Enterprise bargaining, training reform agenda, and best practice standards. Bill Mansfield, ACTU Assistant Secretary.

Over the last decade Australia has witnessed substantial change in working arrangements at enterprise level. In matters such as the classification of jobs, the range of functions and responsibilities carried out by individual workers, the training and skill development system, the number of unions representing workers and the factors influencing changes in wage levels we have seen the introduction of a comprehensive set of reforms to enterprise working arrangements.

 

The ACTU and major unions have been active in promoting change in a range of industrial relations areas, including those which relate to the move toward enterprise bargaining, the training reform agenda, and best practice standards.

 

In my experience the ACTU and its affiliated unions in the 1980’s and 1990’s have been much more concerned about constructive reforms which can improve the overall functioning of the Australian economy than has been the case in the past. During the period, 1940’s to the mid ’70’s there was only a low level of concern by unions about issues such as our competitiveness and the future direction and development of the Australian economy. We were not concerned about wealth creation, we were instead preoccupied with wealth distribution. There was a complacency about the future which probably flowed from the post-’45 period of virtually full employment, consistent economic growth and gradually improving living standards. There was also an attitude that issues of efficiency and competitiveness were not union problems, they were “bosses problems”. We largely defended the maintenance of the status quo in areas such as work organisation, vocational training, functional demarcations and the indifferent relationships between employers and employees.

 

Management of enterprises also often felt comfortable with the established way of doing things. Largely supplying the domestic market behind a high tariff barrier there was little pressure to change and adopt new approaches. Management approaches which sought to improve quality, utilise the most modern technology, reduce inventory and introduce best practice were largely things of the future. In medium to large enterprises there was little or no effective communications between management and employees. Structured training opportunities were confined to a narrow range of industries and occupations and largely favoured young males. The management style was largely Taylorist with a narrow range of functions carried out under close supervision with little opportunity for individuals to reach their full potential through career opportunities and lifelong learning. The environment promoted a “them and us” attitude and it led to an adversarial style of industrial relations. It no doubt also contributed to our bad record in terms of industrial disputes and unreliability of supply.

 

Over the last decade there has been major change to the way in which employers and employees and their unions relate to each other and achieve better outcomes. ..That change was driven largely by the bitter experiences of the 1974-82 period plus a belief that national and international developments required major reforms in the way we conducted ourselves in workplaces and at a national level in areas such as vocational training if we Australians were to have a reasonable opportunity to maintain and improve our overall living standards.

 

The leadership of the ACTU and major unions also sought to take a new course during the 1980’s in recognition of the difficult circumstances confronting the economy. The new direction was designed to address some of the fundamental problems which acted as a brake on our achieving better economic and social outcomes. The challenges which confronted us were spelt out in various forums such as the tripartite Economic Summit of 1983 and the mission by a number of senior union officers to Europe, Scandinavia and the UK in 1985 which led to the ACTU report known as Australia Reconstructed.

 

The 1980’s led to a period of constructive changes to the Australian economy and industrial relations approaches which it is hoped will be further improved in the next few years. Those changes included:

 

 

• The restructuring of industrial Awards to provide for fewer job classifications, broader functions, reduced demarcation, career structures and improved skill development arrangements.

 

 

 

• An emphasis in the second half of the decade on productivity issues at an industry and enterprise level as a basis for wage negotiation.

 

 

 

• The changes in our economy which have accompanied financial deregulation and micro economic reform commencing in areas such as telecommunications, aviation, maritime, waterfront, electricity supply and rail freight.

 

 

 

• The restructuring of the union movement to provide for fewer but larger unions.

 

 

 

• The re-orientation of our manufacturing industry towards more high value added activity and export markets.

 

 

 

• The reform agenda to update our system of vocational education and training.

 

 

In an overall sense many of the developments over the last decade were aimed at achieving a more open, internationally oriented and competitive Australian economy. Some commentators are currently critical of the pace of change, however by our past standards the speed and extent of change in many of our key areas of economic activity has been unprecedented.

 

In terms of wage policy the 1980’s were marked by a centralised wage system which, during the first half of the decade, delivered wage increases based upon price changes to virtually all workers covered by Federal and State Awards. The ability to make adjustments to wage rates or working conditions at an industry or enterprise Level outside of a tightly written set of wage principles was virtually nil.

