Discussion of Industrial Relations Reform and Labour Market Outcomes: A Comparison of Australia, New Zealand and the United Kingdom

The central conclusion of this paper is that despite seemingly significant differences in the approach to labour market policy in Australia, the United Kingdom and New Zealand, labour market outcomes in the three countries have been very similar. It is concluded that ‘while the labour market outcomes in Australia have been inferior to those in the United Kingdom and New Zealand in recent years, the overall differences have not been dramatic’. A subsidiary theme is a re-examination of the Calmfors-Driffill hypothesis, that either highly centralised or highly decentralised systems of wage bargaining yield better outcomes than systems with an intermediate degree of centralisation. On the first point, having described the Employment Contracts Act in 1994 as ‘the dog that didn’t bark in the night’, I can only agree. If employment rather than unemployment is the main variable of concern, even the relatively modest conclusion about Australia’s weaker performance is hard to sustain. Employment growth has been stronger in Australia than in either the United Kingdom or New Zealand, and this remains true even when demographic factors are taken into account. The difference in performance on unemployment is more than accounted for by differences in the behaviour of labour force participation rates.