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Impact of Federal Industrial Relations Proposals

Purpose

The purpose of this paper is to discuss currently available data across Organisation for Economic Co-operation and Development (OECD) nations linking labour market deregulation and economic and social performance.

Issues covered

The federal government claims that deregulation of the labour market will improve productivity, boost employment, raise wages and create a wealth effect. However, there is no clear mechanism or timeframe for these effects to take place. International comparisons of labour productivity and the degree of labour market deregulation show no evidence to support the Commonwealth’s claims.

The paper graphically links labour market deregulation of various OECD countries to:

productivity
unemployment
net social expenditure as a percent of gross domestic product (GDP)
income inequality and annual hours worked
total taxation as a percentage of GDP

Outcomes

While there may be some association between less regulation and lower unemployment rates, international comparisons show the pattern is mixed.
Less regulation is associated with relatively lower minimum wages. This is a concern for Australia as a further erosion of minimum conditions are anticipated.
Countries with deregulated labour markets tend to spend least in terms of their percentage of GDP on social expenditure and welfare and have the greatest amount of income inequality.
Annual hours worked increase with increased deregulation; however Australia already has one of the highest annual hours worked of developed nations.
Further increases in inequality in Australia leading to less social cohesion will also have impacts on State correctional systems, policing activity, school outcomes, family issues and health outcomes.

View the report

View the full report on the Impact of Federal Industrial Relations Proposals. (PDF, 126KB)

Last updated July 21, 2009