Martin Ferguson's Speaking Notes On The Industrial Relations System

Martin Ferguson's Speaking Notes On The Industrial Relations System

Australia's industrial relations system is undergoing a transformation to become more responsive to International economic forces. Martin Ferguson, President, ACTU.

The 1980’s and 1990’s has seen Australia become a more open economy. The trade union movements embarked upon changes to reform workplaces, restructure awards, make enterprises more internationally competitive and improve the skills of the labour force and the quality of working life.

 

The main process by which the ACTU has undertaken reform to respond to these changes I through the Accord we have with the Federal Labor Government.

 

The Accord has been the framework for economic and social policy under the ALP Government in co-operation with the ACTU.

 

Its focus was not only upon economic growth and wages, but encompassed a broader agenda.

 

 

  • taxation reform
  • active labour market policies
  • industry policy to underpin restructuring
  • a more equitable approach to retirement incomes
  • Medicare
  • maintenance of Family Income Support
  • development of Child Care

 

 

The Accord is based on the premise that policies need to be comprehensive and equitable, based on co-operation not confrontation.

 

This approach has been vindicated with an unprecedented period of very low industrial disputation, which contrasts starkly with the previous Fraser Conservative Government’s performance.

 

Some facts:

 

In the 1976-91 period, the Accord years, to date, there has been an average of 237 working days lost per thousand employees.

 

In the 1983-91 period, the Accord years, to date, there has been an average of 237 working days lost per thousand employees. If the NSW ‘Day of Action’ against the NSW Conservative Governments draconian industrial relations is excluded then the average is 182 between 1983 and 1991. In fact, in December 1991 there were 10,400 working days lost – the lowest figure recorded for any month in three decades.

 

So even on conservative estimates, there has been a 60% fall in industrial disputes under the Accord – illustrating what sort of changes have been occurring in the Australian industrial relations system.

 

 

  • The original Accord was originally designed to tackle the problem of stagflation, ie. Simultaneously high unemployment and inflation with low economic growth.

 

 

 

  • Until last year the Accord era has been associated with consistently better macroeconomic outcomes;

 

 

 

  • Growth in GDP and employment was considerable higher relative to both the Pre-Accord period and outcomes experienced in the OECD.

 

 

For example taking the years, 1983-84 to 1988-89, compared to 1977-78 to 1982-83, the Accord brought a 4.2% annual average increase in real GDP compare to 1.9% under the pre-Accord years and a 2.9% average increase in employment compared to 1% previously.

 

 

  • Wages have been restrained with nominal wage growth of 6.8% under the Accord, compared to 11% in the pre-Accord days. Real wages have been averaging –0.9% under the Accord relative to + 1.2% pre-Accord.

 

 

 

  • At the same time, real unit labour costs have fallen 8% since March quarter 1983 consistent with supporting better employment investment and living standards.

 

 

In return the social wages has been boosted. Real household disposable income per head, which captures some but not all benefits, has risen 11 ½ % since March 1983.

 

 

  • There has been a shift in factor shares which has boosted the profit share of GDP from the weak and low levels of the 1970’s and early 1980’s

 

 

 

  • In return the real growth in investment was exceptional over the late 1980’s.

 

 

 

  • A key success of the ACTU-ALP Accord has been the reduction of inflation to a level below that of our OECD Major Trading partners. Australia is now a low inflation country. The trade union movement s committed to keeping our inflation rate low in order for Australia to be competitive and we have been forming our wages policies accordingly.

 

 

 

  • In terms of the ‘big picture’ – macroeconomic performance and industrial disputation, we are proud of our record. The Accord’s benefits to Australia are recognised by a wide cross section of the community especially among the business community – not always big fans of the trade union movement 10 years or so ago.

 

 

 

  • In terms of the detail, there’s a lot of which we can be proud. There has been an ongoing transformation of our wages and industrial relations system itself. For example in 1983, the wage system was centrally determined and fully indexed for CPI movements (allowing for the Medicare adjustments).

 

 

In 1987, there was a two-tiered system of flat increases across the board for price movements and a second-tier of productivity-based increases. With Award Restructuring and structural efficiency, along the way, the system is gradually being centralised to an enterprise-based system. National Wage claims are important to maintain national standards to protect the weak and make sure wage claims are in tune with national economic objectives. This national focus is coupled with enterprise agreements, negotiated by workers and their companies to enhance skills, productivity, quality, workplace structure, international best practice, and allow a '‘win-win’ bargaining outcome.

 

This evolution of the wages system is about attitudinal change among all concerned.

 

Among the key issues in industrial relations comes union coverage.

 

Australia has traditionally had a large number of small unions, and a small number of very large unions. This compares with Japan – some 70,000 unions and Germany – 17 unions. Australia wants to reduce its number of unions (currently around 275) to 17-20 better resourced, larger, main industry based unions. This is taking place through a number of strategic amalgamations, of which there are over 70 currently in train.

 

This strategy is to (1) allow the union movement to better service its members and halt the long term decline in union membership; and (2) allow rationalisation of coverage in workplaces.

 

Single Bargaining Units are to be achieved in “brown-field sites” (only 2-3 unions).

 

Single Union Coverage is achievable on “greenfield” sites.

 

Good examples of green-field sites include Toyota, Daimaru.

 

International companies have been to talk to the ACTU before setting up operation in Australia. Unions provide an effective means of workplace communication in Australia. Unions provide an effective means of workplace communication in Australia. Australia is undertaking changes in workplace culture – the trade union movement is proud to be an agent of change.

 

Martin Ferguson, President ACTU. 26 March, 1992