The new legislative environment presents new challenges for unions but also new opportunities that can be a spur for creative thinking and more effective operation argues Jennie George, ACTU President.
There is no doubt that the role of unions will change as a result of the enactment of the Workplace Relations Act.
However, there are two key points to make about the nature of this change.
The first is that these changes were occurring in any event, as a result of the shift to enterprise-based bargaining reflected in the Industrial Relations Reform Act 1993.
The second is that the change is one of emphasis, as much as anything else, and in some ways represents a shift towards the more traditional union activities of the past.
The main change resulting from the legislation is a greater focus on union involvement at the enterprise. This is the natural result of the closing off of some avenues for pursuit of the fundamental union goal – the maintenance and improvement of employees’ terms and conditions of employment.
In the past, the union movement has been able to utilise the award system as one means of achieving this goal. Many fundamental conditions, now taken for granted, such as annual leave, other forms of leave, allowances for disabilities at work such as shift work and weekend work, supplementary payments and superannuation were established through the arbitral powers of the Commission.
Political action, particularly during periods when Labor was in government, provided another means of improving employees’ living standards and employment conditions. Long service leave, for example, was largely achieved through state legislation.
The 13 years of the Accord demonstrated the ability of the union movement to work with the Labor Government to improve the “social wage”, ensuring that benefits flowed to those most in need in the context of the prevailing economic requirements. Initiatives such as the Superannuation Guarantee Charge, Family Allowances, Medicare and the Childcare Rebate were great social reforms achieved as a result of the Accord processes.
The reality is that under the Workplace Relations Act it is considerably harder for unions to win significant improvements for employees through the Commission. This is not necessarily because of the terms of the Act itself, but because it creates an environment in which the Commission clearly feels limited and constrained. Nothing in the Act prevented the Commission from granting the ACTU claim in the recent Living Wage Case, or to bring wages and conditions for transport workers into line with what had been achieved for most of the industry through enterprise bargaining.
Nevertheless, the Commission obviously felt that the new environment constrained its ability to address the needs of the most vulnerable sections of the workforce.
I don’t think I need to explain at length that the opportunities for improvements in living standards available under the Accord processes are not there today, with this Government.
When you think about it, it is quite extraordinary that the Government condemned the Accord, claimed it held back real wages to the detriment of employees, and then supported a wage increase in the Living Wage case
less than what had been agreed under the Accord, while railing against the level of wages being achieved through enterprise bargaining.
With limitations on the Commission and the political process as a means of achieving its goals, the union movement has no alternative other than to focus on the enterprise. This is, of course, consistent with the legislation, which gives priority to agreements at the workplace level.
There is nothing all that novel about this approach, as anyone who remembers the over-award campaigns in the fifties and sixties will recognise, although in those days there was no statutory regime for such bargaining. On the other hand, the Commission had greater powers to resolve such disputes.
An enterprise focus does, however, have a number of consequences which have not necessarily been thought through.
The first will be growing inequity in wages. The great strength of the award system has been that, at least to some extent, it narrowed the gap between employees with little industrial muscle, and those able to bargain directly with their employer.
Like it or not, if we keep going down that path, we will end up with an army of working poor, as in the United States, with its minimum wage of $5.15 per hour. That kind of minimum wage, together with draconian cuts to welfare payments, are the inevitable corollary of the policies being pursued by the current Government.
This can be seen in Mr Howard’s recent comment to the effect that our relatively high level of minimum wages is a cause of unemployment. There is an obvious campaign to soften us up for draconian reductions to the social safety net, an approach which none of us should find acceptable.
The second consequence of the greater emphasis on enterprise bargaining is that unions will be able to be more directly responsive to their members. There is no doubt that some members became disaffected with their unions during the Accord period when wage restraint was accepted in the national interest.
There is no need for that anymore. Unions are now in a position to say to their members that they should go for whatever they can get, taking into account their strategic position in the enterprise, company profits and similar issues, but not restrained by any overall commitment to national macro-economic goals.
In the absence of any agreed position with the union movement, an approach specifically rejected by this Government, we have seen the Reserve Bank used as a kind of wages policeman, not only to put pressure on the Commission during the Living Wage Case and the TWU award applications, but to intervene in wages disputes, such as Email.
