Ged Kearney address to 9th Annual Workforce Conference

Address by ACTU President Ged Kearney to 9th Annual Workforce Conference

I would like to acknowledge the traditional owners of the land on which we meet today and pay my respects to elders past and present.

Thank you for the invitation to speak at your annual conference today.

Workforce is a must-read publication for anyone working in the industrial relations field. In recent years, we
have unfortunately seen media coverage of the workplace shrink, but specialist publications like Workforce are invaluable for keeping on top of whatever is going on industrially, politically, and in the tribunals.

I also want to put on record the ACTU’s appreciation for the ongoing coverage provided by publications like Workforce, and to let you know that this year the ACTU Executive agreed to establish an annual award for communications excellence to reward individuals who make an outstanding contribution in the area of industrial relations. The award will be open to journalists and other communications professionals both within the union movement and the mainstream media.

Could I also acknowledge the hardworking staff of the venue where we are sitting today. There is a deep, sustained crisis inside Melbourne’s luxury hotel industry, with room attendants (cleaners) facing what have been described as Third World conditions of impossible workloads, poverty wages and high workplace injury rates. The workforce turnover is 50% - an unsustainable position if we want to grow our tourism and major events industry.

Last week, our colleagues in the Liquor Hospitality and Miscellaneous Workers Union launched a new campaign, Hotels With Heart, to win fair pay and respect for hotel room attendants.
You may have noticed a protest out of the front of the Langham Hotel today.

Unfortunately, the Langham Hotel rated poorly in a survey of room attendants, which found half have been injured at work, 82% are stressed about their workload, and 67% work past their finishing time. Guests pay up to $1200 a night for a room in the Langham; the person cleaning the room after they leave has an average take home wage of $464.70 a week.

So I ask you all to support the Hotels With Heart campaign (www.hotelswithheart.com.au).

Federal election confirms workplace rights
It’s now five months since I had the honour of becoming President of the ACTU and I have taken office at a new and exciting stage in Australia’s political history.

A minority government opens not just the possibility of new ideas inside Parliament, but in the wider community as well.

This is also a great time to be working in a movement that speaks and acts directly for some two million Australians and their families.

We are proud of our achievements. Through our work, more than four million Australians enjoy bigger pay packets and have better workplace conditions because their workplace standards are set through collective bargaining and industrial awards.

And we know that the broad majority of the Australian community also recognise this and support the role of unions in collective bargaining and defending workers’ rights against the sort of attack we saw under WorkChoices.

The depth of community support on this issue is also not lost on the Liberal Party.

From day one of the federal election campaign, we saw Tony Abbott recant his previous public commitments to individual contracts, to cutting protections from unfair dismissal, and to winding back the award safety net.

But in recent weeks post the election, our suspicions seem to have been confirmed with a new round of
Coalition MPs calling for the return of those policies.

Some business groups have also been fanning the flames of this new push for labour market deregulation.
If it comes to another battle, you can rest assured that Australian unions will vigorously campaign against any party that threatens workplace rights.

Radical labour market deregulation that puts absolute power in the hands of the employer is not the Australian way.

The ACTU’s polling before, during and after the 2010 federal election confirms this.

It shows concerns among soft voters about the potential reintroduction of WorkChoices was a key driver of votes against the Coalition.

It was not as strong as it was in 2007, but for the second election in a row, WorkChoices was a major factor in the outcome.

Immediately after the election, before the government was known, we found that 80% of Australians wanted the Coalition to keep its promise not to bring back WorkChoices by any means.

They said the Coalition should make sure there were no cuts to unfair dismissal protections and that it did not expand on the use of individual contracts.

So for people like Joe Hockey, Andrew Robb and Eric Abetz to be again talking about changing the Fair Work Act is not just a betrayal of Australian voters, it confirms that many key Liberals continue to misread public sentiment on this issue.

No evidence of a ‘wages break-out’
This brings me to the topic of today’s discussion: Representing Workers Under the Fair Work Act.

I had originally intended to give you a straightforward overview of the union movement’s current positions on the Act – where it is working and where it can be improved.

But I also read the newspapers. And if you have been reading newspapers over the past few weeks, you would think that Australia was on the verge of a massive wages break-out and the pre-Christmas beer strike had been revived from the ‘70s.

Nothing could be further from the truth. And it is quite obvious that some employer and business organisations are using wage rises as a proxy for what is their real agenda: a renewed attack on workplace rights protected by the Fair Work Act.

