How Building Workers’ Power Accelerates the Clean Energy Transition

Kaiyin Wu - Freya Philips Fellow

Executive Summary

Skills and labour shortages are a key risk to Australia’s clean energy rollout. Australia needs to attract and retain thousands of workers to meet our clean energy targets. A key part of the solution is to lift wages in the clean energy sector, relative to other industries competing for the same skills. Wages in the clean energy sector have been held back by sector-specific barriers to unionisation and collective bargaining. International and domestic evidence shows that multi-employer bargaining supports unionisation, workers’ collective bargaining power, and wages growth.

This paper recommends expanding access to multi-employer bargaining for workers in the clean energy sector by removing existing restrictions around single interest multi-employer bargaining. However, high wage increases could impact the viability of clean energy businesses and stakeholder groups may oppose the proposed provisions. These risks would need to be managed to ensure Australia achieves its clean energy ambitions.

Problem Identification

Wages in the clean energy sector lag behind more established sectors that compete for the same workers, for example in fossil fuel energy. Across 38 occupations critical to the clean energy transition, the average annual salary gap between clean and non-clean energy sectors is over AU$10,000 (Jobs and Skills Australia, 2023). This is a barrier to attracting and retaining the workers needed for Australia to meet its goal of 82% renewable energy by 2030, and net zero emissions by 2050. By 2060, the energy sector will need to grow by over 400,000 workers, expanding from less than 1% of the total Australian workforce to 3-4% of the workforce (McCoy et al., 2024). Competition for labour is a key barrier to the clean energy boom (Briggs et al., 2022). Australia is already facing a shortage of key occupations such as electricians, engineers and plant operators (Nous, 2025). Labour shortages lead to delayed projects, increased project costs, and increased cost of capital to reflect increased project risks (Race for 2030, 2024). Without improving the competitiveness of wages in the clean energy sector, the energy transition is at risk.

Context

The Workplace Relations System and Wages in Australia

Enterprise bargaining is the collective bargaining process by which workers, their representatives (unions) and their employer negotiate the wages, working conditions and terms of employment, resulting in a legally binding enterprise agreement that covers a single enterprise or workplace.Over the past several decades, weakening unions and the decline of collective (enterprise) bargaining in Australia have diminished workers’ ability to negotiate better wages (Wright, 2022; Stewart et. al., 2018; Peetz, 2025). The proportion of employees covered by enterprise agreements fell from 22-23% in 2013 to only 12% in 2022. Each percentage point decrease in the proportion of workers covered by enterprise agreements is associated with a reduction in annual wage growth of 0.15 percentage points (Stanford et al, 2022).

The challenges with collective bargaining and wage growth are particularly acute in the clean energy sector, where barriers to unionisation and bargaining contribute to the poor competitiveness of wages. The clean energy sector is nascent, whereas workers in similar sectors benefit from the pay standards built up over decades of negotiations with unions on collective agreements. The short-term nature of renewables projects and the resource intensive process of enterprise bargaining are deterrents to collective bargaining (Jobs and Skills Australia, 2023). The prevalence of outsourcing and the geographic decentralisation of the sector also poses challenges to unionisation (Australian Council of Trade Unions, 2020).

Internationally, industrial relations systems which facilitate bargaining across multiple enterprises or employers, known as multi-employer bargaining, have better labour and macroeconomic outcomes than enterprise-focused bargaining systems. Multi-employer bargaining allows collective bargaining to reach more workers (OECD, 2019). The Fair Work Act 2009 (the Act), Australia’s primary workplace relations legislation, seeks to promote enterprise bargaining as outlined explicitly in the legislation’s objectives. This emphasis on enterprise bargaining limits the beneficial impacts of collective bargaining, including wages growth (Wright, 2022). Wages growth in Australia cannot recover without increasing access to multi-employer bargaining (Stanford et al, 2022). Expanding multi-employer bargaining in the clean energy sector would help overcome the barriers to wages growth in the sector.

Australia’s Reforms to Multi-Employer Bargaining

In 2022, the Australian Government’s Secure Jobs, Better Pay reforms amended the Act to improve access to multi-employer bargaining (Fair Work Ombudsman, 2022; MacDonald, 2022). The reforms changed previous arrangements to create two key forms of multi-employer bargaining:

Supported Bargaining

The supported bargaining stream primarily targets low-paid, feminised industries. Among other provisions, the Minister for Workplace Relations may require the Fair Work Commission (FWC) to authorise multi-employer bargaining in a specific low-paid industry by making it a ‘declared industry’ through legislative instrument (Fair Work Commission, 2023a).

