Employer and employer association matters in Australia in 2017

Abstract

Employers saw some progress in their favour in 2017, including the Fair Work Commission's decision to cut penalty rates in various retail and hospitality awards, and the introduction of legislation to repeal the 4-yearly awards review process. But in spite of these advances, progress on their desired wholesale reform of Australia's industrial relations system had taken a back seat. Much of employer activity had been directed at fending off unions' claims for changes, such as the automatic conversion of casuals to permanent employment, paid domestic violence leave and for a high increase to the nominal minimum wage. Employers' defensive stance on the aforementioned matters was in contrast to the unions' more forceful positioning. Consequently, we argue that in 2017, as in the past few years, employers' remained frustrated at a lack of progress in reforming industrial relations in their favour.

Keywords

Employer associations employer reactivity 4-yearly awards review minimum wage penalty rates

Introduction

Employer frustration over the slow pace of change in industrial relations (IR) continued in 2017 despite some notable progress, particularly in respect to the Fair Work Commission's (FWC's or the Commission's) decision to cut penalty rates in various awards. Indeed, since the end of the Howard Liberal–National ‘Coalition’ Government in 2007, employers have continuously struggled to overcome political and institutional impediments to the implementation of their agenda, and have increasingly become preoccupied with responding to external pressures such as that coming from forceful union advocacy of their own reform agenda. Even their apparent ‘win’ on penalty rates had been soured to some extent by a higher than usual compensating increase in the national minimum wage case, and by the need to defend the decision against claims of its unfairness. In 2017, employers were also preoccupied with responding to unions’ claims for casual conversion and paid domestic violence leave through the awards review process.

Our assessment of employer and employer association activities in 2017 is therefore consistent with previous reviews (i.e. those of Barry, 2016; Barry and You, 2017; Sheldon and Thornthwaite, 2015) inasmuch as it demonstrates that employers' capacity to shape the IR regulatory environment remains limited, notwithstanding their noted dissatisfaction with the current system. Moreover, much of their focus had been on defending employers against union efforts to make advances in wages and conditions through the minimum wage and award review processes. In the following section, we situate our assessment of current employer and employer association activities by briefly examining the academic literature on employer associations, which shows that their involvement in shaping the IR regulatory framework has varied to a considerable degree, in different eras.

What follows from that discussion is a detailed evaluation of the activities and views of employers and employer associations in 2017, on which we base our overall assessment. The inclusion of matters was determined by our judgement of the most important issues for employers and, as in previous reviews (e.g. Barry, 2016; Barry and You, 2017; Sheldon and Thornthwaite, 2015), this determination was based on a variety of sources, including reporting of employer and employer association views in the press, association media releases, submissions to various hearings and inquiries, and key priorities for employers that were identified in our interviews with employer association officials. Due to the broad national scope of the matters under consideration in 2017, such as the Penalty Rates Case and the legislation before federal parliament seeking to regulate the construction sector, we elected to focus our primary data collection by interviewing the leading IR officials of the most prominent employer groups in such matters, specifically the Australian Chamber of Commerce and Industry (ACCI), the Australian Industry Group (AiG) and the Master Builders Association (MBA). To balance these views and bring in other perspectives, we also conducted interviews with prominent officials from the Australian Mines and Metals Association (AMMA) and the Australian Hotels Association (AHA).

Employer reactivity post-Work Choices: An overview of the literature

Employers' contribution to Australia's labour market regulation has vacillated to a considerable degree over the past century. Contrary to the view that employers consistently seek policies of labour commodification, and therefore contribute little to the development of labour regulatory instruments (Esping-Andersen, 1990; Korpi, 1978), authors such as Sheldon and Thornthwaite (1999) and Barry et al. (2006) argued that Australian employers and their associations had, in fact, proactively shaped the nation's IR landscape, including during periods of Labor government such as the Accord era. Sheldon and Thornthwaite (1999) argued that the Business Council of Australia (BCA) decisively shaped IR reform by successfully advocating for a system of decentralised bargaining in the late 1980s and early 1990s, though Briggs (2001) also persuasively argued that powerful elements within the union movement were crucial to the transition to enterprise bargaining. Thornthwaite and Sheldon (2012) and Mackinnon (2006, 2007) also documented employers' considerable success in moulding labour market regulation during the Howard Government years, which culminated in the passage of the Work Choices Act 2005 (Cth).

