ACTU Submission to the Senate

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WORKPLACE RELATIONS AMENDMENT (GENUINE BARGAINING) BILL 2002

INTRODUCTION

  1. The Workplace Relations Amendment (Genuine Bargaining) Bill 2002 (“the 2002 Bill”) is no more than a re-run of the Workplace Relations Amendment Bill 2000 (“the 2000 Bill”) which proposed a prohibition on “pattern bargaining” and other restrictions on the taking of lawful industrial action.
  2. The 2000 Bill was not dealt with in the Senate, following decisions by the ALP and the Australian Democrats to oppose it.
  3. The 2002 Bill contains three main provisions:

(i) Pattern bargaining

This provision requires the Commission to consider, when determining whether a union (or an employer, although this is less relevant, given the rarity of employers taking industrial action) is not genuinely trying to reach an agreement, whether its conduct shows:

  1. an intention to reach agreement with other employers in the industry rather than just with the employer who is party to the particular bargaining period;
  2. an intention to reach agreement with all employers in the industry or none;
  3. an intention primarily to reach agreement with a person other than the employer party to the bargaining period;
  4. a refusal to meet or confer with the employer;
  5. a refusal to consider or respond to proposals made by the employer.

This provides that if a bargaining period ends because a negotiating party has given notice that it no longer wishes to negotiate an agreement, the Commission may order that a new bargaining period cannot be initiated in relation to those same matters for a specified period of time.

This provides that the Commission may suspend a bargaining period for a specified period if protected action is being taken and the Commission believes suspension is appropriate having regard to whether it would be beneficial to the parties by assisting in resolving the matters in dispute.

  1. The ACTU submits that the 2002 Bill is intended to have, and would have substantively the same effect on the bargaining process as the 2000 Bill and, for the same reasons, should not be proceeded with.

Pattern Bargaining

Campaign 2000

  1. The 2000 Bill was introduced as the Government’s response to what it claimed would be industrial Armageddon in Victoria resulting from enterprise bargaining claims being pursued against a large number of manufacturing companies.
  2. The reality was quite different. There was no significant industry-wide industrial action, in spite of agitated predictions to the contrary, and agreements were concluded on an enterprise-by-enterprise basis, with most industrial action occurring at the enterprise level.
  3. To the extent that it was alleged that unions had failed to genuinely try to reach agreement, this was found to be capable of being dealt with by the Australian Industrial Relations Commission (“the Commission”).
  4. In Australian Industry Group - and - Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (Print T1982, 16 October 2000, Munro J) (“the Metals Case”) the Commission terminated a number of bargaining periods, as permitted by subsection 170MW(1) of the Workplace Relations Act 1996 (“the Act”), on the grounds that the union did not genuinely try to reach an agreement with the other negotiating parties before organising or taking industrial action and was not genuinely trying to reach an agreement at the time of taking the action, as provided for in paragraphs 170MW(2)(a) and (b).
  5. In coming to that decision, the Commission made a number of findings.

  1. Munro J also made it clear that common claims and outcomes have a place in the industrial relations system, are not outside the scheme of the Act, and may be pursued by employers as well as unions:

Industrial negotiation is usually directed to achieving benefits and rights through some form of agreement about a provision to which the parties are bound. It is not unusual for major corporate employers to attempt to achieve a consistency and sometimes a relative uniformity of outcomes in negotiations affecting workers. For that purpose, benchmark common outcomes, wage increase levels, flexibilities, and freedom from award restrictions may be energetically pursued against union and employee negotiating parties. There is no good reason to doubt that such bargaining agendas will often form part of a corporate plan or strategy pursued across all the corporation's manifestations, or selectively at key sites. Those familiar with the industrial profiles of employer groups would recognise another group of employers who have negotiation objectives more or less imposed upon them. For that group negotiation objectives are effectively controlled by ostensibly external corporations to whom product or services are supplied, or by a parent company, often off-shore. A uniform cost price reduction for goods supplied under contract is one example of a practice in vogue in the vehicle components industry some years ago. It had some characteristics of a direct enforcement effect on enterprise level negotiation objectives. Another set of employer negotiating parties are suppliers of labour as a product or resource. For that group, labour is product in relation to which work can be converted from an employment into a series of contractual propositions about providing a resource, divorced more or less from collective bargaining or even some statutory standards. And finally in this profile, there are government agencies as employers. Such entities are able to assume configurations not relevantly distinguishable from any, or all of the types of private sector employer negotiating parties outlined.

