ACTU Assistant Secretary, Richard Marles on the reasons for union decline, the changes in the economy and the organising agenda, employer sponsored deunionisation and the legislative framework of industrial relations.
There is one fact about the past which totally towers over the future of employee organisations which is that for the last 30 years there has been a consistent fall in union density and union numbers in Australia. The changing role of employee organisations from the point of view of the ACTU is all about addressing this issue. In this speech I want to explain this phenomenon and the implications it has for future union directions and the consequent effect on labor law and legal practice.
Reasons for Decline in Union Membership
There are two reasons for the fall in union density.
The first reason is the change in the economy. This is far and away the most significant reason behind union decline.
Our economy has shifted from an industrialised economy with large static workplaces, which contain large workforces and work to one large employer to an economy much more based on services with small workforces, more dispersed workplaces and many smaller employers. The shift to the information age will make these changes even more acute.
A specific example of this phenomenon can be seen in manufacturing. In 1973, 1.4 million people were employed in manufacturing which amounted to 24% of the workforce. In February of this year that figure was at 1.1 million which now represents a mere 12.5% of the workforce. In virtually every traditional union area similar kinds of decline can be seen.
In short, the “union economy” has shrunk and with it has shrunk union membership and union density. This is at the heart of union decline.
This phenomenon is not unique to Australia. It is a phenomenon which is being witnessed throughout the English speaking world. In the last 20 to 30 years there has been consistent union decline in Britain, Canada, the United States and New Zealand all based around a similar change in their economies.
The second reason for union decline is employer sponsored activities. This has not been a significant cause to date in the fall of union membership. However, the most celebrated example is of CRA – Rio Tinto who in the late 80’s and early 90’s fairly successfully de-unionised a large part of their workforce.
While this has not been a major cause of union decline it nevertheless raises a number of significant issues about the future of industrial relations.
In dealing with these issues I do not want to give the impression that the union movement has conveniently externalised the effects of union decline. Undoubtedly, the union movement is the governor of its own destiny and has had a role to play in its decline. This is more related to our inability to change quickly rather than a reduction in the relevance of the union movement. The important implication of understanding that unions’ behaviours have played a role in union decline is that it will be through altered union behaviour that we see a resurgence of the union movement in this country.
I’d like to deal with each of these issues in turn.
The Change in the Economy and the Organising Agenda
The reduction in union numbers as a result of the change in the economy is pretty understandable.
Unions 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.
And then the world changed on us and we were faced with a very different economy. It is a bit like we were a big law firm practicing in a certain area of law and suddenly our clientele dried up. And what we are now faced with is having to learn a whole new area of representation.
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 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). I do not mean the IT industry which is, if you like, the “really new” economy. In time we are going to need to learn how to organise these group of workers as well.
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 but in other English speaking countries as well 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.
From the point of view of unions it means entering places that we have never entered before. It means establishing union structures such as delegates and activists in places where both employees and employers are unfamiliar with what these mean as well as the rights which pertain to these people. It means challenging employers about the rights of working people to combine together as unions.
This potentially has significant implications for the kind of labour law which will be practiced in the future and I will return to that a little later.
In recent times these techniques have been applied in a number of organising campaigns around Australia. Examples of these include a campaign to recruit hotel workers in Sydney, the recruiting of workers at David Jones in Melbourne, and more recently a campaign to recruit workers in call centres around Australia.
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.
Once again there are profound implications, I believe, for the legal fraternity in relation to the way labour law may be practiced in the future and again I will address that a little later.
Employer Sponsored De-unionisation
Thinking more about the relationship that unions have with traditional union companies brings me to the area of employer sponsored de-unionisation campaigns.
As I have said, to date this has not been a significant cause of union decline in Australia. However, there are some worrying signs.
For most of the last hundred years there has been a pretty broad consensus in Australian society between labour and capital. Both sides have recognised each other and the legitimate place that each other has in industrial relations. Unions and employers have both had relations which have at times been adversarial but have always recognised the fundamental need for each other to exist.
There have been, however, three things which have seriously threatened this consensus.
The first is the United States of America. Because the USA provides an international example of a very robust economy where such a consensus does not exist. The biggest difference between the US industrial environment and our own is not the legislative framework but the culture between labour and capital which has not so much been adversarial as utterly hostile.
The second is CRA – Rio Tinto who in the late 80’s imported this American culture into an Australia setting. As I said earlier they have 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 in de-unionisation who have since gone on to other companies and exercised those skills in other environments.
The third thing is Peter Reith. If people were to ask me what was the worst thing that Peter Reith did in his time as the Minister for Workplace Relations from a union point of view it would not be the Workplace Relations Act but rather his total obsession with breaking down the consensus between labour and capital. Peter Reith understood that from a political point of view if the conservative forces were 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 and through being a cheer squad for employers across the country who want to take on unions, Peter Reith 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 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 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.
All of these conclusions feed back into the organising agenda and unions’ resource allocation. 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. Accordingly, 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.
The Legislative Environment
All of this takes place in a legislative environment. This perhaps provides the final piece in the puzzle about the future of employee organisations.