The fact is that we will see more long enterprise bargaining disputes, as are common in the United States, and of which the Hunter Valley coal strike is just one example. Strikes will increase, as will their average duration.
The only legislative strategy to deal with this is a range of new prohibitions on taking industrial action, together with provision for penalties for breach of these prohibitions by unions and individual members.
The Government’s only advice to employers is to use the courts to take on their employees and the unions which represent them.
Over the last six months, a number of employers have used the new section 127 to apply for orders from the Commission to stop industrial action. Some applications succeeded, some did not. There is nothing to suggest that the Commission is taking a different view to section 127 than it did to the issue of insertion of bans clauses, or the making of orders under its general powers. This has led to complaints from some employers that the legislation has not delivered them an instant, automatic means of stopping industrial action.
It is well understood that employers want to stop industrial action, but generally they know that there is little to be gained by all out war with their employees.
It needs to be remembered that prior to the introduction of “protected action” in the 1994 Reform Act, all industrial action in this country was unlawful. Workers and their unions have always been liable to damages at common law, as well as to the “penal provisions” of the Conciliation and Arbitration Act for breaching a bans clause in an award.
That potential liability did not invariably inhibit workers from engaging in such action, including against the “penal provisions” themselves. Some of you may remember the gaoling of Clarrie O’Shea and the consequent national strike which saw the end of the use of those provisions.
There is clearly a very strong belief in Government circles that sanctions provide the means of resolving industrial disputes. On the other hand, in quite a public way, employers in key industries, such as the waterfront, have been making it clear that they are not interested in taking advantage of the new sanctions and the increased penalties in order to go to war with the union movement.
They know that, even if they win, the costs for both sides are horrendous, just as in any war. This is not an approach that is of much use in developing a more productive and quality-oriented work environment or a workforce willing to work co-operatively with management. If that is all the Government is offering employers, there is good reason to be disappointed
While unions will have a much more enterprise-based focus in the new environment, this is not to say that we will abandon our traditional role of working to protect those not in a position to gain from direct bargaining.
The ACTU was disappointed with the Commission’s decision to grant only $10 in the Living Wage Case and we will continue to focus on the issues raised by the case.
Through the Living Wage claim, the union movement was asking employers, the Government and the Commission to face up to the challenge of ensuring that Australia retains a fair and properly maintained system of safety net awards. The claim was directed particularly at ensuring fair wages for those unable to negotiate enterprise agreements and who are not in receipt of over award payments.
Evidence presented during the Living Wage Case showed that award wages have lagged well behind average weekly ordinary time earnings, with the greatest rate of increase being executive salaries. There was also evidence that 12.4 per cent of the Australian workforce can be characterised as low-paid, defined as earning less than $9 per hour, or $342 for a 38 hour week. This proportion rises to around a quarter in service industries, such as retail and hospitality, and the female-dominated clothing and footwear industry.
The ACTU will also support unions in efforts to ensure that awards are not stripped back to some bare-bones structure. It needs to be understood that a number of employer organisations have made applications not only to remove the so-called non-allowable matters from awards, but to remove a range of important conditions, such as rostered days off, which can be included in awards under the Act, but which, it is argued, fall into the categories listed in section 143 of the Act, such as being matters of detail or process more appropriately dealt with by agreement at the workplace or which restrict or hinder efficiency or productivity.
If these applications succeed, and they are a matter for the Commission’s discretion, rather than being mandatory under the Act, then the employees who will suffer the most will be those with the least ability to defend themselves at the workplace.
The Union Movement’s Attitude To Individual Contracts And Collective Bargaining
The key issue to be considered in relation to any industrial relations system, is what it does to address the basic power imbalance between an employer and an individual employee.
It was this issue which led to the formation of trade unions, when employees combined together to be in a position to bargain on more equal terms with their employer.
The right to negotiate collectively is as fundamental today as it was in early nineteenth century Britain in the struggle against the Combination Acts, which prohibited collective organisation of workers for the purpose of bargaining with their employers.
The new provisions for Australian Workplace Agreements (AWAs), on the other hand, do allow employers to use their considerably stronger bargaining power to achieve individual agreements which leave employees considerably worse off. Make no mistake about it – that is the clear aim of most of these agreements.