It would be industrially naive to equate all such employer entities with the stereotypical small business entity which most people would identify with the notion of single business. Under the definition given by the Act to a single business or part of a single business, relatively arbitrary arrangements of workforces may be identified by an initiating negotiating party as the field for a bargaining period. That flexibility may give employers a capacity to select the field of employees to be engaged in collective bargaining. Moreover, for the reasons I have discussed in an earlier decision Re Joy Manufacturing section 170MH Application, some employers may also select their preferred employee negotiating party. It appears that some of the more loudly voiced and caustic criticisms of " pattern bargaining", as practised by unions, are muted or tolerant of corporate practices intended to achieve similar uniformities of negotiating outcome across different workplaces.

Industry-wide demands are often made by unions and sometimes pursued at national level. It is not that character of the demand that may cause offence to the policy embodied in section 170MP and paragraphs 170MW (2)(a) and (b). I see no reason why such claims may not be advanced in a way that involves a genuine effort to have each employer concede the benefit sought. In such cases, the "pattern" character of the benefit demanded, its source, and even the uniform content of it, may be a cogent demonstration that the negotiation conduct is genuinely directed to securing agreement from the other party.” (paras 47-49) (emphasis added)

  1. Munro J concluded his decision by stating:

I explain the order and declaration in that way because no part of my reasoning should be taken to mean or imply that it is not lawful or industrially proper for the unions to pursue the core conditions objectives of Campaign 2000. However, the Act operates to inhibit the ways in which common conditions can lawfully be collectively bargained for. If the relevant unions are to continue to pursue the core conditions now associated with Campaign 2000, the necessity of doing so in a manner that complies with the single business bargaining focus of the Act must be adequately heeded.” (para 84)

  1. The clear conclusion to be drawn from this decision in that the Commission has the power to exercise its discretion in relation to whether or not a particular set of facts and circumstances in a particular case meet the test of genuine trying to negotiate an agreement. The 2002 Bill, rather than confirming that discretion, would have the effect of fettering it. As Munro J put it:

“...The meaning of the words of paragraphs 170MW(2)(a) and (b) is clear for the reasons I have stated. It is the application of that meaning to the facts of particular cases that may be complex. For reasons that relate to the character of different sets of employer negotiating parties, it is undesirable in my view to elevate construction of these provisions into a policy dogma that compels a lopsided application of the associated powers. The overall object of the Act to providing a framework for co-operative workplace relations which supports fair and effective agreement making should not be taken out of play.” (para 51)

  1. There is no need to “reinforce” or “draw on” that decision in legislation, a claim made for the 2002 Bill by the Minister in his Second Reading Speech. The decision dealt with particular circumstances, and it is simply inappropriate to steer the Commission “into a political dogma” which may or may not meet the requirements of another set of circumstances, when there is no question of a lack of jurisdiction or discretion.

Pattern bargaining and common claims

  1. The 2000 Bill required the Commission to terminate a bargaining period if the initiating party had engaged in pattern bargaining and/or industry-wide campaigns involving the pursuit of common claims.
  2. In determining to reject the 2002 Bill, the then Leader of the Australian Democrats stated:

“....the pattern bargaining bill proposed by the Government went too far by denying legal protection for industrial action for regular enterprise bargaining that commenced with common claims”. (Senator Meg Lees Media Release 00/34, 6 June 2000)

  1. Further, Senator Lees drew attention to the existing powers of the Commission under the Act to prevent the taking of protected industrial action where a union was not genuinely trying to reach agreement at the enterprise level, and, in light of concerns raised about the potential problems arising from Campaign 2000 (which had not yet commenced) said:

“We will monitor Campaign 2000 very closely. If the Commission’s powers prove to be inadequate, we will revisit the issue.”

  1. As was demonstrated by Munro J in the Metals Case, the Commission’s discretion to determine whether or not a party is genuinely trying to reach an agreement is available to be used in a wide range of circumstances.
  2. Contrary to the Minister’s claim in his Second Reading Speech that “The bill would not prevent unions from making the same claims over a number of employers,” the 2002 Bill would have the effect of placing an onus on unions to demonstrate to the Commission that the making and pursuit of such claims did not evidence “an intention to reach agreement with persons in an industry who are, or could become, negotiating parties to another agreement with the first party, rather than to reach agreement with just the other negotiating parties.” [s170MW(2A)(a)]
  3. It is simply false to say, as the Minister did in the Second Reading Speech, that this is drawn from the Metals Case decision. In fact, Munro J found the opposite, holding that pursuing an industry-wide campaign was not evidence of a failure to try to reach agreement at the enterprise level, so long as the union was prepared to negotiate with individual employers.
  4. The criterion in proposed paragraph 170MW(2A)(b) to the effect that negotiating on an “all or nothing” basis applying to all employers in an industry is consistent with Munro J’s finding that this would not constitute genuinely trying to reach an agreement. This leads to two conclusions. First, given the decision shows the Commission can and did consider this factor in exercising its discretion, it is unnecessary to legislate for it. Second, in referring to this “all or none” factor, Munro J made it clear that it needs to be considered in light of particular cases.

