Managed Decentralism Or Deregulation? The Key Issue In Industrial Relations

Managed Decentralism Or Deregulation? The Key Issue In Industrial Relations

The industrial relations systems deregulation model carries with it considerable disadvantages especially for women workers. Jennie George, ACTU Assistant Secretary.

Introduction

A number of significant changes and developments are occurring in our industrial relations system - most importantly the increasing focus on workplace reform and workplace bargaining.

 

The changes have arisen partly in response to the economic challenges facing the nation, and the growing realisation that our future depends on surviving in an economically competitive international environment. The drive for improvements in efficiency and productivity at the industry and workplace level has meant that unions are becoming involved in negotiations around matters that affect wealth creation and a more consultative ethos is emerging in the system. Disputes such as the one at the Burnie Pulp Mill are hopefully becoming the exception rather than the norm, as employers increasingly realise the value of consulting with their workforce as a precondition for effecting long term changes.

 

If the union movement is to contribute to reforms at an industry and workplace level, it is not surprising that workers would want to have a fair share of the gains in productivity that are secured. So the increased emphasis on change at the workplace has facilitated the introduction of some flexibility in the wages system, through the introduction of Enterprise Bargaining. To date, the devolution to workplace bargaining is occurring in a managed and coherent manner, and within an industrial relations framework in which the Commission ensures that the system continues to protect minimum standards which are enshrined in Awards.

 

In the months ahead, leading up to the Federal election, there will be considerable public debate about the alternative models being promoted: put simply, the choice will be between the current industrial relations system versus the model of de-regulation of both the labour market and wages system, which is being promoted by the Federal Opposition. I would like to focus my comments on these competing models and their implications for workers. In my view the deregulation model carries with it considerable disadvantages especially for women workers, which we, as a union movement, will be highlighting in the months ahead.

Changes In The Industrial Relations System

Unfortunately, many of the changes appear not to be fully understood nor appreciated. I would like to briefly focus on the contribution of the union movement to some of these fundamental and durable labour market reforms.

 

 

  • Wages Policy - Under the Accord process, wages policy since 1983 has been framed having regard to the goals of economic policy generally. Wages growth has been predictable and moderate. (Well at least for workers!). This period of wage restraint has seen Australia top the OECD league tables for job growth (notwithstanding the recession). It has delivered Australia its lowest rate of inflation in thirty years. There has as well been a sustained decline in days lost due to industrial disputation. On average over the past nine years, time lost due to industrial disputes is 60% lower than the preceding decade.

 

 

A deregulated environment would see less constraints in terms of managing macroeconomic outcomes.

 

 

  • Award Restructuring - The ACTU has actively encouraged Award Restructuring. Obsolete Award provisions which encouraged demarcation and discouraged skill formation and hindered flexibility are certainly on the way out. The restructured Awards contain only several broadly defined job classifications, linked by skill levels, so as to provide a career path which workers progress by acquiring additional skills and competence.

 

 

Award restructuring has been of particular importance to women workers - it has provided the mechanism to properly value and recompense the skills of women, to introduce skill related career paths where none had previously existed and to ensure appropriate and relevant minimum award rates.

 

Under deregulation the positive changes in Awards structures would no longer set the framework for improvements flowing through to the whole workforce.

 

 

  • Workplace Reform - Award Restructuring has facilitated change, but actual change at the workplace level is really a matter for the workers and management to implement. Hence, the development of consultative mechanisms and the recent focus on Enterprise Bargaining - a significant phase in the "managed decentralism" of the wages system.

 

 

It is through these consultative forms that both unions and management are collectively seeking solutions to problems such as absenteeism and labour turnover, introducing new training arrangements, focusing on ways to improve product quality and service, introducing flexibility into working arrangements - all necessary ingredients in making for a more satisfying and productive work environment.

 

Enterprise agreements have formalised this process, providing wage increases for productivity and efficiency improvements - building on minimum Award standards.

 

Already there are more than one thousand separate agreements operating across all sectors of industry - in the public and private sector, in large and small companies. They exist in industries as diverse as stevedoring, vehicle, manufacturing, oil, chemicals, metals, meat, telecommunications, postal services, banking, transport and mining. Such agreements embrace change in work arrangements and work performance as well as rates of pay. Overwhelmingly, agreements are negotiated by single bargaining units (SBU's).

 

In a deregulated environment the safety net of Awards and national standards would be removed.