 

In the second half of the 1980’s we maintained a centralised wage system with a rigid set of wage fixing principles but outcomes were determined by the Industrial Relations Commission (IRC) in terms of increases which could be achieved as a result of productivity bargaining at Award level. As most Awards were industry based rather than enterprise based there was not a great deal of scope for enterprise level bargaining around pay and productivity issues. In addition, after the industry bargaining process was finalised the outcome was subject to scrutiny by the IRC to determine whether what had been agreed by the employer and union representatives complied with the prescribed wage principles.

 

Overall, although the wage system of the ’80’s had a number of outcomes which were quite positive it reached the point where few of the parties were satisfied with it. From the union perspective the failure of the system to maintain living standards, whilst imposing difficult tests on unions to justify wage increases at an Award level plus the much higher overall movement in unregulated incomes of managers, the self-employed and professionals, led to a virtual rejection in 1991 of a continuation by the IRC of its central role in national wage fixing. We sought to move to a less regulated system involving agreements between employers, unions and employees which was to focus at the enterprise level but within a framework of minimum standards prescribed in Awards.

 

The issues which the presenters at this session have been asked to address go to the implications of a decentralised industrial relations system for the implementation of national training reforms and how the reforms affect the remuneration levels of workers who are recognised as having competencies at particular levels.

 

In addressing these issues I want to briefly examine the training reform agenda from a union standpoint. In doing so I wish to touch upon

 

 

• The objectives of the training reforms – what do unions hope to achieve?

 

 

 

• Where are the difficulties which are causing unions the most concern at the present time?

 

 

 

• Is the process for achieving change adequate for the future?

 

 

Consistent with other changes which have been supported by the ACTU and its affiliated unions change to our system of vocational education and training is not being sought for its own sake. We want to achieve practical outcomes which are to the advantage of workers, employers and the economy overall. We also want to produce a system of vocational education and training which is efficient, respected, valued and understood by employees and employers alike.

 

The basis of the ACTU’s concern regarding the need for education and training reform was well stated in a recent OECD report where it concluded in part:

 

“Viewed from an economic perspective, the adaptability, dynamism and competitiveness of individuals in the labour market, enterprises, and national economies is seen to depend more and more on the skills and competencies that persons can bring to their jobs. The converse of this, is that deficiencies in the skills and competencies of individuals will act increasingly as a drag, not only on their labour market experience, but on the economic viability of enterprises, and the economic performance of national economies as well.” (OECD (1991) P.5)

 

The ACTU and its affiliated unions endorse the OECD position and believe that the

three issues of

 

i) the education standards achieved by school leavers and their relevance to the individual and the workplace;

ii) the way work is organised;

iii) the availability of initial and further skill development

 

together will largely determine the long term wage levels and career opportunities for workers. They will also determine the skills and productiveness of individuals and groups of workers on the job. The choices we make in these three areas will be important in determining the direction of our economic development and the opportunity to remain as a country enjoying relatively high living standards.

 

Others have recognised the new directions in economic development. A 1989 report to the Chief Executive of a US based multinational concluded that:

 

“The economy is shifting to a high technology manufacturing base and strong service economy. The fastest growing jobs demand higher skills and education levels. There will be few jobs for those who cannot read, follow directions and use mathematics.” (Union Carbide (1989) P.11)

 

In contrast however a review criticising the state of American labor force skills and

qualifications stated that

 

“Because most American employers organise work in a way that does not require high skills, they report no shortage of people who have such skills and foresee no such shortage. Americans are unwittingly making a choice … between high skills and low wages. Gradually, silently they are choosing low wages.” (Commission on the Skills of the American Workforce (1990) P.5)

 

The ACTU supports a position that Australia’s future is not in the development of narrow skilled dead end jobs but in work which requires higher skills and knowledge in structures that offer careers and skill development throughout a working lifetime. If we seek to go down the low skill, dead end job path we will inevitably have to accept the low living standards which go with it. In endorsing the new approach a major policy statement related to education and training developed by the ACTU in 1991 stated in part:

 

‘To maintain and improve living standards, Australia requires a shift from low value added, low skill, domestically oriented production to higher value added production and services directed towards the global market. This can only be achieved through a continuous process of employees adding to their learning and responsibilities in new forms of work organisation and professional development, throughout their working lifetime.” (ACTU Policy – Education and Training – Congress 1991)

 

In the view of the ACTU there has been a number of fundamental inadequacies in our past system of vocational education and training. These have included:

 

i) Many young people on leaving school received no further structured’ training;

 

ii) Training which was given was often enterprise specific and did not result in credentials which would be recognised by other employers;

 

iii) There was no nationally recognised job classification structure against which functions, responsibilities and qualifications could be measured;

 

iv) There was little or no career opportunity available for many employees and the training provided did not articulate into higher skill levels over a working lifetime.