“Does it follow that, if in truth, the respondent negotiator is trying to secure agreement with all, or an entire class of negotiating parties in an industry - all or none - the respondent negotiating party is not genuinely trying to reach agreement with any individual negotiating party in the industry or class? In my view, it does. But in a particular case, a finding to that effect is dependent upon matters of fact and degree.” (para 44)

  1. The situation envisaged by proposed paragraph 170MW(2A)(c), where a party’s conduct shows an intention primarily to reach agreement with a person other than the other negotiating parties, was not a circumstance dealt with in the Metals Case.

Negotiating in good faith

  1. On their face, proposed paragraphs 170MW(2A)(d) and (e) do no more than state the obvious, being criteria generally found in illustrations of the meaning of an obligation to negotiate in good faith. However, on further examination, the criteria of conduct showing a refusal to meet, confer, etc is likely to have a meaning going well beyond a simple refusal to do these things.
  2. First, it needs to be understood that in the most usual situation, where it is the union which initiates a bargaining period, there is no obligation on the employer to meet and confer with the union, or to consider or respond to proposals made by the union, although the union must be able to demonstrate that it has genuinely tried to reach agreement. As the BHP Case [Australian Workers’ Union v BHP Iron-Ore Pty Ltd [2001] FCA 3 (10 January 2001)]showed, an employer is quite free to refuse to negotiate a certified agreement with a union which has initiated a bargaining period.
  3. In these circumstances, the union might take protected industrial action against the employer, in which case it is still obliged to genuinely try to reach agreement. It should also be noted that industrial action is overwhelmingly taken by unions against employers, not vice versa. Two potential difficulties then arise in relation to the proposed paragraphs, both of which show how the 2002 Bill is slanted against unions and their members.
  4. First, although the union would be required to meet with the employer and to consider and respond to any of the employer’s proposals, there is still no obligation on the employer to consider any proposals from the union.
  5. Second, questions arise about the meaning of “conduct (which) shows an intention”. Does this mean that unions which do meet with the employer, and consider, but reject the employer’s proposals, could be alleged to be constructively refusing by their conduct? Could a union which had repeatedly met with an employer, but received no response to its claims, take industrial action on the basis that it would not meet with the employer unless it was prepared to consider and respond to the union’s proposals?
  6. Proposed subsection 170MW(2A) ignores the reality that the taking of industrial action, in itself, is evidence of a union and its members genuinely trying to reach an agreement. Workers do not lightly take action by which they forfeit their wages. In many cases, such as with BHP, it is the union which wants an agreement and the employer which does not.

Onus

  1. The 2002 Bill is not about giving the Commission a discretion. The Commission already has an unfettered discretion in relation to determining whether or not a party taking industrial action is genuinely trying to reach an agreement.
  2. The effect of proposed subsection 170MW(2A) is to direct the Commission to consider a number of matters, and, where it is established that one or more of the circumstances set out exists, to find that this tends to indicate that the first party is not genuinely trying to reach an agreement with the other negotiating parties.
  3. The meaning of “tends to indicate” will no doubt be the subject of considerable litigation, should the 2002 Bill become law. The ACTU submits that the provision creates an onus or presumption, which it would then be up to the union to displace with countervailing circumstances.
  4. For this reason, the provision cannot be seen as other than a limitation of the Commission’s current uncircumscribed discretion, and as directing a presumption against unions seeking to continue take industrial action.

