Richard Marles talks about Australian industrial relations culture and its origins and how American culture is influencing the Australian agenda in the present.
I was not exactly sure what to say to this audience today. I had prepared a general overview of the industrial relations system in Australia. However, I noticed that Peter Nolan was also speaking to you and thought that he might be giving a speech of that kind which indeed he has. I should say that his overview is an excellent picture of the industrial relations system in Australia and it fairly represents the aims of the union movement in Australia.
So instead I propose to talk to you, a bit of the cuff, about the different cultures in America and Australia regarding industrial relations. Because, it seems to me that culture plays as big a role as law in the way in which industrial relations is conducted.
I intend to talk briefly about the Australian industrial relations culture and its origins. Then I intend to say something about the American culture and have a go at explaining how American history has underpinned it. (This is perhaps a dangerous thing to do in front of an American audience so if I make any mistakes in American history, please forgive me.)
I’ll compare the two cultures and talk something about the way in which American culture is influencing the Australian agenda at present. Finally, in light of the upcoming Federal election I propose to give you some sense of the ACTU’s agenda in relation to that bearing in mind the cultural issues to which I have referred.
You have asked me to give advice about how one should do business in Australia against the background of Australian industrial relations. I hesitate to give that advice but I’ll finish this speech by trying to fulfil that request.
The Culture of Industrial Relations in Australia and its Origins
Unions formed in Australia in the second half of the 19th Century. The working people who formed these unions had ethnic origins based in the British Isles. And so by and large the culture that was inherited in the formation of the union movement was received from the United Kingdom.
In the 1890’s Australia went through very significant industrial disputation across a range of industries. It was a defining moment in Australian history both in terms of the severity of the industrial disputation but also the moment in time when it occurred preceding as it did the federation of the six Australian colonies into the Commonwealth of Australia.
This disputation, perhaps, steeled the Australia union movement and it became highly organised and established the Australian Labor Party which has been the social democratic party within the Australian polity ever since Federation.
In 1901 Australia federated and became the Commonwealth of Australia. In the ten years preceding this there had been a series of constitutional conventions involving representatives of each of the six colonies and at times representatives from New Zealand.
These conventions debated the nature and content of a new Australian constitution. An industrial relations power formed part of the federal Commonwealth’s powers. It does so in an awkward way, which has given rise to a quite peculiar division of power between the States and the Federal Government over the last 100 years. However, the point is that it was clearly an issue on the minds of the founding fathers (as they were in those days) when they established the Constitution.
In 1904 the Federal Parliament enacted the Conciliation and Arbitration Act 1904, which was the precursor to the current Workplace Relations Act 1996 and is now the national set of labour laws in Australia.
The significance of the disputes in the 1890’s upon the formation of this legislation was very great. It lead to a system which had within it two key bases. First there was no right to strike, which in modern terms would be in breach of many ILO Conventions. Second, as a trade off for not having this right, there was enacted a very interventionist set of industrial laws which gave unions a significant prominence in the industrial system. Most importantly the Act set up an independent umpire with powers of compulsory arbitration. That umpire was known as the Conciliation and Arbitration Court and now exists in the form of the Australian Industrial Relations Commission.
The idea was that either party to an industrial dispute could put its hand up and ask for the umpire to intervene and when that occurred both parties would have to abide by the decision of the umpire. It was an attempt to solve industrial disputation in a reasoned way rather than through industrial action.
Unions have since that time been very much a part of the establishment within the Australian Governmental framework. The union movement has been an active player in the political scene for the entire duration of the 20th Century. Unions have also had a legally established right to sit at the bargaining table with employers. In addition union density in Australia has been historically high although in the last 25 years it has been decreasing as it has been in other English speaking countries.
This is a simplistic image of the origins of the industrial relations system in Australia, but what it has produced, and this is the key point, is a consensus between labour and capital within the Australian economy. By and large both parties recognise each other’s right to exist. There have been no real disputes about recognition but only about the content of the industrial settlement in any particular workplace.
