On 18 August 1988 the then Conciliation and Arbitration Commission adopted a package of wage fixation principles which included a structural efficiency principle in the terms outlined in the following speech by Laurie Carmichael, Assistant Secretary, ACTU.


Increases in wages and salaries or improvements in conditions allowance under the National Wage Case decision of 12 August 1988 shall be justified if the union(2) party to an award formally agree(s) to co-operate positively in a fundamental review of that award with a view to implementing measures to improve the efficiency of industry and provide workers with access to more varied, fulfilling and better paid jobs. The measures to be considered should include but not be limited to:



  • establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;




  • eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;




  • creating appropriate relativities between different categories of workers within the award and at enterprise level’




  • ensuring that working patterns and arrangements enhance flexibility and the efficiency of the industry;




  • including properly fixed minimum rates for classifications in awards, related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments;




  • updating and/or rationalising the list of respondents to awards;




  • addressing any cases where award provisions discriminate against sections of the workforce.”



That principle was


“the key element in the new system of wage fixation” then adopted.


The Commission indicated that its purpose was


“to facilitate the type of review essential to ensure that existing award structures are relevant to modern competitive requirements of industry and are in the best interests of management and workers” and it was not to be “applied in a negative cost-cutting manner or to formalise illusory, short-term benefits”.


Finally it said that it would


“sit again in February 1989 to hear detailed reports on progress in individual award reviews so that it can both monitor the effectiveness of this decision and consider any matters of general principle that might need to be resolved.”


The now Industrial Relations Commission commenced its proceedings on February 16 1989 and handed down its decision on May 25 from which the following items are relevant for the purposes of this exercise:


Most of the parties and interveners informed the Commission of the progress that has been made in the areas they represent. The material indicated that progress is uneven and varies from industry to industry and enterprise to enterprise. It also showed that negotiations are proceeding at different levels and that, in some cases, progress is slow because of disagreement over the agenda and the procedure. Preparedness to consider change also appears to vary widely. Progress in some areas is considerable but in the majority it is minimal. Notwithstanding that, we are satisfied that the principle as framed in the August 1988 decision can and should facilitate negotiations over a wide range of issues and award areas.


In addition to making reports on progress in various areas, the Australian Council of Trade Unions (ACTU) also produced a “blueprint” for award restructuring which it considered would “facilitate major and sustainable award reform on a general basis, with a clear understanding of award relationships one to another and with the necessary level of control by this Commission.”


In summary, the ACTU contended that award restructuring should involve three associated steps:


“First, Raise the minimum rate in minimum rates awards to ensure that the restructuring is on an equitable base (Minimum rate)


Second, Broadbanding by establishing across industry six to eight skill levels _(The Framework).


Third, Provide the means by which upward mobility occurs through education, training and service The Career Structure).”


Before considering these and other issues it is necessary to deal with the meaning of the structural efficiency principle.

Meaning Of The Structural Efficiency Principle

Much of the debate on the meaning of this principle came from employers who emphasised the need for a wide agenda including both award and non-award make specific reference to:


(i) removing award restrictions on the contract of employment regarding the employment of casual, part-time, temporary, fixed term and seasonal employees and introducing more flexible provisions in relation to the definition of ordinary hours and in the arrangement of working hours, including the working of and payment for overtime;


(ii) reviewing the scope and incidence of the awards; and


(iii) eliminating barriers to efficiency that arise from demarcation issues with particular attention being given to rationalisation of union coverage.


Ultimately, there was no real contest as to the nature of the issues covered by the principle: there was general acceptance that there was no limitation imposed by the Commission’s August 1988 decision. on that occasion the decision was directed to changes in awards not only to assist in ensuring the “work classifications and basic work patterns and arrangements in an industry meet the requirements of that industry ….. but also to provide workers with access to more varied, fulfilling and better paid jobs”. Hence the issues raised by the employers are already comprehended by the structural efficiency principle and there is no reason why they should not be included in negotiations.


It is true, however, that a number of matters raised by the employers such as those associated with the structure of the unions and the coverage of awards are of such a nature that major change may take time, notwithstanding the recognition of the need for change.