Why pattern bargaining is part of the process

  1. Neither unions nor employers approach enterprise bargaining with blank minds and empty pieces of paper. Neither group have the resources to do this. The enterprise bargaining process is based on sharing of collective knowledge and experience, and using this in a cumulative way, rather than re-inventing the wheel on each occasion.
  2. Unions are not merely a collection of groups of workers who relate only to their own workplace. Workers come together in unions because of concerns which they have in common as employees in particular industries, and as participants in the workforce as a whole.
  3. Unions are also democratic organisations. Their job is to reflect their members’ concerns and aspirations and to assist them to achieve these. As a result, unions will normally approach the bargaining process by calling meetings of delegates to draw up lists of issues which they wish to pursue in enterprise bargaining. The unions’ job is then to assist members in bargaining by providing information about the issues through kits, seminars, etc. In order to assist delegates to negotiate agreements, many unions provide model agreements; while these will generally be varied as a result of negotiations at the enterprise, the model or template provides a useful basis for a starting point for the union and for the employer.
  4. Employer organisations, of course, use similar measures to assist their members. Meetings to plan and adopt enterprise bargaining strategies are common, as is production of model agreements and draft clauses.
  5. Employers also adopt and campaign around common issues of concern and attempt to pursue these through bargaining; for example, the introduction of performance pay in the mining industry, the abolition of penalty rates in the finance industry or reductions of pay in the meat industry.
  6. Australian Workplace Agreements (AWAs) are another example of pattern bargaining, encouraged by the Employment Advocate with his promotion of an AWA “template” . The general practice of employers offering identical AWAs on a “take it or leave it” basis has been well-established, with genuine negotiation in the AWA context virtually unknown.
  7. Some unions hold meetings with employers collectively, or with their organisations, to explain the claims and to explore industry views on the issues.
  8. Such assistance is particularly valued by employers and employees in industries characterised by a large number of employers with a small number of employees, such as transport, live entertainment or building and construction. These employers and employees are simply not in a position to approach enterprise bargaining with a clean slate. Most of these employers have neither the skills nor the time, and want nothing more than agreements which put the industry on more or less an equal footing in respect to labour costs.
  9. In many industries, the core issues will be determined in agreements concluded with one or more employers, with other employers and their employees satisfied to then adopt these conditions. Employers are as quick to say, “you agreed to that with him, I want the same conditions” as employees are to say “we won’t accept less than what she is paying her employees”, and will sometimes back these claims with industrial action.
  10. This approach is not inconsistent with enterprise bargaining; the reality is that agreements with each enterprise may or may not contain some or all of the common claims, invariably with other issues relevant to the particular enterprise. Even where common claims are accepted, they will frequently be implemented differently in relation to timing, “offsets” and so on. This was the case, for example, with some of the 36 hour week agreements in the building industry.
  11. It is simply impossible for unions to campaign for improved conditions unless such campaigning can occur throughout an industry, the wider workforce and even the community. This does not mean that unwanted conditions can be imposed on employers and their employees against their wishes. Finally, the employer must agree and the employees must vote; if the union refuses to agree under those circumstances, an agreement can be concluded without union consent.
  12. Paid maternity leave, for example, has been a goal of the women’s movement for many years. The ACTU and a number of unions have campaigned around this issue, which has been included in many claims for enterprise agreements in a wide range of industries. It is this campaigning which assisted the Finance Sector Union and the vehicle industry unions to achieve paid leave in many of their enterprise agreements. At the end of the day, each agreement was negotiated with each employer, and with some variations, including in the length of the paid leave, but the campaigning was crucial in order for employers to understand the importance of the issue to their employees. The current campaign by the SDA for an extension of unpaid parental leave is another example of the need for unions to be able to pursue common claims in a co-ordinated manner.
  13. All the major workplace gains of the last 20 years, including parental leave, superannuation, redundancy pay, training and skill recognition and family leave, were initiated by industry campaigns which resulted in a number of enterprise-based agreements which later were adopted by the Commission for the award system, in whole or in part.
  14. Occupational health and safety is another issue which is frequently not adequately addressed at the enterprise level. In its submission to the Inquiry into the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 (“the 1999 Bill”), the ACTU pointed to the adverse effects on occupational health and safety which have stemmed from the flexible enterprise focus. Adequate health and safety standards should not be available to be bargained away at the enterprise level, but should be based on proper industry-level agreements, as well as legislation.
  15. Campaigning around common issues is integral to union functioning; to remove that ability would be to make it unacceptably difficult for unions to carry out their most basic role. Although industrial action does not always, or even usually accompany bargaining, without the ability to take action the process is unacceptably weighted towards the employer.

Industry-wide bargaining internationally

  1. Prohibiting pattern bargaining has not been an issue internationally simply because no other comparable country imposes the types of restrictions on industry-wide and multi-employer bargaining and agreement-making as apply in Australia.
  2. These restrictions have been the subject of ILO criticism on a number of occasions.
  3. On 6 August 1997 the ACTU wrote to the ILO, setting out a number of concerns about the conformity of the Act with Convention No. 98 on the Right to Organise and to Bargain Collectively.
  4. Australia is a signatory to the Convention, which requires the encouragement and promotion of collective bargaining between employers or their organisations and workers’ organisations. The reference to bargaining with employer organisations clearly reflects a presumption that collective bargaining may be on a multi-employer basis, and that this mode of bargaining should also be encouraged and promoted.

  1. The ILO’s Committee of Experts, a group of internationally eminent independent jurists, found that the Act was inconsistent, in a number of respects, with the requirements of the Convention.
  2. The ACTU submitted that the Act gives clear preference to single-enterprise bargaining, as evidenced by the restrictions on multi-business agreements, and the fact that protected industrial action cannot be taken in relation to these agreements. The Committee was concerned at the level of discretion afforded to the Commission by section 170LC to determine the appropriate level of bargaining and concluded:

"The Committee is of the view that conferring such broad powers on the authorities in the context of collective agreements is contrary to the principle of voluntary bargaining.”

The Committee continued:

".....the choice of bargaining level should normally be made by the parties themselves, and the parties 'are in the best position to decide the most appropriate bargaining level' (see General Survey on freedom of association and collective bargaining, 1994, paragraph 249). The Committee requests the Government to review and amend these provisions to ensure conformity with the Convention."