Single Interest Bargaining

In contrast, the single interest bargaining stream can apply more broadly to the economy. This stream allows the FWC to authorise multi-employer bargaining including, but not limited to, when:

• the employers have common interests

• it is not contrary to the public interest to make the authorisation

• there is consent to undertake multi-employer bargaining.

Under section 249A of the Act, employees undertaking general building and construction work are also banned from single interest bargaining due to employer group concerns that the sector is already well-paid (Business Council of Australia, 2022; Fair Work Commission, 2023b).

There are early signs that expanding access to multi-employer bargaining has stimulated wages growth and bargaining agreement coverage. While data limitations and the relative recency of the reforms prevent a more definitive assessment of their effectiveness, the reforms have correlated with gains in wages and agreement coverage (Bray and Preston, 2025). The proportion of employees covered under bargaining agreements has increased since the reforms from 14.8% (in 2022) to 21.3% (in 2025). Annualised wages growth for workers covered by bargaining agreements has also lifted to 4.8% (in December 2024), the highest growth since March 2009 (Jericho, 2025).

However, the reforms still impose onerous requirements around accessing multi-employer bargaining. There are too many requirements to access single interest multi-employer bargaining, including but not limited to the majority support test, public interest test, employer consent test, employers’ common interests test, and industry specific restrictions. These numerous conditions are each also difficult to satisfy in practice. For example, the majority support test can require a majority of employees at each employer to consent to multi-employer bargaining. In common cases where workplaces are separate and dispersed, with potentially thousands of employees, this requirement would be difficult to demonstrate in practice.

Additionally, the public interest test creates opportunities for single interest employer bargaining to be disallowed. The public interest test would discourage single interest bargaining in cases where it would ‘adversely affect competition [between businesses] on the basis of factors such as quality (including service levels) and innovation’ (Forsyth and McCrystal, 2022).

Further, restrictions on single interest bargaining in the construction sector impact on the clean energy sector specifically. There are only limited exemptions for construction work relating to some clean energy projects under the Act, which don’t apply to transmission infrastructure for example. Given construction work comprises the majority of work on clean energy projects, the restriction depresses potential wages growth in the sector (Australian Council of Trade Unions, 2020).

These factors limit gains in collective agreement coverage and wages growth, including in the clean energy sector. Across the economy, the uptake of multi-employer bargaining has been limited. To date, no multi-employer bargaining agreements covering the clean energy sector have been made (Bray and Preston, 2025). In order to achieve improved wages in Australia’s clean energy sector, policy interventions need to improve the levels of collective bargaining agreement coverage and unionisation in the sector, particularly access to multi-employer bargaining.

Policy Options

Option 1. Repeal section 249A of the Act to allow single interest multi-employer bargaining for general building and construction work

This option would repeal section 249A of the Act which prohibits the making of single interest multi-employer bargaining agreements for general building and construction work. This addresses a direct barrier to accessing multi-employer bargaining in the clean energy sector. While the Act includes exemptions for construction work relating to some clean energy projects, it does not exempt all construction work which impacts on the energy transition. This option would allow construction workers in the clean energy sector to access multi-employer bargaining on the same terms as workers in other sectors. While this option would improve coverage of collective agreements for workers involved in the construction phase of projects, workers involved in ongoing operation of clean energy facilities would not benefit. Additionally, this option would have significant unintended flow-on effects in other parts of the construction sector. There are concerns from some stakeholders that workers in the construction sector are already well-unionised and well-paid. This option could shift the balance of bargaining power in the construction sector in a manner that leads to significant opposition from employer groups.