In particular, attitudes to union structures are deeply ingrained and much time and effort may be required for unions and employers to develop appropriate and acceptable mechanisms which will enable fundamental change to occur without grave industrial relations implications. However, there is no reason why immediate attention should not be given to those aspects of this issue which interfere with the creation of proper career structures and act as an impediment to multi-skilling and broadening of duties. Where warranted, change should be made.


In many cases, alterations to the coverage of awards will also take much time and effort if fundamental change is to occur. Any proposals for change must be carefully handled. However, we recognise that, as part of the structural efficiency principle, the parties may agree to make changes to award coverage to facilitate improved efficiency and improved relations amongst employees and between unions and employers. Again, where warranted, change should be made.

Level Of Operation Of Principle

Significant debate also took place as to the level at which negotiations should occur and the relative merits of award or enterprise based approaches to the task of achieving structural efficiency. Some employers went so far as to suggest that negotiations and developments should occur primarily or solely at enterprise level.


Depending on the nature of individual awards and the respondents thereto, the level at which negotiations are conducted will vary. Generally, the main thrust of the principle is aimed at changing those award structures which inhibit measures to improve efficiency in individual establishments. This means that a major responsibility rests on employer organisations to be properly aware of their members’ needs and to ensure that these are considered in negotiations to restructure their awards.


Further, we agree with the majority of parties and interveners that the Commission’s role is to provide a framework for change and to obtain the necessary commitments from the unions. In the result, the measure of success of the structural efficiency principle will be the extent to which changes made at award level are implemented at the plant and enterprise level.

Classification Structures And Related Matters

It was acknowledged that in many awards, although not all, classification structures do not reflect the needs of industry or employees.


The ACTU, the Commonwealth and some other interveners submitted that there should be a reduction in the number of award classifications; broadbanding; multi-skilling; clearly defined career paths in awards; and incentives for the acquisition of skills. They also contended that there should be an examination of training requirements. The employers emphasised the need for diversity in treatment.


We agree that, where necessary, the number of classifications in an award should be reduced. The purpose of such process should be to provide for clearly defined skill levels, broadbanding of functions and multi-skilling. However, it would frustrate the purpose of the structural efficiency principle and impose rigidities in work arrangements if a classification structure were to be created based on narrow divisions of skill. The range of work functions to be performed, and the skills required, must be the determinant of the appropriate number of levels in a classification structure. It follows that we do not consider that the preferred position of the ACTU of six to eight classification levels would be appropriate in all cases.


Furthermore, there should be no doubt that the principle contemplates changes in fact and not merely changes in award prescription. It requires that there be real changes, for example broadbanding and multi-skilling, in workplace practices on the part of both management and employees.


As a general rule the Commission will only approve payment or reclassification for acquisition of additional qualifications where the employee involved is required to exercise them in the course of employment. We also adopt in principle the conclusions of the Full Bench Inquiry into the Building Construction Industry that disability payments should only be paid to persons who experience the particular disability or disabilities and that disability payments should not be aggregated.


Different skill levels are required for the performance of work in industry. Consequently, there must be properly designed and accredited skill training processes. Indeed, ongoing training and retraining systems are essential to support the effective implementation of the structural efficiency principle and its aim of ensuring that “work classifications and functions and the basic work patterns and arrangements in an industry meet the competitive requirements of …industry”. To a very large extent, this issue of training and retraining is a matter for the parties, governments and the educational institutions.


The decision then went on to deal with a number of related wage fixation matters and concluded with the following statement on page 7:


The situation we have described has been tolerated for too long and it is appropriate that it be corrected at this time. The fundamental purpose of the structural efficiency principle is to modernise awards in the interests of both employees and employers and in the interests of the Australian community: such modernisation without steps being taken to ensure stability as between those awards and their relevance to industry would on past experience, seriously reduce the effectiveness of that modernisation.


Consequently, we endorse in principle the approach proposed by the ACTU though not necessarily the particular award relationships submitted in this case. That is a matter which we expect to be the subject of further debate in the forthcoming proceedings.

In dealing with further procedures the Commission, at pages 10 and 11 said:

Role Of Parties And Commission

The parties to the proceedings made a number of suggestions about the processing of individual structural efficiency exercises and the role of the Commission in that process.

