The Law and the Labour Market
Workplace Management and Industrial Relations: The Great Watershed
Over the past eight years, people at the National
Institute of Labour Studies have been putting forward
ideas for the reform of Australian workplace management
and industrial relations. Key aspects of this reform
agenda---including a shift away from centralism
towards the workplace as the main focus for industrial
relations---now appear to have become broadly
This is a proper occasion for me to salute the courage,
integrity and perseverance of my people (past and present)
who have sustained this research effort.
A great watershed has arrived in Australian workplace
management and industrial relations. This paper discusses
the changes that are in train, why they are occurring
and desirable evolutionary goals that should be pursued.
The paper begins by reproducing a small part of The
Institute's' earliest research on reforming workplace
management and industrial relations.
1. Some Past Research:
- Beyond 1984: Time for Collective Bargaining
- ... In our view, a structural weakness of the arbitration
system may be its distance from the grassroots where
people work and deal with each other on an immediate,
realistic and personal basis....
- ... Good industrial relations should give due prominence
to the fact of ongoing work relations between particular
workers and employers, and the need to resolve differences
by methods which take full account of that fact. Regrettably,
the industrial relations system in Australia appears
to have institutionalised access to third party umpires
as a customary method of resolving differences between
persons at work rather than emphasising the responsibility
of those immediately involved to settle their own differences
in their own way. ...
- ... The 'award' system is quite remote from the actual
economic fortunes of each workplace. It is little wonder
that sensible Australians may become confused about
the relationship between their pay and conditions of
work and the economic condition of their actual employer.
- ... In its most recent decision, the Full Bench of
the Arbitration Commission awarded an increase in awards
... only to wage-earners who gave an undertaking not
to seek further claims, except in circumstances narrowly
defined by the Bench. ... The decision opens up the
prospect of a 'split system' ... with some groups operating
within the arbitration system and some groups operating
- In our view, this is a development worth reflecting
on for the period following centralised wage-fixing.
A more appropriate unit for exclusion from the Commission's
ambit might be the workplace or enterprise rather than
the union. If this course were followed, whole workplaces
would fall in or out of the Commission's ambit. This
might facilitate the development of workplace bargaining
between unions and employers in those enterprises choosing
to fall outside the purview of the Commission and could
lead to an improvement in industrial relations...."
- Australian Bulletin of Labour, 10:1, December
1983, pp. 12-14.
- Employment Contracts in the
- Steel Industry:
- The Prime Minister's comments from China on the possibility
of collectively bargained employment contracts, as
a means to ensuring reliability of supplies of steel
and raw materials to a huge new export market in China,
open up the sort of debate about the future of industrial
relations in Australia which we advocated in the last
issue of this Bulletin, and continue to advocate.
- Mr Hawke's suggestions appear to have surprised a
number of commentators. People seem to have forgotten
that similar suggestions were being made in 1971 by
Mr Hawke, then President of the ACTU, and Mr Cameron,
then Shadow Minister for Labour. Their proposals, which
attracted much media comment at the time, appear to
have been influenced by ideas developed by the late
Mr Justice Sweeney, then Mr J B Sweeney, QC, who was
at the time an adviser to the ALP Industrial Relations
Committee which included both Mr Cameron and Mr Hawke.
- According to Philip Bentley, discussing this episode
in the Journal of Industrial Relations:
- ... Originally the Committee made proposals to the
effect that agreements [between trade unions and employers]
should ... contain provisions for penalties either
by way of liquidated damages or by the loss of benefits
for breaches of the agreement, payable by the union
if the breach were at its direction or with its concurrence
or by the employees concerned otherwise ...'. At an
ALP committee meeting (April 16,1971) the unlimited
damages clause was struck out by Hawke and amended
by him so that neither party would have to pay more
than $500 damages per offence. When Hawke attempted
to gain support for this proposal at the Victorian
State Conference of the ALP he failed by 116 votes
to 188 ...
