Ultimately, industrial relations culture impacts on the workplace more than the law argues ACTU Assistant Secretary Richard Marles.

“… both law and culture have an impact on the way in which the world
works”

It is a great pleasure to be talking on such an interesting topic as this. For not only are we asked to consider what would be an ideal industrial relations system but we are also asked to consider the significance of law in that system and the significance of other things such as industrial culture on the way in which people actually operate in the workplace. The answer to this question is that clearly both law and culture have an impact on the way in which the world works.

Laws obviously matter. In 1993 there were significant legal reforms which changed ours from a system of centralised wage fixing to enterprise bargaining. No one would suggest that this legal change hasn’t had a profound impact on the way in which employers and employees relate to each other in Australian workplaces today.

But law clearly isn’t everything. In a state in America such as Kentucky which is not a “Right to Work” state, which means that there are collective bargaining rights for unions and so unions have an enshrined right to be at the bargaining table, you have a situation which is far more favourable for unions than that which exists in Australia. Nevertheless union density in Kentucky is half of what it is in Australia. So obviously something else is operating here than simply law.

It is precisely for this reason that ultimately I believe culture is far more important than law. And so I want to turn the question around a little bit today and think about what would be an ideal industrial culture. I want to commend to you the merits of the Australian industrial culture which at its best is a model for the world and yet despite this many in our society, most notably our Federal Government, seem determined to undermine it and replace it with a pale imitation of a US style culture of industrial relations.

The rush to copy the US occurs because, to be fair, the US has had the most productive economy on the planet since the Second World War. So people look at the US and in particular they look at its industrial culture and they see a culture of conflict and they attempt to import it to Australia.

This may seem crude but believe me it is happening. In the year 2000 BHP (and if there’s anyone in the audience from BHP can I apologise in advance because you appear a lot in my speech), Telstra and the Commonwealth Bank all engaged to varying degrees in attempts to de-unionise their workforce through the use of individual agreements. They did so by using a hostile conflict based culture of industrial relations which they had imported directly from the United States.

Together these companies employ 5% of the Australian union movement. And together this can be considered the single biggest employer sponsored de-unionisation campaign in our country’s history.

But to simply try and mimic America because of its high productivity and crudely import aspects of its culture into Australia is very flawed reasoning indeed. Culture is far more complicated than that. It has a lot to do with the history and evolution of the particular country. And I think it is worth having a look at how the US has evolved compared to the way in which industrial relations has evolved in Australia.

“Unions were never a part of the fabric of the American
Democracy”

It’s probably fair to say that true democracy did not arrive in Western countries until women finally got the vote. But to the extent that partial democracy was achieved in America through non-land owning males getting the vote this occurred prior to the industrial revolution. This is a very important fact to understand about America. This change occurred before modern unions were even thought about.

The industrial revolution happened in America in a far less harsh way than it did in both the UK and Australia. And there was always the safety valve on the pressure building up amongst working people through the industrial revolution of westward expansion. So the conditions which existed in other countries simply didn’t exist in America which allowed unions to flourish in the second half of the Nineteenth Century.

Unions were never a part of the fabric of the American Democracy. Unions, culturally, never had a seat at the table. The US economy and US employers had been able to flourish without ever having to reach an accommodation which their employees, without ever having to develop a co-operative culture with their workforce. And so when unions sought to impose themselves on the workplace they were met with stiff resistance. As a result the industrial culture that developed in America was one of industrial war. And I use that term advisedly because it is the term that our colleagues in the American Union Movement use to describe their own industrial culture.

“Unions in Australia have been a vital part of the fabric of our
democracy”

In Australia, the partial democracy that came with the Acts of Parliament which gave non-land owning males the right to vote occurred as a product of the industrial revolution just as they did in the United Kingdom.

The industrial revolution was far harsher in both Britain and Australia. The conditions were there for unions to thrive and organise. Unions played a key role in leading the push to civilise the workplace. But more than that, unions were the key part of the campaign which lead to the Acts of Parliament which gave rise to non-land owning males being given the vote.

Unions in Australia have been a vital part of the fabric of our democracy. Unions have always had a place at the table.