I have not mentioned the legislative environment up until this point. In some ways this is intentional because the cultural environment between employers and unions is far more significant in terms of the way that industrial relations is practiced in this country than the legislative environment. Indeed the legislative environment up until this point in time, I believe, has had no significant impact upon the decline in union membership.
However, it is very relevant. For while it may not have played a part in the decline of union numbers it may well inhibit the growth in union membership in the future if the legislative environment stays as it is now.
Right now we probably have the harshest and most oppressive industrial laws in the developed world. They require considerable change. That in itself could be the subject of an entire lecture to you. However, I simply want to mention three things which in our view are at the heart of the kind of reform that is necessary in the Workplace Relations Act. And whether or not the Labor party or Liberal party win the next election these are the kind of changes that we will be advocating.
- First, is the abolishing of AWA’s;
- Second, is dealing with collective bargaining rights; and
- Third, is strengthening the role of the Australian Industrial Relations Commission.
AWA’s 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 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 renumerate 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?
Given the fact that AWA’s have their place in the agreement hierarchy, that is they can operate to the exclusion of collective agreements in certain circumstances, and given that the no disadvantage test which they need to satisfy is such that they can undermine the existing collective structures, I put it to you that the real reason for AWA’s is not only to individualise the workplace but in fact to undermine collective structures. Indeed they are there to be used by employers to exploit the very fact that they are negotiating with people that have no bargaining power.
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.
Now, let me tell you about chicken catchers or in fact chicken farmers in a very different situation in NSW. There are only a few major chicken producers of which Steggles is one. In NSW there are many small chicken farmers. The chicken farmers together approached the ACCC and sought an authorisation to come together and negotiate on block with the chicken producers for the sale of their produce. This would ordinarily be collusive conduct and a breach of the Trade Practices Act. However, the ACCC examined the situation and agreed that is was unfair and unrealistic to expect each of the individual chicken farmers to negotiate with major companies of the likes of Steggles on anything like equal terms. And so they authorised the conduct of negotiating as a block in order to obtain a fair price for their product from the likes of Steggles.
To my mind this is astonishing. Because what it represents in the commercial context is a right to collectively bargain. Commercial law provides for bargaining rights. It contains within it notions of fairness and equality of bargaining power.
The common law in the context of contractual negotiations also has doctrines of unconscionability and equality of bargaining power. When an employee is asked to sign an AWA often the context is one where if she does not sign it her wages and conditions will be frozen indefinitely and in some circumstances her entire employment is dependant upon signing the AWA. Now imagine person A entering a contract with person B and person A says to person B: “I happen to be friends with your boss and if you don’t sign this contract I’m going to have your wages and conditions frozen indefinitely or worse still you’ll lose your job”; and person B then says: “well if that’s the case I’m going to sign this agreement”. How is that agreement not void for duress ? It has to be. And yet AWA’s signed in these circumstances are quite lawful.
And granted that as individuals we often deal in our every day contractual negotiations with large companies; we buy a car from a big car company, or we buy a can of Coke from Coca Cola, or we enter into a mortgage with a big bank. But in each of these situations we are able to shop around. And in even the most significant of these contracts – which would probably be entering into a mortgage that absorbs 40% of our income – none of these contracts is as significant as the contract of employment which delivers 100% of our income.
And so we have a situation where the single most important contract that anyone will ever sign is 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 that AWA’s need to be abolished. However, we would not be seeking to remove the ability of having common law individual agreements. So in our view of the world there is still a place for individual arrangements.
Collective Bargaining Rights
Second is the issue of collective bargaining. In Australia we have a bargaining system with no collective bargaining rights. The simple history to this situation is as follows.
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. Essentially a union needed only to have constitutional coverage of the particular workplace involved. And in addition to this the kind of orders the Commission could make were very broad in nature. Not surprisingly, this scheme of good faith bargaining orders was essentially struck down by the courts in the Asahi Case. So we had a bargaining system with a defective collective bargaining right.
In 1996 the Coalition won government and they had little incentive to solve this problem. Indeed, the way in which they solved the problem was to totally remove any reference to good faith bargaining orders from the legislation. This in turn takes us through to the point we are at now where we’ve had our bargaining system for seven years which 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.
Collective bargaining rights are important because they provide for those who have no bargaining power an ability to elevate the negotiations around the employment relationship into something of a commercial context, into a realm where there is something like equality of bargaining power, into a realm where there is fairness in the bargaining.
So having said that we want collective bargaining rights – what would they look like?
Well essentially we would be advocating that a group of workers who come together and meet some kind of threshold test, can place a demand on an employer for a collective agreement and it is then a legal obligation upon that employer to negotiate with their employees in good faith. Now there are international standards about what kind of things fall within good faith bargaining and these include: the provision of information to the parties, a requirement to regularly meet, and for want of a better term a requirement to engage in the negotiations – that is, to give reasons when a claim is made and to give reasons when a claim is rejected.
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 award system.