No party or intervener appeared to underestimate the difficulties involved in reconciling differences both at industry and enterprise level. However, with one exception, parties and interveners recognised that there is a crucial need for a co-operative approach, rather than one of confrontation, to the application of the principle.


It was implicit in the submissions of all parties and interveners, other than the Australian Wool Selling Brokers Employers Federation, that there is a requirement for joint examination of the needs of the industry, industry sector or enterprise concerned to identify the measures needed to improve efficiency and provide workers with access to more varied, fulfilling and better paid jobs.


There will also be a need to keep all members of employer and employee organisations informed of the process and its possible application to particular awards. As we have earlier said, it is of the utmost importance that all participants fully understand the principle to ensure that it is properly implemented.


The Commission will be involved in assisting parties in their negotiations where appropriate and in assessing whether the required commitments and proposals are genuine and satisfy the requirements of the principle. The Commission will also assist unions and employers to coordinate their approach where it is necessary or desirable for discussions to occur across awards or between more than one employer and one union. The Commission will continue to monitor the results of completed exercises

Certified Agreements

The ACTU, the CAI, Business Council of Australia (BCA) and the Commonwealth proposed that the Full Bench should lay down principles as to the operation of s.115 of the Act.


There was some divergence in the approaches taken by the parties: for example, the CAI preferred that we should apply the current principles to applications for certification pending the review of the principles as a whole, which will not occur before 1 January 1990. However, there was unanimity between the ACTU, the CAI and the Commonwealth (the BCA did not address this point) that the Commission should refuse to certify any agreement which would undermine the principles or threaten the orderly operation of the system.


Section 115(4) of the Act requires the Commission to certify an agreement which conforms otherwise with the section where the Commission concludes that the agreement is in the interests of the parties immediately concerned, unless it is of the opinion that certification would be contrary to the public interest.


In determining the question of public interest, regard must be had to s.90 which specifies certain matters to be taken into account and also s.115(5) which excludes a finding that an agreement is contrary to the public interest “merely because the agreement is inconsistent with general Full Bench principles”. Those “principles” are defined in s.115(10) to be those “established by a Full Bench that apply in relation to the determination of wages and conditions of employment, other than principles that apply in relation to the certification of agreements under this section”.


It is clear from the section that the Commission may develop principles to apply to the certification of agreements. Having regard to the objects of the Act and in particular objects (a) and (c), we are prepared to adopt the following principles in relation to agreements pending a full review of the wage fixation principles:

“Certified Agreements

Before certifying an agreement pursuant to s.115 of the Act, the Commission must be satisfied that the agreement:


(a) is justified on its merits;

(b) relates to circumstances which are of a special and isolated nature;

(c) is not a device to circumvent the general wage fixation principles and thus threatens the orderly operation of the industrial relations system.”


When considering the certification of an agreement the Commission will also invite submissions from any union with members employed in the enterprise concerned and from the. relevant Peak union council.

State Tribunals

In these proceedings the debate embraced a number of areas which come under the purview of the State tribunals. In many instances, employees in the same industry or enterprise may be bound by a mixture of federal and State awards and experience has shown that care must be taken to ensure that appropriate relativities are maintained in decisions of the relevant tribunals. In order to guard against industrial disputation and inappropriate wage outcomes, this Commission will utilise the co-operative powers available to it under Part VII of the Act and will continue to pursue the objective of achieving a consistent approach.


The ACTU “Blueprint” referred to in the decision is appended to this paper. Again in reading it care needs to be taken to separate wage issues from skill formation issues although the wage issues have been closely associated and act as a dynamic force for change.


In April of this year the Minister for Industrial Relations in anticipation of the Commission’s decision issued a statement entitled “Award Restructuring – the task ahead”.

Pages 7, 8 and 9 of this statement says:


“The process of fundamentally restructuring awards is inevitably complex and time-consuming. However, it cannot be short circuited if the opportunities offered by the current wage system are to be fully utilised. It is essential that restructuring proceeds within a clear framework laid down by the industrial tribunals to ensure the process leads to genuine workplace reform and to a better, fairer and more stable wage system.


