The Law and the Labour Market

Workplace Management and Industrial Relations: The Great Watershed

Richard Blandy


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 accepted.

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 outside it.

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 and employers'.

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 parties themselves....

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 main changes:

(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 wages ...

... 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 war ..."

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 endeavours. ...

... 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 restricted.

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 efficient lines.

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 organisations...."

Alternatives to Arbitration (Allen and Unwin 1986), pp. 77-80. Paper presented to a conference sponsored by the Hancock Committee of Review, Sydney, October 1984.

"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 is right...."

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 that objective.

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.

Economic Factors:

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 arise.

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 and regulation.

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.

Social Factors:

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 are:

  • 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, pp. 98-99):
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 organisational arrangements.
... 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 added)

    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).

    Further Reforms:

    Beyond the Wage Case, further reforms will be needed to support an effective evolution of enterprise-focussed industrial relations:

    • 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 interpretation) issues.
    • 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, like Austrade).


    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 12:4, September.

    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.

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