- Despite this rebuff to Mr Hawke, the ALP industrial
relations policy adopted at the 1971 Launceston Convention
emphasised the virtues of collective bargaining and
'agreements initially arrived at between trade unions
- Some flavour of Mr Hawke's views at that time are
conveyed in a newspaper article by Neal Swancott, 'Decisions
of these men are absurd today---Hawke' (The
Australian, 27 May 1971). The men referred to are
the members of the Constitutional Convention in 1898
which adopted the Commonwealth's arbitration power.
Mr Hawke is quoted as saying:
- ... Employers on their side, and unions on their
side are going to have to sit down sensibly and negotiate
wages and working conditions.
- The least likely way of maintaining harmonious relations
in industry is going to be a system where some external
parties impose their will on the two parties most affected.
- The people best able to determine what is appropriate
for the regulation of affairs between parties are the
It is also worth reminding ourselves that Mr Cameron,
then Minister for Labour, in his second reading speech
to his Conciliation and Arbitration Bill 1973 in the
House of Representatives, 12 April 1973, gave strong
endorsement to negotiated agreements and collective
bargaining. Mr Cameron gave notice of the formation
of a committee of inquiry which would report on:
- ... the desirability of experimenting with new forms
of agreements like productivity agreements, whether
there is any role for voluntary mediation or conciliation
committees and what ground rules could be evolved for
collective bargaining in Australia ...
- It will examine plant level relationships ...
- Australian Bulletin of Labour, 10.2, March
1984, pp. 55-57.
- "The Future of Australia's Industrial Relations
System: A Summary and Comment:
- ... The system undoubtedly enjoyed great authority
from its inception to 1969, when the O'Shea affair
effectively made the decisions of the system binding
on only one of the two parties---the employers
Ä and voluntary on the other---the unions.
The balance of power shifted manifestly and heavily
in the unions' favour and the system has been unable
since then to correct this imbalance between strong
unions and weak employers....
- Responses to this situation include proposals for
the restoration of the Commission's enforcement powers
over the unions (Confederation of Australian Industry),
the removal of any residual sanctions on, and an expansion
of the legal immunities of, the unions (Australian
Council of Trade Unions), and acceptance of the status
quo buttressed by ACTU enforcement of voluntary
adherence by the unions to decisions of the Commission
(for example, the 'no extra claims' undertakings under
the present centralised system). This last view is
that of the Department of Employment and Industrial
Relations (DEIR), a view that implicitly acknowledges
the pre-eminence of the union movement in unilaterally
being able to determine the acceptability of the terms
of industrial settlements.
- The social usefulness of the present arbitration system,
therefore, now relies on the voluntary co-operation,
goodwill and economic understanding of just one party
- the unions in general, and the ACTU in particular.
Decisions of the Commission which transgress what is
acceptable to the unions cannot be enforced. In effect,
the Commission has become an enforcement arm of policy
acceptable to the union movement. This is an extraordinary
degree of power to accord a sectional interest group
Ä even one as broadly based as the union movement.
It is hard to believe that such a situation can
be stable in the long run. ...
- ... We know that values across all Western civilisations
have shifted to emphasise autonomy, the desire to grow
roots, freedom of the periphery from control at the
centre, decentralisation, smallness, counting as a
person (see Naisbitt (1982); Hall (1977); OECD (1980);
Harman (1980); Robertson (1978); Kahn (1976); etc.).
- ... In an industrial relations context there are two
- (1) Organisations will need to embrace industrial
democracy in its participative, but not
necessarily in its representative sense, so
as to start the necessary task of building shared
objectives between management and employees (in
both directions) and as a structure emphasising the
importance of the grassroots rather than the superstructure.
- (2) Union structures will have to shift from a craft
basis to an industry basis so that only one
union covers the employees in any one firm. Without
this change, the chance for union leaders to develop
shared objectives with management and vice versa
must be severely curtailed because the craft union
structure cuts horizontally across the industry structure.
It is almost impossible for shared objectives to be
formed between each employing organisation and its
corresponding union(s) in this circumstance. Further,
industry unions would enable greater flexibility in
- ... On the basis of shared objectives within enterprises,
the necessity for and emphasis on enterprise or plant
negotiations over pay and conditions necessarily emerges
as part of the shared package. The aim of most employers
Ä to be free to negotiate with their own workers
(or a single union representing them) in the light
of their own conditions---can then be realised,
with both 'sides' approaching each other informed and
on a basis of trust.
