ACTU Reserarch Officer, Tim Harcourt speaks on the ACTU in a histoical background and outlines the economic and industrial reform that the ACTU has been involved with in conjuction with the Federal Labor Government over the last 11 years.
Thankyou for your invitation to speak to you today.
I represent the national peak council for the Australian trade union movement – the ACTU. As a result I will make comments with reference to Australia (rather than just Victoria).
At the outset may I say that I was at graduate school in the USA (at the University of Minnesota in Minneapolis – St. Paul) so I am happy to speak to a US delegation and make a US/Australia comparison in Industrial Relations and Union Affairs.
In my remarks I want to firstly introduce the ACTU in they way of historical background, and secondly outline the Economic and Industrial Reform that the ACTU has been involved with in conjunction with the Federal Labor Government over the last 11 years.
1. The ACTU
The ACTU represents 3.4 million workers in Australia. Nearly all major trade unions are affiliated to the ACTU. There used to be something like 325 unions in Australia, but through a series of strategic amalgamations we are aiming at having 20 major unions plus some smaller specialist unions. Unions have been around in Australia since the late nineteenth century. The first unions were mainly rurally based (such as the shearers) and craft based (such as the carpenters, bootmakers etc.). Changes in unions have reflected changes in the labour force. Whilst those early unions were craft or agriculturally based, they were later joined by industrial based unions (metal workers, textile, clothing and footwear unions etc.) In addition, Australia has since developed clerical, education and service based unions.
The first unions were affiliated to State trades and labour councils in the major cities. The Victorian Trades Hall is the local body – the building that you might have seen on Lygon Street in Carlton is one of the oldest in the State. The state labour councils were influential in forming the Australian Labor Party in the 1890’s. It was not until 1927 that a national trade union body was formed, the Australian Council of Trade Unions (ACTU) with the State labour council remaining as the State branches of the ACTU.
The ACTU has always been based in Melbourne. there is historical argument over why this is so. The official reason is because Melbourne was the industrial capital of Australia at that time. Most of the major companies were based here (specifically manufacturing ones) as were the employers bodies and the Conciliation and Arbitration court (the predecessor of the Industrial Relations Commission). The ‘unofficial’ view is that the NSW based union officials preferred to have the national ACTU down in Melbourne so as to maintain some independence in Sydney. In fact, in the 1940’s there was a vote taken to ‘move’ the ACTU to Sydney but it was never carried through during the war. (Who knows – there might be another ‘push’ to put the ACTU in Sydney – perhaps around the year 2000?)
The ACTU is the decision making forum for the unions. There is a Congress every two years (alternating between Sydney and Melbourne) and the ACTU Council, and Executive which meets four times a year. The ACTU operation itself consists of only 50 or so staff who assist unions in the industrial work, make submissions for wages and conditions in the Industrial Relations Commission, provide a union view point on international and domestic economic, social and political issues, and provide research work and other functions in finance, childcare, legal services, occupational health and safety etc. The ACTU has also provided some public figures whom may be well known to you, former Prime Minister Bob Hawke, was research officer (1958-69) and President (1969-80), current Keating Government Ministers, Ralph Willis (Treasurer) and Simon Crean (Employment Education and Training) were Research Officers and President respectively, and several Industrial Relations Commission Deputy Presidents worked at the ACTU. Jan Marsh, for example, was ACTU Advocate for 18 years.
With this historical background in mind I would like to focus on the last decade.
I think it is especially important to outline the ACTU’s program in economic and industrial reform since 1983 when our prices and incomes ‘Accord’ was negotiated with the Federal Labour Government.
2. Economic And Industrial Reform – 1983-84
To set the scene I take you back to the 1982-83 recession:
Australia in 1982, was like many other nations in the world experiencing high levels of unemployment and high levels of inflation.
The Unemployment rate was rising beyond 10%, accompanied by an inflation rate of 11.5%. ‘Stagflation’ had hit most industrialised countries and ‘monetarism’ was gaining ascendary over the economic policies of the 50’s and 60’s.
The Australian manufacturing industry was in decline, wages were increasing by 14%, the conservative Government was seeking to impose a wage freeze. (Refer Attachment 1)
Industrial disputation had increased significantly. Over 6 1/4 million working days were lost in the two year period 1981/1982.
With the exception of a brief period of Labor Government between 1972 to 1975 the preceding 30 years were periods of conservative Government. (What we call ‘Liberal’).
Whilst the nation had made progress over the period it was not without costs, distractions and inequities.
The industrial environment was politicised. The anti-union strategy of the Government of the day was the basis for shifting blame from Government to unions.
Whilst Australia was a multi-cultural nation with rapid migration it was still a nation that looked inward and often back to its past.