When I say that there has been a consensus between labour and capital, I perhaps mean that this consensus has been in place, largely unchallenged, until 1996. However, in the last few years there has been a challenge to this consensus and I will refer to this later. Nevertheless, I do think that the consensus between labour and capital basically remains the fundamental characteristic of the Australian industrial relations culture.
The Culture of Industrial Relations in the United States and its Origins
The culture of industrial relations in America appears to be very different.
The United States is a country based on an idea. Freedom, civil liberties, liberalism have all been the hallmark of the national American polity. These ideas form part of the Declaration of Independence and were teased out in the historic correspondence between America’s second and third Presidents in their twilight years: John Adams and Thomas Jefferson. It is a philosophy that can be traced through almost all the American administrations in the 19th Century and epitomised in that of Lincoln.
So it appears from an outsiders eyes that notions of civil liberties, freedom of the individual and importantly freedom of capital run deep in the American psyche. This in turn appears to lend itself to notions of smaller government and a major reticence to embrace any form of regulation particularly those which may impinge on individual freedoms.
In addition to this neither of the major American political parties have their foundations in the labour movement. Indeed, from the point of view of an Australian set of eyes, both the major American political parties seem to be incredibly fluid. When Abraham Lincoln became the first Republican President of the United States in 1861 he was leading what was then effectively the social democratic party within the overall political system. This position then changes from about 1890 through until about 1928 when Hoover assumes the Presidency and the Republican Party becomes the conservative party and the Democratic Party the social democratic party in American politics.
So the place of American labour in all of this seems far less assured. While being generally supportive of the Democrats, American labour is not exclusively supportive of the Democrats. There have been occasions where individual unions have endorsed a Republican candidate and there are many unions in which Republican caucuses participate. The situation is simply not as clear-cut. This position is highlighted by the irony that the only American President ever to be a life member of an AFL-CIO affiliate is, of course, Ronald Reagan.
In cultural terms it seems to me that American unions are not nearly as much a part of the American establishment. Their participation in the party political debate does not appear to be as historically rooted as it is in Australia. While it is true that American unions are now becoming really active in the American political system this is a relatively recent phenomena over the last few decades but not one which goes back over a history of more than a century.
Confirming this sense is the fact that union density in America has historically been much lower than it has been in Australia. And right now union density in America is around 12% and in Australia it is around 26%.
Moreover, if there is a national culture based on the absolute right of the individual and which is suspicious of any form of regulation then there is naturally going to be a sense of antipathy from business to organised labour whose aim is basically to regulate and moderate the excesses of capital.
This appears from an outsider’s point of view to have given rise to an adversarial culture of industrial relations in the United States. Certainly when we talk to our colleagues in the American Labour movement they describe the existence of an industrial relations war, which we do not really have in Australia. It appears that the status quo between management and unions is one of conflict unless unions manage to win the war and impose themselves on a workplace. In short there does not exist any consensus between labour and capital.
Introduction of American Ideas into Australian Industrial Relations
Employer Sponsored De-Unionisation
Having stated that the Australian system has been characterised by a consensus between labour and capital it needs to be pointed out that this consensus in now under threat. And, it is under threat from a move by many people in business to import an American culture of industrial relations into Australia.
The reason they have done this is to try and mimic the US economy which has basically been the most productive economy in the world for the last 50 years. But while there are undoubtedly winners in the American economy there are many losers as well.
This move started in the late 80’s when CRA – Rio Tinto, a major Australian resources company, imported this American culture into an Australia setting. They ran a strategy of individual contracts and fairly successfully managed to de-unionise a large part of their workforce. The significance of this was to provide a contemporary Australian example of how a company can operate without such a consensus in place. Moreover, it taught a whole range of people the skills of de-unionisation who have since gone on to other companies and exercised those skills in other environments.
Since 1996 the Australian government has actively sought to break down the consensus between labour and capital. They understand that from a political point of view if the conservative forces are to get rid of unions which they see as underpinning the Australian Labor Party then the consensus between labour and capital has to be broken down. Through the Maritime Dispute (a major Government sponsored totem dispute akin to the PATCO Dispute under the Reagan Administration) and through being a cheer squad for employers across the country who want to take on unions, the Government has begun to challenge the consensus model of industrial relations in Australia.