- The secret for the future must be to bury the class
- Australian Bulletin of Labour
- Supplement No. 5, September 1984, pp. S2, S7-S10.
- "Towards Shared Objectives and Industrial Democracy:
- The industrial relations system in Australia is notable
for its legalistic, bureaucratic and, therefore, rationalistic
forms. After all, at the national level the arbitration
system was created to establish 'a new province of
law and order'. It is a top-down system in which the
most important decisions are made at the peak---
the furthest-removed level from the production units
the system regulates. At this level, argument is in
terms of economy-wide or industry-wide concepts and
measures bearing only remotely on the actual fortunes
of any particular workplace. ...
- It is the central thesis of this paper that dispute
prevention now goes hand in hand with the development
of dynamically-efficient enterprises which respond
to the post-industrial values of their workforces,
which are bottom-up in orientation, which practise
industrial democracy in the sense of being loosely
structured in lateral networks, rather than rigidly
structured in hierarchies of control and which emphasise
the formation of shared senses of purpose and objectives
among the entire work group within each enterprise.
Part of such arrangements must be an agreed basis among
the people directly involved for sharing materially
in the productive success or failure of their mutual
- ... There are some particular problems for the unions
in coming to terms with the industrial relations requirements
of dynamic efficiency. First, the very ideological
basis of the unions---namely, to oppose the exploitation
of workers by capitalists---must be at risk. Unless
the unions can find some 'softer' version of this perspective
and some more constructive means for involvement in
furthering the interests of workers, it is doubtful
that societies like Australia in which the unions hold
great power, can look forward to very dynamic futures.
This is an enormous conundrum for democracies. It is
clear that free trade unions are an important element
in the checks and balances of free, democratic societies.
On the other hand, it is also clear that a powerful
trade union movement can seriously reduce the dynamic
economic potentials of societies by excessively restricting
the scope for shared objectives and sense of purpose
to be developed in each workplace between managers
and employees. Insofar as it is held that such identity
of interests and objectives cannot exist, the scope
for evolution of organisations and the industrial relations
system along dynamically efficient lines will be severely
- Second, the craft basis of the unions in Australia
makes the formation of shared objectives between the
workers and managers of any particular enterprise more
difficult than if unions were organised on industry
or enterprise lines. Under craft unionism, the objectives
of each union cut across the objectives of numerous
enterprises and industries. The unions are horizontal,
the enterprises vertical in terms of collections of
workers. It would assist the prospects for shared objectives
to be discovered between workers, and between unions
and employers, if unions were to be reorganised along
enterprise, or at least industry, lines. The forsaking
of class war ideology and the acceptance of restructuring
along industry or enterprise lines are the major changes
which the unions could accept to assist the restructuring
of Australian industrial relations along dynamically
- Employers, whether in the private or public sectors,
need, for their part, to embrace the structures that
an overwhelming body of research has shown to be dynamically
efficient (National Institute of Labour Studies, 1984:
100-145). These structures involve industrial democracy
in its participative sense, a focus on the 'small'
(teams of 10, plants of 500 or less), job enrichment,
semi-autonomous work groups and diffusing managerial
prerogatives towards grass roots to give greater reign
to post-industrial values in the society. The objective
of restructuring in this way is to build shared objectives
and senses of purpose among all groups of people within
each organisation and to provide sufficient 'looseness'
in the structure that each person can have scope to
contribute creatively to the overall objectives. The
touchstone for managers is the establishment of an
assumption of trust between all the people in their
- Alternatives to Arbitration (Allen and Unwin
1986), pp. 77-80. Paper presented to a conference sponsored
by the Hancock Committee of Review, Sydney, October
"The Hancock Report: The Last Hurrah of the Past:
- ... There is no doubt in my mind not only that an
Australian democracy needs strong trade unions, but
also that the union movement in Australia today is
too strong. The Arbitration Commission has played an
important role in this development. Mary Shelley would
have appreciated the script: the creator consumed by
its own creation. From the situation in which the Commission
rightly sought to build the strength of the trade unions
at the turn of the century, when they were weak, we
now have a situation where the Commission has become
emasculated by trade union power. The Accord represents
the final emasculation. As Simon Crean, John Halfpenny
and others forthrightly said at the 1985 South Australian
Industrial Relations Convention, the Accord is an exercise
in union power. What the unions have done is traded
off a capacity to inflict unacceptable damage on the
economy for a direct say in government at the federal
level. The Commission has no course but to go along
with the ACTU/Government. It is inconceivable that
it will take the Confederation of Australian Industry
seriously in opposition to the Accord partners, however
sensible the Confederation's arguments may be.