Given historical interrelationships between awards a coherent approach to restructuring is required to avoid the risks of leapfrogging between awards and to ensure an equitable basis for the overall operation of the wage system.


Award restructuring is not a one-off exercise. The new awards must be translated into action at the enterprise level and be complemented by major reforms to our training structure. It must be an ongoing process, ensuring that our awards and workplace arrangements continue to meet the needs of industry.


While the nature of the agenda will differ between industries and awards, a number of elements relevant to securing effective change may be identified.

A Co-operative Approach

The importance of a co-operative approach to award restructuring was stressed by the Commission when it introduced the Structural Efficiency Principle. Constructive and detailed negotiations between the parties have already been occurring for some time in those industries which are well advanced in award restructuring.


Negotiations at the industry and award levels need to be complemented by discussions at the enterprise level: it is, ultimately, at the enterprise level that restructuring agreements will be implemented and the benefits derived. Clear guidelines for consultation and sharing of information can facilitate negotiation and the implementation of change.

Simplifying Awards and Reclassifying Jobs

The new awards and associated arrangements should, where appropriate:



  • be simple and remove obsolete and outdated classification structures and conditions;




  • encourage new forms of work organisation and the development of a multiskilled, adaptable workforce;




  • provide for new classifications which encourage horizontal and vertical mobility within firms, allow for a broader range of functions and responsibilities and minimise lines of demarcation;




  • establish career paths which involve successively higher levels of skill, responsibility and pay, providing training incentives, wider career opportunities and higher levels of flexibility and productivity;




  • include definitions of classifications which clearly establish the range of work required and the level of expertise to be achieved through training;




  • make provision for competency standards and appropriate certification and accreditation arrangements;




  • lead to complementary training arrangements – both institutional and on-the-job;




  • provide the opportunity to rationalise the number and type of awards where this will reduce the potential for demarcation disputes and make arrangements at the enterprise level easier; and




  • provide scope for a less prescriptive approach which establishes basic standards and a process for negotiation of detailed conditions at a local level.


Flexible Work Organisation

Award restructuring provides the opportunity to:



  • introduce more modern and flexible forms of work organisation and work patterns which allow companies to make the best use of new technology consistent with occupational health and safety standards;




  • consider more flexible working patterns and arrangements of mutual benefit to employers, employees and the community;




  • remove restrictive work and management practices which inhibit flexibility and efficiency, and which exist for reasons other than the safe and efficient performance of tasks; and




  • remove discriminatory provisions from awards and encourage equal employment opportunity. Guidelines developed by the ACTU and the CAI, entitled Suggestions to Assist in the Removal of Discriminatory Clauses and Language in Awards can be obtained from the Department of Industrial Relations.


Relativities Between and Within Awards

Award restructuring enables the parties to address inequities arising from multiple award arrangements while protecting the position of lower paid workers, as well as anomalies between key classifications across some awards. It provides the opportunity to adjust, where appropriate, pay rates and relativities within and between awards.

Payment Systems

Award restructuring provides scope to develop appropriate payment systems which are consistent with and support new classification and award structures. Different approaches such as performance related pay and financial participation may also be relevant.


Lower paid workers, particulary women, will benefit from more equitable pay levels with reduced labour market segmentation and access to career paths based on training and skills.

Training for New Skills

Successful implementation of restructured awards will call for a number of training issues to be addressed, including:



  • improving the responsiveness of training systems to industry needs;




  • progressive introduction of competency-based training;




  • developing articulated training and effective accreditation systems, to ensure that transferable skills and broadly recognised;




  • developing coherent and consistent training standards;




  • providing new means for sharing the costs of training, including paid/unpaid training level;




  • developing effective mechanisms at industry and enterprise level for assessing training needs and skills development.



A number of these issues require an urgent response from Government, and are addressed in Mr. Dawkins’ Statement Improving Australia’s Training System. Others will be addressed following the Government’s consideration in May of the interim report of the Employment and Skills Formation Council on consultations on Mr. Dawkins’ discussion paper Industry Training in Australia : The Need for Change.

