A few days ago I noticed a comment from Mark Bahnisch that indicated he had some experience in the industrial relations field, and had been a consultant to the Queensland government. Given that I have no particular expertise in the area myself and that the Howard government is trying to beat up a scare campaign against Labor’s IR policy, I thought it would be worthwhile asking Mark to contribute a guest post on the subject. Fortunately he agreed, and here it is.
Mark is employed at QUT as a Sociologist, has a first class honours degree in Industrial Relations from Griffith and a Graduate Diploma in Industrial Relations (with Distinction) from QUT. He has published on union strategy, the politics of IR policy, and structural aspects of the sociology of work organisation. He has consulted to the Queensland Department of Industrial Relations on IR policy, and regularly does consultancy for private sector clients on IR and HRM issues. He currently teaches Industrial Relations at postgraduate coursework level, and has 8 years’ experience lecturing at undergraduate and postgraduate levels in IR and Employment Law. His article follows overleaf:
Demystifying Labor’s industrial relations policy
by Mark Bahnisch
It is often lamented that the two major parties have increasingly similar policies, though perhaps this lament is less salient now that the Liberals have adopted a “conservative big government” approach to governance and re- invented themselves as the party of tax and spend. Nevertheless, commentators normally point to the Industrial Relations policies of the two major parties as clear points of differentiation. This is indeed true in the 2004 election. John Howard, in my view, epitomises the postmodern incarnation of Robert Musil’s “Man Without Qualities”, but there is no doubt that one consistent argument in support of his claim to be a conviction politician is his opposition to unionism. His rather bizarre invocation of the 1998 Waterfront dispute as an example of “courage” in his policy speech can only be justified by this idee fixe.
However, Labor’s initiatives on Industrial Relations have been obscured through a campaign of misinformation and hyperbole designed to articulate the “union bogey” scare to the “interests rates will rise under Labor” scare. Thus, evaluation of the actual implications of Labor’s policy has been made more difficult by the degree of misinformation, deliberate distortion, and the rhetorical kicking and screaming from big business in the pages of the Fin Review (for instance). This post is an attempt to cut through some of this noise and assess Labor’s IR initiatives in a reasonably objective manner. The fact that the Government has yet to release its IR policy, aside from reference to an Independent Contractors bill of rights in the policy speech (which appears to conflate two categories of employment status and comes with no analysable detail), means that discussion of the Coalition’s position will be confined mainly to its negative argument against Labor. The promise to abolish the States’ IR jurisdiction – while noteworthy as a part of the odd anti-federalist focus of Howard Liberals – is most unlikely ever to get past the Senate hurdle. My suspicion, despite claims to the contrary, is that there will be little positive policy in IR from the Government.
The first issue to address is the line from the Prime Minister in the Coalition policy launch that “Labor wants to give 100 per cent control of that system to the trade union movement” and its supposed corollary, the proposition that “Labor will go back to the 50s and 60s when it comes to industrial relations and that will inevitably produce inflationary wage rises with all the consequences for interest rates that that entails.”
Both these statements are clearly untrue, but it is nevertheless important to examine the underlying premise that the effect of Labor’s policy, in the words of the BCA would be to “re-regulate the workforce”. The BCA also notes, correctly, that the twin objectives of productivity and flexibility are best served by decentralised negotiations at enterprise level, and that the shift from a centralised system was initiated under Labor governments. The question to answer, then, is whether there is any substance in describing the ALP’s initiatives as re-regulation. The quick answer is no.