- ... Perhaps the Hancock Committee has shown us a way
out of this problem: recommendation 21.... This recommendation
rewrites Part X of the Act to permit 'the parties'
to an award to 'opt out' of the official arbitration
system into their own system. Such private systems
could make their own penalties, enforceable by the
Labour Court, unlike the official system. They might
rely entirely on 'conciliation', that is, negotiation
or bargaining. A potentially massive breach in the
wall of the official system has been recommended by
the Hancock Committee, therefore, although the Committee
does not believe much use will be made of this provision.
- ... In time, I would expect the enterprises in this
second track to flourish and that their example will
encourage State jurisdictions to offer the same prospects.
Why will these enterprises flourish ...? In my view
the reason is that given by economist Glenn Withers,
quoted in the Report (page 231): the 'opted out' enterprises
will develop more effective workplace cooperation,
which is a key variable in high productivity. As Withers
(1984, 19) says:
- Australia's industrial system is based on legally
imposed adversary relationships in which the relevant
parties take no responsibility for encouraging sound
work-place relationships. There was a choice under
the conciliation function for this to be otherwise,
but the determination of Australian industrial judges
to become and remain arbitral centralised wage fixers,
and the compliance of employers and unions in this,
may have nullified any such achievement. This could
be the real cost of the arbitral system - not any direct
effects on wage levels, relativities or strikes, but
the subtle effects on workplace co-operation and functions.
- The Hancock Committee regarded such remarks as 'pure speculation', but I am confident that Glenn Withers
- Journal of Industrial Relations, 27:4, December
1985, pp. 458-459.
2. The Great Watershed Arrives:
- ... what you need to do is ... establish national
minimum rates of pay, and within that framework, there
can be the implementation of award restructuring on
an enterprise basis and there can be [a] move to far
greater extent to more successful enterprise involvement.
- Undertaking ... that does in fact involve ... a devolution
of authority from the ACTU to its affiliates; from
the affiliates to the workers involved [it] must equally
involve a devolution of responsibility from a national
wage system, an industrial tribunal, to the individual
workers and management at a workplace. And we do not
shy away from that objective. We do not shy away from
- I accept ... that it is about time the ACTU had less
influence, less influence, in the determination of
wage rates on an enterprise basis and that the unions
and individual workers had more.
- [We must] create a new wages system ... involving
... a diminution in the authority of bodies such as
the ACTU; bodies such as the conciliation and arbitration
systems of Australia, as more and more is done where
more and more has to be done, and that is in the workplaces
of this country.
- Bill Kelty (AIRC, 1990, pp. 45-46)
The present National Wage Case is almost certainly
going to be historic. It will set the ball rolling
in the Federal sphere towards 'enterprise bargaining'.
The long history of the Commission as a powerful central
authority in wage fixing and industrial relations is
starting to move to a close. This has come about for
a number of reasons, which can be divided into broad
economic and social factors, on the one hand, and more
specific developments which have eaten away at the
authority of the Commission, on the other.
It is important to remember that, from the Harvester
Judgement in 1907, arbitration and protection have
been linked together. The capacity for a central authority
to impose wage levels above their market-clearing rate
without at the same time reducing employment opportunities
depends on other actions being taken by the authorities
to 'validate' such decisions.
For example, by increasing protection for an activity
subject to an above-market wage order, the competitive
position of that activity relative to imports can be
sustained, and output and employment in that capacity
can be maintained---at the expense of output and
employment in the unprotected sectors of the economy
and the average real income level of Australians as
a whole. Similarly, for a generalised wage order in
excess of average productivity improvements, inflation
will have to be permitted to increase to offset the
difference, if unemployment is not to increase.
