THE World Economic Forum (WEF) has released its annual Global Competitiveness Report 2014-15, showing Australia’s global ranking as a competitive place to do business has dropped to 22, and the data shows it is the nation’s industrial relations system dragging it down.
According to the WEF, which surveys the global business community annually, Australia’s worst performing business factors are flexibility in wage determination (132nd in the world), pay and productivity (125), hiring and firing practises (136) and co-operation in labour-employer relations (109).
The data shows over one-in-four business leaders in Australia now rank labour relations as the most problematic factor to doing business in the country.
Tellingly, the WEF measures of corporate governance, tertiary education, market competition, banking stability and scientific research (innovation) all place Australia within the top 10.
For the highly globalised resource industry, AMMA CEO Mr Knott says this competitive decline in labour relations is exacerbated by emerging low cost competitors and increasing domestic cost pressures.
With the carbon and mining taxes may now be gone, he says a mature debate about workplace reform is well overdue to ‘get our nation back on a level playing field’.
“While local political and vested interest groups continue to neglect and downplay the impact of industrial relations on our competitiveness, the rest of the world views our country as a less attractive place to do business than 12 months ago,” Mr Knott says.
“Perception remains very important when global companies are looking to invest in a country. Back in 2010-11, before the full impacts of the Fair Work Act were felt, only 13.1% of survey respondents nominated labour regulation as the biggest barrier to business in Australia. This has risen steadily to now see 25.4%, or over one-in-four business leaders, nominate IR as our worst area.
“We choose to live and work in a first-world nation and thus don’t seek to compete with Asia, West Africa or the Middle East on labour costs, but we clearly compete on the stability of our financial systems, our management and innovation.
“Only by improving our workplace system to at least match our OECD peers can Australia’s overall competitive position in the world rise and see us bring more capital and jobs to this country.”
Click here to read the World Economic Forum’s Global Competitiveness Report 2014-15.