The Federal Election on November 10 offers us a stark choice in industrial relations says ACTU Assistant Secretary Richard Marles.
This election offers us a very stark choice.
It is a choice between conflict and cooperation. It is a choice between de-unionisation and a consensus.
This is an unseen debate in the context of this election. However, it is a debate, which has been around in Australian industrial relations now for some time.
Australia has been characterised by a consensus between labour and capital for most of the last 100 years. Australia has been characterised by cooperation within the workplace. That side of the debate has always been there.
However, in the last three years we have seen the other side of the debate where companies have been encouraged by the Federal Government to de-unionise their workplaces and engage in conflict with their workforce. To a greater or lesser degree the Commonwealth Bank, BHP, and Telstra have all sought to de-unionise their workforces in the last three years. Together, 5% of the Australian Union Movement is employed in these three companies. It represents the single biggest employer sponsored de-unionisation campaign in our country’s history.
The outcome of this debate will characterise our country.
The debate was initiated when CRA/Rio Tintio sought to de-unionise its workforce in the late 1980’s. They did so with some success by importing into Australia a culture of US industrial relations. This is a culture, which does not acknowledge a consensus between labour and capital. This is a culture, which has a high degree of conflict between unions and management. In many senses this debate is one which is a debate between the American culture and the Australian culture of industrial relations.
The rush to Americanise industrial relations in Australia is understandable in one sense. America has been for all but four of the last 60 years the most productive economy on the planet. But the nature of America and the role of their industrial relations culture needs to be properly understood in understanding what has contributed to the productivity of their economy. What also needs to be understood is whether or not the sole difference between Australia’s economic productivity and America’s economic productivity is the industrial relations environment.
So in large measure this speech is about trying to compare, in an intelligent way, the two cultures in the industrial relations in America and in Australia. To see how applicable the American culture really is to an Australian setting. And to see what we would lose in Australia if we simply adopted en bloc the entire American culture.
Industrial Relations Culture of the United States
America was founded upon an idea namely, individual human rights. It is arguably the most rights based society on the planet. Much of the thought behind the rights of the individual in America represents an enormous contribution to our sense of what are human rights across the entire global community.
The field of political debate in the United States was marked out in an amazing set of correspondence between the second and third American Presidents: John Adams and Thomas Jefferson. This correspondence occurred after both men had completed their Presidencies. While they were adversaries in political life they became friends in their private lives and their discussion about political ideas has stood the test of time in terms of defining classical liberal thought.
Thomas Jefferson represented the individual liberal view, which is in broad terms taken up by the Republican Party today. And John Adams articulated the reform liberal view, which in broad terms is articulated by the Democratic Party today.
However, this debate was much more significant for what they agreed upon than for what they differed about. Both men agreed in notions of individual liberty, freedom of capital, popular government and small government.
At one level these are basic ideas. However, they have very significant implications particularly for the differences between the social democratic parties in America and Australia. On many issues members of the Australian Labor Party and members of the American Democratic Party would have similar positions. However, there are also profound differences, which highlight the different cultures in America and Australia.
For example there is a consensus in America about a limited role for the government in the economy. Similarly, there is a consensus in America about the freedom and primacy of capital.
As a result in the second half of the 19th Century trade unions did not take off in the Untied States in the way that they did in both the UK and here.
In having a consensus about the primacy of capital the differing interests of labour in a market economy were not acknowledged.
Regulation of capital by either Governments or unions was by and large frowned upon by both sides of politics.
It is worth reflecting that in a country the size of America, which is after all twice as big as any other market economy, macro political solutions through regulation do not gain any political currency because they are generally impractical. In short, it is very hard to manage an economy with that number of people in it. Similarly, a culture which is based on the rights of the individual gets significant currency on both sides of the political fence.
If you like, it is impossible to tame the jungle but you can give an individual the utensils to make their way through the jungle. Accordingly, public policy in America focuses on individual rights rather than macro solutions.