A generation of conservative governments had left Australia with
- Superannuation – less than 40% of employees had any entitlement;
- Pensions – inflation had eroded the (already low) real value of social security pensions and benefits to less than one quarter of male Average Weekly Earnings;
- No job security – managerial discretion to terminate employees was virtually unfettered
- Education – the retention rate to final year of secondary school was one in three;
- Medicare had been dismantled – some 2 million Australians had little access to affordable, quality health care.
The Accord – the development of the understandings between Government and the Trade Union Movement was generated in opposition to the strategy of the then Government.
However, the Accord had its origins in the failure of the Labor Government to survive beyond three years in the 1970’s and the legacy of unfulfilled expectation which the period delivered. The Union movement at that time was not sufficiently mature to co-exist with Labor Government. Labor was led by Prime Minister Gough Whitlam and the ACTU by Bob Hawke.
A number of prominent union officials believed we could have done more.
The unions decided to learn from the mistakes of 1972-75.
From 1976 to the early 80’s the ALP in opposition and the ACTU developed closer understandings of what was necessary in Government.
The Accord also recognised the internal weaknesses and mistakes of the Union movement itself.
The Accord was a central feature of the 1983 Election, the Liberal Government having rejected any basis for agreement in 1982. The ALP won the election and Bob Hawke became Prime Minister.
The Unions believed that the Accord could produce:
- recovery from recession
- improved living standards over time
- a fairer, more equitable society
The objectives of the Accord:
- to reduce unemployment and inflation simultaneously
- to provide a consensus based policy approach
- to integrate economic and social policy.
The Stages of the Accord [see Attachment 2)
Accord 1: Election of Labor Government sees implementation of the Prices and Incomes Accord. Wage restraint until profits recovered, jobs first, wage indexation restored. Medicate.
Accord 2: From mid 1985 it is clear that a severe Terms of Trade decline has slashed Australia’s national income. Accord is re-negotiated to discount wage increases for the price impact of currency depreciation, compensated by income tax cuts.
Accord 3: June 1986 – wage adjustment is discounted as agreed and superannuation up to 3% of wages is introduced.
Accord 4: Mar 1987 – continuing national economic difficulties required complete revision of Accord with respect to wages system. Two-tier wages system introduced: first tier to protect weaker groups against continuing inflation, second tier to promote productivity and efficiency. Union movement explicitly embraces the cause of national wealth creation, in addition to traditional concern regarding equitable distribution.
Accord 5: February-May, 1989 – Award restructuring introduced as thorough overhaul of Australian system of industrial awards. Restructuring of the regulatory infrastructure. Career paths, training, equity, efficiency are key goals.
Accord 6: March 1990 – April 1991 – Enterprise Bargaining agreed – logical next step in award restructuring, to implement facilitative (enabling) provisions of restructured awards at workplace level.
Accord 7: February – March, 1993 – “Putting Jobs First” – commitment to continue enterprise bargaining plus “safety-net” wage adjustments for weaker and lower paid. Commitment to low inflation and continuing workplace reform.
The Social Wage Achievements Of The Accord [Refer Attachments 3,4,5]
At each stage of the Accord there has been a priority given to social wages:
– Employment: Putting Employment First, has been the key priority of the Accord throughout its tenure.
– Medicare: A universal health care system.
– Superannuation: For all workers, not just executives.
– Child Care: Especially given increased female participation in the labour market in the 1980’s.
– Job Protection and Security
– Taxation reform
– Occupational Health and Safety
In addition the unions have been concerned with social security and have been at the forefront of negotiations regarding pensions. Ensuring that provision of social security is equitable and goes to the genuinely needy.
The unions have regarded these issues as part of the labor market reform process providing:
- The basic safety nets to ensure that part of the growth of society is distributed to those in need.
- The processes of accelerating change are backed up by economic and social projections.
- Redundancy pay, superannuation, pensions and unemployment benefits and latterly labor market programs and a by part of the process.
- The provision of fair and equitable health and education systems whilst integral to the labor market are essentially public goods that individual employers can not be relied upon to deliver in full as society needs.
- The recognition of occupational health as a fundamental prerequisite of a safe and productive working environment.
The search for a society whose constituent groups do not wage war on one another and the amelioration of the pressure of class conflict motivated both the Government and Unions to negotiate a safety net of basic societal projections and opportunities. The Union movement wants to avoid the development of an ‘underclass’ that has occurred in other industrialised countries.
The Wages System: Decentralised Or Centralised [Attachment 6]
The ACTU has not been in search of a perfect wage system. There is no perfect wages system. Both centralised, and de-centralised wages systems have advantages and disadvantages, and each arrangement will be preferable in different circumstances.
