The New Industrial Order

What are the consequences of the new industrial laws announced today by John Howard?

In a booming economy, those who are employed in sound businesses and those who have skills in high demand, not much. The labour and skills shortages will insulate them from change.

For employees in industries that are struggling, the picture isn't so good. They can expect management to pressure them to give up award conditions. Long service? The company can't afford it. Penalties for overtime? We can't afford time and a half .... you'll have to accept time and a quarter. What, you don't like it? Well, we can move the factory to China and cut our costs even further.

The government knows there'll be losers. There won't be any meaningful assurances from the government countering this.

The effects of changes to unfair dismissal laws will be mixed. It will encourage businesses to hire. I know of small business proprioters who won't hire after losing out to former employees who knew how to manipulate the current unfair dismissal regime. On the other hand, the small business 'nazi' operator will have the ideal means to cover up harassment, unsafe work practises and exploitation.

The government's strategy is typical of conservative thinking. Where the former Labor government worked on the consultative model to bring in change and productivity improvements and allow all parties to reap the benefits, the conservative's method is to make it easier to reduce labour costs as an alternative to gaining productivity improvements. The consultative model takes more effort, but the effects are longer lasting. Expect a lot more manufacturing to move offshore in coming years, after cost cutting doesn't result in improved productivity.

The real effect of the new laws won't be felt until the next economic downturn. In the event of a recession, with profit margins squeezed and unemployment rising, all employees will face the possibility of eroded work conditions without being able to do much about it.

Update: Flute and Surfdom have more to say on this.