Workplace Relations Minister Bill Shorten will push for workers aged 65 years to be able to get income protection insurance, as part of a broader drive to end “overt discrimination” against older workers.

While Labor’s Fair Work laws dominate the political debate, the ambitious Shorten is also thinking hard about the broader future of work with an ageing population and a pressing need to lift national productivity.

“Australia is in the process of redefining the last third of your life – what it means to retire,” Shorten tells The Australian Financial Review. “That has huge implications for work. That’s why participation rates are going to keep going up . . . the border between working age and retirement age is going to blur.”

The government has already legislated to lift the retirement age, which had sat unchanged at 65 years since 1911. Under these changes, the age pension will gradually increase from 65 years to 67 between 2013 and 2023. The move is politically sensitive, even if it is required to meet demographic changes, but Shorten argues that it was inevitable. “Before World War I, the average life expectancy was 55. It’s now 86 for women and it’s only going to go up.”

The government has already legislated to allow employees aged 70 and over to receive the superannuation guarantee, meaning about 51,000 older workers will receive employer super contributions. Shortens says it will also act on income protection insurance.

He hit the ground running in his new portfolio, personally intervening in an old-style industrial relations stoush on the waterfront in late 2011 even before he had been formally sworn in.

While happy to give his “preliminary thoughts” on the workplace of the future, he is categoric on one point — that the debate is far broader than the fine details of the current workplace laws. “A lot of these issues are not about where you draw the pendulum between [Labor’s Fair Work Act and [the Coalition’s] Work Choices,” he says.

“Productivity is a big issue . . . but the poor old Fair Work Act, that’s a camel which has got to carry a lot of straws.”

Shorten strongly agrees with the arguments of Telstra director Steve Vamos on the need for Australia to improve the quality of management to lift employee engagement and productivity. “Leadership in individual workplaces, innovation, passion – these aren’t soft concepts, but you can’t put them in legislation,” Shorten says.

“The critics of the Fair Work Act, they’re obsessed about the black letter [of the law]. High-performing companies are ones that have employee engagement; you don’t need the government to tell people to engage with their employees. I think that’s so obvious, you shouldn’t need to write it on the back of a Fantales wrapper.”

Cynics may well snort that Shorten, as a former national union leader, would say that, wouldn’t he? But he is also a former union leader with an MBA from Melbourne Business School who has a broad grasp of the competing pressures in business.

Shorten cites the need for employers to attract and retain good workers. “If you become an employer of choice because you pay better super, because you’ve got family friendly conditions, you will have lower turnover of labour. Therefore, you avoid the whole cost of retraining,” he says.

“This debate that if you cut penalty rates in hospitality somehow we’ll go to a golden era of hospitality . . .  hospitality is already the second lowest paid industry in Australia. It’s roughly $20,000 less than the average of industries in full-time adult earnings. So this idea you can cut your way to greatness, reduce pay rates to greatness, is not right.”

Shorten argues that the future workplace is, in some senses, already here, because of the acceleration of trends that have been in play for 20 to 30 years, such as higher participation rates, more women at work, more people working from home, rising wages and salaries, and lifelong education and training.

“We’re going to see people doing seven or eight jobs in their lifetimes, not one job for life . . . it’s not going to be enough to have year 10 or year 12 or even an undergraduate degree or an initial trade qualification,” he says. “We’re going to see a lot more women as entrepreneurs and as directors.”

These changes are partly driven by technology: the internet, broadband networks, and smartphones. Shorten singles out long-distance commuting to and from work as a drag on productivity, which will be eased by the national broadband network.

But what about the “f-word” – flexibility? Do industrial awards, detailed enterprise agreements and workplace rights for workers and unions leave room for workplaces to adapt, let alone to keep pace with technology and international competition?

“I didn’t come down in the last shower,” Shorten says. “Most people who cry for flexibility are generally well off . . . To use the Japanese adage, it’s the same bed, flexibility, but people in it have different dreams.

“If you’re paid $200,000 a year, it’s a very live concept – weekend work, any time of day or night, being paid on output. But if you’re paid $35,000 or $40,000 and ‘flexibility’ means that you drop $2000 to $3000, that is a cataclysm. That is a catastrophe.”

Shorten argues workers are already flexible when judged against Organisation for Economic Co-operation and Development countries on absenteeism, part-time and casual work and growth in contracting, along with a rising number of employees being paid on output rather than hours of input.

“Flexibility is in the eye of the beholder, too,” Shorten says. “It might mean a highly skilled member of your workforce who goes on maternity leave can come back slowly to work, you keep her job open, job share, work from home, use ICT.”

About 1.8 million Australians are still union members, but this falls into two streams. The biggest is in the public sector where the proportion of union members is about 41 per cent, thanks to the number of nurses, teachers, police and public servants.

In the private sector, just 14 per cent of workers are union members, concentrated in sectors such as high-rise construction while the old blue-collar stronghold of manufacturing is shrinking under a currency kept aloft on mineral exports.

So are the old employer and union structures out of date? Shorten reckons this type of demarcation is itself outdated. “There are a lot of people out there who are not represented by unions or by employer groups – they’re not represented by the BHPs or the Gerry Harveys of this world,” he says.

“Productivity had grown most in the last years in communication and media . . . agriculture, financial services, retail, manufacturing. Where it’s been worst is in mining. Now, mining was the poster child of individual contracts. In the last five years, productivity has gone backwards by 11 per cent. The only thing which has made mining do well is the quadrupling of prices. The volumes have only increased 25 per cent.

“If you look at real estate, productivity has gone back there by 2.2 per cent according to the Australian Bureau of Statistics in the last five years. There’s not a union problem there . . . the Fair Work Act has not been seen to be an issue in the real estate industry, has it?

“A lot of CEOs don’t have problems. But I guess they’re not the ones who get reported.”

The government might yet be surprised by the review of the Fair Work Act, which has to report in May. But employers have generally welcomed the government’s push to increase skills and training. Unions likewise support the skills agenda but they will be wary of another of Shorten’s views.

“Some people say the way you guarantee job security is to protect particular jobs in a particular place, and that’s a legitimate point of view,” he said. “But I’m also attracted to the argument that the way you protect someone’s job is you make them highly skilled and able to move easily between the eight or nine jobs they are going to have in their life.”

“The highest participation rates in the world are in the societies where you’ve got the highest levels of education. Life-long learning’s here – [for] a 17-year old finishing year 12, you’re probably going to have to spend another eight to 10 years in education and training somewhere along the line.”

What are employers to make of Shorten coming from a union background?

“So does Australia,” he retorts. “So did Ronald Reagan, so did Lech Walesa.”

Readers will recall that Walesa rose from being a sparkie at the Gdansk shipyards to leading the Solidarity movement, then president of Poland. They may be less aware that Reagan was president of the Screen Actors Guild before he became governor of California and later, US president.

While Shorten thinks big, he keeps a small target when asked what positive role unions could play in the workplace of the future. “Assisting their members through change,” he says. “The skills agenda is a good positive area, the savings agenda is a positive area. Helping to work co-operatively with industries to develop. There’s always a role for a positive, constructive voice in the workplace.”

Where can unions improve? Shorten reckons that better engagement between management and employees is “where the game is” nowadays. “I’m not saying unions don’t have a chance to change, but I will leave that to others to discuss and debate.”

Source: Australian Financial Review

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