But in the 1890’s, in a sense, this was tested during the most significant period of industrial disputation in our country’s history. That industrial “war” ended in a compact which was the Conciliation and Arbitration Act 1904. It had two key components. The first was that industrial action was banned which may seem a very draconian outcome from a union point of view. But the second part was that employers were forced to engage in compulsory arbitration of union claims in front of an independent umpire which was then the Conciliation and Arbitration Court and which is now the Australian Industrial Relations Commission.

What arose was a consensus between labour and capital. Companies were forced to reach an accommodation with their workforce and what developed from there was a culture of co-operative based industrial relations. It was a culture of co-operation which had at its heart a sense of fairness. While the laws are now gone, in the sense of compulsory arbitration and the banning of industrial action, I would argue that the culture which underpinned these laws remains largely in tact in Australia today.

“So is a co-operative culture better than a conflict culture?”

So is a co-operative culture better than a conflict culture? Well to me the answer to that question is self evident. But don’t take my word for it, take the word of John Hannah who was the President of BHP Iron Ore at the time that they decided to de-unionise their workplace in the Pilbara in 1999 using individual contracts and a US style conflict based culture of industrial relations.

This was a decision that the unions challenged legally and ultimately unsuccessful. But in the course of this John Hannah was required to give evidence and he was asked about why BHP had made the decision that they did when they decided to de-unionise their workforce. And to me, John Hannah gave a remarkable answer.

He said that BHP relied heavily upon a piece of American research which attempted to analyse what was best practice industrial relations. And it found that world’s best practice industrial relations occurred when you had a highly unionised workforce with a cooperative relationship between the unions and management. He went on to say that world’s second best practice or mediocre practice (and to be fair they are my words) was where you had individual contracts and no unions present. Now if the story stopped there you might ask, reasonably, why BHP ever took the decision that they did. But of course the story doesn’t end there. John Hannah went on to say that world’s worst practice occurred when you had a totally unionised workplace and where there were very hostile relations between the unions and management. He then said that he believed that this was the situation that was in place at BHP’s operations in the Pilbara, that they had tried to improve their relationships with the unions but failed, and so as a second best option they attempted to de-unionise their workforce.

Now I may disagree with John Hannah’s analysis of what happened in the Pilbara but I think his comments are very interesting. They provide lessons for us all. For employers they make it clear that co-operation is world’s best practice and that if you go down the US path of a conflict based style of industrial relations where you seek to de-unionise your workforce, you are necessarily taking a second best option. For unions there are also lessons. Because it says to us that to the extent that we contribute to world’s worst practice we are slitting our throats. For we are providing companies with the very incentive they need to de-unionise.

And so to me this is a vivid example of why a culture of co-operation gives rise to a far more productive workplace from the employer’s point of view and a much better situation from the union point of view.

“We should have laws which try and promote fairness and
co-operation”

If we now turn to the law, ours is a bargaining system which is underpinned by a minimum safety net. In that, it is a very similar to most industrial systems in the OECD.

However, beyond that to my mind the law should try and complement our culture. We should have laws which try and promote fairness and co-operation and which inhibit conflict and inequity. But in three significant ways the current laws do precisely the opposite. And I want to deal with each of these.

Australian Workplace Agreements are underpinned by a legislated scheme in the Workplace Relations Act 1996. As such they are unlike any other contract in our society. To be legal they need to pass a no disadvantage test as measured against the minimum safety net of the award system. Ten years down the bargaining track most enterprise bargaining agreements in their wages alone provide for pay which is 15% better than the award safety net. And so if you use an AWA to replace a collective agreement it is very easy to have a lawful AWA which has significantly worse conditions than the prevailing collective agreement.

This means that you can be BHP in the Pilbara, with a revenue of tens of billions of dollars every year, going one on one with a worker who has a revenue of say $50,000 a year, and where there are many people out there who are quite happy to replace that worker if they refuse to sign an AWA, and you can use the power you have in this situation to lever a very unfair contract.

Were this to occur in other parts of our society it would be immediately unlawful. Doctrines of unequal bargaining power in the common law would prevent such a contract being unlawful in general commerce. The Trade Practices Act 1974 prevents people misusing their market power to lever unfair contracts. Yet this is completely legal under the Workplace Relations Act 1996.