However, in the view of the most prolific academic contributor to the employer association literature, employers’ substantial contributions at these times ‘does not diminish claims of their reactive nature in previous periods’ (Plowman, 2000: 597). Plowman (1988; also Plowman and Rimmer, 1992) asserted that the formation and behaviour of Australia's employer organisations had traditionally been determined by, and in response to, their external environment, and in particular the arbitration system. In his view, the influence of employer groups on the development of Australia's IR system was minimal in comparison with the role played by employer associations in other countries. In a critique of Plowman's reactivity thesis, however, Barry (1995) argued that employer coordination was not actually an artefact of the advent of compulsory arbitration and, moreover, that so-called reactive behaviour could also be interpreted as employers’ proactive (albeit defensive) efforts in attempting to preserve their status quo, particularly in respect of existing managerial prerogative.

Observers of current employer and employer association activities (e.g. Barry, 2016; Barry and You, 2017; Sheldon and Thornthwaite, 2015) have documented the difficulties that employer associations have encountered in realising their broad regulatory agenda, and we suggest that the recent experience can also be interpreted in light of the extant literature. Employers saw some progress late in 2016 with legislation enacted to restore the Australian Building and Construction Commission and the passage of the Registered Organisation legislation (Barry and You, 2017). However, they remained frustrated by the slow pace of change, given conservative government rule at the federal level since 2013, and the fact that substantial reforms have stalled, aside from those applying specifically to the Construction sector. Additionally, unions have been pushing hard through the award review process for additional benefits and entitlements that chip away at areas of existing managerial prerogative, such as claims for minimum length of engagement of casuals, and indeed in challenging the very basis of casual employment itself. Unions have also been effectively contesting the public relations debate over how IR should be regulated (Barry and You, 2017; Workplace Express, 2017a).

In light of the current instability in the Commonwealth parliament, and the highly charged and politically contentious nature of IR reform post-Work Choices, employer groups appeared to have pragmatically narrowed the scope of their agenda. This reasoning is consistent with Stewart's (2016: 15) view that because of Work Choices ‘the obstacles to radical reform are becoming powerful’. If the disappointment registered by groups such as the ACCI and BCA at the outcome of the Productivity Commission (hereafter PC) Inquiry demonstrate anything, it is that calls for wholesale IR change misjudge what is possible in the current political climate (see Barry and You, 2017; Stewart, 2016). Kinderman's (2017) analysis of the activities of employer association think tanks in Germany and Sweden reinforces this argument. He claimed that these neo-liberal advocates pragmatically adjusted their reform proposals during periods of political and economic uncertainty in such a way as to defend earlier gains against strong counter-arguments for anti-market and redistributive proposals. If the role of such agents of capital is to articulate business preferences for liberalisation in the public policy process (Culpepper, 2016), Kinderman (2017: 601) also showed that ‘the role of business in politics is not only an influencing but also an adaptive one’, and that business ‘must sometimes swim with the tide’.

Therefore, as discussed later, instead of advocating for radical reform proposals, employer association officials have found themselves needing to counter claims by unions and Labor that any amendments to the current regulatory framework in favour of employers represent profound unfairness. What is at stake in this public relations contest is the possible derailment of the employers’ narrative that further liberalising IR reforms are necessary for economic growth and prosperity. At the same time, employer representatives are also realising the need to proactively work within existing constraints by employing such tactics as directly and more intensively lobbying the cross bench as well as the government with strong, evidence-based arguments for their proposals. If these activities appear ‘defensive’, or even ‘reactive’, as the traditional Australian literature may have suggested, we would assert that they are more precisely a pragmatic adjustment to the current realities of a regulatory space that is highly contested, as we discuss in more detail in the following.

