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ACTU wages plan would increase rigidity of wages system



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PETER REITH MP FEDERAL LIBERAL MEMBER FOR FLINDERS SHADOW MINISTER FOR INDUSTRIAL RELATIONS

COMMONWEALTH PARLIAMENTARY LIBRARY

: . MICAH

ACTU WAGES PLAN WOULD INCREASE RIGIDITY OF WAGES SYSTEM 7

The wages strategy endorsed by the ACTU executive yesterday would greatly increase the rigidity of Australia's wage fixing system.

The central aim of the plan is to establish a supposedly more equitable set of wage relativities that would link all major awards. At the same time supplementary payments would be used to

eliminate the role of over a ward payments and to improve the relative position of the low paid.

This approach runs totally counter to the need for greater flexibility in the wages system to take account of the particular needs of different industries and enterprises.

It totally denies any role for market forces in determining wage relativities.

Overaward payments provide one of the few areas of flexibility in our industrial relations system. They are almost always determined at the enterprise level, and permit employers to respond to labour market conditions, and to reward individual or

group performance.

Mr. Kelty however apparently sees overaward payments as a source of "instability".

A similar line of thought formed the basis for the most ambitious attempt to eliminate overaward payments yet seen - the introduction of paid rates awards in the building industry. It is generally agreed that that approach has been a total failure.

While some elements of the ACTU' s plan are welcome, for example the belated recognition that indexation is dead and buried, it does not represent the major breakthrough in thinking that some commentators seem to believe.

The plan as a whole represents an attempt to massively increase the degree of regulation and centralisation of the wage system. It is unfortunate that some people, including the Minister for Industrial Relations, appear so mesmerised by the scope of the

strategy that they cannot see that it is leading Australia down precisely the wrong track.

Canberra 2 December 1988

For further information contact Jonathan Hamberger (062) 774031

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