WORKPLACE RELATIONS
AMENDMENT (GENUINE BARGAINING) BILL 2002
INTRODUCTION
- 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.
- The 2000 Bill was not dealt with in the Senate, following decisions by the
ALP and the Australian Democrats to oppose it.
- 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:
- 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;
- an intention to reach agreement with all employers in the industry or
none;
- an intention primarily to reach agreement with a person other than the
employer party to the bargaining period;
- a refusal to meet or confer with the employer;
- 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.
- 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
- 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.
- 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.
- 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”).
- 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).
- In coming to that decision, the Commission made a number of
findings.
- The Commission has the authority to terminate a bargaining period, even
where that bargaining period had been terminated by the union, and another
period initiated (para 32).
- The test for whether a party is genuinely trying to reach agreement is
whether its conduct evidences a genuine trying to reach an agreement with the
opposing negotiating party to whom the industrial action or bargaining
period is specific (para 43).
- A party which is trying to secure agreement with all, or an entire class of
negotiating parties in an industry - all or none - is not genuinely
trying to reach agreement with any individual negotiating party (para
44).
- A common set of demands for conditions of employment or for timing of
negotiating rounds and outcomes is not sufficient in itself to establish that a
negotiating party is not genuinely trying to reach agreement with the
counterpart party (para 46).
- However, advancement of such claims in a way that denies individual
negotiating parties the opportunity to concede, or to modify by agreement, does
not meet the test of genuinely trying to reach agreement (para 49).
- Industrial action taken in relation to separate bargaining periods but at a
common time in support of common claims is an issue for subsection 170MW(3) of
the Act, and is not required to be dealt with in relation to whether or not the
parties are genuinely trying to reach an agreement (para 56).
- Orders can be made under section 170MW in relation to protected or
unprotected industrial action (para 58).
- 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)
- 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)
- 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)
- 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
- 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.
- 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)
- 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.”
- 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.
- 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)]
- 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.
- 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)
- 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
- 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.
- 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.
- 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.
- 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.
- 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?
- 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
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Some unions hold meetings with employers collectively, or with their
organisations, to explain the claims and to explore industry views on the
issues.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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
- 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.
- These restrictions have been the subject of ILO criticism on a number of
occasions.
- 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.
- 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.
- 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.
- 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."
- 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.
- 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.”
- 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.
- 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.
- Nowhere else in the developed, industrialised world are there restrictions
on industry-wide agreement-making as exist in Australia.
- 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.
- 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.
- 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]
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- In Zimbabwe, 1992 amendments to labour law gave joint management-worker
committees the right to override industry-wide agreements negotiated by
unions.
- 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.
- 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.
- Turkey has a ban on industry-wide bargaining.
The economic implications
of pattern bargaining
Labour market competition
- 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.
- 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.
- 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.
- The reasons given by the Council for recommending retention of the exemption
were:
- maintaining the primacy of the industrial relations framework in labour
market relations;
- compliance with Australia’s ILO treaty obligations;
- the certainty provided by the exemption in relation to the application of
the TPA to employment agreements and arrangements.
- 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.
- 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]
- 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)
- 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.
- 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.
- 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.
- 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.
- 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.
- 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
- 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.
- 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).
- 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)
- 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)
- 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)
- 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.
- 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)
- 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.
- 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.”
- 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)
- 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.
- 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.
- 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.”
- 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)
- 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.
- 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
- 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.
- 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.
- 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)
- 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
- The 2002 Bill proposal for cooling-off periods is recycled for the third
time - from the 2000 Bill and from the 1999 Bill.
- 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.
- 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]
- 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.
- 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)
- 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
- For the reasons stated, the ACTU urges the Committee to recommend that the
Bill not be proceeded with in the Senate.