Federal Employment Minister Eric Abetz is warning of a wages breakout if unions and employers do not act responsibly in negotiating new agreements.

Senator Abetz has never been shy of criticising the union movement, but in a speech to the Sydney Institute last night he also lamented the behaviour of some employers.

“As shadow minister it was also disappointing to see weak-kneed employers caving in to unreasonable union demands and then visiting me, advocating for change in the system,” he said.

“And now as Minister this phenomenon has unfortunately become even more frustrating.”

Senator Abetz says in recent years unions in some sectors have gone too far in their demands for wage rises and conditions.

But he says it is not just the Government’s role to step in.

“Instead of agitating for reform to outlaw certain tactics, why can’t employers just say no?” he asked.

He says if unions and employers do not act responsibly in future negotiating agreements, it could have a significant impact on the broader economy.

“Employers and unions must be encouraged to take responsibility for the cost of their deals; not just the cost to the affected enterprises but the overall cost in relation to our economy efficiency and the creation of opportunities for others,” he said.

“If this is not done, then we risk seeing something akin to the wages explosion of the pre-accord era when unsustainable wage growth simply pushed thousands of Australians out of work.”

Wage explosion claims ‘a bit of a stretch’

But economists say that although some sectors of the economy may have high wages relative to productivity, Australia is not facing a wages breakout.

Steven Walters, a chief economist with JP Morgan, says claims of a wage explosion are “a bit of a stretch”.

He says wages growth is the lowest it has ever been.

“We’ve only got comparable series back to about the late 1990s and in fact wages growth [over the past year] is the lowest we’ve ever seen in that period,” he said.

“So the increase in nominal wages over the last 12 months is only 2.7 per cent, whereas comparing that just to say five years ago heading into the global financial crisis, wages growth was well above 4 per cent.

“So in fact it’s a very benign outcome. Inflation as we know from last week’s numbers is running at about 2.6 per cent, so in fact wages growth is really only roughly matching inflation.”

Government to intervene in Toyota workplace dispute

Senator Abetz also used the speech to announce the Government intends to intervene in a legal dispute between Toyota and its employees.

He says the demise of Holden in Australia can be attributed in part to the wage increases and generous conditions it agreed to give workers in the past 20 years.

He says Toyota is now facing the same problem as it decides whether to stay in Australia.

The car manufacturer is appealing against a Federal Court decision that stopped it from varying its workplace agreement.

Toyota wants to vary clauses to reduce the Christmas shutdown period, require a doctor’s certificate for sick leave after two days, and take away some extra leave and payments.

“It’s clearly in the public interest that workers be allowed to vote on Toyota’s proposed variations and determine their own destiny,” Senator Abetz said.