In the most simplistic sense, the deregulation debate in IR is based on a furphy. The Workplace Relations Act 1996 (Cth) contains 549 sections. Many of these have a number of clauses – s. 298 ranges across the whole alphabet from s. 298A to s. 298Z – and interpretation of the Act is a somewhat specialised art. Lest this be seen as pure nit-picking, the broader point is that Australia continues to have a much more regulated and legalistic system of Industrial Relations than many comparable jurisdictions. Neither party is proposing to change this. The Labor Party says in its policy document Flexibility with Fairness for Australia’s Workplaces that the difference between product market deregulation and labour market deregulation is that “while product markets affect people, labour markets are people”. The Coalition – despite moving the system further down the route to a market model – in effect recognise the need to balance efficiency in labour utilisation with some degree of equity. In National Wage Cases, for instance, the Coalition have regularly urged the Commission to award an increase in the minimum wage (albeit smaller than that sought by the ACTU) and awards still provide a floor under bargaining – both collective and individual. So the “free labour markets” beloved of neo-classical economists are unlikely to feature in Australian policy any time soon. The real debate about “deregulation” is actually a debate about how slanted policy is towards equity and whether this goal is compatible with the degree of efficiency and flexibility necessary to sustain productivity growth.
So, is Labor proposing to re-centralise the IR system? No. Howard makes the claim that “Only 17.5 per cent of the private sector workforce in this country belongs to a union, yet Labor wants to give 100 per cent control of that system to the trade union movement.” It is difficult to know what to make of this, as the two main thrusts of Labor’s systemic changes are to allow the AIRC greater power to intervene in bargaining, and to enable awards to contain more than the current 20 allowable matters. It may be that Howard assumes that the AIRC is a creature of the unions. It may of course be a lie.
Labor has made it very clear that the inclusion of matters within awards would be within the discretion of the Commission, and the sort of argument that Kevin Andrews makes in his charmingly titled paper “Mark Latham’s Plan for Higher Interest Rates” that Labor will return to a “comprehensive award system” is an attempt to confuse. (Andrews displays a fine talent for the traditional IR art of rhetorical overkill with headlines such as “The Horror of Latham’s IR Plan”).
There is a big difference between allowing awards more scope to entrench some conditions rather than have them potentially able to be traded away in each bargaining round (a function that awards presently perform with regard to the 20 matters) and getting rid of bargaining and returning to awards as a basis for wages fixation generally. The latter is not being proposed by Labor, but the Government likes to insinuate it is through semantics. The productivity “flat-lining” argument is parasitic on this nonsense about a return to the award system. The reality is that Labor proposes to maintain the current regime of bargaining as the key method for determining wages and conditions. There is a technical argument about the degree to which enterprise bargaining has delivered productivity improvements, and it certainly hasn’t achieved the gains claimed for it by the BCA in its reports of the late 1980s (see some of the research on productivity published by ACIRRT at Sydney Uni). But this is a separate debate, and the claim that Labor’s IR policy will negatively impact on productivity is based on a falsehood, as is the related claim about “inflationary wages breakouts” which again is dependent on a non-existent return to industry awards. Labor vows to continue to update awards – a reflection, as Dr Emerson has argued, of the provisions of the Queensland Industrial Relations Act 1996 which provides for triennial reviews of all awards by the Commission – in an attempt both to maintain reasonable community standards for the large cohort of award only workers (around 20% in the Federal system in 2002), and to continue the productivity focus of award restructuring. As anyone with any background in IR knows, the thrust of the movement to simplify awards and to build skills incentives and career structures into them was an initiative of the ACTU and the Labor government. It is simply wrong – and counter-intuitive in terms of the known positions of the players – to assume that Labor wants to “turn back the clock” to a centralised system.
