Rules of the Game

Posted by on July 31, 2018 in Focus

Rules of the Game

Howard Guille


In 2018, Australian industrial institutions are in serious disarray. Employers now have more power to get what they want (much of which involves stopping workers getting much at all) and are using that power.

The ACTU demands in “Change the Rules” are comprehensive. This is needed since the critical matters are equality and solidarity which involve matters well beyond enterprise bargaining. Sally McManus can justifiably say that unions now ‘have a reduced role in the creation of rights and because of this, fewer workers’ rights are created’. One question is why this has eventuated under a industrial relations system rewritten by Minister Julia Gillard in the first Rudd Government following the “Your Rights at Work” campaign.

The current situation

The situation for workers is stark. Australia has one of the highest levels of non-permanent work (casual, fixed-term and sham contracting) of any OECD member. The share of national income going to employees is at a 50-year low. It was 63 per cent in 1974 and fell to 50 per cent in 2008. Each one percentage point fall is a shift of over $17 billion per year from wages (and wage earners) to profits (and hence executive bonuses and shareholders).

The processes of industrial relations have shifted in favour of employers. For example, before the Howard Government of 1966, most awards had provisions limiting the use of casuals and fixed-term contracts. These became ‘non-allowable’ and had to be removed from awards. Then, with Work Choices, there was no room for awards at all.

Enterprise bargaining has become a province for lawyers briefed to spoil the process. The tactics include terminating agreements and forcing conditions back to the ‘modern award’ (think Aurizon, Collie Coal and Murdoch University); lockouts (think Qantas and Glencore-Oaky North); and getting orders against industrial action (from Loy Yang Power Stations, Sydney Rail to James Cook University).

The aggression of employers and their legal helpers is quite recent. The General Manager of the Fair Work Commission does a three-yearly report on developments in bargaining. In 2015 the report stated ‘No significant developments in the termination of enterprise agreements occurred during the reporting period’. By late 2017, one legal group was heading its advice as ‘Termination – The Bargaining Tool of Choice?’ As another legal group stated ‘employers need to be aware of the benefits that the termination of an enterprise agreement can give them during bargaining’.

Liberal industrial relations

Industrial relations in market economies drew from both the ‘new’ liberalism’ of the turn of the nineteen century and social democracy/labourism. The first provides an impetus for managing industrial conflict; the other for getting labour ‘out of the market’.

Ralf Dahrendorf was perhaps the leading Anglo-German liberal social theorist of the immediate post-world war II period. His concern was how to steer between totalitarianism and communism. While expressly not a Marxist, he saw industrial conflict as a structural feature of modern societies; part of what he described as ‘the frictions between the rulers and the ruled’. The task for the state was to ensure that the struggle between capital and labour was within the ‘rules of the game’. Writing in the late 1950s he said

The contending parties in industry and politics agreed on certain rules of the game and created institutions which provided a framework for the routinisation of the process of conflict.

The industrial routines included ‘collective-bargaining bodies of many kinds as well as systems of conciliation, mediation, and arbitration. Class ‘conflict’ might continue but was ‘far removed from the ruthless and absolute class struggle visualized by Marx’. Nobody, he said, is a permanent winner or loser. Critically, the institutions, including an arbitration body, need to act ‘politically’ and not ‘judicially’. Their task is find compromise.

Institutional arrangements for ‘industrial relations’ were adopted in North America and Western Europe at various points over the first half or so of the twentieth century. They became the fundamentals of the International Labour Organisation. Despite the local and national variations, this always involved employers and the state recognizing the legitimacy of unions, whether in the US New Deal legislation of the 1930s, the Swedish accords in the 1938 Saltsjöbaden Agreement or the German Co-determination laws reintroduced after WWII and amended since then.

The Australasian version of compulsory arbitration was among the earliest version of conflict regulation through ‘rules of the game’. It was an integral part of ‘new liberalism’ of the turn of the nineteenth century – with the New Zealander William Pember Reeves leading the world with the Industrial Conciliation and Arbitration Act 1894. Pember Reeves went on to be the Director of the London School of Economics and a prominent Fabian. The Australian version was championed by Henry Bourne Higgins, another liberal who described it as a ‘new province for law and order’.