2. Amend Division 10 of the Act to Allow the Clean Energy Sector to be a ‘Declared Industry’ for the Purposes of Single Interest Multi-Employer Bargaining

This option would amend division 10 of the Act to require the FWC to authorise single interest bargaining if it relates to employees in a ‘declared industry, occupation or sector’ as prescribed by the Minister for Workplace Relations by legislative instrument. The Minister for Workplace Relations would then nominate the clean energy sector as a declared industry. This option would give all workers in the sector preferential access to multi-employer bargaining by removing existing thresholds for accessing single interest bargaining, for example around the majority support test and the public interest test. This amendment is modelled off section 243(2A) of the Act which reserves a similar power for the Minister under the supported bargaining stream. Option 2 would duplicate the provision under section 243(2A) to apply beyond the typically low-paid, feminised industries targeted by supported bargaining. There would be limited flow-on effects to other sectors.

However, employer groups are still likely to oppose the provisions as it limits their ability to contest multi-employer bargaining applications. The definition of the ‘clean energy sector’ as a ‘declared industry’ would be new and subject to contestation and potential opposition. Notably, any opposition would be limited to the clean energy sector where the balance of bargaining power is more strongly in favour of employers.

3. Require Union-Negotiated Collective Agreements on Australian Government Financed Clean Energy Projects

This option would amend the eligibility requirements of Australian Government renewables financing mechanisms - the Capacity Investment Scheme and the Rewiring the Nation program - to require applicants to have, or to demonstrate the intention to negotiate, collective bargaining agreements with their workforce. The Department of Climate Change, Energy, the Environment and Water would be responsible for assessing applicants according to this additional eligibility criteria and enforce penalties where applicants are found to be non-compliant.

This option would cost $4.8 million over four years in staffing costs, supporting 10 FTE employees to administer the additional regulation. Option 3 would directly promote collective bargaining on specific projects. Workers on privately financed clean energy projects would benefit from the flow-on effects of wage setting on publicly financed projects. This option would provide a targeted means for the Government to increase access to collective bargaining without making broader legislative changes to the multi-employer bargaining framework that would engender opposition from employer groups. However, the cumulative effect on wages in the clean energy sector may not be as significant as other options. A relatively small number of clean energy projects are directly funded through Australian Government mechanisms and this option does not address the underlying structural causes of slow wages growth.

Policy Recommendation

Option 2, to “amend division 10 of the Act to allow the clean energy sector to be a ‘declared industry’ for the purposes of single interest multi-employer bargaining” is recommended as the most effective mechanism to increase unionisation, collective bargaining and wages in the clean energy sector. This option strikes the most appropriate balance between increasing access to collective bargaining while minimising unintended consequences and stakeholder opposition. It addresses the structural barriers to bargaining by lowering requirements to access multi-employer bargaining while minimising impacts outside the clean energy sector. In contrast, option 1 is likely to have significant impacts on construction generally. While option 3 arguably would result in the least opposition from employer groups, it also does not address the underlying policy issues that contribute to slow wages growth.

The recommended option would see the Federal Minister for Workplace Relations (the Minister) and the Department of Employment and Workplace Relations (DEWR) introduce a Bill to Parliament amending the Act to add three new subsections to section 249 (5A, 5B and 5C) regarding “When the [Fair Work Commission] must make a single interest employer authorisation”.

Proposed subsections 249(5A) and 249(5B) would be modelled off sections 243(2A) and 243(2B) of the Act. Proposed subsection 249(5A) would require the FWC to authorise single interest multi-employer bargaining “if: (a) an application for the authorisation has been made; and (b) the employees specified in the application are employees in an industry, occupation or sector declared by the Minister under subsection (5B).” Proposed subsection 249(5B) would specify “the Minister may, by legislative instrument, declare an industry, occupation or sector.”

Finally, proposed subsection 249(5C) would specify that “the operation of sections 249(5A) and 249(5B) take precedence over the operation of other provisions in this Division”. This resolves the conflict between the existing restrictions on single interest bargaining for general building and construction work and the proposed provisions. It allows workers in general building and construction in declared industries, occupations and sectors to access single interest bargaining, while maintaining the restriction in non-declared industries, occupations and sectors.

Following the passage of the Bill, the Minister would then make the clean energy sector a ‘declared industry’ under the provisions. The legislative instrument would refer to the “construction, repair, maintenance, operation or demolition of structures that generate, store, transmit, or otherwise facilitate the use of eligible renewable energy sources as defined under section 17 of the Renewable Energy (Electricity) Act 2000”. The aim would be to pass the Bill and implement the legislative instrument by the end of 2026, noting the urgency of the clean energy transition and the long lead times for effects on collective bargaining and wages to be felt after the reforms.