 

v) Training and certificates received in one State or from one training institution were not necessarily recognised in other States and institutions;

 

vi) Women and people with low literacy and numeracy skills were often left out of the training opportunities which existed.

 

vii) The higher levels of secondary school often did not include sufficient emphasis on abilities, or “key competencies” which were relevant to the workplace.

 

In responding to these problem areas the ACTU, unions and employers have done a lot to build both relevant skill structures and career opportunities through Award Restructuring over the last decade. The recent report on the Australian vocational certificate complements that reform to propose a national vocational training strategy to develop the skills that are needed to match the new structures and the needs of workplaces in the future.

 

Just as other areas of our economic performance have been the subject of change so also must the system of education, training and skill development.

 

At the 1991 Congress there was a significant debate which considered the developments in the area of education and training and which set out a policy for the future. The policy adopted dealt with ten key areas of activity in the area of workplace reform and skill development ranging from the convergence of learning and working through to trade union involvement in training. Ten key principles were set out and developed in detail – these included:

 

 

• To maintain and improve living standards, Australia requires a shift from low value added, low skill, domestically oriented production to higher value added production and services directed towards the global market. This can only be achieved though a continuous process of employees adding to their learning and responsibilities in new forms of work organisation and professional development, throughout their working lifetime.

 

 

 

• A structured national approach to career development, competency based training and skill formation under tripartite control is required.

 

 

 

• Schools must provide the opportunity for the development of the full potential of their students. Along with the need for the workforce to be more highly skilled, there is a need for young people to remain in the learning system longer, to receive a broadly based education which is at the same time related to the experience of the workplace and achieving quality standards of competency.

 

 

 

• Work organisation in the future must overturn the Taylorist approaches of the past. Workers must be provided with greater scope for individual initiative, judgement and responsibility for quality outcomes. The nature of management and supervision must change from an emphasis on control and direction to one which co-ordinates and develops the skills and potential of all employees.

 

 

 

• Training opportunities in the future will be provided through a variety of organisations including State training institutions, private providers and individual enterprises. The essential requirements of this development of a training market are to achieve quality standards with education and training which leads to recognised qualifications associated with those standards.

 

 

 

• The TAFE system must be an essential element of the developing education and training resources of Australia. Adequate funding for up-to-date industrial technology and skill formation practices must be available to TAFE institutions and their related operations with industry.

 

 

 

• Higher education institutions have been transformed from elite institutions into a fundamental part of the public education system. The growth in higher education enrolments and the need for greater mature age access challenges the institutions to provide a diverse range of courses of a generalist and professional nature, to achieve genuine quality standards of competency.

 

 

 

• There is a need for a structured, Active Employment Strategy to provide skill development and training opportunities for those in need of further assistance. Courses provided through the AES should be properly resourced and lead to recognised qualifications.

 

 

 

• Education and training opportunities are a pre-requisite to achieving greater equity in Australian workplaces. Access to skill development with literacy/numeracy training will significantly assist in overcoming the barriers to equal opportunity.

 

 

 

• Training for active trade unionists is essential if up to date union services for new skill formation are to be provided effectively at workplace level.

 

 

It should be clear that the ACTU and affiliate unions have developed a comprehensive approach to education and training issues. We wish to play an active part in the process of providing working people with the opportunity to gain in skills and knowledge throughout their working lifetimes.

 

Summarising what we are all about in this area the ACTU wishes to secure a system of vocational education and training which allows individual workers to obtain skills relevant to the needs of the enterprise and the broader labor market over a working lifetime. Those skills should be nationally recognised through a system of certification and they should be portable across industries and State boundaries. In obtaining recognition of skills there needs to be processes which accept that they can be obtained through a variety of means and once having been achieved the skill development effort should not have to be repeated unnecessarily.

 

Skills must also be utilised in an effective way in the workplace. If management at enterprise level does not support a broader role for individual workers within career structures which allow people to effectively express their talents over a working lifetime the training reform agenda will fall short of its potential.