In summary then, the American culture does not acknowledge the differing interests between labour and capital. And given the role of labour in the economy is not acknowledged there is no consensus between labour and capital. Yet in a modern and mature market economy where the interests of labour are very apparently different to those of capital, it has meant that those seeking to represent labour are in a state of war in terms of being able to get their interests acknowledged and being able to obtain fairness for working people. I use the word “war” advisedly because that is the word that is often used by our colleagues in the union movement in American when they describe the environment in which they work.
Industrial Relations Culture in Australia
Our later separation from the United Kingdom meant that Australia inherited much more of the UK’s traditions than did the United States.
Possibly, we inherited more of an industrial class system but importantly we inherited an acknowledgment of the interests of labour in a market economy.
In a way, we had our own war in the 1890’s between labour and capital. Then in 1904, through the introduction of the Conciliation and Arbitration Court which ultimately became the Australian Industrial Relations Commission, we had an entity whose aim was to allow the differing interests between capital and labour in the economy to be resolved through civilised debate rather than the law of the jungle.
Our war ended with a treaty and that treaty was a consensus between labour and capital about each other’s role in the economy.
This consensus has characterised our industrial relations system and our culture up until this day. Moreover, the consensus has had bi-partisan support of all Australian Governments up until 1996.
This has included conservative governments. If you look at all the post war conservative governments from Menzies through to Fraser, while it is true that they supported the employer argument within the rules of the game it is also true that they supported the rules of the game. The rules of the game acknowledged the role of labour and acknowledged the role of unions in the industrial relations system.
And so in contrast to America, our culture does acknowledge the differing interests between labour and capital and does acknowledge a consensus between labour and capital about their respective roles in the economy.
The Introduction of the American Culture into Australia
As I stated earlier there has been in the last few years an attempt to introduce and American style of industrial relations into the Australian setting.
This commenced with the de-unionisation strategies of CRA/Rio Tinto in the late 1980’s early 1990’s and continued with the respective campaigns of the Commonwealth Bank, BHP and Telstra.
The current Federal Government is actively inviting this culture into Australia. They have sponsored the debate which has sought to challenge the consensus that exists between labour and capital. They ask employers to assume what they perceive to be a natural right of control in the economy. In so doing they seek to strip working people of the dignity and rights which they have enjoyed whilst this consensus has been in place.
Obviously, as trade unions we must resist this push but we must also work out how to analyse it in a dispassionate way.
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 collectivism, 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 the 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 where 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.
If we are to learn anything from this it is that unions must be absolutely passionate advocates for the consensus between labour and capital. Because a highly unionised co-operative workplace not only provides the best productivity but it also provides the best conditions of employment and the greatest stability in terms of union numbers. Unions must passionately resist the introduction of a US style culture of industrial relations into Australia.
If we assume that the consensus between labour and capital has merit is this reflected in the respective natures of the American and Australian economies?
The Nature of the US Economy
The American economy has had enormous productivity. As I have stated, it has been by and large the most productive economy in the world ever since the Second World War. In turn this has produced enormous wealth across a population of 250 million people. By any measure, that is an extortionary achievement. However, it comes at a price.
Obviously, the levels of unionisation in America are very low. In a sense that is the premise of this speech. However, in addition to that there is also an enormous gap between rich and poor in the American economy. Indeed, it is the biggest gap between rich and poor in the OECD. While the American economy produces a majority of winners it also produces a very significant minority of losers. If you consider all those people living in America in third world conditions then America becomes one of the biggest third world countries in the world.
Maybe the public policy adopted in America is the only alternative given the enormous size of their population and their economy. However, they pay the price for that public policy. They pay the price for their size.
The Nature of the Australian Economy
In Australia we used to have the greatest wage equity in the OECD. That is the gap between rich and poor used to be lowest in Australia than in any other developed economy. Moreover, at the same time we used to have very high levels of unionisation. Our economy did not produce any significant numbers of real losers. It would be fair to say that as Australia progressed through the 20th Century we did not really leave any of our own citizens behind.
That said, things are definitely changing. The gap between rich and poor is now growing faster in Australia than in any other developed country. Whilst on that ladder we still rank in the middle of OECD countries we are falling down that ladder at a faster rate than anybody else.