Action in the Enterprise

The success of award restructuring will in the end be expressed in fundamental changes at the enterprise level. These changes will be supported by the Government with expanded programs and services which are outlined in Section 5 of this paper.


The ACTU is continuing to play an initiating role for these considerable changes and out of negotiations early in 1989 with the Federal Government in relation to Taxation and Wags adjustments, formulated a draft agreement. This is due to be ratified by a Federal unions Conference on June 2, 1989.


The draft agreement includes the following:




The increases in restructuring as set in 3 (a) are to facilitate the restructuring of awards. Unions are to accept:


(i) The wider definition and change in job titles where appropriate

(ii) Preparedness to undertake the training to do the wider range of work

(iii) The general wage increases are applicable to actual rates of pay

(iv) National minimum award rates will be accepted and the award changes will phase out existing interstate differentials

(v) The award to be restructured into base rate plus supplementary payment; S115 Agreement or a paid rate award

(vi) No extra claims

(vii) Acceptance of the principles of restructuring.


The ACTU is prepared to further recommend to affiliates that provided the wage structure is acceptable that affiliates further confer in regard to the principles outlined in the structural efficiency principle as set out below:



  • “establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;




  • eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;




  • creating appropriate relativities between different categories of workers within the award and at an enterprise level;




  • ensuring that working patterns and arrangements enhance flexibility and the efficiency of the industry;




  • including properly fixed minimum rates for classifications in awards, related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments;




  • updating and/or rationalising the list of respondents to awards;




  • addressing any cases where award provisions discriminate against sections of the workforce.”



On the understanding that there shall be no negative cost cutting.


To go further with the Award restructuring effects it is necessary to study the principle of the approach of the ACTU as based in the Blueprint.


The Industrial Relations Commission said that it


“adopted the principle though not necessarily the particular award relationships submitted.”


That is a matter we expect to be the subject of further debate in the forthcoming proceedings.


The ACTU strategy incorporated in the blueprint says the following:


1. Maximise degree of trade union solidarity by maximising understanding of relativities.


2. The new structure will provide the opportunities for skill and career development.


3. The new structure will inextricably link wages with education and training.


4. Lower paid workers will receive the priority of the union movement.


5. The greatest gains are designed for those who have made the greatest concessions.


6. It is compatible with the organisational structures which broaden workers skills and responsibilities and reduce middle management bureaucracy.


7. The system provides a positive incentive to adjustment to change.


8. There shall be reduced demarcation barriers to increased broad skilling of workers.


9. The role of unions shall be promoted by involvement in training and establishment of the appropriate wage structures.


10. The restructuring strategy envisages a clear role for enhancing equal employment opportunity, affirmative action, industrial democracy, consultative processes and job protection and security.


During 1989 the ACTU summarised what it believes to be the essence of Award restructuring and was included in the ACTU blueprint put before the Industrial Relations Commission in which it said on page 2:


“2. The Executive recommended that restructuring proceed on the basis of a detailed review of the:


(i) structure of the award itself;

(ii) definitions of classifications;

(iii) identification of skills exercised in performance of tasks within classifications;

(iv) relationships between classifications;

(v) wage rates applicable to classifications;


The aim of such a review is to establish:


(i) a simplified and modern award structure;

(ii) the removal of obsolete classifications, cover new classifications;

(iii) a reduction in the number of classifications;

(iv) the broadbanding of a range of jobs under appropriate single classifications;

(v) career paths for all workers within the award;


In considering award restructuring there are three associated steps:


First – Rate the minimum rate in minimum rates awards to ensure that the restructuring is on an equitable base (Minimum Rate)


Second – Broadbanding by establishing across industry six to eight skill levels (The Framework)


Third – Provide the means by which upward mobility occurs through education, training and service (The Career Structure).


The Blueprint then proceeded to deal with particular industry sectors starting with what it calls “Key General Awards” , viz, Metals, Transport, N.U.W., Clerks, Building and then further proceeding with other sectors.


It set out a “draft” classification structure for a new Metals and Engineering Federal award and incorporated award proposals covering the Professional Engineers and Scientists.


It proposes 10 grades with sub grades at grades 7-8-9-10.


