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Employer Associations And Modern Awards

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Question:

Discuss about the Employer Associations and Modern Awards.
 
 

Answer:

Introduction

The modern awards system as applied in Australia has attracted the attention of various stakeholders. The employer associations have incessantly advocated for substantial changes on this awards system (McKell Institute n.d). Knox (2009) maintains that the issues regarding penalty flexibility and rates stemming from companies. The employer associations have made submissions relating the changing of modern awards systems. Studies have provided evidence showing that the associations are sensitive to the cost minimization goals (Craig & Brown 2015). Indeed, the employer associations seem to enhance managerial prerogative instead of emphasizing performance and productivity. Based on this issue, the article will focus on managerial productivity, flexibility and prerogative and penalty rates. The discussion will pay attention to the modern awards changes.

The management practices focus on cost efficiency, managerial and legitimacy power, and controllable flexibility (Boxall & Purcell 2016). These management goals are critical in determining the organizational success and productivity. The identified goals have formed the basis of debate as stipulated by various employer associations. To this effect, the managers have recognized the significance of their roles that revolve around resource combination, allocation, and utilization to realize organizational objectives (Jackson 2015). Over the years, companies have observed significant changes relating to the involvement of employer association. The employee association have the responsibility to influencing and negotiating with the government and tribunals so that their issues and concerns can be addressed mutually as explained by Productivity Commission (2015). Studies have identified key system issues relating to employer associations (Grattan 2016). For instance, most of the association advocate for the restriction of union rights, penalty rates, and related provisions that incorporate procedural and substantial rules.

 

The debate regarding modern awards began in 2012 that saw the leading employer associations opted to promote provisions that are more workable (Wooden 2012). The associations also campaigned for substantial changes on the modern awards systems. Without a doubt, the employer associations have had to deal with numerous submissions to the tribunals touching on different claims such as flexibility, public holidays, and penalty rates. Technically, the penalty rates are important to the affected stakeholders. As a result, they view penalties based on financial context and the related benefits associated with the workers payments, in particular when the employees work beyond the normal working hours (Markey 2015). Sloane (2014) states that the motivation of regulators is based on the penalty rates. These penalties are viewed in different forms such as worker compensation for the tasks performed during the unsociable hours. The regulator also uses the association to dissuade them from engaging in tasks within the historical unsociable hours.

Sheldon and Thornwaite (2013) showed that the employer association advocate for the reviews of modern awards.  To the employers, the award reviews offer opportunities for the associations and employers to campaign for the importance of these penalties in industrial operations within the unsociable hours. It is evident that companies prefer employer associations that enhance managerial prerogatives than performance and productivity. Indisputably, the employers should focus on the managerial productivity, which concerns the cost of resources (White 2017). Based on the debates, the push for reviewing the penalty rates seem to affect the retail and tourism industries. Arguably, the penalty rates provisions are unfriendly and require immediate review. Flexibility encompasses various components in the workplace context. This factor involves critical thinking about the lives of the working class. Healy (2016) held that employers should be flexible in structuring the rates that are in tandem with the business and individual needs. The individuals who advocated for the amendments of flexibility provisions and penalty rates paid attention to the manufacturing companies.

 


White (2017) has identified the efforts the Australian government is making to respond to the needs of the employees. This has seen the employers compelled to pursue greater complexity. Interestingly, the greater flexibility focuses on the cashing and taking out the annual leaves to minimize costs. The cost cutting initiatives using the control measures have caused the underlying concepts relating to the managerial prerogative. According to (), the elevated managerial prerogative are unacceptable and many stakeholders view it as illegal because it emphasizes the aspects of management’s unqualified authority in undertaking their discretion. The managers working under such prerogative provisions believe in an exclusive right to make decisions. Such managers resist interference with their control as explained by Duncan and Daly (2015). Barry (2016) explained the managerial prerogative based in the defensive context using aggressive industrial actions. In fact, the historical aspects affirm that aggressive industrial actions have strengthened the managerial prerogative.

Healy (2016) demonstrated the managerial prerogative based on the organizations decisions. This followed the efforts by the managers to participate in a lockout. To entrench the managerial prerogative, the employers wanted to participate in the aggressive bargaining strategies. These efforts ensured the disputes were escalated so that the managers access the arbitration that tends to affect the organization productivity. Indisputably, the managers should emphasize productivity by investing in greater efficiency and flexible and fair employment provisions. It is imperative for the managers to trust work systems that embrace fair working opportunities. According to Knox (2009), productivity is an important factor with economic connotation. It justifies that the organization utilizes its resources efficiently. It thus measures the achievement of workers using the output resulting from the utilization of the primary resources such as capital, land, and labour (Wooden 2012).