  1. ILO jurisprudence has conclusively established that the right to strike, although not explicitly referred to in the ILO Constitution, or in Conventions 87 or 98, is implicit in these instruments.
  2. In March 1999 the ILO Committee of Experts published an observation in response to an ACTU complaint about Australia’s breaches of Convention No. 87 regarding Freedom of Association and Protection of the Right to Organise. The Committee found, in relation to multi-employer agreements:

“The Committee notes that by linking the concept of protected industrial action to the bargaining period in the negotiation of single-business certified agreements, the Act effectively denies the right to strike in the case of the negotiation of multi-employer, industry-wide or national-level agreements, which excessively inhibits the right of workers and their organizations to promote and protect their economic and social interests.”

  1. In considering the Government’s response to its 1999 observation, the Committee of Experts stated in its 2000 observation:

“With respect to the right to strike in support of a multi-employer, industry-wide or national-level agreement, the Government states that the Act does not expressly limit or restrict the scope of the subject matter pertaining to the relationship between an employer and employee, but does provide immunities in respect of a proposed single-business agreement. The Committee recalls that where strike action is ‘unprotected’ and therefore potentially subject to a wide range of sanctions, as in the case of action in support of multi-employer, industry-wide and national-level agreements, it is for all practical purposes prohibited.”

The Committee concluded by once again requesting the Government to amend the provisions of the Act to bring the legislation into conformity with the Convention.

  1. Although the Government has repeatedly told this Senate Committee that it is in “dialogue” with the Committee of Experts, it would appear that its representations have not succeeded in altering the ILO’s consistent finding that Australia is in breach of its obligations under the Convention.
  2. Nowhere else in the developed, industrialised world are there restrictions on industry-wide agreement-making as exist in Australia.
  3. Industry-wide bargaining is the general model in most European countries. In the UK and the US bargaining is more often at an enterprise level (although in the UK it may cover groups of employees from the same craft or occupation). However, in neither of these countries is there a prohibition on multi-employer bargaining or on industrial action associated with it.
  4. In the UK multi-employer industrial action has occurred in a number of industries. The Blair Government has legislated to make it easier to organise pre-strike ballots for multi-workplace action.
  5. In the US construction industry, bargaining occurs at the local and regional as well as the industry level. Enterprise bargaining coverage is greatest where there is industry-wide bargaining. [G Bamber et al “Collective Bargaining” in R Blanpain & C Engels Comparative Labour Law and Industrial Relations in Industrialized Market Economies Kluwer Law International 1998]
  6. In New Zealand legislation allows multi-employer bargaining, if union members employed by each employer agree to go into the multi-employer negotiations. The New Zealand Department of Labour reports that seven per cent of employees in its contract data base are covered by multi-employer contracts. [ERA Info Vol 5, October 2001] The same issue of ERA Info also reports the first determination of the Employment Relations Authority defining the duties of good faith bargaining and ordering the parties to resume bargaining. In Independent Newspapers Ltd (INL) v Amalgamated Engineering Printing & Manufacturing Union, INL, a newspaper group, had refused to bargain for a multi-employer agreement, other than for the purpose of defining the scope of bargaining. The Authority held that the fact that INL refused to bargain on any issue until the matter of coverage was settled, made it clear that it intended to bargain in a very limited way only. INL was ordered to meet with the union for the purpose of bargaining for a multi-employer agreement and properly consider the union’s claim for this type of agreement.
  7. A 2000 dispute in the US involving 100,000 cleaners, members of the Service Employees International Union (SEIU), demonstrates that the ability to campaign on an industry level can be crucial for workers in precarious and fragmented employment.
  8. Prior to the dispute, Los Angeles cleaners, mainly Hispanic immigrants, had been employed for around half the rate of unionised workers since they replaced union members sacked in the 1980s. Growing concentration of contractors has led to a relatively small number of companies employing most of the cleaners.
  9. As a result of a union strategy for common expiry dates of contracts, not only in Los Angeles, but in many other cities, it was possible for lawful industrial action to be taken by cleaners across the state.
  10. In Los Angeles, a three week strike led to the cleaners increasing their wages by 26 per cent, the biggest rise ever. The campaign was supported by political and civic leaders, and marchers were joined by Cardinal Mahoney, the head of the Roman Catholic archdiocese.
  11. The nationally co-ordinated campaign resulted in gains such as family health insurance and home computers and training, as well as significant wage increases for precarious workers recognised as amongst the most exploited in the US.
  12. In addition to Australia and New Zealand (discussed above) a small number of countries were cited in the International Confederation of Free Trade Union’s 2000 Annual Survey of Violations of Trade Union Rights in relation to industry-wide bargaining.
  13. In Swaziland, industry level bargaining can take place only if the Commissioner of Labour considers this to be “desirable or practicable”. The parliament has passed a new labour bill, drafted with ILO assistance, but the King has not yet assented to it.
  14. In Zimbabwe, 1992 amendments to labour law gave joint management-worker committees the right to override industry-wide agreements negotiated by unions.
  15. In Argentina a number of legislative changes were introduced by decree, including limiting the scope of collective bargaining to the company or enterprise level. The changes were a response to IMF demands for restructuring as part of a loan package. The decrees were then declared unconstitutional by the courts and suspended. A new reform bill was negotiated with trade unions, but opposed by employers and the IMF. The law was finally passed in September 1998 and confirmed the priority of industry-wide collective bargaining, although news laws introduced in 1999 provide that the Ministry of Labour must approve collective agreements which extend beyond enterprise level.
  16. In Chile, where most labour law dates from the Pinochet era, the ICFTU reports:

    “...the majority of workers are covered by individual employment contracts. Collective bargaining usually takes place at enterprise level. Industry-wide bargaining is rare and is at the discretion of the employer.”

A bill which would have made bargaining at industry level the norm was voted down by the Senate in December 1999.

  1. Turkey has a ban on industry-wide bargaining.

The economic implications of pattern bargaining

Labour market competition

  1. It is a universally recognised principle that the labour market should not be open to free competition in the manner of other markets for goods and services, and that the reason for this is the unfairness which would result from the exercise of the greater bargaining power of the employer over the employee.
  2. This principle is reflected in paragraph 51(2)(a) of the Trade Practices Act 1974 (“the TPA”), which has the effect of excluding from the reach of the TPA agreements and arrangements between employers and employees that relate to employment conditions.
  3. In 1998 the National Competition Council reviewed the exemption provisions of the TPA, including paragraph 51(2)(a). In recommending that the exemption be retained, the Council rejected a Government submission to the effect that the exemption be revocable where the anti-competitive detriment to the community of the particular arrangements in question outweigh labour law policy objectives. The revocation would only be applicable for agreements or arrangements outside the formal industrial relations system.
  4. The reasons given by the Council for recommending retention of the exemption were:
  1. The effect of prohibiting the pursuit of common claims, as provided for in the Bill, would be to reduce enterprise bargaining to a series of completely isolated negotiations, where workers would be unable to use the collectively-gained knowledge and experience which comes from participation in their union. Employers would, of course, not be so inhibited, and would be free to pursue approaches in common with other employers in the industry.
  2. In his submission to the Inquiry into the 1999 Bill, Professor Joe Isaac submitted that multi-employer bargaining was not only fairer and more efficient, but did not necessarily result in higher outcomes:

“It is difficult to understand the in-principle objection to multi-employer agreements. There may be situations where a number of employers in the same industry prefer to deal collectively with the union and to have, as far as possible, uniform wages and conditions within the industry, while allowing certain variations to meet the circumstances of particular firms. Competition and profitability would then be based on managerial performance.

“There is much to be said for such a situation, both on equity and economic grounds. It is an accepted labour market convention of fairness that similar work (particularly in the same industry) should be remunerated in similar terms. Perception of fairness encourages better workplace relations. On economic grounds, uniformity in pay and conditions ensures greater efficiency in the allocation of resources. Under free market rules, the less efficient firms would be expected to earn lower profits, which should spur them to greater efficiency; or fall by the wayside and release resources for more productive uses. There is no sound reason, except where substantial unemployment and hardship could fall on employees, why employees should subsidise the less efficient firms. In a competitive market, the efficient and less efficient firms pay the same price for their raw materials, fuel, power, transport, etc. Apart from the special circumstances noted, is there a case why the price of labour should be treated differently?

“Further, many would see multi-employer bargaining as avoiding a situation in which the least resistant firm gives way to a standard of settlement that others would be opposed to. It is arguable that the bargaining power of a union facing a single employer may be greater than if it faced many employers at the same time in an industry bargaining situation. Picking on one employer at a time may be strategically a more effective way for the union to exact the best terms from all.” [Submission 377, Vol 12, pp2692-3]

  1. Professor Isaac’s view is widely shared throughout the industrialised world. In criticising the lack of explicit encouragement of industry-wide bargaining in the US, one legal commentator has written:

“Another fundamental issue for a labour relations system is the structure of bargaining. In most countries, industry-wide (sectoral) bargaining is preferred for it is believed it produces greater stability, a virtue both governments and employees recognize. From unions’ viewpoint, industry-wide bargaining means that the cost of labor is taken out of competition within the industry.” [JR Bellace “Breaking the New Deal Model in the USA” in JR Bellace & MG Rood Labour Law at the Crossroads: Changing Employment Relationships Kluwer Law International 1997)

