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Modern award and enterprise bargaining changes will play a crucial role in improving the current industrial relations system so it is fairer and makes workplaces more productive, the Productivity Commission says.

In its sixth interim report arising from the Federal Government's five-year productivity inquiry, the Commission sets out how the "at times adversarial" IR system could be adjusted to benefit all parties, as well as the economy.

Noting the IR system affects many factors directly relevant to productivity – such as investment, wages, and cooperation between managers and employees – the PC says it also indirectly impacts productivity because of the "complex and often protracted and convoluted regulatory processes it entails"...