In the last two years major companies such as Telstra, Commonwealth Bank and BHP have all gone down the path of de-unionisation campaigns. And these three taken together represent the biggest employer sponsored push for union decline this country has ever seen.
Obviously from a union point of view this is something we need to resist. But how does one analyse what this is all about ? Is it that there is a natural conflict between labour and capital which can only be resolved by strength ? Is the American way not just the American way but THE way in terms of industrial relations ? Or is there a mutual interest that companies and unions have which has been forgotten in all of this ? In other words is there a rationale for the consensus between labour and capital which has existed in this country for the last hundred years ?
An answer to these questions came to me from the most surprising of places. It came in a piece of evidence which was given by John Hannah, who was the president of BHP Iron Ore during the time when BHP offered individual contracts to its workforce in the Pilbara in an attempt to try and de-unionise that workforce. John Hannah gave this evidence in the litigation which ensued as a result of that campaign. In the evidence he referred to research which was based in America which gave some very interesting findings.
It said that world’s best practice in terms of industrial relations and the productivity that resulted from those industrial relations involved having a highly unionised workforce where there were co-operative relations between the union and management. The research also found that world’s mediocre practice involved having a de-unionised workforce which was individualised, where there was no collectivisation, where there was a degree of hostility in the workplace, but where management was clearly in control.
Now if that was all the research said one could reasonably ask: why on earth would a company seek to de-unionise when world’s best practice is based on having collective arrangements in the workforce ? Well the answer is that the research also found that world’s worst practice involved having a unionised workforce where there were poor relations between management and unions.
These findings are really interesting. What they show is that where you have unionised workforces there can be a great spread of outcomes from the very best to the very worst. However, where you seek to have a non union workforce the results are far more consistent albeit that they are mediocre.
In the midst of all this are some significant messages for both employers and unions. Moreover, I think there is a bit of a road map in here for both parties about the future.
The message for employers is that world’s best practice does involve a union in their workplace in a co-operative relationship. That is common sense. A ship obviously will run most smoothly were everyone is pulling in the same direction where the company is productive but in turn is providing secure jobs and dignified terms and conditions of employment. The opposite of this is also common sense. If you declare war on your workforce you are unlikely to get very productive results. Further, it gives the message to employers that, quite apart from the reaction that might occur from unions, if an employer seeks to de-unionise its workforce and individualise it, it is going for a very mediocre option.
The messages for unions are also very significant. It indicates that our relations with traditional union companies in the union economy must be very well managed. There are perhaps two clear implications. One is that unions must take on companies who seek to de-unionise with the kind of ferocity that any organisation would which is battling for its survival. Because the notion of union companies seeking to de-unionise strikes very much at the heart of our existence. Secondly, however, we must acknowledge that where we contribute to world’s worst practice in terms of industrial relations this is to our own detriment. To a certain extent like any movement and any organisation the union movement must get its house in order in relation to that.
I know that as a unionist we do not want the US culture to be imported into Australia because we will be the losers. However, I think that as a country we also don’t want that kind of culture in Australia. It does create a great division between rich and poor and it is worth noting that the country in the developed world which has the greatest division between rich and poor is the United States.
This debate is being had in Australian corporate board rooms today. Our message to the Australian business community is that it doesn’t have to be the adversarial way. It is certainly not the European way. In Europe, for example, they have an industrial relations culture far more based on co-operation: where workers and employers work together to have their companies be as productive as possible. Their divisions between rich and poor are not nearly so great. And yet these are very productive economies, indeed France is now starting to match the US in terms of productivity.
The Organising Agenda
Unions have also responded to this challenge along with declining union density by importing our own piece of American strategy in to the Australian setting, namely the organising agenda.