I was particularly taken with an editorial in last Friday’s Australian newspaper, headlined ‘Avoiding a wages breakout’. The editorial’s message was delivered through the sub-head: ‘A more flexible IR system would serve the nation well’. That seemed to say it all.

This is nothing new, of course. WorkChoices was the culmination of a decade of attacks on workplace rights by the Howard Government under the guise of ‘economic reform’. But as we know, national productivity actually fell during the Howard-Costello era.

It is a fact of life for unions that we have to be constantly on guard against a neverending employer agenda to introduce ‘flexibility’ into the workplace – flexibility, of course, being code for “the flexibility to cut pay and conditions at a whim”.

It is extremely disappointing to have to continually have these old fights again and again.

If we are going to have a serious discussion about wages then we need to get the facts straight.

We also need to use language that is unbiased and non-inflammatory. Our economic and social language has been hijacked by neo-liberalism. Social constructs that protect us from corporatism and the free market have been carefully framed to make us believe they are bad for us or have been demonised - that includes unions, taxes, regulations, even wages.

We constantly hear of wage pressures, of tax and regulatory burdens – loaded language aimed at drumming home the pressure that a decent wage, a fair tax system, and regulation are bad for the economy.

We have to change that.

Economists believe that if real wages, that is wages adjusted for inflation, start to grow too much faster than productivity then they will start a wage-price spiral that will push up inflation and ultimately leave workers no better off than they were before.

So, if wages start to grow by much more than the rate of inflation plus the rate of productivity growth, or if wages grow by much more than their long term trend growth rate, economists start to worry about a wages break out.

That is not happening at the moment. Growth in the Wage Price Index (3.5%) is less than the sum of CPI growth (2.8%) and productivity growth (0.8%). All measures of wages growth are also in line with their long-term averages.

Workers are entitled at the very least to see their wages maintained in real terms. The ABS Living Cost Index for employee households shows that the cost of living for workers increased by 4.6% in the year to September. Seen in this light, the WPI increase of 3.5% in the year to September is moderate indeed and below the real cost of living for working families.

We also need to remember that wages rose only modestly during the economic downturn – indeed, for the nations’ lowest paid workers, more than 10% of the workforce, they were frozen in 2009.

Another way of looking at wages is as a share of national income. And when we do this, we find that company profits are back to the record levels of 2008, while wages’ share is now at its lowest point since December 1964.

Don’t let anyone tell you business is struggling; business is doing well from the resurgent economy.

Corporate profits are up strongly.

This imbalance is even greater in selected industries. Gross operating profits in mining have risen by 60.6%, while wages grew by just 3.8%. Construction profits rose by 55.5%, but wages by just 2.9%. And profits in the information, media and telecommunications sector grew by 10% - five times wages.

If we are going to have a discussion about a wages break-out, then let’s have it in the mahogany-lined boardrooms of Collins Street and Martin Place. Because this is where we are really seeing a pay boom.

We have just gone through an interesting exercise at the ACTU where we examined the remuneration reports of Australia’s 50 largest publicly-listed companies to better understand the nature of executive pay in this country.

The results were an absolute eye-opener. In 2010, the average starting salary of a top 50 CEO is $2 million. But add in bonuses and incentive payments, share options and other non-cash benefits and that grows to $6.4 million. That is almost 100 times – 98.6 times, to be precise – the annualised average ordinary time earnings of a full-time employee.

Since 2001, the average CEO base pay has risen by 130%, while average earnings have grown by less than half that amount, 52%.

In the last year alone, CEOs’ pay rose by 17% - five times the Wage Price Index, which increased by just 3.5%.

When you also see that many of these CEOs are the same people who led these companies while their share prices and profits plunged during the Global Financial Crisis, you can understand why workers resent being told by big business that they should shut up and accept small wage rises that barely keep pace with the costs of living.

It really is gross hypocrisy for big business and employer groups to be pushing for industrial relations deregulation that would cut the pay, conditions and rights of Australian workers while continuing to reward themselves so handsomely in a way that is out-of-synch with community expectations.

Finally, any claims by employers that a big wage rise in one sector will flow through to the rest of the economy must be taken with a grain of salt. This may have been the case in a more centralised IR system in the 1980s, but under the Fair Work Act, our system remains based around enterprise bargaining with natural brakes on a wages break-out.

Productivity and flexibility
Unions welcome any form of national discussion about productivity and flexibility. We will come to the table armed with facts and the concerns of workers from the factories, shops and offices of Australia.
But it has to be a two-way discussion.