How about the argument that Labor will be a captive of the Unions? Ignored in this debate has been the shifting nature of the relationship between unions and the Labor Party. In my view, unions’ aims will be well served by a greater strategic distance from the ALP in government. Much ink has been spilled on the topic of the Accord, with those arguing from a social democratic position for a revival of such an organic relationship being very thin on the ground these days (for a representative example, and a sense of the debate, see the work over the last few years by UQ academic Dr Geoff Dow published in the Journal of Australian Political Economy ). Although only one factor in the decline of unionisation, prominent Griffith researcher Prof. David Peetz argued in his 1998 book Unions in a Contrary World, found that dissatisfaction with wage restraint and the seeming insignificance of workplace unionism to wage outcomes under the Accord should be accorded some causal weight. Both the Labor Party and the Unions have learnt from the Accord experience. The ACTU has prioritised grassroots organising and community campaigns in its Unions @ Work strategy. Successive ACTU congresses during the Howardian years have seen the ACTU build links with the Democrats and Greens, and adopt a political strategy which puts the union movement at arms length from a potential Labor government. Similarly, Mark Latham, based on the evidence of his previous writing, can probably be taken at his word that he has no intention of providing “special deals” for unions, and that their success – or otherwise – under his government will be a matter of their own efforts. Thus, a Labor government will probably have a relationship closer than that of Blair’s New Labour with the TUC, but more akin to this than to the Accord framework.
So what of the positive case for Labor’s policy? Labor’s policy can be taken as an attempt to redress some of the bargaining imbalance currently suffered by employees under the Coalition regime, and to address the issues of insecurity at work and insecure work. In some ways, Labor’s objective of increasing employment security is met outside the IR system per se, through the introduction of a 1% payroll levy on larger employers to fund protection of employee entitlements. There is legitimate room here to debate whether employers who act responsibly ought to pay for those who don’t, and the possible creation of moral risk attendant on this. But as a public policy objective, it appears to command support, being attacked by the Government only as a “tax” rather than for its intrinsic aims. Labor’s initiative to enable the easier recovery of unpaid wages is a must – the Federal Government has effectively opted out of any award enforcement, giving unscrupulous employers a field day and putting the onus on individuals to take legal action. Similarly, Labor’s planned amendments to enable long-term employees to request conversion to full time status – if they wish – is a recognition of the increasing number of employees who are really only in this category to avoid employers’ oncosts rising. The High Court decision in Electrolux Home Products v AWU makes it unlikely that restrictions in the flexibility of labour utilisation through limits on casual and part time labour will be part of the bargaining agenda and for a number of technical reasons, it would be difficult to include such provisions in many federal awards even if the AIRC were of such a mind. Again, Latham is likely to adopt a Blairite position of demonstrating independence from Unions and refuse to legislate to overturn the Court’s decision. In the same category, achievement of the aim of facilitating women’s return to the workforce on a part time basis after giving birth is done through amendment to the objects of the Act, and should represent little real imposition on any employers who ought to be convinced of the benefits in skill retention such participation commonly brings – as well as the equity arguments. My contention, in fact, would be that the Labor Party does not go far enough in addressing the manifold issues of employment insecurity.
The main meat in Labor’s approach is in the shifts to the regulation of bargaining and the powers of the AIRC referred to earlier. The two big issues here are the bargaining framework and the abolition of AWAs. In terms of the bargaining framework, Labor proposes to re-introduce a number of aspects of the regime established under the Industrial Relations Reform Act 1993 by the Keating government. The most important aspects of this are the duty of employers to negotiate, and to negotiate in good faith. Few seem aware that under the Workplace Relations Act, employers can refuse to recognise a union as a bargaining agent. The non-union stream will continue – the thrust of this reform being the obviously fair obligation of the employer to negotiate with the union if the employees wish to be so represented. Similarly, the Commission at the moment can do little if either employers or unions drag out the bargaining process by stalling, failing to provide relevant information, etc. Employers often attempt to subvert genuine negotiate by dragging it out, seeking to place the blame on the union for recalcitrance and picking up on employees’ desire for a payrise sooner rather than later. Enabling conciliation and arbitration to play a role in the bargaining process and enabling the commission to order parties to bargain in “good faith” (this provision being very common internationally in Labour Law) really ought to be seen as procedural reforms aimed at facilitating bargaining. They are not equivalent to imposing “union power” where it is not wanted. They are about procedural fairness and enabling remedies for abuse of bargaining power.