In the long run, added protection and other anti-competition
regulation designed to 'protect jobs' undermines growth
in real living standards. Endemic inflationary expectations
lead to rising interest rates, speculative distortion
in the allocation of national savings, and inevitably
to periodic credit squeezes imposed by the monetary
authorities (leading to recession and unemployment).
The decision by both Government and Opposition to
support policies to internationalise the Australian
economy (i.e., to participate more in international
trading and financial markets), and to undo anti-competitive
regulation of key economic activities (microeconomic
reform), undermines the capacity of the Commission
to set levels of wages and conditions above market-clearing
rates for particular economic activities. The resolve
of Government and Opposition to eliminate inflationary
expectations sets a cap on the capacity of the Commission
to increase money wages without creating unemployment.
Both these changes in the economic policy background
undermine the capacity of the Commission to do other
than attempt to replicate market outcomes unless it
is willing to accept the extra unemployment that will
Some people argue that we should abandon economic
internationalisation, microeconomic reform and the
fight against inflation. This is not only to accept
slow growth in real living standards and a perpetuation
of boom/bust cycles, but is contrary to economic policy
developments around the world. These 'new' directions
of policy in Australia are reflections of a world-wide
collapse of faith in the economic and social value
of economic autarchy, central planning, 'centralised
democracy' and centralised power in general. This collapse
of faith is most forcibly demonstrated by the dramatic
events in Eastern Europe and the Soviet Union and the
revelation of the appalling economic, social, moral
and environmental outcomes that have accompanied their
extreme experiments with government economic planning
But the democracies are also pulling back from central
planning and regulation in favour of more market-driven
processes, particularly in order to participate more
effectively in world economic relations. For example,
four years ago the ruling Social Democrats in Sweden
commissioned a special independent study of power and
democracy in their country. The 'Swedish model' has,
of course, been influential in many circles in Australia
in framing how we might try to organise ourselves.
The final report, published in July 1990 (quoted in
Taylor 1991, p. 3), said:
- The period of Sweden's history which is characterised
by a strong public sector expansion, centralised agreements
on fundamental questions through an historical compromise
between labour and capital, social engineering and
central planning is at an end ...
- ... The present change of times is characterised by
individualisation and internationalisation.
It has also been said (Taylor 1991, p.4) that the Swedish
Finance Minister has made it clear:
- Sweden can no longer pursue its own economic policy
at the expense of other countries;
- Defeat of inflation must have the highest priority,
even more than the traditional Social Democrat commitment
to the maintenance of full employment;
- The total tax burden would have to be reduced; and
- The first task of Sweden's economic policy must be
to ensure that the country "can participate actively
and fruitfully in international integration".
The truth is, particularly with the end of the Cold
War, that a world economy run by the G7 group of countries
has started to emerge. Failure to participate as fully
as possible in this newly-arrived world economic order
will be painful. There can be no turning back from
the course being charted for us towards internationalisation
except towards far greater long run economic discomfort
than an adjustment now will impose.
But these are not the only reasons for supposing that
time has run out on centralism in wage-fixing and industrial
relations (as in many of our present ways of doing
things). Study after study shows that productivity
and performance are related to organisational structures
that are decentralised---that devolve power, authority
and responsibility to the ordinary people in organisations
Ä whether they be enterprises, trade unions, political
parties, clubs or whatever.
Everywhere---and especially in wealthy, well-educated
advanced societies---people want more freedom
and participation. People want some of their potential
for greater wealth (if necessary) to be used to satisfy
their desires to be free, on the one hand, and to belong
(to a group that can reaffirm their worth and contribution),
on the other. The balance of social values as we become
more affluent and better educated, and as more women
enter economic life is shifting towards meeting goals
of self-actualisation and esteem, belongingness and
affection (rather than simply material and safety needs).
Organisational systems that pay regard to these values
will exhibit greater motivation, enthusiasm, commitment,
cooperation and productivity than systems that do not.