How the rewards of work are distributed, is critical to national productivity and our society. These are not abstract questions, in either economic or personal terms.

Many workers actually experience concepts like “reform”, “productivity” and “flexibility” as “insecurity”, specifically as temporary work and / or volatile income.  

They see “risk” as being progressively transferred from both Government and their employers to them – for example on skills and training, hours flexibility and contracting out.

Unions share the government’s aspiration to lift productivity after it has languished as a result of the Howard years. But employees do expect to be fairly rewarded for their efforts.

Experience from the Hawke-Keating era shows that higher labour productivity will be encouraged when workers feel they will share fairly in the benefits of that growth.

Recently we have seen productivity rise faster than wages, resulting in real unit labour costs hitting an all-time low of more than 17% below what they were during the mid-1980s.

It is no coincidence that productivity growth has been more sluggish at a period when there has been strong downward pressure on wages from employers taking advantage of unfair IR laws.

So, how do we get back up to those productivity peaks of the 1990s?

Well, we have to accept from the start that union collective bargaining is far from an impediment to productivity.

Collective agreements typically incorporate skill-based progression mechanisms and commitments about worker training, as well as ensuring that workers receive their fair share of productivity improvements.

The WorkChoices approach of fragmenting and isolating individual workers and cutting them off from unions has been proven not to work.

To lift national productivity over the long term will also require strategic thinking about investment in skills, education, training and infrastructure, along with an incentive of higher real wages delivered through collective bargaining.

And we need a combined effort to lift workforce participation, particularly in the face of an ageing population.

Unions do not have any opposition to increasing workplace flexibility. But we will not stand by and allow employers to undermine rights and safety net standards in the name of “flexibility”.

A current example is the repeated attempts by employers in the retail sector to vary the modern retail award to reduce the minimum engagement from three hours to two. They say this is too inflexible, and is hindering greater employment, particularly of young people.

Minimum shifts are an important condition that make sure people get a fair wage for coming to work and that it’s actually worth it.  They ensure a workers’ wage isn’t subsumed in the costs and time of travelling to work, childcare etc.

Only in Victoria has the minimum shift in the modern retail award increased from 2 hours to 3.  

Why is it that employers in every other state other than Victoria has managed to pay workers for at least 3 hours work, but suddenly minimum shift lengths are a threat to jobs?

Remember, this is a safety net that not only students rely, but that adult workers, who may have families to care for, rely on too.

So, if we are going to talk about flexibility, it should not be at the expense of rights, fairness and proper workplace protections.

Nor should it be a code word for more outsourcing, more use of labour hire companies, more casual work.
Precarious work and job and income insecurity in Australia is approaching crisis point, and this type of “flexibility” is not good for workers nor for the economy.

Fair Work Act
The union movement is immensely proud of helping get rid of the unjust WorkChoices laws.

The Fair Work Act turned the tide. It restored many of the rights taken away under WorkChoices.

  • Safety net: Employees now have a fair safety net consisting of 10 National Employment Standards and modern awards.

  • Fundamental rights such as annual leave and redundancy pay have been put in the NES and cannot be bargained away. New entitlements have been won, including important rights for working parents to request flexible working conditions and paid parental leave.

  • No AWAs: It is no longer possible to make AWAs. Existing individual statutory contracts will be progressively replaced by collective agreements. There is now scope for appropriate individual work flexibility through common law contracts, through ‘Individual Flexibility Arrangements’ made under awards and agreements, and through flexibilities that are permitted by awards and the NES. But unlike AWAs, these instruments contain strong safeguards against misuse and must leave the employee genuinely better off.
  • Modern awards: Last year, as part of award modernisation, the AIRC reviewed more than 1500 awards and created 122 industry and occupation awards.  
  • These new modern awards are an important part of the new safety net and are intended to be relatively secure and stable.

    In this respect, we have been very concerned by the persistent efforts of employer groups to undermine the safety net by attempting to re-litigate many matters that were settled during award modernisation.

    Over 150 applications to vary the modern awards have been made this year already by employers and their representatives.

    Many of these variations risk undermining key safety net conditions for vulnerable employees, such as minimum shift entitlements.

    We’re now keen to move on from award modernisation and we’ve urged employers to do the same. But if they want, we’ll take the fight up to them, I can assure you.

  • Unfair dismissal: The Fair Work Act has also restored unfair dismissal protection to most employees. The needs of small businesses are catered for through the provision of a longer qualifying period (12 months) and a ‘Fair Dismissal Code’ to help employers ensure dismissals are not unfair.

