How wide is the impact of Work Choices?

Abstract

As a result of WorkChoices, more employees were moved onto AWAs than before, and fewer onto union collective agreements. Award coverage declined. However, the coverage of AWAs was greatly exaggerated by the former government, with no more than 5 per cent of employees on AWAs at the end of September 2007.

The effects of WorkChoices were reduced for several reasons. Few employees have been covered by WorkChoices agreements and many firms did not take advantage of the opportunities WorkChoices presented. Because such a small proportion of workers were on AWAs, their impact on aggregate wages was relatively small. The full effects were unlikely to be felt for some time because some of the provisions of WorkChoices could only affect parties' behaviour several years after WorkChoices came into force, and because employer strategy would take some time to adjust, especially amongst firms wary of the effects of cutting pay and conditions. The full effects of WorkChoices would probably only be seen when the boom slows and economic conditions deteriorate, leading a larger number of employers to make use of WorkChoices provisions while the alternative available to employees narrow. In that sense, any evaluation of WorkChoices at the moment is, if anything, likely to provide a rosier picture than would later have become apparent if voters had allowed it to stay in place.

Yet WorkChoices had a major political impact. This was partly because of the impact of some of its broader provisions, such as unfair dismissal changes which immediately reduced protections for several million workers and their families and increased insecurity. In addition, while many people were not directly affected, they often heard stories from friends or relatives of adverse effects. The impact that WorkChoices had on a minority of people was sufficient to engender feelings of insecurity amongst a significantly larger group, and to offend voters' sense of justice.