Employers in the Commission

Penalty rates case

In February 2017, the Commission handed down its decision to cut Sunday penalty rates in various retail and hospitality awards ([2017] FWCFB 3001), a decision long anticipated by employers following the recommendation of the PC Inquiry in 2015 (Barry and You, 2017). The common argument from employer associations is that Sunday penalty rates in these awards should be in line with their corresponding Saturday rates ([2017] FWCFB 3001). In addition, the decision also resulted in cuts to public holiday rates (Workplace Express, 2017b). Employers were pleased with the decision, which they argued would improve employment in the affected sectors (ACCI, 2017a; AMMA, 2017a; Burke and Chung, 2017; interview, A Matheson). However, they remain underwhelmed by the transitional arrangement that spreads out the rate reduction over successive annual wage review cycles (Workplace Express, 2017b; interview, A Matheson). Nonetheless, unions were up in arms over the cut and challenged the Commission's decision in the Federal Court (Workplace Express, 2017b), though the full bench of the Federal Court ultimately (and unanimously) rejected the unions' case (Knaus, 2017).

The Federal Labor Opposition, which seemed reluctant to commit to reversing the cuts by legislative means prior to the 2016 election (Workplace Express, 2016), was emboldened by the public's cold reception to the decision, and actively challenged it in parliament. Along with One Nation and the Nick Xenophon Team, which previously supported the cut, Labor, the Greens, Sen. Hinch and Sen. Lambie pushed the Fair Work Amendment (Protecting Take Home Pay) Bill 2017 (Cth) through the floor of the Senate in order to reverse the Commission's decision. However, the Bill is unlikely to pass in the House of Representatives because the government has consistently affirmed to maintain the independence of the Commission (Barry and You, 2017; Workplace Express, 2017c). Nonetheless, employer groups were wary. The AiG cried foul the day that the Senate passed the said Bill, asking ‘What is the point in having an independent umpire if the umpire is only able to make decisions in favour of one side?’ (Willox, 2017a). ACCI, for its part, also sought to remind Opposition Labor leader Bill Shorten of his past support for the independence of the Commission (ACCI, 2017b; also per Kelly, 2017c). It noted that ‘a genuine commitment to an independent industrial umpire means respecting its decision in setting minimum pay and conditions and respecting its weighing of the evidence’.

Two aspects of these statements are noteworthy. The first is the way that these prominent associations position themselves as the defenders of the independent role of the Commission, given the scathing remarks employer groups have made about the Commission's power, structure and decision making, including just a couple of weeks prior to the penalty rates decision (and following the resignation of Vice President Watson, who also called for the FWC to be reformed; per Durkin, 2017; also ACCI, 2017c; AMMA, 2017d). The second is the indication that despite the government's unequivocal position on not interfering with the penalty rates decision, employer groups were still ruffled by the political opposition against it. Even before the Bill was first introduced in the Senate chamber, the BCA proposed the creation of an alliance of business groups to fight the then anticipated Bill (Massola, 2017). Although the BCA proposal was ultimately turned down by other associations, the attempt and subsequent disquiet over it highlights a lack of confidence from employer groups in the government's resolve to not interfere in the matter.

Employer reactions also demonstrated their concern over the direction and reporting of the debate surrounding IR in recent years (see Hannan, 2015; Willox, 2017b). At various times, the AiG's chief executive officer (CEO) Innes Willox, came out publicly, as he saw it to correct media reporting on penalty rates, and to combat ‘union revisionism’ in the current IR debate (Willox, 2017f). Willox (2017c) sought to remind the public that the penalty rates reductions only applied to retail, hospitality and fast food workers; did not apply to the many workers in these industries employed under enterprise agreements; took account of the particular circumstances relevant to workers in those industries, and indeed partly reflected those employees’ work preferences; would be phased in at the same time as workers were being awarded similar increases via the annual wage review (see later); and that many workers in these industries in fact received ‘loaded rates’ that rolled up penalties and other benefits into higher rates (more on loaded rates below). Willox's statements in support of the decision were, as we suggest above, an explicit attempt by employers to contest the debate about IR reform, notwithstanding their natural capacity to influence Coalition government policy.