And we’re not talking about any old contract. We are talking about a contract which determines 100% of the income of the particular worker concerned. It is the most significant contract that that worker will ever sign and yet it is governed by a set of laws which have none of the protections which exists in our common law and in our general commercial law.

I put it to you that no other law in the land puts one person so much at the mercy of another as the legislated scheme of Australian Workplace Agreements in the Workplace Relations Act 1996. If fairness be the test then AWA’s should be abolished straight away.

In Australia we have no collective bargaining right. There is no obligation on an employer to bargain in good faith. So again you can be BHP in the Pilbara and your workforce, who can be almost entirely unionised, can come to you and seek to negotiate a collective agreement through their union and you have no obligation to even open the door. You can simply ignore every comment they make and just roll out a set of individual agreements. If workers choose to collectively bargain with you through organised labour then tough. That a law allows for this is a breach of ILO Conventions to which Australia is a signatory. The only other countries out there in the world which don’t have collective bargaining rights are the Gulf States such as Saudi Arabia and Bahrain. So you can be a unionist in Swaziland, Paraguay or Indonesia and you have greater rights than you do as a unionist in Australia. This is a law which needs to change.

And finally the Commission. The umpire has been central to a concept of fairness in our industrial legal system. The ability of the umpire to set minimum standards of employment through the award system is a critical part of having a fair safety net. And yet there are now only a limited number of allowable matters about which the Commission can make a decision. The Commission has in effect been written out of huge chunks of the industrial relations arena by the Workplace Relations Act 1996. To have a fairer legal system we need to take the shackles off the Commission and restore the umpire to its rightful place.

Abolishing AWA’s, providing for a collective bargaining right, and restoring the role of the Commission would all be good steps toward an ideal industrial legal system.

“We work together at work but we work together as a people as
well”

Finally, I want to talk a little about how our industrial culture affects the broader culture of our people. Because the way we relate to each other at work points us in the direction of even bigger cultural issues.

The UK is a very class orientated society compared to Australia. Indeed the history of unions in the UK and their reaction to the industrial revolution and the establishment of the working class has in some respects enshrined that.

The US, through organised labour not having a place at the table, is a society which is largely based on wealth. The greatest division between rich and poor in the OECD occurs in the United States.

Yet while sharing the history of the UK our journey to the New World has helped us shrug off concepts of class. At the same time our consensus between labour and capital has prevented the disparity of wealth from occurring in Australia that has been seen in the United States.

I believe that the consensus between labour and capital and the pre 1996 industrial laws were critical to our system of industrial relations. But it goes beyond that. Because both were vital pillars which underpinned the culture of our people. A culture which is egalitarian, a culture which is compassionate, a culture which is fair.

We work together at work but we work together as a people as well.

And we can see that in so many ways which go far beyond industrial relations. A few years ago a series on the ABC reminded us of how Australians working together in the most horrendous conditions in the prisoner of war camps in Changi saw Australia have the highest survival rate of any nation in the Japanese prisoner of war camps.

We see it in the shared love of sport that so many of us have. So you can be a dock hand loading trucks at 5am at Linfox or you can be Lindsay Fox and you’ll both have a view about what it means that Brisbane has won the last three grand finals and what it means that Collingwood is on the bottom of the ladder.

And we also saw it in the remarkable achievement that was the Sydney Olympic Games and in particular the opening ceremony. The opening ceremony highlighted a number of wonderful things about Australia: our fantastic sea fauna, and our indigenous culture. But you may remember that scene with the men and women in their work boots and their work clothes using angle grinders which sent sparks into the night sky that told the world that ordinary Australian workers were extraordinary too.

At our best ours is a culture which acknowledges diversity and embraces it. Ours is a culture which is based on unity rather than division. We are freer than Europe and fairer than America. And when our Federal Government seeks to change us both legally and culturally as they have so patently done over the last few years they not only threaten to lessen us as a people but they threaten to remove Australia’s unique contribution to humanity.

Address by ACTU Assistant Secretary Richard Marles to the Australian Human Resources Institute Convention 2004
Melbourne Exhibition and Convention Centre 11 May 2004