cover a number of different areas such as annual leave and overtime benefits, actual union agreements are quite restrictive.

“A typical clause in an enterprise agreement might limit the matters about which an individual flexibility agreement can be reached to things like the timing of tea breaks, for example.”

“I think the suggestion that more flexibility arrangements would be back door AWAs is well wide of the mark in practice. I think there is a lot of scope within the legislation to alter the amount of flexibility there for individuals.”