Award and agreement making

There are also a number of broader issues about the regulation of awards and agreement making, which were a source of much frustration for employer associations. The mandate surrounding the 4-yearly award review process is one such issue. In respect to their own work and that of their members, peak association officials characterised the process as resource sapping, both in terms of the actual cost of resourcing it and the opportunity cost of not being able to allocate resources to other activities such as membership recruitment (interviews, S. Barklamb and S. Smith). At a time when employer associations are changing their business model from a broad-based subscription to a bespoke/fee-for-services model (Sheldon and Thornthwaite, 2004), it is increasingly difficult to justify and absorb such imposts. Employer associations were also reporting a sense of futility and disappointment with the implementation of the review process. This is prompted by the need to reopen award matters even where they are settled between the parties and are not contentious, as well as the feeling that the review is undermining the historic role of employer and employee representatives, as stewards of awards, by directing the Commission to identify review matters on its own volition (interview, S Barklamb). This argument is consistent with Stewart's (2016) assessment that the revised powers of the Commission under the Fair Work Act have, in the case of awards and minimum wages, returned it to the role of a regulator rather than mere facilitator.

The Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill 2017 (Cth) seeks to address these issues. This Bill is a response to a rare display of unity by unions and employer associations in calling for the mandatory four-yearly reviews to be scrapped because of the heavy workload they generate, and the unworkability of the review framework and timeframe (Marin-Guzman, 2017; Workplace Express, 2017d; interview, S Smith). AiG's Willox remarked ‘The existing 4 yearly review is now into its 4th year and will undoubtedly continue into a 5th, given the very large number of matters that are underway’ (Willox, 2017d). The passage of the Bill would mean that the parties would not have to endure another cycle, with its associated costs and complexities (Workplace Express, 2017d; interview, A Matheson).

The Bill also seeks to address another employer grievance regarding agreement making. As it stands, employers are very unhappy with the Commission's agreement certification process, specifically with the way that the Better Off Overall Test (BOOT) is being administered (interviews, S Smith, A Matheson and S Barklamb). Employer groups (AiG, 2017a; interviews, A Matheson and S Barklamb) contended that the FWC's approach to applying the BOOT is overly strict, inflexible, unpredictable, even ‘theoretical’, and is leading worthy agreements to fail when they should not have, had they been looked at holistically. The AiG (2017a) speculated that this is one of the reasons behind a substantial decline in agreement making over the last few years as the Commission's ‘risk averse’ and highly technical approach is leading many employers to assess that the risks of bargaining are greater than its benefits (also, interviews, A Matheson, S Barklamb and S Smith).

Consequently, the impending passage of the Bill presented another significant win for employers in 2017. However, it would be a mistake to suggest that the political support for this Bill is attributable to employer advocacy alone. As earlier indicated, the Bill enjoys bipartisan support from unions, whose backing for the legislation is instrumental.

Casual conversion clause in modern awards

The likely repeal of the compulsory 4-yearly award review process is also welcomed because employers felt that the process has been utilised by unions as a tool to advance their agenda. An example of this is where unions lodged a claim to allow casual employees to elect to become – and even automatically be deemed to be – permanent employees after a period of regular and continuous engagement. Additionally, in the current review cycle unions sought a 4-hour minimum engagement period (for both casual and part-time employees) and a prohibition against employers from engaging new casual employees without first offering additional shifts to existing casual and part-time workers (Edwards, 2017; interview, A Matheson).