Productivity and penalty rates are distinct based on the definition context. Wooden (2012) has identified the concerns relating to the Fair Work Act. White (2017) has reported that the Fair Work Commission considered increasing the minimum wage. In fact, “the Australian Council of Trade Unions” has advocated for A$45-a-week rise” (Australian Council of Trade Unions 2015). According to the employer associations, the current business trends can rarely afford the proposed wage increases. To this effect, the industry wants the minimum wage to be capped at 1.5 percent. To the employer associations, the Fair Work Act hampers productivity growth, competitiveness, and workplace flexibility thus affirming that penalty rates can rarely affect the productivity rates (White 2017). Walsh (2015) affirmed the position of White (2017) relating the employer’s associations that value cost cutting efforts and instilling the managerial prerogative. To these employer associations, enhancing productivity and performance rarely supersede the managerial prerogative and cost cutting.

 


Desloires and Dunckley (2015) have explored the impact of the Fair Work Act on the employer association. Based on the exploration, it is evident that the employers have lost managerial prerogative thus weakening their freedom to contract as explained by Wooden (2012). According to Hannan (2017), employers have completed disregarded the efforts to increase the penalty rate. They have opposed the proposal of penalty rates increase. However, the Fair Work Commission published the submission of various parties on how the tribunal should hand the issue, as it will affect over 600,000 workers (Hannan 2017). The move to apply the penalty rate would compel employers to avoid Sunday penalty rates. The current Sunday rates would double the regular wage thus pushing the costs as explained by Woodman (2014). Since employers favour cost cutting initiatives, they might be discouraged from offering the work at unsociable time.

The Australian Hotel Association view the new rates to be unfair thus opposing the take-home pay. According to Hannan (2017), these employers argue that the take-home pay orders should be applied to part-time and permanent workers who worked for over 34 Sundays. “The Pharmacy Guild of Australian” also submitted that the penalty cuts in instalments could be offset by the current minimum wage (Hannan 2017, par. 4). Hannan (2017) further identified the Australian Retailers Association and the National Retail Association supported the penalty cuts but opposed any effort to introduce the take-home pay orders.

The economic impact of penalty cut will be felt in the hospitality and retail industry. According to McKell Institute (n.d), the retail and hospitality industry accounts for over eighteen percent of the rural Australia workforce. This sector employs over 500,000 million. Therefore, any partial abolition of these penalties would see the rural Australia lose $691.5 million annually. In fact, full abortion of the penalty would impose worse situation to the rural Australia as they stand to lose $1.55 billion annually (Haynes 2017).

 

Conclusion

Based on the finding in this article, it has emerged that employer associations are disappointed with the equitable and productive workplace. The move to cut the penalty rates has affected the employers across Australia. In fact, the Fair Work Commission has advocated for an increase of minimum wage. Unfortunately, the employers have remained adamant to adopt the changes that entrench aspect of productivity and performance. The employer associations value managerial prerogative instead of enhancing productivity. This demonstrated that the employers are concerned with their managerial prerogative and cost cutting. Conversely, the amalgamation of various managerial concepts would enhance organizational competitiveness. The employer associations made submissions that appear to have obscured the significance of the issues relating to penalty rate cut, flexibility, and productivity. Interestingly, the employer associations appear to value the working conditions of managers at the expense of workforce.

 

Bibliography

Australian Council of Trade Unions. 2015, ‘Turnbull must reject Productivity Commission call to cut take-home pay’, 21 December <https://www.actu.org.au/actu-media/media-releases/2015/turnbull-must-reject-productivity-commission-call-to-cut-take-home-pay > [website], date accessed 18 April 2017.

Barry, M. 2016 ‘Employer and employer association matters in 2015’, Journal of Industrial Relations, vol. 58, no. 3, pp. 340 - 355.

Boxall, P. & Purcell, J. 2016, Strategy and Human Resource Management, Third Edition, Basingstoke and New York: Palgrave Macmillan, Chapter 1 ‘The Goals of Human Resource Management’, pp. 1-33.