A decline in union density has occurred in Australia because there has been a dramatic change in the economy. Economists will tell you there are the three ages of the economy. First came the industrial age, then in about the 1970’s there came the service age, and now we are moving into the information technology age. In the transition from the industrial to the service age our economy went through major changes which resulted in a decline in union density.
But it was not only us. It was an international phenomena which occurred across the English speaking world – the UK, Canada, New Zealand and the US.
To give you one example, in manufacturing in 1973 1.4 million Australians were employed in the industry, which comprised about 25% of the workforce. Now there is 1.1 million Australians employed in manufacturing which comprises a mere 12.5% of the workforce. As a proportion of the economy manufacturing has halved in the last 27 years. And this is indicative across the entire “union economy”. The “union economy” has declined and so too has union density with it.
But if you take union density within the “union economy” you will find that it has actually increased over that period of time. We could well argue that we have in fact been doing our job better over that period of time and that more people who are able to join the union movement have joined the union movement. We could argue that a decline in union density is not our fault. However, that doesn’t help. Because whoever’s fault it was, it is certainly the union movement’s responsibility to ensure union growth in the future.
The reduction in union numbers as a result of the change in the economy is pretty understandable.
As I said unions in Australia evolved toward the end of the industrial revolution at the end of the 1800’s. At that time the skills that we learned in representing workers were to represent: by and large men, in large groups, in geographically proximate places, to single large employers. There is a particular set of skills and strategies in representing people in this environment.
But the world changed on us. And what we are now faced with is having to learn a whole new area of representation amongst smaller more disparate workplaces made up of a much more diverse group of people both in terms of gender and ethnicity.
If the union movement has been at fault in the last 20 years it is by virtue of being slow to recognise this change in the economy and being slow to change our strategies in organising the newer economy. However, this change is now occurring.
The short answer to arresting union decline is for unions in Australia is to learn to organise the newer economy. By this I really mean the service economy which is not all that new now (it is about 20 years old).
The organising agenda which is embodied in a document called Unions@Work which was published by the ACTU toward the end of 1999 is in large part a strategy to organise non-union workplaces in the service sector and other parts of the economy. It brings forth a body of knowledge which has largely been developed in the United States about recruiting techniques and representative techniques in these areas.
It is about making unions relevant at a grass roots level to people who have previously not had much contact with unions. It is also about selling the very essence of collectivism and unionism to working people who have not experienced these things previously. The basic message is that when two people go to an employer with a problem in their workplace they do so with more strength than one. It is about empowering people in a workplace to solve their own problems by working together.
In developing this kind of strategy to organise the non-union sector there are significant implications for the way in which unions continue to operate in the traditional unionised sectors – the old economy. These implications derive from the fact that unions do not have infinite resources and so there is a real issue with resource management.
Unions are now forced to think much more carefully about their relationships with traditional union companies. These relationships need to be far more low maintenance from a union point of view. That is, they need to take up less time for any specific organiser. Accordingly the workload involved in servicing existing union members has to be performed much more by the delegates at the workplace level. That is, by people who are not union officials but are representatives of the workforce but employed by the company in which they work. This can be an empowering process for those workers.
Considerations of resource allocation feed back into the question of employers importing the American culture of adversarial industrial relationships. Where unions and employers engage in enormous fights over de-unionisation campaigns it soaks up resources on both sides. And the resources spent on this are resources not spent organising in the newer economy.
And so in my view, unions must become passionate advocates for co-operative relationships between unions and management or in the old language a consensus between labour and capital. And more than being passionate advocates for it we need to be active participants in those kind of relationships. In doing so we free up resources to allow us to organise in the non-union sector. Consistent with this we must be vigorous opponents when union companies seek to de unionise so that we provide a deterrent for this choice.
Taken together these strategies set out something of the agenda that the ACTU has been trying to put in place for the Australian union movement.
At the end of this year there will be a federal election. Most pundits at this stage are suggesting that the Australian Labor Party will win this election. However in modern politics nothing can be certain. Whichever party wins the ACTU will be advocating for legislative change.
