No positive outcomes from FPA proposal

May 7, 2021

The EMA says there will be no positive outcomes from the Fair Pay Agreement (FPA) proposal for businesses.

Chief Executive Brett O’Riley says the effects of the proposal to Cabinet today on FPAs to standardise conditions across industries or occupations will make them less flexible, less resilient and ultimately less productive.

The EMA is also concerned that only unions can initiate bargaining for an FPA in the proposal, which does not allow for voluntary negotiation and arbitration, and is currently a breach of international law. This has repeatedly been raised with the Government in the lead-up to this announcement.

Mr O’Riley says FPAs are equally disadvantageous to everyone – employers and employees – and will not achieve the highly-skilled, innovative workforce and economy with well-paid jobs that is needed.

“Given there is no evidence that FPAs will increase productivity or reduce inequality – which have in fact both improved since company-level bargaining became permitted in 1991 – where are the benefits and why is the Government looking at this beyond copying what has happened unsuccessfully in Australia?”

“Essentially, this would take us back to the past when we had industrial awards which saw workers’ share of Gross Domestic Product (GDP) decline and more inequality in income than we have now. This is not the way to create a high performing competitive economy,” Mr O’Riley says.

The EMA has no anecdotal evidence from its 7400 member businesses that employers are cutting down their costs to get contracts by paying people less, except where Government procurement has forced this outcome in areas like the provision of bus services.

“Our concern is that FPAs will result in higher wages, and the solution for businesses will be to cut down their workforce, or in the case of already struggling manufacturers and SMEs, they may have to shut up shop,” says Mr O’Riley.

“Those at greatest risk will be the unskilled, unemployed and inexperienced – particularly our young people, because typically they are the cohorts that are impacted the most by margin pressure or downturns, as evidenced during the last 12 months.”

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