The newly-elected Coalition Government has committed to engaging the Productivity Commission to review the "Fair Work" framework and is set to play a significant role in influencing the industrial relations framework in Australia. 

Recently in an address to business leaders, the Chairman of the Productivity Commission, Mr Peter Harris, expressed his view that the Australian workforce needs to alter its expectations regarding income growth from the current expectation of around 2% a year to a more realistic 0.5% a year. 

Mr Harris commented that weak income growth via productivity at the point of the last decade (around 1.3%) is "hardly to be preferred" over a higher rate that returns to the long-run productivity growth figure of around 1.6%. He highlighted the recent mining boom as having disguised weak productivity growth for most of the 2000s and masked the even less impressive contribution to productivity from specific sectors such health, aged care, retail and education. 

In order to achieve better productivity, Mr Harris suggested a return to the widespread microeconomic reform adopted in the 1990s. Mr Harris calls for a "serious reflection" on productivity needs to be undertaken by business, unions and the bureaucracy and foreshadows there will be significant change made to the Fair Work Act 2009 (Cth) under the new Coalition Government. 

Key Take Away for Employers

Employers should be aware that, despite the political rhetoric, industrial relations policy will be under scrutiny by the new Coalition Government. Any IR reforms in the name of productivity will most likely be met by opposition, so expect the debate on this issue to be ongoing.