In July, the full bench of the Commission [2017] FWCFB 3541 came to a decision that largely favoured the unions, namely that:

it is necessary that modern awards contain a provision by which casual employees may elect to convert to full-time or part-time employment, subject to specified criteria and restrictions. (Summary decision para. 5)

However, the Commission rejected the claim for a deeming provision and, moreover, employers retained some, albeit limited, rights to refuse a regular casual employee's request for conversion. Furthermore, the Commission rejected the claim for a 4-hour minimum engagement period, but did concede that ‘it is necessary for modern awards to contain some form of minimum engagement period for casual employees in order to avoid their exploitation’ (full bench decision para. 408). The Commission also rejected the claim for a prohibition against engaging new casual employees without first offering work to existing workers.

Overall, while retail associations were critical of the Commission's decision (National Retail Association (NRA), 2017; Patty, 2017), hospitality and peak employer groups appeared to be generally satisfied. They happily downplayed the significance of the union's victory on casual conversion (interview, A Matheson; Woolway, 2017; Workplace Express, 2017e) because conversion provisions are already ‘common in [existing] awards and … [the FWC's decision means that] employers will have the right to refuse requests if refusal is reasonable in the circumstances’ (Willox, as quoted in Workplace Express, 2017e).

A related victory for employers in the FWC's review of casual and part-time provisions came with the recognition of the need to make the part-time clause in the Hospitality Industry General Award 2010 more flexible. Currently, the hours of a part-time hospitality worker must be fixed from the time of their commencement with the employer, unless varied by agreement. The Commission judged that this provision in the award is:

close to being a dead letter because it does not provide a workable model for the regulation of part-time employment in the sector covered by that award. It does not properly bear upon or connect with the circumstances of that sector.

While the Commission's decision is a directly supported the submission of the AHA (interview, P. Ryan), the ACCI suggests that employers covered by other retail and hospitality awards should be encouraged by the comments and expect their awards to follow suit (interview, A Matheson).

Domestic violence leave

Another claim, made by the ACTU (2016), in the awards review process in 2017, was for an additional 10 days' paid leave for all employees who are victims of domestic violence. This would have been in addition to the annual and personal leave, to which employees are already entitled through the National Employment Standards (NES). In rejecting the union's claim, the Commission, in [2017] FWCFB 3494, reasoned that ‘employers have different capacities to provide support to employees who experience domestic violence in their personal lives, and a “one-size-fits-all” approach is not appropriate’. Nonetheless, the Commission ‘formed the preliminary view that all employees should have access to unpaid family and domestic violence leave … [in addition to existing] personal/carer's leave for the purpose of taking family and domestic violence leave’ (para. 6). Employer groups welcomed the decision as a reasonable compromise (Willox, 2017f), given their view that employers are already making this option available to victims of domestic violence even without regulatory mandate (interview, A Matheson; the Australian Public Service Commission expresses a similar view per Spaccavento, 2017; Workplace Express, 2017f). However, unions remained unsatisfied with the compromise offered by the Commission, and secured Labor's pledge to include a 10-day paid domestic violence leave provision in the NES should it win the next election (Workplace Express, 2017g).

Overall, employer associations perceived that they succeeded to a significant degree in containing unions' gains in the Commission in 2017. As mentioned earlier, we characterise this as a pragmatic effort to preserve existing areas of managerial prerogative, rather than simply being reactive behaviour, in the face union efforts to expand employee protections and entitlements through the award review process (Workplace Express, 2017g). Unions have also been vociferous in their calls for a substantial enhancement of the minimum wage, which we discuss next.

Annual minimum wage review

The Commission's annual wage review for the year raised the federal minimum wage by 3.3%, which translated to an increase of $22.20 per week ([2017] FWCFB 3501). This amounted to the largest increase by percentage since Fair Work Australia decided on a 3.4% increase in 2011. In coming to the decision, the Commission seemed to have paid little attention to the government's warning, in its submission, against an ‘excessive increase’, which carries the risk of reducing employment in award-reliant sectors, particularly for younger people (Gartrell and Patty, 2017).