In 1993 the system of compulsory arbitration in Australia was removed and replaced by a system of enterprise bargaining which, in general terms would seem fairly familiar to people experienced in the American system.
In 1996 the Howard Government won power in Australia and has been the most anti union government in our country’s history. It has attempted to manipulate the bargaining system in such a way as to link it to a removal of the consensus between labour and capital. They hope that bargaining will remove co-operation between employers and unions and will promote the kind of industrial conflict, which characterises the environment in the United States.
Against this background there are three particular reforms that we would like to see in the Workplace Relations Act 1996 which would make the system more based on co-operation and less on conflict:
- First, is abolishing the legislated scheme of individual contracts
- Second, is dealing with collective bargaining rights; and
- Third, is strengthening the role of the Australian Industrial Relations Commission.
Abolishing Individual Contracts
Australian Workplace Agreement’s (AWA’s) are a legislated scheme of individual contracts. However, they are not the only form of individual arrangement in the employment relationship. There are common law individual agreements which must, in all there terms, sit entirely above existing industrial instruments in the workplace. This is unlike an AWA which in order to be legal need only pass a sub-standard no disadvantage test which is often far below the existing employment conditions in a workplace.
Common law individual agreements can be used to individualise the workplace and remunerate an employee who has performed excellently. This is often quoted as the reason for needing to have a legislated system of individual agreements. But if these needs can be addressed through common law individual arrangements what can possibly be the purpose of an Australian Workplace Agreement? In our view the real reason for AWA’s is not only to individualise the workplace but in fact to undermine collective structures.
AWA’s also form part of a legislative scheme. That is, they are removed from the common law and doctrines relating to unconscionability and inequality of bargaining power simply do not apply to them.
The contract of employment is the single most important contract that anyone will ever sign and so right now it can be governed by a set of laws which does not contain any notions of equality of bargaining power or fairness.
There is no other law in the land which places one party so much at the mercy of another as the legislative scheme of Australian Workplace Agreements. Obviously we believe they need to be abolished.
Collective Bargaining Rights
In Australia we have a bargaining system with no collective bargaining rights.
In 1993 when enterprise bargaining was introduced the collective bargaining rights that were put in place with it provided for good faith bargaining orders to be issued by the Commission. The threshold for obtaining those orders was incredibly low and the kind of orders that could be made were very broad. This scheme of good faith bargaining orders was essentially struck down by the courts. So we had a bargaining system with a defective collective bargaining right.
In 1996 the Conservatives won government and their solution was to totally remove any reference to good faith bargaining orders from the legislation.
And so in 2001 we now have a bargaining system which for seven years has contained no effective collective bargaining rights.
This allows for the situation where 100% of the workforce can come to a company and demand a collective agreement and the company can quite lawfully ignore them completely. Only the Gulf states have worse legislation than Australia in this regard. If you’re a union in Swaziland, Indonesia or Paraguay you have better collective bargaining rights than you do in Australia.
So whether we have a US system or a European system or any other system of collective bargaining rights the priority for us is that we at least have some system of bargaining rights as part of our legislative scheme.
The Role of the Commission
Finally, the role of the Commission needs to be strengthened. This is in terms of its role in the bargaining process so that it can be a fair umpire. However, the Commission also needs to be strengthened in terms of its role as the custodian of the system of minimum employment standards. This system of minimum employment standards needs to be a living body of law which encompasses changes in the workplace and changes in our values as a society.
This agenda for legislative change can be seen in the context of our industrial relations culture and particularly the attempt to import a US culture of industrial relations into Australia. Because our legislative agenda is very much about trying to make sure that the consensus between labour and capital becomes the basis for a bargaining system: that bargaining is based on co-operation not conflict.
Advice to Americans Doing Business in Australia
Finally, you have asked me to give advice as to how to do business in Australia. In the context of this speech the advice is pretty clear. When you arrive in Australia get out the telephone book. Look up the number for the relevant union and give them a call.
In both your country and ours dealing with unions can produce world’s best practice in terms of industrial relations. This should be both of our aims.
Thank you for having me.