One of the less big front-page aspects announced yesterday was the banning of non-compete clauses for non-executives.

These are very good changes that the Productivity Commission has called for and which Nobel Prize winner Joseph Stiglitz also called for last year when he visited Australia as a guest of the Institute. Traditionally non-compete clauses are to stop executives who are privy to commercial in confidence information moving to another executive role at a competitor. That is fair enough. But now these non-compete clauses ae being used to stop normal workers from going to work for a competitor – such as preventing McDonalds workers going to work for KFC.

This is bad because it means if you have skills you are most likely to find work in the same industry – but if you find a better job at another company in the same industry a non-compete clause prevents you from doing this for a set period of time – for example 12 months.

That means it is harder for workers to find better paying jobs, and it also means companies don’t have to worry about competitors poaching their workers so they don’t have to worry about increasing wages to try to keep their workers.

So it is no surprise at all that business groups hate the changes. ACCI for example says “employers are disheartened that legitimate uses of non-competes to protect legitimate business interests have been successfully demonised by the union movement.” Both it and the Business Council of Australia are saying the changes are not needed because the courts can decide if a non-compete clause is unfair. So yeah, a worker just needed to take a company to court! So easy!

There are not many things you can count on, but if the BCA and ACCI are against something, you know that something is good for workers and bad for profits.