Unions want a dramatic shakeup of the way employees can negotiate pay and conditions.

The Australian Council of Trade Unions (ACTU) has laid out demands ahead of the next federal election.

It wants workers to be able to engage in sector or industry bargaining wherein they negotiate pay and conditions based on the type of work they do or the site at which they work.

“The enterprise-only bargaining system is failing,” ACTU secretary Sally McManus said in an address to the John Curtin Research Centre.

“More and more people are falling out of it and the pay increases it delivers do not reflect productivity increases.

“There are 750,000 fewer workers under enterprise agreements now today than when the Abbott-Turnbull-Morrison Government first came to power.”

The ACTU says its proposed approach is common in countries like Germany and Denmark, and has contributed to higher productivity and wage equality.

“While enterprise bargaining did assist for some time achieving productivity improvements, these productivity improvements have been exhausted at the enterprise level,” Ms McManus said.

“Now bargaining has become an almost ritualised period of conflict over wages or, from the perspective of workers, fights to resist the pressure to further cut wages and job security.

“There is now little talk about productivity or innovation as this cannot be seen outside the narrow focus on wages and wage competition.”

The ACTU also wants an independent umpire to help resolve bargaining disputes and maintain wages that take into account the minimum cost of living.