 

 

  • Union Restructuring - The development of SBU's is another major aspect of reform, one important component of union restructuring. For years commentators have pointed to the existence of a multiplicity of craft based unions in Australian workplaces identifying the resultant inefficiencies in bargaining and demarcation as a major flaw in our labour market structures.

 

 

About 5 years ago the ACTU acknowledged the need for the union movement to improve its own performance and embarked on the process of union amalgamations and rationalisation. The pace of union restructuring has increased dramatically.

 

By mid 1993 the ACTU estimates that 98% of union members in Australia will be covered by about 21 large unions organised on industry lines, with single bargaining units becoming the norm at the enterprise level.

 

 

  • Women Workers - The union movement is responding in a more positive way to issues of particular concern to women. This is reflected in changed attitudes to permanent part-time work, to increased flexibility in working arrangements, in the need to better integrate work and family policies, in attempts to reduce pay inequity, and in the ongoing commitment to childcare as a priority concern an increasing representation of women in unions. There is much that remains to be done, but all the indications are pointing in a more positive direction.

 

 

These developments, in summary, reflect some of the important changes now occurring in the industrial relations system.

 

The key choice that faces us in the months ahead is clear.

 

Do we as a nation wish to build on the positive reforms of the past few years - to have flexibility in a system that is premised on consultation and is underpinned by minimum Award standards and national standards like parental leave, that has recourse to conciliation and arbitration, or alternatively - do we abandon all this in favour of deregulation, of the law of the jungle, of contracts of employment and common law as the means of resolving industrial disputes?

 

That is the choice between the two competing models. Do we pursue an approach based on managed decentralism as is now occurring or deregulation by which market forces shape wage levels and conditions?

 

Deregulation in the view of the ACTU in fact leaves the most vulnerable in the community in the most defenceless position and that is why we are so opposed to that philosophy.

 

The Federal Opposition has not yet spelt out its industrial relations policy in any detail, but an examination of the policies of the newly elected Victorian Government highlights the contrasts I wish to draw.

Deregulation: Victorian Style

In a speech earlier this year Dr Hewson summarised his views about future directions in a few short sentences.

 

“You should only get more when you contribute more, and raise your performance and if that means lengthening the work week, if it means scrapping leave loadings and penalty rates and so on at each workplace around Australia as part of that negotiation, it simply has to happen.

 

You can’t tinker! We should have learned over decades off trying. In fact, sometimes tinkering makes the problem worse. It is really a BIG BANG approach to policy.”

 

The Victorian Liberal’s industrial relations policy provides an example of how deregulation would be pursued, and how the existing Award system would be progressively dismantled.

 

All employees covered by State Awards and their employers will be placed outside the system and then given an option to return, but only with the agreement of both parties. This in effect means that employers can unilaterally choose to stay outside system of Conciliation and Arbitration.

 

So what happens when the boss decides not to opt back in? Theoretically one is able to strike contracts of employment that are supposed to be mutually acceptable.

 

But if the paries cannot strike a deal, we are told that existing Award conditions would remain in place but now in the form of an employment contract – but of course any breaches would mean that workers no longer have recourse to the Commission. As contracts of employment they would be open for renegotiation and operate within common law.

 

Mr Gude himself acknowledged that “the ‘safety net provision’ was intended to pacify immediate employee resistance to the Liberal scheme rather than remain a crucial feature of its labour reforms”. (Financial Review 29 September, 1992)

 

Only the naive would imagine that current Award entitlements would be adhered to! Denied access to the Commission, and in a situation of unequal bargaining power in a time of hight unemployment, we will be witnessing the beginning of the end of the Award system for many workers; and it is precisely those who are most vulnerable who will be left in the most defenceless position without the protection of Awards and the Commission.

 

What bargaining power will an 18 year old shop assistant be able to exert in a climate of high youth unemployment? The choice for many will either be to accept the contract on offer or have no job. Workers in a tight economy would be vulnerable to exploitation, particularly non unionised workers.

 

Given the fact that on average people switch jobs every five years, the proposed contract system for new employees – (those switching jobs as wheel as those entering the workforce) – is the heart of their deregulatory model.

 

These workers will be guaranteed the existing minimum Award rate for wages but all other minima such as annual leave, long service leave, sick and maternity leave will be set down by Parliament rather than through Award of the Commission.

 

Award conditions such as leave loading, penalties, overtime rates, meal and rest breaks, superannuation, redundancy payments among many others would disappear.

 

In an interview (Financial Review 29 September, 1992) Mr Gude acknowledged that the impact of this category of employment would be crucial to introducing genuine deregulation among those forced into the contract system, but on Award minima.

