Russell Lansbury | IR changes the biggest win for Australian workers in a lifetime

Senator David Pocock's amendments to the bill will help to restore the social contract at work in Australia. The concessions he has won from the government will strengthen both the industrial relations and welfare systems.

Clearly, enterprise bargaining has not been working effectively and reforms are necessary to create a fairer and more efficient system.

Pocock has been subject to a strong campaign by some employers and their organisations against the rights of workers and their unions to engage in collective bargaining beyond the enterprise level.

Following intensive negotiations with Workplace Relations Minister Tony Bourke, Senator Pocock agreed to support the bulk of Labor's industrial relations reforms, after gaining some changes to the bill.

The concept of a new social contract at work has been defined by US industrial relations academic Thomas Kochan as "the mutual expectations that employers, employees and society at large have for work and employment relations, holding us all accountable for adding value at work".

At the recent world congress of The International Trade Union Congress in Melbourne, one of the main agenda items was a new social contract which included strong collective bargaining in its six principles. It was endorsed by over 1000 delegated from 132 countries.

The right of workers and their unions to collectively bargain have been part of an implicit social contract in Australia since the foundation of the Commonwealth in 1901.

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The late Professor Joe Isaac, a highly respected labour economist and senior member of the federal industrial relations tribunal, argued that, for most of the years since federation, Australia practised a hybrid form of arbitrated bargaining that served the national well.

However, industrial relations reforms by the Howard Coalition government severely restricted collective bargaining and reduced other industrial rights of unions.

Senator Michaelia Cash, a former minister for industrial relations in the Morrison government, recently boasted the Howard government's legislative reforms had restricted collective bargaining, reduced the powers of unions and limited the powers of the Fair Work Commission to arbitrate disputes.

These reforms had a deleterious effect on the conduct of fair industrial relations in Australia.

There are three key means by which the new IR reforms will benefit the Australian society and economy.

The changes will assist the lowest paid and most vulnerable workers by increasing unions' bargaining power to raise wages and improve working conditions without fuelling a significant increase in inflation.

Our research comparing Australia with the Nordic countries has revealed sectoral agreements between employers and unions provide a stronger set of minimum conditions and protections, particularly for low paid and vulnerable workers, than agreements which are confined to the enterprise level.

Australia's low wage growth has been criticised by the Reserve Bank of Australia for holding back economic growth and penalising workers who lack bargaining power.

Restrictions on the scope of bargaining beyond the enterprise level has led to low wage growth for many workers across the Australian economy.

A recent OECD study concluded coordinated bargaining, across industries, has achieved economically superior results to enterprise bargaining.

Coordinated systems of bargaining have been linked to higher employment for young people, women and low-skilled workers, who tend to be the most vulnerable in the labour market.

Australia is a signatory to the ILO Convention on "the right to organise and collectively bargain". The ILO is a tripartite body comprising representatives from employers, unions and government to which Australia has belonged since it was founded in 1919.

Australia ratified the ILO's convention on collective bargaining which encourages and promotes voluntary negotiation by means of collective agreements. The ILO has stated that "legislation should not constitute an obstacle to collective bargaining at the industry level".

Multi-employer bargaining is an important part of macroeconomic policy settings for most OECD member countries.

When employer organisations and unions in these countries negotiate collective agreements, they do so across industries and ensure that wage increases fit established wage targets and inflation benchmarks.

Recent collaborative research by my colleagues at the universities of Sydney and Copenhagen revealed Denmark's coordinated bargaining at multiple levels has provided a stronger set of minimum conditions and protections for workers.

Yet Denmark has a lower rate of days lost to strikes (per head of population), lower unemployment and similar annual wages growth to Australia.

The passage of Labor's IR reform bill through the Senate will help to restore the social contract at work in Australia by bringing employers and unions together to achieve collective bargaining agreements across multiple workplaces with a common interest.

The new IR regime will enhance both the economic welfare of workers as well as increasing national productivity.

Multi-employer bargaining, as part of these reforms, will bring Australian industrial relations policies and practices into the mainstream with other OECD member countries.