Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I thank the honourable member for Moore for his question. I can inform him that the OECD released its employment outlook overnight, expecting Australian economic growth to accelerate in 2006-07 and forecasting employment growth of two per cent in 2006 and 1.2 per cent in 2007. Although that is slower, that would outpace labour force growth, leading the OECD to project a fall in the unemployment rate to 4.7 per cent in 2006-07. That is a fall from an unemployment rate which is now at a 30-year low, with the government having presided over the creation of 1.7 million new jobs since its election.

The OECD jobs strategy has four components: set appropriate macro-economic policy, remove impediments to labour market participation, tackle labour and product market obstacles to demand and facilitate the development of labour force skills and competencies. In identifying barriers to labour market demand, one of the things that the OECD focuses on is what it calls employment protection legislation, known in this country as unfair dismissal legislation. The OECD says this:

The link between the stance of employment protection legislation and aggregate unemployment is uncertain in theory, and in practice is highly dependent on the specific national context. However, there is evidence that too-strict legislation will hamper labour mobility, reduce the dynamic efficiency of the economy and restrain job creation. This may worsen job prospects of certain groups, like young people, women and the long-term unemployed.

In other words, the OECD is saying not just in respect of Australia but in respect of all of the developed economies of the world that, if you have employment protection legislation that is too strict, it worsens the opportunity for employment of those that are the most marginalised in the community—the young people, the women and the long-term unemployed. This is an observation which the OECD has made across all the developed economies of the world, whether it be the United States, Japan or Europe.

There is one factor that increasingly becomes obvious as you do comparative labour market studies: those countries which have the strictest employment legislation have the highest unemployment rates. That is why unemployment is high in Germany; that is why unemployment is high in France. If you want to structurally reduce barriers to unemployment, flexibility in employment protection legislation is required. The Australian Labor Party, which has set its face against the modernisation of Australia’s industrial relations law, is doing injustice to the people who would be most marginalised in the labour market.

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