The award system needs to be a living body of law which encompasses changes in the workplace and new employment standards. In the last five years it has been anything but that. In the last few years the absence of a strong umpire has given rise to the law of the jungle in the industrial relations environment and a number of wars of attrition.
An Overview of the Future for Unions
At this point I just want to summarise how we see the future for the union movement. First of all we need a better legislative environment in which to do our representative work. Secondly, unions must be more adept at organising the non-unionised/non-union sector using the latest and most innovative recruiting techniques. Thirdly, amongst those companies that are unionised, unions must be passionate advocates for the consensus model of industrial relations. And finally, those companies which decide to adopt a consensus model of industrial relations must be rewarded in this decision with a co-operative and productive relationship with unions.
At the start I said that declining union membership was an international phenomenon across the English speaking world. Well this recipe is being adopted across the English speaking world and in recent times there has been a new phenomenon which has emerged. In the UK after 25 to 30 years of union decline the last two years has seen an increase in union density. In the USA after and even longer period of union decline the last two years has seen an increase in absolute union membership albeit not in union density. In New Zealand in the last year we have seen an increase in union numbers. And this year for the first time in this country in twelve years we have seen an increase in union membership by about 24,000. This still represents a decrease in union density as the workforce is growing at a faster rate. However, this is the first turn around in figures for a long time and we hope it bodes well for the future.
The Implications for the Legal Fraternity
The changing nature of unions has a range of implications for the kind of law that will be practiced by lawyers who are servicing unions and working people.
The Non-union Sector
As I stated earlier a large part of the organising agenda is now to try and recruit in the non-union sector. This gives rise to a whole different range of legal issues than have been the mainstream of the labour lawyer’s practice in the past.
Enforcing right of entry is an obvious issue for somebody who is attempting to recruit in a non-union workplace. At a federal level these provisions are found in sections 285A – G. Increasingly there is litigation and general legal work surrounding these sections.
The rights of delegates become a major issue. The rights of delegates are often found in award clauses but these will be at the forefront of the ACTU’s efforts in advocating for legislative change in the future. The legal issues surrounding the status of a union representative in the workplace and the protections which pertain to this person will be at the heart of the kind of services and advice which unions and unionists will want in the future.
Finally, the provisions of Part XA which relate to freedom of association also become critically important in the context of recruiting in non-union workplaces. These rights really relate to protection against discrimination against unionists and union representatives. The whole notion of a non-union workplace becoming unionised involves the introduction of unionism to both employees and employers in that workplace. Often people have had no contact with unionism in the past. The notion of freedom of association as a legal right enjoyed by every worker in this country is often not understood. Accordingly, breaches in this part of the law are very frequent. This means that there is much legal work to do, but it also means that it is a matter of great concern for unions.
Union Activities in the Traditional Union Economy
Part of the way in which unions need to behave in the union economy is to develop low maintenance relationships with union companies. This means that unions are looking for new ways in which to more efficiently service their existing membership. A lot of that servicing is legal work which previously has been done by unions. Unfair dismissals, wage claims, and general award prosecutions have all largely been done by unions in the past. However, they have consumed enormous amounts of union resources. This might be better done by lawyers who can do it in an efficient and cost effective way. Performing this kind of work in a systematic way on a no win – no fee basis may well provide a range of useful answers for unions in the way they represent their members. It is not unlike the way in which law firms currently operate in providing personal injury and workcover services to unions. I believe this could be a burgeoning area of work for law firms.
As the consensus between labour and capital continues to be challenged so to there will be big industrial cases continuing to appear like BHP and the Commonwealth Bank case.
Of course our efforts are in trying to promote co-operative relationships between employers and unions. It may be that the major impact of having a Labor government is that the consensus is less challenged.
However, I tend to believe that the influence of the US economy and the US culture on the rest of the Western world will inevitably mean that the consensus will continue to be challenged by companies wishing to import a US agenda onto the Australian scene. Whenever that occurs you are talking about major legal cases. And so, at the high end of the market, if you like, I do see that there is going to be an ongoing role for lawyers in labour law.
The last four years has perhaps seen the most activity in this kind of law that there has been in Australia’s history. Whilst it may reduce a little in the event of a Labor victory there will still be much work in relation to this.
The final implication for lawyers in what I have said today is obviously the possibility of there being new legislation in the event that the Labor party wins government. This is not assured nor are the changes that I have advocated today assured. Far from it. However, the Labor party policy adopted at its National Conference in Hobart last year does contain within it significant differences to the existing policy of the Coalition government. One would assume that that will play out in legislative change.
If you assume that there will be an election around November or December of this year, which most pundits predict, and that Labor will win that election, which most pundits also predict, and that the task of introducing new legislation will take about 12 months, then it is quite possible that in the next two years we may have different industrial legislation. Whenever this occurs there are opportunities for law firms who most quickly get across the changes in legislation and learn how to represent people in a new environment. Undoubtedly, from a union point of view, this is something that labour law firms are going to need to prepare for and need to respond to quickly.
I trust that this has been a useful address and I very much appreciate the opportunity to talk to you.
ACTU Assistant Secretary
9 May 2001 – Leo Cussen Institute, Melbourne