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Don’t play hardball on wages, employers urged

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Don’t play hardball on wages, employers urged

Deborah Lindemann

Australian employers are being urged not to use their new-found confidence on the back of the Coalition’s election to drive down wages growth, lest it “come back to bite them”.

Deborah Lindemann, principal consultant at enterprise negotiation firm Adelhelm & Associates, said that employers are breathing easy after last month’s largely unexpected election win by the Coalition government.

“Instead of significant reforms like ‘a living wage’ and legislative changes to broaden the powers of the Fair Work Commission — as well as an anticipated empowered union movement driving wages up — it is status quo in the industrial relations space with a low likelihood of significant reform over the next three years,” Ms Lindemann said.

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“If anything, there are some bills that the Coalition is likely to continue to push that enhance union accountability and transparency.”

However, she warned employers against feeling emboldened to play overly hardball — or even refuse to bargain at all — over employee pay negotiations, as any apparent financial gains can quickly evaporate.

“When employees feel they are unfairly dealt with over wages or not being heard, you get lower productivity, disengaged staff, low morale, higher absenteeism, greater turnover and more disputes,” Ms Lindemann said.

“Unquestionably, a Liberal-National Coalition government puts employers in the driving seat when it comes to enterprise bargaining, but I would encourage them to instead use this as an opportunity to focus on the future, and look at modernising agreements, not driving wages further down or avoiding bargaining.”

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According to Ms Lindemann, many employers have been backed into a corner by unions and forced into “completely unreasonable” employment agreements that inhibit the business’s flexibility and ability to adapt to changing market conditions.

“Some of the agreements I have seen, where employers have to seek agreement with employees and unions to implement significant change, are causing heartache for companies who are struggling to stay competitive,” she said.

As such, she suggested that impacted businesses and industries use the new term of government to try and strike a new balance over employee agreements.

Ms Lindemann advises using a consultative approach when negotiating with employees over remuneration and conditions, explaining the business position as to what it can afford, what is happening with the wider industry and why it is seeking certain changes or flexibilities.

“Explain or justify your offer with real data and sound reasoning,” she said.

“Employees might not like it, but most people will be more likely to accept it if they feel they’re getting a fair wage, and they understand why it is in everybody’s best interests.”

Ms Lindemann’s comments come after ABS figures, released earlier this month, showed company profits increasing at almost twice the rate of wages.

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