Such 'loose' systems are necessarily based on mutual
trust among the people in them---trust that others
will not take opportunistic advantage of moments of
vulnerability accepted on behalf of the group as a
whole. Without such trust, willingness to accept change
will be restricted. Innovativeness and flexibility
in organisations---from which productivity improvements
flow---are based on trust deriving from commitment
by the organisation to all the people in it---
and vice versa.
This sort of system is less likely to come into being
within a framework of industrial relations which assumes
and institutionalises adversarialism between 'managers'
and 'managed', which organises the reward structure
and key working arrangements at arm's length from the
real historical circumstances of each workplace. A
necessary, but not sufficient, condition for higher
productivity organisations to come into being is an
enterprise focus in industrial relations, a focus which
gives primacy of place to each person's real employment
relation with their own production unit. The additional
conditions necessary for higher productivity to result
- a competitive, outcome-driven environment for the
output of the production unit which forces a task orientation
(rather than a lobbying orientation) on the unit; and
- a devolution of power and authority within the unit
towards ordinary members of the unit and away from
the centre (or 'top'), i.e. the 'management' of the
unit. Managers of such organisations have to become
leaders, advisers, coordinators and defenders of the
group's efforts rather than controllers insisting on
their 'prerogatives' to direct those below them.
- Charlie Fitzgibbon (1986, p. 22):
- ... the one thing that no ideologue or anybody else
can ever overcome is a feeling of being part, of being
fairly treated, and seeing the advantage of the enterprise
also meaning an advantage to the individual ...
- The MIT Commission on Industrial Productivity (1989,
- Underdeveloped co-operative relationships ... stand
out in our industry studies as obstacles to technological
innovation and the improvement of industrial performance
... Sustained labour-management co-operation has been
limited by the deep-seated anti-union attitudes of
many American managers and a corresponding distrust
on the part of many American union leaders of new forms
of employee participation and work organisation ...
This legacy of conflict has produced an adversarial
pattern of industrial relations, one characterised
by much conflict and little trust between workers and
their employers ...
- ...Yet this same research has documented the emergence
of new forms of industrial relations ... based on employee
participation in shop-floor problem solving and in
flexible teams ...
- Haruo Shimada (1990, p. 7):
- The Japanese type of humanware technology is based
on the fundamental recognition that workers at the
workshop are the people who know best about what is
going on in production processes. Under this recognition,
the most effective corporate strategy is to take full
advantage of their awareness, motivation, sense of
contribution and improvement by listening to their
appeals, suggestions, opinions, and by preparing conducive
- ... This approach naturally has profound implications
for industrial relations. Since managements know that
they are vitally dependent upon the motivation, alertness
and preparedness of the workforce, they are willing
to make the utmost efforts to share information, understanding
and goals with workers.
- Robert Townsend (1985, p. 170):
- ... Organisations work when they maximise the chance
that each one, working with others, will get for growth
in his job. You can't motivate people. That door is
locked from the inside. You can create a climate
in which most of the people will motivate themselves
to help the company reach its objectives. Like it or
not, the only practical act is to adopt participative-management
assumptions and get going ...
- Eric Trist (1980, pp. 118-126):
- ... The technological bureaucracy becomes increasingly
dysfunctional ... Organisations become decentralised
(though each unit shares common goals) and power is
dispersed ratherthan concentrated ... The periphery
is freed from control by the centre ... Collaboration
and sharing are emphasised ... Individuals are freeing
themselves from institutional bondage ... We enter
the age of the person.
- His Holiness John Paul II (1991, pp. 79-80):
- [The Church's] teaching also recognised the legitimacy
of workers' efforts to obtain full respect for their
dignity and to gain broader areas of participation
in the life of industrial enterprises so that, while
co-operating with others and under the direction of
others, they can in a certain sense, work for themselves
through the exercise of their intelligence and freedom.
- The integral development of the human person through
work does not impede but rather promotes the greater
productivity and efficiency of work itself, even though
it may weaken consolidated power structures ...