By late 1983, high inflation and high unemployment had emerged from a chaotic decentralised wages system.
The Conservative government in a philosophical U-turn imposed a wages freeze – the most centralised wages system every in peace time Australia.
The early Accord was premised on a highly centralised wages system – to secure an effective (non inflationary) exist from the wages pause, and to provide protection to weaker groups in a high inflation context. But the cost over the next 5-6 years was declining, wages for stronger, organised, skilled groups – whose solidarity was never questioned.
It was the same groups who, from the late 1980s, shouldered the weight of award and workplace restructuring. As inflation fell, and the need to spread reform grew, the pendulum swung back in favour of decentralised arrangements in the early 1990s. [Attachment 7]
Productivity, Working Practices, Skill And Economic Growth
The ACTU has placed productivity, working practices and skill enhancement on the agenda on a number of occasions during the last 15 years.
Productivity bargaining for reduced hours of work (1979 -1982).
Changes in work practices for job security (1984-1985).
Traineeship wages (1986-1994).
Changes in work practices for wage increases – second tier increases 4% 1987.
Recognition of skills, career structures and links between education and work (1989 Restructuring – continuing)
In every case the link between skill enhancement, education and training, productivity adaption, economic growth and living standards has been accepted as being fundamental.
These changes have to be seen side by side with changes in the education system:
- The increased completion rates of secondary school;
- The increased number of tertiary qualified employees;
- The Training Guarantee Levy and the recognition of the increased need for training.
- The embryonic development of the Australian Vocational Training Certificate. (Attachment 8)
In essence, the objective is to build upon one of our attributes – a skilled and educated workforce so that we can:
- adapt to the changing technological requirements and opportunities.
- meet the challenges of changing market priorities – regionally, services and manufacturing.
- develop new products
- meet the challenges of an internationalising economy.
A skilled, adaptive and flexible labor force is a pre-requisite for growth, improvement in living standards and an equitable society.
The ACTU has supported this agenda and the reform process which underpins this objective.
The aim of the reform program is not difficult to comprehend. Broadly it is to maintain our position as a first-world economy and fair society into the next century; it requires us to adapt to technological imperatives and to maximise our geo-political lot down-under, on the south side of Asia.
The ACTU is working with Government and employers to establish:
- Competency based training, from basic literacy and numeracy and interpersonal skills right through the conceptual, analytical and specialist ranges.
- The establishment of the Australian Vocational Certificate.
- Career opportunities and work organisation.
- The removal of gender inequities.
- Improving support for Industry Training Advisory Boards.
- The development of a variety of pathways to achieve qualifications.
- Increased credit transfer arrangements.
- Increased resources for achieving the national reform agenda.
Unions, Their Structure And The Accord
In early 1983 there were 300 Unions registered. By June 1994 98% of the workforce will be covered by 21 Unions. [Attachment 9]
As stated above the ACTU has not adopted an ideological position on the wages system – there is no perfect wages system. Consequently, the ACTU is seeking to ensure that unions have the organisational capacity to deal with any wages system
- national negotiations
- industry negotiations
- enterprise negotiations.
The ACTU Congress in 1989 adopted a strategy to change the structure of unions by amalgamation and rationalisation to provide for:
- 17-20 larger unions
- industry streams
- an increased capacity to bargain at an enterprise level.
The view taken by the ACTU is that union structures should be capable of ensuring adaptation to changed political, economic and social environments.
The Industrial Relations Framework
The framework of Australian industrial relations system has since 1904 involved a Federal Compulsory Arbitration system establishing minimum rates of pay and conditions. The system has also provided a means of settling and preventing industrial disputes. As a Federation this has involved National systems and State systems.
The Federal Government has recently enacted new legislation which clarifies the role of the award system, promotes greater bargaining and maintains a system of enforcement.
The USA would see our system as more ‘regulatory’ however there are some elements where the reverse is so and in some cases the same things occur in USA and Australia but by different names.
A more detailed summary is attached.
In the new Act:
(From March 30)
- the role of the Commission in exercising all its functions is guided by the objects of the Act.
- the role of the Commission with respect to Awards is made much more explicit by the new legislation.
- the Commission is given new powers in respect of Sanctions.
- the need for the Commission to take family responsibilities into account in awards and agreements is highlighted.
- promotes enterprise bargaining and provides rights to bargain and the requirement to bargain in good faith subject to minimum entitlements.
(similar to US provisions but with more ‘teeth’ to IRC than WLRB has).
The legislation provides minimum entitlements including:
- minimum wages for groups of employees.
- equal pay for men and women for work of equal value.