Rather, the decision appeared to have been guided to a significant degree by a study by Hafner et al. (2017), which measured the effects of minimum wage increases on the labour market in the UK. The study, which was presented in support of the ACTU's submission to the annual wage review, suggested that regular wage increases have no negative employment effects as long as the increases are ‘modest’, which is defined as being at around 4% on an annual basis (Hafner et al., 2017; [2017] FWCFB 3501). This prompted the Commission to remark that its ‘past assessment of what constitutes a “modest” increase may have been overly cautious’ ([2017] FWCFB 3500, p. 7; see also Karp, 2017a; Workplace Express, 2017h).

Employer groups were aghast at the decision (Workplace Express, 2017h) after submitting that the increase should be in the order of 1–2% ([2017] FWCFB 3500; Willox, 2017e). The ACCI (2017d) boldly claimed that the decision ‘risks the job prospects of vulnerable people in the labour market and puts pressure on small and award-reliant businesses’. Furthermore, the ACCI questioned the applicability of Hafner et al.’s (2017) UK study in Australia for two key reasons (per interview, A Matheson). First, Australia's minimum wage is already considerably higher than that in the UK. Second, the minimum wage regulation and awards system in Australia are much more pervasive than comparable systems overseas (including in the UK). An increase in the base minimum wage in Australia affects a much larger number of employees than just those who are paid the federal minimum rate, and includes very highly paid professionals, like engineers and airline pilots whose professions are covered by the award system.

If employers viewed the increase as excessive, the Commission's decision must also be judged in the context of the penalty rate case. The ACTU argued for a 6.7% increase, while SDA and United Voice pushed for higher still–10% and 13.5%, respectively. These unions argued that an historic increase was needed to compensate for the penalty rates cut (Workplace Express, 2017i). Unions remain unhappy with the Commission's wage decision, arguing that more needs to be done to lift award-reliant employees out of poverty (Workplace Express, 2017h). However, unions may yet be encouraged by the decision, because the Commission's dicta seem to suggest that the higher annual percentage increase may be the new norm.

Employers and the political process

Uncertainty seems to be the only real certainty in recent federal politics. If employers have struggled to push their agenda for reform forward, as we suggest in this review, it is partly due to circumstances that are not of their making. The government's capacity to act on the wishes of employers, and indeed on its own IR Inquiries and Commissions, has been highly constrained by its tenuous majority, and the need to negotiate with an unpredictable Senate cross bench. Indeed, the year 2017 has demonstrated that the IR preferences of the cross bench are far from predetermined, and that these key players are open to careful persuasion. Labor Senator Doug Cameron's defeated motion to disallow the introduction of the Building Code for tendering on Commonwealth-funded projects is a case in point. Implementing the ‘Building Code’ is seen by industry officials as the real key to unlocking reform because it places the onus on head contractors to negotiate Code-compliant agreements if they wish to tender for any funded projects, hence forcing a change to the practice by some contractors of seeking union-friendly agreements that would ensure industrial harmony (interview, S Schmitke; see also Barry, 2016). Given the importance of the matter, the MBA produced a lengthy document outlining what it saw as the facts and fiction of the reform proposal. This document was written specifically for cross bench members and journalists to solidify and defend their stance in favour of the Code, and is seen by MBA as a key lobbying win for the construction employers in defeating the motion, and achieving implementation of the Code (interview, S Schmitke).

The construction representatives in particular (i.e. AiG and MBA) also unreservedly supported the passage of the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 (Cth) currently before parliament (at the time of writing). This legislation seeks to greatly restrict the scope given to unions, through agreements, to require employers to purchase products, such as income insurance protection, from designated providers who pay commissions. Moreover, citing the findings of the Heydon Commission, the same employer representatives argued that other employee entitlement funds lack appropriate governance arrangements, and are a vehicle by which unions can divert funds set aside for specific employee benefits into general revenue to support industrial action and/or to defend themselves in cases of alleged industrial illegality (AiG 2017b; interview S Schmitke). Unfortunately, for now long-suffering advocates of these and other changes, the current IR Bills are stalled (see Barry, 2016; Sheldon and Thornthwaite 2015).