- Bill Kelty (1990, pp. 45-46, see start
of this section):
This is what the wage case is really the beginning
of. The 'bosses' in enterprises, in the bureaucracies,
in the unions, in the Commission and everywhere else
must give ordinary people at work more chance to organise
more of their productive lives for themselves. All
these 'bosses' should reduce their drive to wield power
and become more supporters and leaders of people's
own efforts. Enterprise bargaining---whatever
shape it begins with---has to end up with increased
employee ability and willingness to contribute freely
and participatively to outcomes in their own enterprise.
These changes in economic and social circumstances
are the 'fundamentals' behind the impending shift from
centralised wage fixing and industrial relations to
enterprise bargaining and enterprise-focussed industrial
relations. There is also, however, a historical sequence
of events which has undermined the authority of the
inheritors of Higgins' mantle.
The Decline of Authority:
First, and most important, is the Clarrie O'Shea affair
(in 1969), as a result of which the Commission effectively
lost the power to compel obedience from the trade unions.
Instead, the Commission came to rely on the ACTU to
discipline its affiliates or to stand aside while unions
(such as the Pilots' Federation) were disciplined by
Government actions and in the civil courts.
An implication of such reliance on the ACTU has become
quite clear under the Accord between the ACTU and the
ALP. The Accord agreements have been based on an implicit
expectation that the Commission would ratify the positions
taken by the Accord partners. What is the meaning of
an Accord agreement if it can be set aside by an independent
third party, i.e. the Commission? This expectation
has become manifest as a result of the Accord partners'
rejection of the Commission's April National Wage Case
decision, preferring to maintain their agreement than
to accept the Commission's statutory authority to arbitrate
such matters. How can the Commission deal fairly and
impartially with the merits of the evidence before
it by all the parties, if only a decision consistent
with the position of the Accord partners is going to
be accepted by the latter?
On the one hand, an Accord undermines the independent
authority of the Commission. On the other, an independent
Commission must put Accord-type agreements at risk.
The position of the Commission was also undermined
by the Staples affair (when the change from the Australian
Conciliation and Arbitration Commission to the Australian
Industrial Relations Commission took place). Mr Justice
Staples was not reappointed from the former Commission
to the present Commission, thus breaching a democratic
principle of independence of the judiciary (or quasi-judiciary)
from the executive government of the day. There were
(and are) proper provisions under the Act for removal
of Commission members from office. These were not pursued.
The position of the Commission was also damaged by
the affair surrounding the salaries of Commission members.
Insofar as these salaries are not seen to be set quite
independently of parties appearing before the Commission,
the Commission is placed in an invidious position.
Finally, the vehemence of the reaction of the
ACTU to the April Wage Case decision has also placed
the Commission in an invidious position in dealing
with future matters involving the ACTU.
This succession of events has adversely impacted on
the authority of the processes of the Commission. It
is untenable for the 'umpires' in a democracy not to
be able to enforce their impartially-considered decisions
on all the parties before them. It is not surprising
that increasing recourse has been had to the civil
courts in recent times, including in the pilots' dispute.
A system of independent arbitration which is not enforceable
on all the parties cannot be an acceptable system.
As Ian Spicer, President of the Confederation of Australian
Industry recently put it (1991, pp. 2-3):
- ... it is just impossible to maintain a compulsory
and centralised arbitration system, if two of the three
parties which make up that system refuse to accept
its decisions ...
- Given that situation, never again could anyone enter
into a National Wage Case with any sort of confidence
that its decisions would be observed. These actions,
by two major parties, clearly showed that the commitment
to the system had gone and that things could never
ever be the same again ...
In all of the circumstances---internationalisation
and microeconomic reform of the economy, the need to
build more co-operative and productive workplaces and
the events that have befallen the Commission---
the present National Wage Case should move Australian
industrial relations vigorously down a decentralised,
enterprise-focussed path, and away from a centralised
and compulsory Arbitration system.
What the Wage Case Should Do:
First, the present National Wage Case should not set
any centrally-determined wage guidelines, nor should
it set any 'principles' in train, except those needed
to decentralise wage fixing and industrial relations.
Second in this regard, the Commission should extend
to all Federal awards the historic enterprise arrangements
principle adopted in May by the NSW Industrial Commission
(1991, pp. 2-4). That principle permits negotiations
at the workplace level which can adjust the award to
the needs of individual enterprises. In such negotiations:
- the authorised representative of employees at an enterprise
may include a delegate, organiser or official
of the relevant union if requested by the majority
of employees at the establishment.