These are set out on pages 10 and 11 of the blueprint.


Transition requirements in going from the current to the new position are set out as follows:


First – Raising the minimum rate through supplementary payments. This should be progressively achieved on the basis that the objective is to increase supplementary payments to a level comparable to the Building Industry.


Second – Providing the incentive to change skills and responsibilities and to broadband 330 classifications into nine skill levels plus a traineeship position. This would involve the willingness to undertake training as required and preparedness to undertake a wider range of functions. Wage adjustment in two steps should be provided.


Third – Provide through the new structure career opportunities for all workers by establishing promotional steps.


If the Metals award is taken as the guide which is what was argued before the Commission and if reference is also made to submissions put from that sector of industry (M.T.I.A.) then the following emerges:



  • Vocational content at secondary school at least in years 11 & 12.




  • Entry level apprenticeships (Certificate Courses) with reduction of “time” for completing up to secondary school year 12.




  • Traineeships available for other than apprenticeships at levels below these qualified by Certificate Courses.




  • Credits for taineeships and experience where a person is able to later enter into apprenticeships and Certificate Courses.




  • Adult apprenticeships in terms of the previous criteria.




  • Post entry training for Special Class trade classification.




  • Advanced Certificate Courses for Advanced Class trade Classifications.




  • Associate Diploma Courses for Technical officer Classifications.




  • Diploma courses for Principle Technical Officers




  • Degree Courses for Engineers classifications A & B (Service Experience between A & B).




  • Degree Courses for Classification C.D.E. (Management levels).



The Metals Award Negotiations also include



  • Appropriate modularisation




  • Core Curricular grouping of Modules




  • Enterprise specific modules related to core curricula




  • National standards




  • Competency assessment that can modify training time requirements to meet standards.




  • Career pathing from level to level




  • Bridging courses to provide adequate credits for levels already achieved




  • Credit flexibility in changing career path channels.


Other Matters Emerging from Metal Award Project

Negotiations in the Metal Industry part of which were submitted to the Industrial Relations Commission hearing take place as a result of a project authorised with funding assistance by the Minister of Employment, Education and Training.


This project provides for a National Board and Executive and with working parties as required to deal with various award and training issues.


A number of matters including many of those set out are in the process of being finalised and expectations are that this will proceed quite rapidly (viz)



  • Vocation orientation at Secondary school final Year
  • Certificate courses entry level
  • Traineeships
  • Advanced Cretificates
  • Associates Diplomas
  • Diploma
  • Degree
  • Post Degree
  • Career pathing credits and bridging courses
  • Modularisation
  • Core Group Curricula
  • Industry or Enterprise specific modules
  • Competency assessment



It is possible to generalise the Metal Industry hierarchy principle and this will occur at least in some instances (it is already occurring in some).


However the extent to which it applies, will as stated by the Commission, be determined in the course of dealing with those awards in the forthcoming procedures which the ACTU accepts.


The next steps will be to finalise the minimum wage rate fixation within the terms of the Commission’s decision. The hearing for this is set down for June 6th. It is expected to be a relatively short hearing and will (in itself) unlikely to impinge upon skill formation and training requirements but will set base upon which subsequent classification and training structures will be built.


The following stage is then expected to be an intensive period of dealing with awards in various industry sectors with the assistance of the commission in terms set out in its decision.


Quite obviously the implications for training and skill formation are considerable including implications for training systems, TAFE, On the Job, Assessment procedures, Accreditation courses and others.


Furthermore structures such as group training schemes, skill centres, I.T.C.s, Training authorities including the New National Training Board will also be affected.


Finally the ACTU asserts it is essential that the award restructuring process is not isolated from industry development processes.


e.g. the ACTU broadly agrees with the view that technology now available provides the opportunity for innovation in product, process and service uniqueness and quality which is increasingly becoming an imperative of the market and which can only be adequately met by integration into networking systems that inter-relate industry with training and research.


It is this integrated skill formation that needs to be achieved for world class enterprise and it is vital that the award restructuring processes begin to create such an approach.


Speech by Laurie Carmichael, Assistant Secretary, ACTU. 25 October 1989.