  1. In Australia, although multi-employer agreements are rare, and sectoral agreements non-existent, a number of industries are characterised by similar bargaining outcomes. Building and construction and transport, for example, are characterised by a large number of employers in a very competitive environment.
  2. If employers are forced to compete on labour costs, the effect is simply to keep driving these down until they reach a floor below which people will not work. The effect of labour cost competition is also to put stress on safety, of key importance in both building and transport. Recent cases of accidents involving long-distance drivers working for excessive hours demonstrates a result of downwards pressure on labour costs.
  3. With little individual market power themselves, employers in this kind of industry are finding themselves forced to attempt to compete by driving down wages and conditions if they can. Employers of unionised labour find themselves at a disadvantage over those operators who are not bound by collective agreements or industry standards. This is a serious concern to many employers and their organisations, as well as to unions and their members.
  4. The disparity is exacerbated by the growing gap between award rates of pay and the market in industries such as building, manufacturing and transport. This means that there is no relevant or effective floor for bargaining, leaving employees open to exploitation and to growing disparity between the wages of unionists and non-unionists.
  5. The award system operates as a form of industry-wide wage setting for small employers in industries such as hospitality and retail, where there is a very low incidence of certified agreements. These employers do not want to compete on wages; they want to know that they have a level playing field in relation to wages, taxes and other costs, and can compete on the quality of the goods and services they offer, and their entrepreneurial skills.
  6. In industries such as these the award system remains as the most appropriate means of regulation. However, in the context of the current Act, with its limitations on the Commission’s jurisdiction, and its emphasis on minimum wages and conditions, awards are rapidly falling behind community standards of fairness.

Productivity and employment

  1. Productivity growth is a measure of the extent to which more output can be produced with the same inputs. Labour productivity specifically relates output to hours worked.
  2. Productivity growth is highly cyclical, typically accelerating sharply in the early stages of economic recovery (when output picks up ahead of employment) and slowing as the recovery matures (when employment catches up and output growth slows).
  3. By any measure, Australian productivity growth has been strong and sustained over the past decade. (Australia’s Strong Productivity Growth: Will it be Sustained? D. Gruen, Head of Economic Research, Reserve Bank of Australia, 2 February 2001)
  4. Labour productivity growth dipped (in line with output growth) in early 1995 and late 2000; nonetheless, the average annual growth rate of 2.3 per cent for 1995-2001 is the highest for any comparable period in history. Similarly, the growth rate over the year to December 2001 is the highest since quarterly National Accounts have been taken. (Treasurer Paul Costello, Press Conference – National Accounts, 7 March 2002)
  5. Australia’s productivity growth over the past decade has exceeded most other industrial countries including the USA and UK. Our rapid productivity growth performance over the past decade is widely attributed to technological change (lately, the “new economy”) and microeconomic reform, including the lowering of tariffs and increasing exposure of local industry to the international economy. (Gruen, op cit)
  6. It has been asserted that Australia’s improved productivity growth reflects the introduction of enterprise bargaining. The ACTU has consistently argued that award restructuring from the late 1980s provided the essential platform for collective bargaining to build upon, and that that reform process explains much of the nation’s sound economic performance over the past decade.
  7. The ACTU has always rejected the view that enterprise bargaining simpliciter is a magic elixer for boosting productivity growth. Recent academic assessments provide support for that view (M Wooden, J Loundes, and Y-P Tseng, Industrial Relations Reform and Business Performance Melbourne Institute Working Paper No 2/02)
  8. Over the past decade, the making and pursuing of common claims, by unions and employers, including wage claims, has been a general feature of enterprise bargaining in Australia – as it has long been in most industrial economies. The argument that pattern bargaining is a threat to productivity growth is unsustainable.
  9. Moreover, in seeking to identify the causes of the pick-up in Australian productivity growth in the nineties relative to the eighties, Gruen finds that:

    The sectors which made the largest contribution to this pick-up were the non-traded sectors of wholesale trade, retail trade and construction. Together these sectors accounted for more than 100 per cent of the pick-up in market sector productivity growth between the two decades, despite contributing only 40 per cent of the hours worked in the market sector.

  1. Pursuit of common claims, by employers and unions, in the construction sector is widespread and appropriate to the nature of the industry. In the retail sector, agreement coverage reflects the industry structure; the few major employers are party to collective bargains but the vast numbers of small retail employers rely on award provisions. In wholesale trade, individual agreements (overwhelmingly traditional overaward pay arrangements) account for three quarters of total employment. (Commonwealth Submission to the Safety Net Review – Wages 2001-02, Appendix A)
  2. Gruen points to increased use of computers and related technology in these sectors as one powerful potential explanation of their faster productivity growth in the nineties, and suggests that this beneficial influence will continue for some years yet.
  3. Wooden et al also document the faster productivity growth in the nineties, and note the sectoral concentration of the pick-up identified by Gruen. Wooden et al acknowledge that work intensification in these sectors may account for some of the apparent rise in labour productivity; that is, the higher output may be attributable to higher unmeasured labour input, thus falsely inflating apparent productivity growth.
  4. Wooden et al review the available evidence regarding the alleged impact of bargaining (“industrial relations reform”) on economic performance generally and productivity in particular, and present some new econometric evidence of their own. They conclude:

“But what has enterprise bargaining actually achieved? As demonstrated in this paper, the case for enterprise-based bargaining systems hinges in large part on its potential to enhance the productive capacity of business. Nevertheless, the available evidence is far from supportive. While it is true that Australia experienced a marked resurgence in productivity growth during the 1990s, the available evidence from workplace- and enterprise-level studies does not enable any strong conclusions to be reached about possible links between enterprise bargaining and productivity.”

  1. The latest data show Australia’s labour productivity growth rate (five year moving average growth from previous year) exceeds all industrialised OECD countries except Finland and Ireland. (OECD Main Economic Indicators February 2002, Basic Structural Statistics, pp268-271)
  2. In terms of unemployment, at end 2001 Australia’s unemployment rate was broadly in line with the OECD average. Several European countries including Sweden, Switzerland, Norway, The Netherlands, Ireland, Denmark, and Austria had lower unemployment rates than Australia, as did the UK, USA, and Japan. Canada, France, Germany, Italy, Finland and Spain continue to struggle with unemployment rates in the order of 8-9 per cent or more.
  3. There is no evidence to suggest any concordance between the presence of pattern bargaining and the level of unemployment or the productivity growth rate across OECD countries.

New Bargaining Periods

  1. In the Metals Case, Munro J dealt with a situation where unions terminated bargaining periods with a number of employers under section 170MV, informing them that the unions no longer wished to reach an agreement with them. This was apparently done by the unions for the purpose of instituting a “cooling-off” period. Bargaining periods relating to similar claims were then reinstated with the same employers a short time later.
  2. Munro J held that “there is an adequate basis upon which to find that relevant bargaining periods may not have ended” in light of continuing actions by employees, including taking of industrial action, which indicated that an agreement was still being sought, in spite of the advice forwarded by the unions.
  3. Following on this, Munro J determined:

“Having regard to all the circumstances, I am satisfied that it is appropriate to exercise the power to order the termination of respective bargaining periods. I am satisfied also that I should associate with that order a declaration under sub section 170MW (10). The effect of that order and declaration is to attempt to force an end to the current phase of Campaign 2000 activity against the 33 employer applicants. Thereby, the order will allow an effective and unequivocal cooling-off period, free of bargaining periods until the end of November. That will not preclude negotiation or agreement. It should preclude continuance of industrial action during the period.” (para 84)

  1. The orders made in the Metals Case demonstrate that the proposed section is 170MWA is unnecessary. There is simply no evidence of any widespread difficulty caused by termination and reinstatement of bargaining periods justifying the proposed amendment to the Act.

Cooling-Off Periods

  1. The 2002 Bill proposal for cooling-off periods is recycled for the third time - from the 2000 Bill and from the 1999 Bill.
  2. Although the 2002 version purports to do no more than give a discretion to the Commission, the reality is that it can have no other effect than to restrict further the taking of industrial action in the context of a legislative regime which already falls short of international standards.
  3. The Government’s obsession with industrial action is completely unwarranted. The necessity for such a provision, given that most strikes in Australia are of short duration, should also be questioned. In 2001 there were 665 industrial disputes involving 225,700 employees. Of these, 512 disputes involving 86 per cent of employees were for two days or less. Only 72 disputes, involving 12,100 or 5.5 per cent of the employees, lasted for five or more days. The decline in working days lost from industrial disputes has continued, with 16 per cent fewer days lost in 2001 compared to the previous year. [Industrial Disputes ABS Cat 6321.0]
  4. The effect of the proposed amendment would be for bargaining periods to be suspended even when the party taking the action has behaved within the law. It should be noted that the Commission already has the power to suspend the bargaining period where a party has not tried or is not genuinely trying to reach an agreement.
  5. To the extent that there is an issue of protracted industrial disputes, it reflects the lack of power in the Commission to deal with the underlying causes. Restoration of the arbitral power of the Commission would provide a means of dealing with such disputes, as submitted by the AiG to the Inquiry into the 1999 Bill:

“There have been a number of disputes where the option of arbitration might have had an advantage for the parties.” (Transcript, 1/10/99, p45)

  1. In the Metals Case, the cooling-off period was initiated by the unions in terminating the bargaining periods. It should be noted that this is not necessary; if a party taking industrial action wants a cooling-off period it can suspend its action and recommence, if it wishes, at a subsequent time.

Conclusion

  1. For the reasons stated, the ACTU urges the Committee to recommend that the Bill not be proceeded with in the Senate.

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