DEWR would be responsible for reporting on the coverage of collective bargaining agreements in the clean energy sector as part of their usual reporting on collective bargaining agreements nationally. DEWR would also evaluate changes in the wages gap between occupations in the clean energy sector and other sectors after every Census (when key wages data is reported).

No funding would be required to implement the policy as it is a legislative change.

Risks

Risk and Barriers

The potential complexity of the proposed provisions is a key barrier to successful implementation. Given the range of workplace relations reforms recently passed in 2022, not all unions or businesses may feel confident navigating the changes to the workplace relations system. If unions and employers do not understand their rights and responsibilities and the intended operation of the provisions, there is a risk that bargaining processes become protracted and characterised by adversarialism and litigation. A lack of clarity around the effect of the provisions may also lead to the provisions being underutilised. In particular, a lack of clarity around the definition of the ‘clean energy sector’ as a ‘declared industry’ may be subject to disagreement and litigation. This barrier could be overcome if DEWR conducted education activities with unions and employers to ensure shared understanding. DEWR would also continually monitor the operation of the provisions.

There is also a risk the recommended policy option negatively impacts the viability of clean energy businesses. While the success of clean energy projects is reliant on attracting and retaining sufficient workers through competitive wages, there is a risk that if wages increase too much this could make clean energy projects economically unviable. This would negatively impact the pace of the clean energy transition and limit economic opportunities for workers. Additional policy interventions may be required in this scenario to support the viability of clean energy businesses.

References

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https://www.actu.org.au/wp-content/uploads/2023/06/media1449338d61-renewable-energy-report.pdf

ABray, M., & Preston, A. (2025). Secure Jobs, Better Pay Review. https://www.dewr.gov.au/download/17101/final-report-secure-jobs-better-pay-review/40698/final-report-secure-jobs-better-pay-review/pdf

Briggs, C., Atherton, A., Gill, J., Langdon, R., Rutovitz, J., & Nagrath, K. (2022). Building a ‘Fair and Fast’ energy transition? Renewable energy employment, skill shortages and social licence in regional areas. Renewable and Sustainable Energy Transition, 2, 100039. https://doi.org/10.1016/j.rset.2022.100039

Business Council of Australia. (2022). Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022: Submission to Senate Education and Employment Legislation Committee. https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/SecureJobsBetterPay/Submissions

Fair Work Commission. (2023a). New supported bargaining agreements. https://www.fwc.gov.au/about-us/secure-jobs-better-pay-act-whats-changing/bargaining-support-6-june-2023/new-supported

Fair Work Commission. (2023b). New single interest employer agreements. https://www.fwc.gov.au/about-us/secure-jobs-better-pay-act-whats-changing/bargaining-support-6-june-2023/new-single

Fair Work Ombudsman. (2022). Secure Jobs, Better Pay. https://www.fairwork.gov.au/about-us/workplace-laws/legislation-changes/secure-jobs-better-pay

Forsyth, A., & McCrystal, S. (2022). Fair Work Legislation Amendment (Secure Jobs, Better Pay Bill) 2022: Submission to Senate Education and Employment Committee.

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/SecureJobsBetterPay/Submissions

Jericho, G. (2025). Increased enterprise agreements and wages show the government’s IR policy is working. https://australiainstitute.org.au/post/increased-enterprise-agreements-and-wages-show-the-governments-ir-policy-is-working/

Jobs and Skills Australia. (2023). The Clean Energy Generation. https://www.jobsandskills.gov.au/download/19313/clean-energy-generation/2385/clean-energy-generation/pdf

Macdonald, F. (2022). A mandate for multi-employer bargaining? Without it, wages for the low paid won’t rise. https://theconversation.com/a-mandate-for-multi-employer-bargaining-without-it-wages-for-the-low-paid-wont-rise-193829

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https://australiainstitute.org.au/report/the-curious-incident-of-low-wages-growth/

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Wright, C. F. (2022). Addressing problems for labour not problems of labour: the need for a paradigm shift in work and industrial relations policy. Labour and Industry, 33(1), 11-21. https://doi.org/10.1080/10301763.2022.2051230

The views and opinions expressed by Global Voices Fellows do not necessarily reflect those of the organisation or its staff.