Another significant feature of Labor’s approach – which has not received the attention it deserves – is the promise to allocate funds for test cases on pay equity between men and women. As I have argued elsewhere in a submission on behalf of the State of Queensland to the QIRC Inquiry on Gender Equity, this is an area where there remain significant structural barriers to the achievement of genuine gender equity in pay (as opposed to legislative recognition of the goal) and this is an excellent step in the right direction.
The most controversial aspect of Labor’s policy is the proposal to abolish AWAs (and consequently the OEA). There are several problems with AWAs – their non-transparency leads to gender disparities in pay for equal work which cannot easily be addressed, they are subject to a flawed no-disadvantage test which enables a lessening of conditions against the award through trading off conditions for pay, and they place low-wage employees in a very unfavourable bargaining position. It is difficult to assess wage and condition outcomes due to the secrecy provisions applicable to AWAs, but the evidence from the WA regime under the Court Government demonstrated that they were most often implemented to increase the ordinary span of hours and to decrease penalty and overtime rates when compared to the award provisions. The take-up of AWAs has not been massive in the Federal system, applying to less than 5% of employees in 2002. Statistics from the OEA are misleading because they refer to numbers of new AWAs not to penetration. Significant penetration of AWAs is highest in the Federal public sector, telecommunications and mining. To some degree, AWAs are an ideological touchstone both for unions and employees – but the fact that almost 40% of workers in the Federal system are covered by unregistered individual contracts suggests that their appeal to employers and employees has been massively overstated. Labor does not propose any measures to prevent anyone entering into a common law contract, if so desired – contrary to Howard’s latest scare campaign. The most likely reason why the takeup of AWAs is low is that there are significant transaction costs for both employer and employees and little benefit in the absence of an ideological motivation. The argument about AWAs in the Pilbara is really a reflection of a separate issue – BHP’s unwillingness to bargain collectively with employees who wish to do so (see this ACTU press release). The effects of the current legal regime in this instance belie the government’s claim to uphold freedom of association, as do the one-sided enforcement efforts of the Office of the Employment Advocate. It is difficult to make out a prima facie case that AWAs are significant instruments for either fostering productivity or empowering employees, and their recognised problems should be given sufficient weight to suggest that their abolition would lead to gains.
One other unanswered – and extremely interesting – question arising from the IR debate is the degree to which a scare campaign on unions will cut through. Research conducted by ACIRRT in 1996, 1997, 1999 and 2001 showed a significant public turnaround on attitudes to unions during the Howard years. In 2001, a poll of 1100 people nationwide found that:
- a majority – 52 per cent – of people agree with the proposition that “I’d rather be in a union” (up from 44 per cent two years ago);
- only 14 per cent of Australians now agree that “Australia would be better off without unions” (down from 23 per cent in 1999);
- and 56 per cent of respondents agreed that “management has more power than unions” (up from 53 per cent two years ago)”.
These results are not surprising given the low level of industrial disputation, and other survey evidence which suggests many employees are worried about their level of security at work. It also lends weight to the argument advanced by Peetz that one cause of de-unionisation has been employer hostility and an unfriendly legislative regime. The lack of purchase of the union bogey may end up being as significant in reframing political and policy debate as the realisation that the Liberals do not enjoy an automatic advantage on national security and defence issues. The Liberal polling may also show up this, which would be a reason for muddying the waters by linking IR (implausibly) to interest rates. My contention would be that the ALP policy on IR is reasonably grounded in addressing issues of procedural fairness and equity in the workplace without sacrificing efficiency and productivity, and it will be interesting to see in post-election analysis the degree to which it proves to have been a factor. My feeling is also that the ALP has made a mistake by underselling the policy, which would seem to be a strategic decision not to give the IR scare campaign any oxygen. This may be a mistake – as themes of equity, security and fairness at work have the potential to impact on a large proportion of the electorate.
For anyone interested in further researching these debates, Jim MacDonald, an adjunct Lecturer at Griffith University’s Department of Industrial Relations, has done the community a great service by maintaining a comprehensive website linking to all relevant IR material that has arisen during the campaign.