Protecting Vulnerable Workers Act

The exposé of the rampant exploitation of 7-Eleven employees in 2015 (Ferguson and Danckert, 2015; Patty, 2016) prompted the enactment of legislation aimed at making ‘franchisors and holding companies responsible for underpayments by franchisees or subsidiaries where they knew or ought to have reasonably known of the contraventions and failed to take reasonable steps to prevent them’ (Workplace Express, 2017j). The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Cth) additionally imposes significantly higher penalties for record-keeping failures and serious contraventions of payment-related workplace laws, and strengthens the evidence-gathering powers of the Fair Work Ombudsman (‘the Ombudsman’) (Workplace Express, 2017k; A Matheson, interview).

Employer groups did not provide any substantial resistance against the passage of the Act, but they voiced concern about the broad-reaching powers of the Ombudsman (Workplace Express, 2017l; interview, A Matheson). Furthermore, the Franchise Council of Australia failed to see why franchise businesses are particularly targeted and singled-out (Business Franchise, 2017; Workplace Express, 2017l). Indeed, cases of worker exploitation affect a whole range of industries and business models throughout the country, and the informal labour market is rampant in non-franchise small businesses as well, especially among migrant communities (Doherty, 2016; Fair Work Ombudsman (FWO), 2017). Additionally, while employer groups do recognise the importance of protecting vulnerable workers, they argued that it is important to ensure that penalties fit the breach, and that new regulations are not unfairly imposed on businesses so as to discourage investment (Franchise Council of Australia (FCA), 2017; Willox, 2017b; interview, A Matheson).

Repeal of 457 Visa program

In April the government announced its decision to abolish the Subclass 457 Temporary Skilled Visa program and introduce two new types of visas (Coorey, 2017; Kelly, 2017a; Newscorp, 2017; Workplace Express, 2017l), namely, a short-term 2-year visa for positions on the short-term skilled occupations list and a medium-term 4-year visa for positions on a much narrower medium and long-term strategic skills list. The significant number of associated changes, among which were the tightening of eligibility requirements and mandatory labour market testing, made it more onerous for employers to access skills from overseas. The initial draft of the reform also removed the pathway to permanent residency from the program. From March 2018 onwards, the government will also impose a levy on businesses that employ foreign workers on the new visas. In turn, the levy will contribute towards the Skilling Australia Fund, a permanent federal–state collaboration aimed at addressing skills shortages, especially in regional growth areas (Workplace Express, 2017m).

The government's rationale for tightening the skilled migration program was indicated by the Prime Minister's introduction to the legislative changes: ‘Australian workers must have priorities for Australian jobs … we will no longer allow 457 Visas to be passports to jobs that could and should go to Australians’ (Turnbull, 2017). But critics argued that the move was little more than an act to cater to populism and far-right political interests like Pauline Hanson's One Nation Party (Bramston, 2017; see also Darvall, 2017; Kelly, 2017a; Newscorp, 2017; Swan, 2017). Atlassian's Mike Cannon-Brookes voiced his concern about the government's rhetoric, suggesting that it promotes an ‘us-versus-them mentality [which] hurts our ability to attract talent’ (Swan, 2017: 6). Bramston (2017) characterised it as ‘Trump-lite’.

Employer groups’ responses to the changes were curiously inconsistent. Soon after the Prime Minister's announcement, for instance, AMMA came out in support of the reform (Diamond, 2017). In the same statement, though, Acting CEO Tara Diamond appeared to challenge the Prime Minister's logic for the move, noting that ‘Clearly, any groups characterising the 457 visa programme as detracting from Australian job opportunities have been misinformed at best, and acting mischievously at worse’. AMMA published two media releases just 1 day after the government's announcement: one in support of it (AMMA, 2017b) and another slamming it as unnecessary (AMMA, 2017c). The ACCI's response was more sympathetic to the government's position (Coorey, 2017: 1), although it was wary of the restrictions imposed by the new changes (Karp, 2017b). AiG's response was also mixed. CEO Willox (2017g) stated that the reform ‘will contribute positively to delivering the skills Australia needs and … further improve the integrity of the program’, but in another statement was critical of the financial burden imposed on businesses by the changes (Willox, 2017h).