 

As was referred to earlier there has been a move from national and industry approaches to wage fixing and industrial relations to one which has a substantial emphasis on enterprise level negotiations. This changed approach appears likely to continue for the foreseeable future.

 

The question arises as to how the change in emphasis will impact on the training reform agenda.

 

Firstly it needs to be understood that although there is to be greater scope for negotiation at an enterprise level there will continue to be industry wide Awards of the Industrial Relations Commission which will set out minimum standards of wages and working conditions. Those Awards will include job classification arrangements which we would expect to provide a framework for application throughout the industry. So there will continue to be a national reference point though Awards for an industry approach to determining the framework for education and training reforms.

 

In our view for the majority of employees there is no practical alternative to an industry wide consideration of what is required for vocational education and training into the future. Most employees are employed in small to medium enterprises. It is not possible for example for a business with less than 100 employees as well as getting involved in curriculum development and skills assessment and the other elements of the training reform agenda. Yet businesses of this size employ probably more than 70% of the Australian workforce.

 

In general we see that classification frameworks and competency standards will be developed at industry level and applied in standard units but with flexible overall packages throughout most enterprises.

 

Whilst supporting industry standards overall the ACTU recognises that there can be an important role of an enterprise approach. Where an enterprise wishes to develop its own competency standards and to deal with the related issues of curriculum development and delivery of training plus assessment of competencies it should be free to do so providing:

 

i) that the standards do not degrade the skills required for the industry overall

 

ii) that the competencies are sufficiently broad to allow individuals to be flexible within the enterprise and able to change employers without extensive retraining

 

iii) that there is a consistency between the core standards in the enterprise and those set down at industry level

 

iv) that there is a public process of scrutiny of the standards developed to ensure that they are adequate for the awarding of a national certificate at a particular level

 

v) that the employees and their unions have a role in the development of the standards for the enterprise

 

Broadly speaking the ACTU is not opposed to enterprise standards but we want their development to maintain the value of a national system and not degrade it with training which is either second-rate or narrow in its application.

Remuneration

In terms of remuneration there has been considerable debate about the relationship between skills acquired and remuneration received. Some have argued that there is absolutely no relationship whilst others have proposed that the acquisition of higher competencies should automatically lead to salary increases. Some prominent commentators such as Judith Sloane and Professor Pennington appear to argue that the whole training reform agenda has been taken over by the union movement as a back door method of getting wage increases which would not otherwise be justified.

 

The bottom line on remuneration is that the pay rate received must ultimately reflect the value of the employee to the employer. Where there is an increase in the value to the employer because an employee has achieved a higher competency level then a case exists for higher remuneration. If higher or different competencies result in little or no change to the value of an employee to the employer then remuneration should not be affected.

 

In some enterprises there have been agreements reached to recognise the achievement of higher competencies with guaranteed higher pay rates. In many cases this is associated with a broadening of functions through Award Restructuring which is able to be better addressed on attainment of higher competencies.

 

Unions argue that in classification structures which have been multi-skilled with fewer levels and broader functional prescriptions the achievement of higher levels of competency often increases the value of an employee and should lead to higher levels of remuneration. There is substance in this argument and it should be responded to positively in those circumstances where the value of the employees’ contribution can be seen to improve.

 

In other cases employers have sometimes wanted to lift the skills base of the total workforce in the enterprise. In a recent example in the National Rail area the employer has wanted to lift the overall skills base to around the ASF Level 3 range of competencies. As a result an agreement was reached with the unions involved that as individual employees achieved nominated levels of competency up to Level 3 there would be a guaranteed increase in remuneration. Above Level 3 an improvement in competency was only rewarded through promotion on merit to fill a vacancy. The unions have accepted this proposal.

 

There will no doubt be claims made in the future which essentially seek higher pay for higher qualifications. As a simple proposition it is not valid to state that the simple attainment of higher or different set of competencies must automatically lead to a higher pay rate, however where those competencies are required to be used in a way which adds value to the work which was previously undertaken then a case exists for higher levels of remuneration.

 

A further dimension of the qualifications, skills, remuneration debate has been concern that NTB framework has established some sort of industrial relations agenda by linking ASF levels to Award classifications and from there to wages. Through these linkages some people seem to believe that trade unions are using the training reform agenda as an industrial weapon to obtain higher wages.