 

“It changes” he said, “because as employees resign and are replaced, they are replaced under different arrangements.”

 

Considering that 57% of Australian workplaces are currently non unionised, it is non unionised labour that has most to lose. Rates of unionisation are poor in small enterprises and so women – and young people are very much at risk in this brave new world of deregulation.

 

Geoffrey Barker in “The Age” (25 August, 1992) describes the inequities of the deregulatory model, arguing that “over time their policies would seem certain to ensure that the skilful and powerful would be big winners, while the unskilled and weak would probably lose heavily... This is just because the Coalition envisages a more decentralised, voluntary and market driven approach to wage fixation, which could reasonable be expected to accentuate the weak bargaining position of the plentiful, least skilled workers and the strong position of scarcer, skilled workers. Wage differentials would be bound to widen significantly.”

Women Stand To Lose The Most From Deregulation

Dr Hewson in a recent address stated that he did not believe in gender and that women should be treated “in exactly the same way as everybody else”.

 

But in our view reality cannot be ignored. Women are already concentrated in low paid, low status jobs, in part-time and casual employment with fewer opportunities for training and promotion and earning less than men.

 

Part of the purpose of reforming the Award system through award restructuring has been to narrow the wages gap and improve the position of women in employment.

 

It is through the Award system that the greatest gains for women have been achieved – pay levels commensurate with skills, the introduction of caree paths, proper entitlements for part-time workers, parental leave, superannuation entitelments to name but a few.

 

We are all familiar with the range of difficulties faced by women in the bargaining process.

 

These include:

 

 

  • less industrial strenth – therefore potentially more vulnerable;
  • high numbers in part-time employment;
  • many are employed in small, non unionised workplace;
  • lack of involvement by women in union activities at workplace;
  • tendency for intersts of men to dominate the bargaiing agenda;
  • constraints to participation – family responsibilities, language, etc.;
  • concentration in industries where productivity is not open to measurement in conventional terms.

 

 

In recognising these difficulties the ACTU has welcomed the safeguards built in to the certification of Section 134 agreements in te current system. In particular the new test that “an agreement cannot be certified if it disadvantages the employees it covers, by reducing the employment tandards which apply to them”.

 

In the course of his second reading speech on the Bill, Senator Cook made it clear that “the provision is not intended to operate in a way to reduce well establishe and accepted standards which apply across the communty, such a merternity leave, standard hours of work, minimum rates of pay, termination change and redundancy provisions and superannuation”.

 

Deregulatioin is anti women! If the award system is to be dismantled as the method of regualting wages and conditions, it is women who will be the single largest group of workers to be adversely affected.

 

The Federal opposition’s lack of concern for the disadvantaged position of women in the workforce is compunded by other proposals contained in the Fightback package – the abolition of the Affirmative Action Agency, the Equal Pay Unit and Work and Family Unit.

 

In case I am accused of promoting the “women as victims” syndrome let me give you but one example to show that market forces do not produce fair and equitable outcomes.

 

Through a variety of strategies the union movement has succeeded in reducing the raio of female to male weekly award rates to 93%. A recent ILO study confirms that Australian women have fared better in a regulated environment than their counterparts operating in a deregulated wage bargaining situation

 

But even in Australia the pay is considerable for women in award free areas. A recent survey of Australian executives found that despite an equivalence in eduational qualifications and / or background 57% of women sruveyed received an income of less than $50 000 p.a. while 76% of men received an income abover $70 000 p.a.

 

It would be expected that such women would have considerable more personal bargaining power than the typical migrant clothing factory workers – and yet it is clear tha market forces are not even in the best of cases delivering fairness nor equity.

 

Mr Howard acknowledged the unequal bargaining relationship between employer and employee when in an interview he state that....”I cannot guarantee that under my policy some people will not try to exploit difficult economic circumstances”. (The Australian April 1992).

 

A masterly understatment! – but in essence an accurate reflection of the real world.

Conclusion

We are in the process of significant reforms in our industrial relations system – a system which provides for increased flexibility through enterprise agreements, but one which is also mindful of equity considerations – where minimum standards are underpinned through Awards and recourse to conciliation and arbitration.

 

The brave new world of deregulation will turn back the clock and leave the most defenceless in the most vulnerable position – and large numbers of these are women workers.

 

I am sure that once these competing models are explained and understood, that the Australian electorate will make the sensible and wise choice at the next Federal election.

 

Address By Jennie George, ACTU Assistant Secretary. Industrial Relations Society of Queensland. 9 October, 1992