Suggestive of a change in employer attitude, in the months between April and June, employer groups worked hard, and succeeded, in pushing the government to soften and revise the proposed changes to narrow the occupations able to access the new visas (Beech, 2017; interview, S Cerche). Additionally, it partly restored the pathway to permanent residency, albeit only to workers who have a medium-term working visa. Employer groups were encouraged by this, but vowed to continue to push for more business-friendly amendments (ACCI, 2017e; Acharya, 2017; Beech, 2017; ERP Retail, 2017; interview, S Cerche).

Meanwhile, individual employers, such as Yarrawonga Caravans owner Dean Goudie and Sydney-based hairdresser Luke Smart, took their grievances with the reform directly to the media and offered scathing criticisms of the government's seemingly populist agenda (Burke, 2017; also see Swan, 2017). They claimed that the changes would make it more difficult for businesses like theirs who will be required to consider bad applicants for work that they are not adequately qualified to do (Burke, 2017; Swan, 2017).

While Australian employer associations have been known to display a high degree of coherence in relation to labour immigration policy making (Wright, 2017), this is not the case with respect to the 457 Visa repeal. On the one hand, they welcome the ‘chance to hit the reset button on temporary skilled migration’ (Lambert, as quoted in Benson and Martin, 2017) and an opportunity to end the use of working visa arrangements for political point-scoring. But on the other hand, they recognise that the changes will create considerable financial and administrative burdens on businesses, and restrict their access to overseas skills. Employer groups will be monitoring progress on the matter, not least on the implementation of the Skilling Australia initiative this year, for which ‘employers will pick up the bill’ (Willox, as quoted in Kelly, 2017b).

Conclusion

Our observation of employers and their associations in 2017 is consistent with the notion that since the end of the Howard era a decade ago, employers have struggled to achieve even part of their regulatory platform, such as in the proposals for substantial reforms they outlined in various submissions to the PC Inquiry (Barry, 2016). Despite some successes, including the penalty rates cut, progress on many matters of employer interest remains stalled as a result of political/parliamentary constraints, and due to ongoing frustrations encountered with the operation of awards and agreements. Moreover, as the review outlines, employers' involvement in IR in 2017 is largely defensive. Debates surrounding the implementation of the Protecting Vulnerable Workers Act 2017 (Cth), union and Labor opposition to the FWC's penalty rates decision, and union claims throughout the 2017 award review process, all contributed to putting employers on the defensive. Unions, on the other hand, have been on the offensive (Workplace Express, 2017a), and have been successful in framing the debate on IR, and garnering public and political support. Employers will need to put forward a more compelling and consistent narrative to a cautious public, government and Senate cross bench if they are to see a more systemic reform of the current IR system in their favour.

Footnotes

Interviewees

Scott Barklamb, ACCI Director – Workplace Relations, 16 November 2017.

Sarah Cerche, AMMA Head of Policy (as at the date of the interview), 7 July 2017.

Alana Matheson, ACCI Deputy Director – Workplace Relations, 10 July 2017.

Phillip Ryan, Australian Hotels Association, Director, Legal and Industrial Affairs, 24 November 2017.

Shaun Schmitke, MBA Deputy CEO and National Director for Safety, Contracts and Workplace Relations, 15 November 2017.

Stephen Smith, AiG Head of National Workplace Relations Policy, 3 November 2017.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship and/or publication of this article.

Biographical notes

Michael Barry is a Professor in the Department of Employment Relations and Human Resources at Griffith University, Australia. His main research interests are in the areas of employee voice and engagement, international and comparative employment relations and employer associations.

Kevin You is a PhD candidate at the School of Government and International Relations at Griffith University, Australia. His main research interests are in the areas of business and employer associations, business–government relations and the political economies of developing countries.

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