- Termination of employment rights:
– minimum period of notice
– protection against unfair dismissal
– severance pay
– notification to CES (Commonwealth Employment Service and Labour Exchange).
- Parental Leave.
The new Industrial Relations Court takes over the industrial relations jurisdiction of the Federal Court.
In addition, the Court enforces the minimum standard, certified agreements and enterprise flexibility agreements, and the secondary boycott provisions and sanctions for industrial action.
Skills, Work Attitudes And Internationalisation
There is overwhelming evidence that an economy’s rate of superior economic progress is substantially explained by the skill, adaptive capacities and leadership of its people.
[The Competitive Advantage of Nations, Michael Porter;
Made in America: Regaining the Productive Edge, MIT Commission on Industrial Productivity;
Accounting for United States Economic Growth 1929 – 1969, Edward F Denison]
Whilst, it is recognised that nominal wage adjustments are not irrelevant to economic performance, and as any nation is subject to fluctuating prices for its exports and fluctuating exchange rates real wage levels are also necessarily variable.
However, the ACTU has recognised that:
- over time, real wages or incomes improve;
- the reward for higher growth should be improvement in living standards;
- higher wages should be associated with higher skills;
- increased productivity is normally associated with increased skills;
- a multi-skilled workforce with career prospects provide a basis for growth;
- technology demands that we generate increased skills;
- a co-operative and team approach to work organisation is more appropriate to most work organisations;
- the service sector plays an increasing role in growing economies;
- management must not be about manipulation of workers but the genuine involvement of workers;
- the workplace, like most other aspects of society, will naturally and desirably recognise increased democratisation;
- education and training is fundamental to the wages system – an incentive for accumulating skills;
- the education system and the labor market must be considered together;
- a society should seek to underpin change by a safety net to provide standards of decency and protection for those subject to change.
The internationalisation of the Australian economy has meant that we have had to face up to economic restructuring and the development of best practices in a competitive world.
- industry restructuring
- enterprise bargaining
- the Best Practice Program
- the exposure of reduced tariffs (Australia is a low-protection economy)
- awareness of the international market.
- award restructuring
Accord: The Balance Sheet
The Accord has developed into a process rather than an end itself.
However, it would be misleading to pretend that any approach has only strengths.
The Accord has had its strengths:
- Social Wage achievements; medicare, superannuation, child care etc.
- the development of a more mature industrial relations approach;
- a co-operative approach to implement change;
- the development of a wider union perspective;
- development of a greater range of skills;
- greater opportunities for unions to develop their own strategies for reform;
- provides a catalyst for major employer support;
- a more sophisticated union movement.
However, the Accord has been associated with defects.
These include its:
- the objective of restraint with equity has not been met;
- lack of accountability from the private sector;
- reduction in real wages;
- insufficient by itself – the need for an integrated strategy;
- institutional dependency upon the Industrial Relations Commission;
- Facilitated some employers always taking the position of opposition knowing that they are not accountable or responsible.
- Fall in membership (lack of recruitment and organising capacity).
In fact the ACTU sent a mission to the USA in July 1993 to look at recruitment and organising by the American labour movement.
The labour market of the 1990’s is substantially different from that of the 80’s.
The economy is different.
The institutions have changed.
In our judgement there are three inexorable and linked trends:
These trends mean that change will not go away, that new attitudes must be moulded.
For our own part, we recognise that we are not at the end of the process and judge and be judged as having succeeded.
There are things we could have done better.
In some cases no matter what we did we could not have escaped the pressure of a world changing.
However, the conclusions the ACTU has drawn are that:
Australia, not unlike most countries has experienced a decade of change amidst fluctuating economic experience.
The essential trends have been to:
- increase the openness of the economy and the exposure to international competition;
- shift the industrial relations culture to a more consultative constructive and less divisive character;
- integrate education and training into the wage fixing criteria, at an award and enterprise level;
- provide a framework for increased multiskilling, team work and a career structure;
- provide a safety net of social and economic support;
- put in place longer term instruments for retirement income and national savings through superannuation;
- ensure that the macro-economic targets of lower inflation and increased employment are being met.
In conclusion I thank you for the opportunity to speak to you today.
I think that Australia and the USA can always learn from each other – and with the advances in technology that have occurred in the latter half of this century it is easy to do so.
American Labor Expert, Ray Marshall (LBJ School, former Labor Secretary) recently visited, and our Secretary Bill Kelty has given an outline of Australian IR and the Accord to the Dunlop Commission in Washington this month. It is flattering that a small country like Australia has developed such interest.
Thank you. I am now available for questions.
Tim Harcourt, Research Officer, ACTU. Speech To Pacific Islands Institute (Usa), Southern Cross Hotel, 28/3/94