Howard’s claims of productivity gains ‘a furphy’

The Howard government’s claim that individual contracts deliver higher productivity is highly questionable, according to Dr Bradon Ellem, Associate Professor at the University of Sydney Faculty of Economics and Business.

‘This is a complete furphy. There’s no compelling evidence one way or the other,’ said Bradon.

‘In fact, there are studies in some industries that show that highly unionised industries with collective contracts are more efficient. It makes management raise their game,’ he said.

This is backed by evidence comparing Australia and New Zealand, and by comparisons over time in Australia.
New Zealand introduced its Employment Contracts Act in 1991. It drastically shifted the emphasis in employment contracts from collective to individual and is widely seen as a blueprint for the Howard changes to our IR system.

In the five years following the Act’s in-troduction, unemployment in New Zealand remained at over 8 %. Productivity increased by 0.5% per year, compared with 3.5% per year in Australia (which had a Labor government supporting an award system).

During this time New Zealand slid to 24th out of 26 countries in the OECD for standards of living.

Research shows that individual contracts did away many long-held entitlements, such as overtime and penalty rates – and often contained pay cuts as well.

The Employment Contracts Act did not deliver on employment, productivity or wages. Many average Kiwi workers are still reeling from the fallout.

Current rates of productivity growth under the Liberals are lower than the rates achieved under the traditional award system in the 1960s and 1970s.

Report card from 17 labour market experts on Howard’s IR changes
According to the 17 eminent labour market experts the government’s proposals will:

  • undermine people’s rights at work
  • deliver a flexibility that in most cases is one way, favouring employers
  • do – at best – nothing to address work-family issues
  • have no direct impact on productivity
  • disadvantage the individuals and groups already marginalised in Australian society

To read full copies of the academic research or their summaries visit the University of Sydney, Faculty of Economics and Business website at