A background on Enterprise Bargaining by Martin Ferguson, President, ACTU.

Where Did Enterprise Bargaining Come From

1. Enterprise Bargaining has come from a realization by all sectors of the community that there is an urgent need for Australia to lift its economic game and become more competitive.


It has come from an understanding that to be successful we need to be more flexible, innovative and consultative in the way we organize and manage our enterprises and this cannot be centrally prescribed, it must be determined by those directly involved in the work.


2. These views were becoming more widely accepted in the mid ‘80’s and this was reflected in changes in the industrial relations and wage fixing system, much of it initiated by the union movement and the Labor Government under the umbrella of the various Accords. The key points in the development of enterprise bargaining were:


Introduction of the two tier system in March 1987 which embraced the requirement to address national wealth creation beyond traditional concern with distribution alone;


Involved flat $10 wage increase for all workers and further increases up to 4% which had to be justified by improvements in efficiency.


In August 1989 the National Wage Case decision endorsed award restructuring based on:



  • overhaul and simplification of awards to build in flexibility and skill based career paths;




  • establishing stable relativities between key awards to eliminate flow-on pressures;




  • protection of weak groups by raising low paid workers rates over time.



In April 1991 the AIRC rejected an immediate move to enterprise bargaining as being dangerous in that flow on and wage breakout pressures could be unleashed as parties were not ready for responsibility of handling their own negotiations without the Commission “too immature” were the exact words used.


ACTU rejected the decision and opted for direct enterprise bargaining.

What Is It?

The concept of enterprise bargaining involves employers and employees a the company, enterprise or worksite level being able to reach agreements on productivity, efficiency, wages and working conditions based primarily on the interests of the enterprise and its employees.


Within an environment where there is maximum flexibility afforded the local parties, there should be a minimal overall framework of constraints which:


1. establish minimum standards which are acceptable to the community as a whole in accordance with the economic and social circumstances of the National at any particular point in time;


such standards in addition to basic wages include;



  • annual leave
  • penalty rates and allowance
  • long service leave
  • termination and redundancy provisions
  • parental leave
  • total daily and weekly working hours
  • superannuation entitlements
  • occupational health and safety conditions;



2. Provide a basis by which grievances can be independently considered and one party is not in a position to impose unfair requirements on the other.


3. Provide for the involvement of Unions in the bargaining process where requested by employees who are affected by the enterprise negotiations and in the process by which community standards are determined and updated from time to time. Despite the views of some I believe that ultimately employees have insufficient economic power as individuals to ensure the survival of a fair system and unions must be available to them provide a balance.


4. Clearly I would envisage the continuation of an independent Industrial Relations Commission with the power to make binding decisions(compulsory arbitration) within the context of setting minimum standards and ensuring the system operates fairly.

Where Is It Going?

Enterprise Bargaining has met with some success with over 500 agreements being formally recognized nationally but clearly many of the direct parties have taken considerable time to decide how the opportunities of enterprise bargaining can benefit them.


In the case of employees and their unions there has been little incentive to seek wage increases in many industries.


The retention of jobs being the first priority and the knowledge that the requirements of employers are likely to be loss of jobs and/or working conditions in terms of any agreement.


In the case of employers, outside of seeking direct reductions in working conditions and/or wages, in many instances they have not been able to formulate a coherent, medium to long term strategy for improving productivity and efficiency.


However, the system itself cannot be said to have placed impediments in the way of employers or employees progressing flexible enterprise agreements. Yet we have many on the employer side and conservative politicians arguing for further deregulation of the system.


In Victoria this has been translated into the most radical set of industrial relations reforms seen in this country with the virtual abolition of the award system, removal of the rights of workers and stripping of the powers of the industrial tribunal.


The only purpose of such reforms, and we obviously will see more of the same from a Hewson Government if he is elected on March 13, can be to allow for reductions in wages and working conditions of employees through enterprise negotiations where the bargaining power is with the employer.


It is a sham to dress such reforms up in the name of improving productivity and efficiency. They simply pander to those employers who have not the wit to put together worthwhile strategies to improve the performance of their companies.


They simply opt for a cost cutting exercise. If that is what enterprise bargaining is about people should be honest about it.


Martin Ferguson, President ACTU. Enterprise Bargaining Seminar, Parliament House Adelaide. Tuesday, 23 February, 1993.