 

Firstly let me state that so far as the ACTU is concerned we are not seeking to pursue an industrial relations agenda for wage increases through training reform initiatives. Many of those who allege that we are pursuing a secret agenda have so far as I know never spoken to the ACTU about matters they go to press on. Most of the critics are ivory tower academics who have their own positions of privilege to protect or else are individuals who distinguish themselves through their stupidity rather than intellect.

 

If the ACTU wanted to increase wages in Australia I can assure you that it would find far easier routes to achieve that outcome than the current rather torturous and complex training reform agenda.

 

One element of the current process which has caused part of the problem in this area of “what is the ACTU up to?” is the structures which are used for determining the direction and speed of change. In effect they mean that the reform agenda is not being driven by business. Also it results in the forums for change not allowing the ACTU/unions and employers to talk in a substantial way and we have not yet remedied that gap. I want to come back to this point a little later.

 

In stating that the ACTU is not involved in training reform to secure wage increases this is not to say that we see no relationship between competencies and wage levels. A competency is a measure of what a person can do on the job. What a person does is directly related to value to an employer and there fore to the wage levels which can, in the circumstances facing the economy, the industry and the enterprise be negotiated in a bargaining process.

 

As many here would know the ACTU has been pursuing Award Restructuring. In that process we have been seeking to reduce the number of skill classifications, broaden or multi-skill individual work levels and develop career structures. We have also been seeking to establish minimum rate Award wage relativities between various work levels both within Awards and across Awards. Broadly we wanted to achieve an outcome whereby equivalent skill levels in different Awards would have around the same minimum wage rate. This process has been complex and it has taken a long time. But is should not be taken to mean that we intend arguing that because a certain set of competencies in on Award are at, say ASF 2 Level then there must be exactly the same pay rate prescribed as that of a classification in another Award which also has competencies at the ASF 2 Level.

 

In any case Award minimums and actual paid rate pay levels are usually very different in quantitative terms. The Award minimum for a tradesperson at the C10 rate in the Metal Industry Award who has competencies at the ASF 3 Level is $22, 150 annual. Most workers in the skilled tradesman classification would receive around $25,250 and their take home rates are largely (and will increasingly be) set by enterprise level negotiations.

 

So the notion that we will somehow get a movement in all Award rates through a change to one Award at particular classification levels linked to particular ASF levels is just a bit unreal.

 

I described earlier that enterprise bargaining will be the dominant mechanism for securing wage increases for the foreseeable future. In effect this means that the range of factors to be taken into account in wage bargaining will include:

 

 

• Productivity/ profitability issues
• Work organisation issues
• Rostering practices
• Nature of the industry
• Nature of the work involved
• State of the local/ State/ national labor markets

 

 

These factors, plus others suggest that standardised training in the future will, just as in the past, not result in standardised pay rates at the enterprise level. It will have a bearing on the minimum rate of pay prescribed in the Award but this will be a long way short of what most workers actually get in their pay packets.

 

In terms of the difficulties for unions at the present time and the processes which are being used to implement the reforms I believe the major concerns are over the complexity, the demands on resources, and the size and speed of the changes which are being implemented.

 

At this time we have two major changes being implemented or in contemplation. The first is the move to CBT within the ASF and the second is the introduction of the Australian Vocational Certificate known as the Carmichael report. In addition on could throw in the Mayer report on key competencies. All of these are putting pressure on employers, unions, teachers and government officials to the point where many are calling for a slow down. In many ways I can understand the need for a breather but in reality we need to keep up some pressure because if it is let slip we could easily come to a halt. There is however a need to demystify where we are going and why because at this stage the complexity of the proposals has caused many to become largely disinterested.

 

Finally to return to a point made earlier it is of serious concern that the reform process is not both owned and driven by industry. In the key forums of VEETAC, NTB, NBEET, ACTRAC and ANTA there is often only a nominal presence by industry representatives, of employers and employees through their union. The people who are designing and driving the changes are largely government officials who, although dedicated people, often don’t have a practical understanding of industries’ needs and also, when implementing change are inclined to become too complex in their processes. In other countries such as Germany industry has equal numbers with officials and it drives the agenda through treating it seriously with senior and experienced representatives. This is how we should operate in Australia and changes should be made accordingly.

 

Thank you.

 

Bill Mansfield, Assistant Secretary, ACTU. 29/3/1993