- (NSW Industrial Commission, 1991, Appendix, emphases
Third, the Commission should announce that it will
apply less restrictive criteria, or interpretations
of criteria, for certifying agreements under S115 of
the Act. In particular, the Commission should remove
the 'isolated case' test from its criteria (or interpret
it less restrictively) and adopt a less restrictive
view of 'the public interest'. In face of the present
degree of restrictiveness, a number of 'failed' S115
applications appear to have been put in place as private
agreements between enterprises and unions.
Fourth, the Commission should require that all enterprise
awards and certified agreements be for fixed terms,
subject to laid down grievance processes backed by
the Federal Court. These enterprise awards and agreements
should be permitted to include a 'no strike' provision
during the currency of the award or agreement up to
a defined 'renegotiation period'.
Fifth, the Commission should determine that it will
not now, or in future, vary multi-employer awards.
This would greatly reduce the prospects of 'flow' and
therefore of 'wage explosions'.
Sixth, the Commission should declare that, under S118,
it will no longer enforce the 'convenient to belong
to' rule in determining union coverage rights in enterprises.
This rule is the basis of the existing unions' monopoly
rights of coverage of particular classes of workers.
Instead, the Commission should announce that, in future,
it will pay primary regard to the wishes of the employees
in each enterprise as to what unions should represent
their interests (if any).
Beyond the Wage Case, further reforms will be needed
to support an effective evolution of enterprise-focussed
- A clear separation of rights and interests issues should
become the basis of fixed duration employment contracts,
with industrial action limited to interests issues
in contract renegotiation periods and rights issues
dealt with through grievance processes backed by the
Federal Court, with powers to grant injunctive relief,
make contempt findings, and impose sufficient financial
penalties to enforce resolutions of rights (i.e. contract
- Regulations prescribing minimum membership requirements
for union (or association) registration should be withdrawn
for plant and enterprise unions or associations (i.e.,
unions or associations able to demonstrate majority
employee membership in a plant or enterprise).
- Preference to unionists in employment should be abolished
and the rights of employees to form and join unions
and associations of their own choosing should be affirmed.
- Federal and State systems of industrial relations law
and institutions should be further harmonised under
'new Federalism' arrangements.
- 'Roping in' and 'common rule' extensions of particular
award decisions or certified agreements should be expressly
abandoned by the Federal and State systems
- Private conciliation and arbitration services should
be allowed in competition with the official Federal
and State systems (which should, however, not only
be voluntary but be funded on a fee for service basis,
Australia needs conciliation and arbitration services
Ä but not the compulsory ones we have got. We
need unions---but not the monopoly occupational
ones we have got. We need management---but not
the authoritarian management we have too often got.
Australia's employees need to be empowered in their
own workplaces so they can get themselves (and us)
out of the mess that our present system has contributed
to. That is what the industrial relations reform agenda
is all about: 'left libertarian' not 'new right'.
Kelty, W. (1990), Australian Industrial Relations Commission,
Transcript of Proceedings, 13 September.
Fitzgibbon, C. (1986), "Rethinking Australia's International
Competitiveness", Australian Bulletin of Labour
MIT Commission on Industrial Productivity (1989), Made
in America: Regaining the Productive Edge, MIT
Press, Cambridge, Massachusetts.
NSW Industrial Commission (1991), "State Wage Case,
May 1991, Statement", 29 May.
Shimada, H. (1990), "Labour Problems of Japanese Companies
Abroad", Japan Labor Bulletin I, January.
Spicer, I. (1991), "Industrial Relations - Where to
Now?", The New Deal Conference, S.A. Chamber of Commerce
and Industry, Adelaide, 28 August.
Taylor, R. (1991), "The Economic Politics of Sweden's
Political Parties", Current Sweden 383, June.
Townsend, R. (1985), Further Up the Organisation,
Coronet Books, Great Britain.
Trist, E. (1980), "The Environment and System-Response
Capability", Futures 12.
Why HR Nicholls?