  • And – contrary to what employers would have had us believe – the extension of unfair dismissal protection to more employees has not led to an explosion of claims.

  • Fair minimum wages: The Fair Work Act helps the low paid. Wage setting functions have been restored to the independent umpire, Fair Work Australia. Balance has been restored to the wage setting principles.
  • Collective bargaining: The ACTU has welcomed the introduction of good faith bargaining in the Fair Work Act. Employers now have to bargain in good faith with their workers, if a majority of workers so desire. The choice of union members to be represented by their union in bargaining must be respected. Employers can no longer make dodgy non-union agreements or greenfield agreements: all agreements must leave workers ‘better off overall’.

  • There is no doubt that these new bargaining rules are helping to spread the benefits of collective bargaining throughout Australian workplaces. I have been pleased to see employers renown for their resistance to collective bargaining in the past – such as Telstra and the Commonwealth Bank –sitting down at the table with unions and concluding collective agreements.

    The Fair Work Act contains new and innovative provisions on bargaining for the low paid. FWA can provide a range of assistance to low paid workers who want to bargain collectively but lack the resources or capacity to do so. FWA can also provide one-off arbitration, which can help low paid workers get into the bargaining stream.

    Just today, an important case is beginning in FWA using the low paid bargaining provisions to improve the chronically low wages in the residential aged care sector. There are about 170,000 workers in this sector caring for 178,000 people, and they are paid as little as $16 an hour because until now they have not been able to successfully bargain with their employers. The LHMU’s case seeks to increase pay to $26 an hour.

    We will all be watching this test case very closely.

    Further improvements
    Of course, it is no secret that the union movement sees the Fair Work Act as an unfinished canvas.

    First, we believe that there should be one law for all workers and that this law is the Fair Work Act. We want to see the Building and Construction Industry Improvement Act (BCII Act) repealed, the ABCC abolished and its compulsory powers of interrogation removed. The Fair Work Ombudsman has more than enough powers to ensure that all players in the building industry understand their rights and responsibilities and comply with the law.

    The safety net established under the Fair Work Act can be strengthened. In particular, we think that there is scope to extend the right to flexible work arrangements to workers who provide care, including care of school-aged children or elderly parents. There should also be a robust right to appeal when a request is refused.

    There are a number of areas in which the bargaining provisions of the Act can be improved.

    First, we’d like to see fewer restrictions on the right to bargain above the enterprise level. In some cases, it simply isn’t efficient or viable to bargain at the workplace level – for example where there is a third party that effectively controls the wages and working conditions at the enterprise.

    We will also continue to press for the removal of restrictions on what parties can bargain over. The Act contains fewer restrictions than its predecessor. But it still prevents workers from bargaining on a range of issues which are of key importance to them – such as job security, consultation rights, access to union help and the rights of workplace representatives.

    Third, we’d like to see changes so that, where an employer interprets or applies a collective agreement unfairly, workers can challenge this decision in Fair Work Australia. FWA should be given the power to settle the dispute by making orders about how the agreement should be applied in the future.

    Finally, we want to see Australia fully respect its international obligations in the world of work.

    We continue to fail to comply with key International Labour Organisation Conventions – conventions to which we as a country are a party.  For example, workers in this country do not have the right to:

  • Bargain at the level they choose – be that sector, industry or economy; or
  • Take legal industrial action in respect to general industrial, social and economic issues

  • We also need to improve workers’ rights to representation. Union delegates play a vital role in representing workers’ concerns and interests and in preventing or resolving workplace conflict for the benefit of both workers and employers. Unions want the law to recognise this important role and to help delegates fulfill their role effectively.

    We also will continue to monitor the right of entry provisions to ensure that they are operating as intended.

    It is essential that workers can get advice and assistance from their union in the workplace. For example, the law gives workers a right to meet with their union in a venue that is fit for the purpose, such as the lunchroom. However, we continue to hear from our affiliates that workers are facing difficulty in exercising this right.

    Conclusion
    Calls by some big businesses and employer groups for a wind back of the Fair Work Act in the name of greater flexibility or productivity to avoid a “wages break-out” are both premature and motivated more out of ideology and self-interest than any genuine interest in economic reform.

    If we are going to have discussion about these issues, let us do it maturely and based on facts.
    And let us continue this open and honest dialogue as we work towards a more productive, flexible and equitable workplace.

    Thank you for your time.