Craig, L. & Brown, J.E. 2015, ‘Nonstandard work and non-work activities, time alone and with others: Can weekend workers make up lost time?’ Journal of Industrial Relations, vol. 57, no. 1, pp. 3 – 23.

Desloires, V. & Dunckley, N. 2015, ‘Employers step up efforts to get rid of penalty rates’, Sydney Morning Herald, 3 January, page 1,  <https://search.proquest.com.ezproxy.uws.edu.au/anznews/docview/1641402602/8E1DE46003374D59PQ/3?accountid=36155> [database], date accessed 18 April 2017.

Duncan, A. & Daly, A. 2015, ‘Fact check Q&A: Are a lot of cafes and restaurants closing because of Sunday penalty rates?’, The Conversation, August 17, <https://theconversation.com/factcheck-qanda-are-a-lot-of-cafes-and-restaurants-closing-because-of-sunday-penalty-rates-45951>

Grattan, M. 2016, ‘Penalty rate cut will hurt economy without helping business: Labour’, The Conversation, March 21, < https://theconversation.com/penalty-rate-cut-will-hurt-economy-without-helping-business-labor-56571> [website], date accessed 19 April 2017.

Hannan, E. 2017, Mar 24, ‘Employers Call for Penalty Rate Cuts to be Imposed by July 2018’, The Australian, Mar 24, <https://www.theaustralian.com.au/national-affairs/employers-call-for-penalty-rate-cuts-to-be-delayed-until-july-2018/news-story/300e9979f874b56dc44a79ad0371b039> [website], date accessed 19 April 2017.

Healy, J. 2016, ‘The Australian labour market in 2015’, Journal of Industrial Relations, vol. 58, no. 3, pp. 308 – 323.

Jackson, S. 2015, ‘Frozen wages, insecure jobs, struggling youth, rising inequality, shrinking unions… join the dots’, The Conversation, November 26, <https://theconversation.com/frozen-wages-insecure-jobs-struggling-youth-rising-inequality-shrinking-unions-join-the-dots-50981 > [website], date accessed 20 April 2017.

Knox, A. 2009, ‘Better the devil you know? An analysis of employers’ bargaining preferences in the Australian hotel industry’, Journal of Industrial Relations, vol. 51, no. 1, pp. 25-44.

Markey, R. 2015, ‘Myths about penalty rates and those who rely on them’, The Conversation, November 16, <https://theconversation.com/myths-about-penalty-rates-and-those-who-rely-on-them-49947> [website], date accessed 19 April 2017.  

McKell Institute. (n.d), Who loses when penalty rates are cut? The economic impact of penalty rate cuts in Australia’s retail and hospitality industries. <https://www.sda.org.au/download/industrial-research/The-McKell-Institute-Report-Who-Loses-Penalty-Rates-Are-Cut.pdf> [website], date accessed 19 April 2017.

Productivity Commission. 2015, ‘Workplace Relations Framework Final Report’, Productivity Commission Inquiry Report, vol. 1, no. 76, 30 November, Commonwealth of Australia, Canberra. <https://www.pc.gov.au/inquiries/completed/workplace-relations/report> [website], date accessed 19 April 2017.

Sheldon, P. & Thornthwaite, L. 2013, ‘Employer and employer association matters in 2012’, Journal of Industrial Relations, vol. 55, no. 3, pp. 386-402.

Sloane, J. 2014, ‘Pay penalty rates, but not through awards system.

Walsh, L. 2015, ‘A day of rest: the costs of removing penalty rates’, The Conversation, 3 February, <https://theconversation.com/a-day-of-rest-the-costs-of-removing-penalty-rates-36911> [website], date accessed 18 April 2017.

White, G. 2017, ‘Explainer: how wage growth contributes to the economy’, The Conversation, April 12, <https://theconversation.com/explainer-how-wage-growth-contributes-to-the-economy-75625> [website], date accessed 20 April 2017.

Wooden, M. 2012, ‘Penalty Rates in Awards: do we really need them?’, The Conversation, 10 September, < https://theconversation.edu.au/penalty-rates-in-awards-do-we-really-need-them-9255> [website], date accessed 19 April 2017.

Woodman, D. 2014, ‘Before you call for penalty rates to be cut, try working a few Sundays’, The Conversation, 19 August, <https://theconversation.com/before-you-call-for-penalty-rates-to-be-cut-try-working-a-few-sundays-30594 > [website], date accessed 17 April 2017.

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