Getting labour out of the market

The fundamental objective for social democracy is to ‘decommodify’ labour and remove the treatment of workers from the vicissitudes of the market. Some of this became part of industrial relations arrangements when the ruling bourgeoisie was prepared to concede some degrees of fairness and justice and equitable shares in the proceeds of economic growth. This was about class compromise - a bigger matter than the management of conflict at work. The social democratic and labourist achievement of the 1940s was to ensure that comprehensive industrial regulation was backed by the welfare state, full employment policies and broad regulation of the economy.

Regulation and standards must cover all workers and not just those in unions and/or union organised industries and workplaces. The standards applying to workers at the bottom of the labour market are the best test of the fairness of the overall system. This is why the European Union is a better place for workers than the United States. Moreover, unregulated conditions for those at the bottom make it difficult to protect, yet alone improve, conditions for those higher up. Labour market ‘flexibility’ generally, and more specifically casual and fixed term jobs and under-employment, expand the ‘reserve army of labour’.

Bring the market back in

The erosion of industrial relations in Australia is part of the march of the market and the political victory of neo-liberalism. No regulation is too small to remove for zealots inspired by Hayek and Friedman; just read any utterance from the Institute for Public Affairs (IPA) or the Centre for Independent Studies. One example, specific to industrial relations, was that the Business Council of Australia set out its stall in 1989 with “A better way of working’. It gave first preference to individual contracts (subsequently provided by John Howard) and second preference to company by company ‘enterprise bargaining’ (provided by Paul Keating and reinforced in the 2007 Fair Work Act).

The victory of the right was also facilitated by the failure of the advocates of industrial relations (including in Australia most unions, the ALP and moderate employer organisations) to respond to external strains and internal contradictions. Put plainly, both industrial relations and welfare arrangements were based on the male bread-winner with a full-time, permanent job. This ‘ideal’ continues to permeate the provisions in Australia even if some of the most heinous features of the mistreatment of women have been removed. Overall, though, adequate changes were not made to advance gender equality or to cope with technological and organisational change or to limit insecure work.

Australian industrial relations give very few rights to workers and unions in regard to change; at best there is ‘consultation’ and a statutory and quite minimal redundancy payment for permanent workers. There has been no strong and consistent demand from unions for industrial democracy. Finally, the system was built on the presumption of permanent and full-time employment. This is most obvious in superannuation and in long service leave and other matters related to length of service. People with broken work careers, again women more than men, are disadvantaged. Likewise the ‘industry’ funds are not particularly suited to people who move between industries.

Reconfiguring the system

The system is in serious disarray but much more needs fixing than enterprise bargaining. The urgent need is to establish a system that sets industry and economy-wide standards as the award system did before John Howard neutered it. Julia Gillard’s Fair Work Act may have resuscitated the structure but did not restore its vitality.

In the 1900s, Australian employers opposed the very idea of arbitration but eventually settled down to just opposing claims for better wages and conditions. Militant unions characterized it as a bosses court while ‘arbitration unions’ fell over themselves getting to the Commission and almost lost the ability to strike. By the 1970-early 1980s, a workable, ad hoc system had developed where breakthroughs could be made in particular companies or industries and then flowed across the entire economy. This occurred with conditions as well as wages – for example the reduction of working hours and increase in holidays. In the same period the Commissions (federal and state) also started to address issues of equal pay.

It is no longer possible to pursue a standard provision for all workers in these ways. For example, the provision of domestic violence leave or longer maternity leave requires thousands of not very effective and increasing long and costly sessions of bargaining, workplace by workplace. And then it would only apply to the third of the work-force covered by agreements.

The award system was a lay and political system, not a judicial one. The procedures were conducted by unions and employer associations with legal representation excluded, except for some appeals and Industrial Court matters. While not legalised, industrial action was part of the process. There is much to gain for the future by looking at what we had. This will mean higher and more comprehensive universal standards, whether set by legislation or some kind of tribunal. It means bargaining at industry and occupational level in which industrial action is an effective collective right not circumscribed by reams of law and process.


Howard Guille is a member of the Australian Options Editorial Committee

Be Sociable, Share!
    Skip to toolbar