Australia has moved from a highly centralized to a predominantly decentralized wage setting system. There has been a shift from agreements and rewards to enterprise bargaining, through the 1996 Workplace Relations Act. Recent policies include changes to unfair dismissal claims and the 2005 workplace reform package. Throughout the 20th century, Australia has maintained a system of tribunals to make decisions on wage and non-wage outcomes and to help resolve industrial disputes. Institutional forces influence the functioning of the free market to improve labor market outcomes, such as ensuring minimum wages and conditions. The four institutional forces that influence labor markets are governments, trade unions, employers' associations and the Industrial Relations Tribunal. Unions represent groups of workers on a collective basis. The largest trade union is the Australian Council of Trade Unions (ACTU), which is the peak trade union body with which most trade unions are affiliated. Union membership has declined substantially since the 1970s, averaging 55% to just 23% in 2003. This is driven by increases in casual and part-time employment, growth in sectors with a low membership rate in unions such as retail and the decentralization of wage setting. Employers' associations represent business groups from similar sectors in industrial relations matters. They seek wage moderation to maintain profitability. The main employers' association is the Australian Chamber of Commerce and Industry. At federal level there is the independently run Australian Industrial Relations Commission (AIRC). They establish and maintain fair minimum rates of pay and conditions (rewards safety net system) for all workers. Premium pay rises are determined annually by the AIRC after listening to proposals from the Government, the ACTU and the trade unions. They apply the disadvantage test to CA and AWA to ensure that workers are better off relative to the underlying premium. They also help resolve industrial disputes through conciliation and arbitration. Moving away from centralization The Agreements (1983-1995) were a social contract negotiated between the federal government and the ACTU on minimum wages and specific working conditions for a range of occupations under federal premiums. This centralized wage system reduced inflation levels, industrial disputes and the wage-setting role played by the Australian Industrial Relations Commission (AIRC). It aims to increase productivity by increasing flexibility in the workplace and placing new constraints on unions. The change aims to ensure that workers are covered by individual employment contracts rather than collective bonuses. Its creation is a major victory for employers' groups, who have been fighting for decades to reduce the powers of the industrial relations arbiter to determine workplace arrangements. However, many believe that this will lead to a reduction in wages and working conditions. The new legislation will also eliminate minimum working conditions. The current 20 "eligible issues" will be reduced to around 16. The wage-setting system has moved from centralized determination through national wage cases to an enterprise bargaining framework. Safety nets exist primarily for low-paid workers who are unable to secure within-scope pay raises.
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