This paper outlines how enterprise bargaining fits into the Accord process and the key elements of the ACTUs approach to enterprise bargaining.
1. How Enterprise Bargaining Fits Into The Accord Process
In spite of the magnitude of changes that have occurred under the Accord, it is easy to forget how the Accord changed the face of modern industrial relations.
It provided a bridge to sanity from the industrial chaos of the 1970s and 1980s [A world of wages booms, wage-price spirals and ultimately wage freezes] to a period of aggregate wage stability, and over time into a search for a sustainable reform of the labour market and greater flexibility. It represents a major cultural shift for all parties in industrial relations, and has proved its durability in spite of the fragility of initial expectations.
Certain facts are indisputable:
(i) The level of industrial disputation has declined by over 60% since 1983, and has stayed at historically low levels
(ii) Wages outcomes have been moderate and predictable
- Aggregate Wage Outcomes have come in on target with respect to the budget
- Real Unit Labour Costs considerable improvements have been sustained since 1983
[In spite of this real household income per capita has risen 1.3% per annum over the same period due to the social wage.]
(iii) Our rate of inflation has fallen to less than 2% per annum in 1992. Whilst many commentators glibly assume that this is the recession alone, clearly they have forgotten the 11% plus world of the last recession in 1982/83.
Whilst wages policy was initially an instrument of macroeconomic policy alone until 1986, it was deliberately refocussed on the achievement of better productive performance and workplace reform commencing with two tier system of 1987. However, it was the Award Restructuring process under the Structural Efficiency Principle which proved the real catalyst for reform.
Australia’s industrial relations infrastructure in the mid-1980s was more appropriate for the 1930s, reflecting the Taylorist principles that dominated best-practice management theory. At the same time the early Judges of the Arbitration system were using their observations of how work was done in factories and workplaces across the country as their input for the creation of Awards in settlement of disputes. Thus by dint of historical accident, the organisational principles of scientific management became embodied in the institutional structures – the regulatory instruments – of the Australian wages system.
Returning to the 1980s, Award Restructuring has totally reshaped the legal framework which governs attitudes to work and training and the way in which work is done in Australian workplaces.
The realisation that companies are more flexible and competitive when emphasis is placed on team performance rather than individual output, when skills and competence are emphasised, when authority and responsibility are devolved to workers through flat management structures, and that quality earns a premium on prices, is a truth from the modern world.
Award Restructuring builds these principles into the institutional framework which sets the rules in Australian workplaces. The obsolete award provisions – which encouraged demarcation and discouraged skill formation and hindered responsiveness and flexibility – are either already gone or well on the way out.
In each industry the restructured Awards which continue to set minimum standards in employment contain only a few, broadly defined job classifications, linked by skill levels so as to provide a career path along which workers may progress throughout working life by acquiring additional skills and competence.
It is one thing to re-write every Award in the country, but it is another to ensure that the scope thus made available for changing to the way work is performed in each workplace across the country, is in fact used. Award Restructuring facilitates change. It enable and assists the change process to occur and grow, but responsibility for actually changing things at any place of work is ultimately a matter for the workers and management there.
Subject to the broad principles and minimum standards set by restructured awards, the precise details of change to take place in any workplace is best addressed by the people directly involved. Governments and unions and the Industrial Commissions can help and advise and assist, but enterprise (or companies) must actually do it.
So that brings us to enterprise bargaining, the logical next step in reforming Australian labour markets.
2. Enterprise Bargaining
From the outset I must clarify that the ACTU supports the development in Australia of a highly skilled, highly productive workforce, rewarded by first class wages and conditions.
The ACTU believes that for flexibility to be a positive process for both parties, then workers should receive wage rewards for bringing about greater productivity, efficiency and quality through workplace change. It is a “win-win” approach which ensures the build up of ongoing trust and co-operation, and enables the parties to improve the performance of their place of work, which results in the positive externality at the national level of a boost to international competitiveness. This approach reflects the fact that industrial reform is not necessarily a zero-sum game, and a win-win approach is more enduing than mere cost-cutting.
However, equity and efficiency are not mutually exclusive concepts, in the same way that greater performance through enterprise bargaining does not in anyway preclude the maintenance of the Award system as a meaningful (as opposed to tokenistic) safety net. A contemporary Award system with a range of minimum standards of pay and conditions [in close conjunction with the improvements to the Social Wage] are a necessary support for the lower paid and (industrially) weak. It does not by itself inhibit efficiency and/or flexibility, except the ability to drive wages below award minima.
Even amongst the range of conditions supported in awards, the union movement has been supportive of proposals by forward-looking employers. For example, in the Sheraton Hotels’ agreement penalty rates were phased out by a method of averaging into the hourly rate.
The role of the Australian Industrial Relations Commission will be to facilitate workplace agreements between parties, and maintain the integrity of the award system and national minima.
We have lent support through the Wages Policy of the 1991 Congress for longer-term agreements, many of which are “closed”, in the sense that they include allowance for any National Wage increase which may occur during their currency. [This combination of enterprise bargaining plus closure means that the impact of any National Wage rise will be limited in its impact.]
Overwhelmingly agreements are conducted by Single Bargaining Units (SBU’s) representing workers at each place of work, which is a major efficiency gain in its own right.
Related to this is the union restructuring process. Commentators have pointed to the existence of multiple union coverage at workplaces as being a major flaw in our labour market structures.
By mid 1993 98% of union members will be in 21 industry-based unions, with the total number of unions around 50 from the current estimate of 175 as at June 1991. This coupled with SBUs will mean that each employer has only one set of negotiations to conduct in order to reach an agreement covering all its operations.
There is occurring a devolution of power from the ACTU to affiliates who will be better resourced, with a major priority to raise the quality and skills of workplace representatives through increased training via the Trade union Training Authority [TUTA].
Another priority is the development and improvement of workplace is the development and improvement of workplace consultative mechanisms, which is a necessary step towards better relations, ie. More modern approaches to management which do note expect workers to leave their brains at the gate.
In a more devolved world Aggregate Wage targets lose their meaning, given that wages are directly linked to greater productivity, efficiency and or quality. Consequently the ACTU has committed itself and affiliates to ensure that wage outcomes will be consistent with Australia maintaining its inflation rate comparable to that of our major trading partners. Apart from being a huge boost to international competitiveness, the change in focus from wages to relative competitiveness reflects the maturity of the parties under the Accord.
Workplace relations are in the process of developing, with the rewards for our members being more job and income security and a better quality of work life, the national benefits include greater productivity and competitiveness. This is a delicate period of transition as relationships of trust are built, but clearly to destroy the award system would derail this process and undermine all the progress made in industrial relations over the last ten years.
The ACTU approach is not a “cyclical winner takes all approach”, with “winners” temporarily being employers in slow economic times and unions/workers in booms, because such a system means in the long run everyone loses.
Stephen de Rozairo, Research Officer, ACTU. Paper presented to the Enterprise Bargaining Seminar organised by the Office of the Economic Planning Advisory Council, 26 October 1992. D 171-1992.