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News News The Econtech study that forms the basis of the employer ads is flawed, says Peetz
The Econtech study that claims that rolling back the Howard Government's IR laws would reduce employment and labour productivity in fact "tells us nothing about the effects of abolishing Work Choices", according to Griffith University Professor of IR, David Peetz.

Peetz, in a supplementary submission to South Australia's inquiry into the federal legislation, says the Econtech study (see Related Article) relies on "extraordinarily weak" data and makes a "fundamental mistake" in its modelling of the effects of unfair dismissal laws.

Peetz says the brief given to Econtech - to estimate the economic impact of reversing IR changes implemented since 1993 - is "a nonsense request... because no political party or major interest group is proposing to do this".

The Econtech findings, he says, are "meant to represent a basis for an argument that WorkChoices should be retained". But the greatest boost to productivity came after the Keating Government's introduction of enterprise bargaining. It then slowed after the introduction of the Workplace Relations Act and its statutory individual contracts, and has been "particularly weak" since Work Choices.

"Clearly, the Econtech study - covering quite different periods in which collective bargaining has been promoted and then discouraged - does not measure at all the impact of reversing WorkChoices", he says.

After examining Econtech's economic modelling, Peetz identifies what he says are deficiencies in its method of arriving at its conclusions on productivity and employment, such as in its correlation of union density and employment.

He says it makes unreliable assumptions that best suit its case, when there is evidence that points in the opposite direction.

"The point is that it is irresponsible to definitively claim on the basis of a selectively chosen equation, when contrary results are equally available, that declines in union density have a significant, quantified, large, positive impact on employment".

Peetz also takes issue with Econtech's correlation of employment growth with a shift from centralised to decentralised wage fixing. He says the consultancy has ignored other evidence which suggests decentralisation leads to reduced employment.

He says that using different assumptions with more predictive power would suggest that reversing the changes would have created jobs, rather than lead to the 300,000 lost jobs predicted by Econtech.

He says Econtech's basis for predicting large-scale job losses is "extraordinarily weak".

The consultancy's claims about productivity, based solely on projections about removal of employment protection legislation, are also deficient, he says.

But without even looking at the calculations, Econtech has made the "fundamental mistake" of assuming that unfair dismissal legislation applied long before 1993, when it was introduced by the Keating Government, he said.

Peetz notes that employer associations have used the Econtech findings to justify a major advertising campaign against abolishing Work Choices.

"It is clear that the modelling results tell us nothing about the effects of abolishing WorkChoices", he says.

"What is unclear is whether it tells us anything at all".

 

 
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