Some of you might recall John Howard promising workers during last year’s election campaign that they would continue to receive at least the same pay for doing the same work at the same hours as they would have under an award.
You might have also noted Industrial Relations Minister Peter Reith recently exhorting employers to use AWAs to do away with penalty rates and other employment conditions.
Although AWAs have not been made public, we do know a bit about them. We know that a Melbourne restaurant has introduced AWAs which cut out all loadings and penalty rates in return for a 10 per cent wage increase. It has been estimated that employees could be up to 30 per cent worse off, when weekend and public holiday penalties and annual leave loading is taken into account.
In this case, as in others applying at new businesses, employees are given an AWA to sign as a condition of employment. If they are not prepared to work for less than award conditions, they simply don’t get the job.
An examination of ten AWAs by the Australian Centre for Industrial Relations Research and Training reveals that they are being used primarily to allow employers to roster employees at any time of the day without being required to pay penalty or overtime rates. These agreements are nothing more than a vehicle for wage-cutting, and give the lie to the Prime Minister’s pre-election promise that no worker would be worse off.
Apart from the wage reduction which follows abolition of penalty rates, flexible working hours as directed by the employer can create great difficulties for employees, particularly those with family responsibilities.
Flexibility is not an absolute good; in theory, the idea that employers and employees should be able to work out their own arrangements seems reasonable, but the reality of the power relationship for most workers, particularly young people and women in the service sectors of the economy, is that what the employer wants goes.
In spite of Mr Howard’s campaign rhetoric, AWAs are working precisely as intended. The intention that such agreements be used to lower wages and conditions can be seen in the original Bill, which provided for total secrecy, with no third party scrutiny whatsoever. Resulting from the Government’s agreement with the Australian Democrats, a number of significant changes were made, including scrutiny by the Employment Advocate and, in some cases by the Commission, together with the ability for the Advocate to make the agreement public, although without identifying information.
How these agreements will operate in practice is another question. Is the Advocate, or even the Commission, going to do the painstaking job of comparing the agreement with the terms of the award for the purpose of working out whether there is compliance with the no-disadvantage test? The experience with non-union agreements to date shows that it has been the union interveners who have put together the evidence to demonstrate where an agreement does not comply with the statutory requirements. Who is going to bring any problems with an individual agreement to the notice of the Advocate or the Commission?
The experience so far tells us that the Advocate is not making those detailed comparisons. I know of at least one union, which had been authorised by a number of employees as their bargaining agent, which made submissions to the Advocate as to why the AWA failed the no-disadvantage test. The submissions were rejected, but no reasons were given as to why this was the case. This clearly demonstrates the denial of natural justice which results from the lack of a public process and public accountability.
There are real questions to be asked about the secretive operation of the Employment Advocate, a concern which has been raised with him during a hearing before the Senate Estimates Committee.
Unless the content of AWAs (without information identifying the parties) is made public, the community cannot have confidence that the Employment Advocate is ensuring that employees are not disadvantaged.
AWAs do not involve individual negotiations; in every case which has come to my attention of where individual contracts have been used for significant number of workers, the same basic contract terms have been offered on a take it or leave it basis. There is no real negotiation; when you think about it, the transaction costs of such a process would be prohibitive.
This will immediately become obvious to workers, particularly if they decide to appoint a bargaining agent so as to get the best possible deal. The fact is, no matter how individualised and confidential employers try to keep the process, it doesn’t take long for everyone to know what’s been offered to everyone else.
The trade union movement is committed to collective bargaining as the only effective means by which there can be some equalisation of the power relationship between employers and employees.
The right to bargain collectively is a fundamental right and recognised as such in a number of internationally binding instruments to which Australia is party. This legislation does represent a breach of Australia’s obligation to encourage and promote collective bargaining, in particular by favouring individual agreements over collective instruments, such as awards, and by excessively restricting the right to strike. I am confident that findings critical of the legislation will be made when the matter is put formally before the International Labour Organisation, although it needs to be understood that this is a lengthy process.
At the same time, where workers do become involved in individual agreements, unions will not abandon them. Strategies will vary in different industries, but in some cases unions will become bargaining agents, acting for a number of workers whose employers have offered them individual contracts.