It is true to say that our productivity has improved over the last few years. However, it would not be right to say that the only path to a productive economy is the one which has been adopted by North America. Right now, in fact, the most productive economy in the whole world is that of France. Continental Europe is very productive – more productive than Australia. The consensus between labour and capital is as strong in Continental Europe as it is for us. So a consensus model of industrial relations can sit quite consistently with a productive economy.
All in all it would be still reasonable to say that the economy in Australia is fairer than that of America.
It seems to me that in adopting the American culture of industrial relations we would be getting the worst of both worlds. We would inherit all the down sides of the individual, capital based economy that America has; namely a massive gap between rich and poor and the development of an under class. At the same time we would not pick up the benefits of the American economy. For an industrial relations culture is never going to give us a domestic population of 250 million people, which is so critical to providing the large domestic market which makes the American economy work.
Moreover, we would forego the benefits that exist in a smaller country. In a smaller country macro solutions to public problems can be found. Governments can be pro-active in solving problems. Indeed, arguably the way forward for a smaller economy like ours is for Governments to play an active and leading role in our economic development.
The Policies of the Different Parties in the Current Federal Election
The Labor Party and the Liberal Party could not be more divided on this issue.
If the Labor Party wins then it is likely that there will be significant industrial relations legislation reform. Our view is that there are three major issues, which need to be addressed in reforming the industrial relations legislation. That is, the removal of Australian Workplace Agreements, the institution of collective bargaining rights and the strengthening of the Australian Industrial Relations Commission. Arch Bevis has just run through a more extensive list of proposed changes to the Workplace Relations Act that Labor would put in place and so I will not run through these again.
However, if there is one thing which characterises each of the proposals that have been put forward by the Labor Party in this election campaign it is that they promote cooperation in the workplace. Each of their proposals is about industrial harmony. Each of their proposals is ultimately about maintaining the consensus between labour and capital in a modern way. It is not about turning back the clock but it is about recognising and embracing what has been good about our culture.
If the Liberal Party win I do not believe there will be an enormous change to the legislative agenda. No doubt the Liberal Party will attempt to put more regressive legislation through the Parliament, though, it is hard to imagine how the legislation could be much worse. However, it is likely that the Democrats will hold the balance of power in the Senate and if they maintain the position they have over the last three years it is unlikely that they will allow the pendulum to swing any further in the direction of employers.
Much more likely however, is that the Liberal Government will attempt to incite Australia’s blue chip companies into taking the union movement on. They will incite them to go down a conflict path of de-unionisation.
This prediction is hardly that of a union movement wanting conflict. In fact it is quite the opposite. It is the prediction of a group of people anticipating what is about to be wrought upon them by a state sponsored campaign of employer militancy.
And so ultimately this is a debate between conflict and cooperation. I venture to say that it is the manifestation of this debate, which will be the single most important outcome of the decision that the Australian people make on November 10.
The way we relate to each other at work goes a long way to the heart of who we are as a people.
We have always worked together at work but we have also worked together as a people as well.
In many ways a discussion about our industrial relations culture inevitably leads to a discussion about our national culture.
The recent series on the ABC has reminded us that it was Australians working together in the most terrible conditions which prevailed in the prisoner or war camps in Changi which saw Australians having the highest survival rate of any of the nations in the Japanese prisoner of war camps. Many of the survivors talk about how the class based system of the British saw many officers survive but many privates not make it through. Similarly, the every person for themselves attitude of the Americans was not conducive to a high survival rate. But by all accounts the Australians in those prisoner of war camps worked together, looked after each other, viewed each other in egalitarian terms and cared for each other. It was these national characteristics which saw Australians survive that ordeal better than anyone.
It leads one to think that what we have in Australia as a national culture is something which is really important. We sit in the new world free of the class divisions of the old while not embracing the individualistic nature of North America. We retain a caring society which regards everyone as equal. We have acknowledged all parts of our society and we have attempted to reconcile them through a national consensus.
Were we to turn our backs on this culture in a simplistic rush to American public policy, a public policy which is based on an economy and a country ten times the size of our own, then we would be changing ourselves much for the worse and we would be robbing the world of Australia’s unique contribution to humanity.