It may seem fanciful, but unions and big business are good bed partners. Whether it be deliberate or accidental, the unions have operated in such a way that they have only benefited big business.

It is now in the news that wages of employees have not increased for quite some time. There is now a push to increase the salary of employees.

Employees deserve what they can get. But what no one has thought about is that constantly increasing the salaries of everyone means that the only organisations who can afford employees are on the big end of town. Small organisations are unable to afford talent and skilled labour. Two things are happening:

  • Big business is getting the most talent; and
  • There are less jobs available because small businesses are unable to afford the talent.

I have mentioned in previous conundrums that I have a number of clients who have moved their staff off shore. We think this is only the big businesses and the call centres which have moved overseas but it has now become the bailiwick of small business. Leverage has a number of clients who have moved all their staff, both administratively and operationally, over to other countries.

Leverage represents a mortgage broker who had three loan writers employed. His wage bill was $180,000 per annum for essentially two employees. He has dismissed the three of them and replaced them with one Philippino accountant with seven years of experience for under $20,000. You might this is slave labour, it is not. This mortgage broker is playing 30% above the local accepted rates.

There is a solicitor in Sydney who only has three employees: A receptionist and two IT people to scan material and send it to the Phillipines. His whole conveyancing team, estate planning team and litigation resources are set up in the Phillipines.

What do we end up with? A movement of employment to overseas places. Unions and Big Business now have the major components of the talent within the marketplace.

The worst outcome is that unions and big business have looked after the employees in the big end of town and have closed out small operators. Considering small business employs two out of every three employees in Australia, we are rapidly looking down the scope of unemployment for a great number of people.

It is interesting that the unions are screaming that it is wrong that CEOs earn 300 times what their workers do but whose fault is that? It’s not the business, it’s the employment market. While CEOs and other executive officers are free to negotiate with their businesses regarding their salary remuneration, unions want to continue to negotiate on an industry wide model.

In the 90’s it was considered right that enterprise bargaining should happen on an enterprise basis. This enterprise bargaining process should take into account a fair share for all employees so that those at the top are proportionately remunerated for their effort against those at the lower levels on the ladder. Unions do not like this bargaining aspect because it does not provide sufficient political clout. It may not help the small business completely, but it’s a fair approach whereby individuals join an organisation based on their contribution as opposed to automatically being paid a figure because they have a particular qualification or time within the industry.

Australia needs to have a good look at itself in relation to its employment policies. Unions have played into the hands of big business and big business is loving it.  It’s clearly not the intention of unions, however, they have opened the door to squash any entrepreneur who wants to conduct a small business.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au