This is analogous to the old non-union Enterprise Flexibility Agreements; where unions became involved they were sometimes able to negotiate better deals. It appears that the retail industry has already seen one example of this, where the employer abandoned its AWA strategy in favour of an agreement with the union. One can see a scenario where employer attempts to establish AWAs end up as collective negotiations, almost certainly to the benefit of all parties.
Union Strategies For Recruitment
The decline in union membership in recent years has been well documented, and has been used by some to attack the relevance and competence of the union movement.
In my view, the reasons for the fall in union membership are largely structural, in that there has been a decline in employment in traditional blue-collar industries, which are highly unionised, and a rapid growth in sectors of the economy, particularly services, which have not historically been highly unionised.
In addition, the increase in the proportion of the workforce who work part-time has increased rapidly, up from ten per cent in 1966 to almost 25 per cent in 1995. Part-timers, for obvious reasons to do with weaker attachment to the workforce and more vulnerable employment, are less likely to join unions – 22 per cent are currently union members, compared to 35 per cent of full-time employees.
Apart from these structural problems, we have seen over recent years a climate of government and employer hostility to unions which has influenced unionisation rates in a number of industries.
Factors such as member concern over a perceived too close relationship between the ACTU and the Labor Government, or alienation from the larger unions created through the amalgamation process are, in my view, of marginal significance.
The challenge for the union movement is to find the means of attracting to unionism employees in the categories where we have not been all that successful in the past; that is, young people, women, part-time employees and workers in the service sector.
To a certain degree, the Workplace Relations Act will assist with recruitment. Some employees are turning to unions because of their fear that they will lose existing entitlements.
Others are looking to unions to assist with enterprise bargaining, in order to achieve the best results.
However, we need to do more than simply wait for Mr Howard and Mr Reith to deliver us membership.
I am on the record many times as stating that unions need to change and modernise in order to meet the needs of employees in the twenty-first century.
The first and most important role for unions is to effectively represent members in the workplace. The primary expectation which members have of their union is to improve their wages and conditions.
In the past the award system somewhat concealed the role of unions because it was seen to deliver regular wage increases and other improvements to members and non-members alike. Many employees believed that these had come abut as a result of government decision, or independent action by the Commission – the part played by individual unions in the process was almost invisible.
I believe that as unions are seen to achieve results in the workplace, the recruitment process will be greatly assisted. When union members negotiate an enterprise agreement, the results of union activity are more immediately obvious, and the issue of “freeloading” by non-members is highlighted.
Development of better workplace organisation is critical for effective workplace bargaining, as is the presence of union delegates on the job, a factor linked to higher unionisation.
We recognise that workplace organisation is harder in small business, where employees are far more likely to have a direct relationship with the employer. However, unions are examining ways in which they can resource and assist members employed in small business, to give them greater skills and confidence in negotiating with their employer.
The second key recruitment strategy is linking work issues with community concerns. The recent childcare campaign is a good example of this approach, where unions have linked the low wages of childcare workers, and their concerns about their jobs, with the great anger amongst parents caused by Government cut-backs and consequent reduction in services and closures.
By demonstrating a knowledge and interest in the totality of childcare issues, together with expertise in campaigning, the unions have been able to make significant progress in recruiting employees in the industry.
Another example is the outwork campaign, where the union has linked the concerns of its members employed in factories on award wages that they will lose their jobs to poorly paid outworkers, with community concern at exploitation of migrant women working at home for as little as $3 per hour. The union has combined consumer campaigns, with action in the Commission, legislative pressure and a prosecutions campaign against employers who underpay outworkers, and has effectively put this issue on the nation’s social agenda.
The third major strategy is to develop the traditional role of unions in providing individual benefits to members. Funeral benefits and discount schemes of various sorts have formed part of union services to members since their inception. Today, the ACTU is working to develop a more sophisticated package of financial, legal and buying services which will take advantage of the consumer power of our more than two million members.
So, in conclusion, I am optimistic about the future of the union movement in this new environment. Of course, in some ways it will be harder for unions to operate, and there can be little doubt that those with least bargaining power will suffer deteriorating conditions in relation to those in a stronger position in the labour market.
On the other hand, new challenges create new opportunities, and are a spur for creative thinking and more effective operation. I am sure you will see a lot more of this from the union movement in the next few years.
Speech by Jennie George, ACTU President, at IBC Conference, Sydney, 23 July 1997