Industrial Relations
updated 17 May 2008
Econtech Report
On 10 August 2007 the Australian Chamber of Commerce and Industry (ACCI) released a report that it commissioned
from Econtech on
"The Economic Effects of Industrial Relations Reforms Since 1993".
ACCI's terms of reference for the report were to analyse what would be the economic impact should all the
major industrial relations reforms in Australia from 1993 onwards be reversed, and Econtech's report
was finalised in July 2007.
In the report, drawing mainly on recent OECD studies of the international evidence on the effects of industrial relations
arrangements on productivity and unemployment, it was estimated that industrial relations reforms since 1993 have
reduced the structural unemployment rate by 1.77 percentage points and added 1.4 per cent to labour productivity.
These conservative estimates of labour market gains are modest viewed against the large improvements in unemployment
and productivity that have occurred since 1993.
Econtech's highly-regarded MM2 model was then used to trace through the implications for the economic outlook if
these labour market gains were lost by reversing the industrial relations reforms that have occurred since 1993.
Compared with a baseline scenario where the reforms were maintained, the unsurprising findings for the year 2011
included losses of about 316,000 jobs and 4.8 per cent of GDP. Compared with the baseline scenario, higher wage
inflation and lower productivity also led to higher price inflation countered by higher interest rates.
Further Developments
Econtech sees its report as providing an important analysis of the economic benefits of flexible industrial
relations arrangements. The report was never designed to model the industrial relations policies of any political
party. Further, Econtech does not agree that the Federal ALP's Forward With Fairness industrial relations policy would
take us back to 1993. At the same time, Forward with Fairness does, as the Rudd Government
suggests, swing the industrial relations pendulum partway back. It is
encouraging that following the publication of the report in July 2007, in August 2007 the Federal ALP
released a policy implementation plan for Forward with Fairness that improved its flexibility.
Chris Murphy will address these issues further in a 21 August 2008 address to the National Industrial Relations Summit on
"Examining the possible economic effects of the Forward with Fairness IR policies".
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