No Ticket, No Start---No More!

Enterprise Unions---The Alternative

V C Routley

Distinction between Trade Unions and Trade Unionism

Basic to any rational debate about the role of trade unions in present-day Australian society is the need to draw a clear distinction between principle and practice. It is essential to recognise that the idea of trade unionism---of collective action by employees to negotiate with employers about wages and working conditions---exists quite independently of the particular organisations through which at any time such collective action may be undertaken. Thus, we may accept the principle of trade unionism---and, subject to varying qualifications, the great majority of the Australian population do. What we do not have to accept, however, is that the present organisational structure of trade unions is an inevitable feature of the Australian way of life. Yet, in the ongoing debate about industrial relations in Australia, it is precisely what always seems to happen. There is a continuing high level of dissatisfaction with trade unions, but the dissatisfaction is polarised in hostility towards those individual unions and union leaders whose activities from time to time disturb the community. For the most part the present trade union structure is accepted as the natural order of things.

Despite its widespread acceptance, however, there is no necessary reason why collective action by workers to bargain with employers should take place through large, centralised, bureaucratic organisations. On the contrary, it is entirely possible for the same activity to be carried on through a system of localised unions each covering a particular plant or enterprise. Clearly here is an opportunity for some lateral thinking.

Potential Advantages of Enterprise Unions

Enterprise unions would ensure greater equality of bargaining power in the labour market between buyers and sellers of labour. The support of the ordinary Australian worker for the principle of trade unionism arises from his belief that, in the absence of any form of collective action, he will be at a continuing disadvantage in bargaining with the employer. At the same time, the ordinary employer in Australia is now at a disadvantage in bargaining with the average trade union. Indeed very often he is really at their mercy since they can make decisions which will involve him in severe financial loss or, in extreme cases, put him out of business. With enterprise unions, however, the balance will be redressed and the two sides of the labour market will be more nearly equal.

A system of independent enterprise unions would ensure that industrial relations reflected the particular needs and special circumstances of employers and employers in each individual establishment. The ordinary employee in an enterprise union would have the opportunity of influencing the day-to-day details of his working environment. Issues affecting industrial relations in each establishment would be debated and decided by the workers employed in that particular establishment instead of being determined outside of it by the bureaucratic decisions of central union executives endorsed by orchestrated rank-and-file meetings.

The democratic decentralised approach of determining wages and working conditions through enterprise unions will generate conditions far more conducive to profit sharing and worker participation schemes. Decisions taken by enterprise unions will inevitably reflect the economic conditions of the particular establishment concerned since all members will be conscious that existing and future benefits for themselves and ultimately even their own job security will be dependent on the profits of their employer. Under the existing centralised bureaucratic structure, trade union executives can and do take decisions which involve redundancy for workers unlucky enough to be employed in establishments which are unable to meet union demands. Furthermore, the present trade union hierarchy is unsympathetic, if not indeed actually hostile, to the idea of worker participation and profit sharing for the simple and, from their point of view, very sound reason that such schemes weaken the loyalty of workers to the union and set up a potential source of opposition to decisions of the union executive.

A nationwide system of enterprise unions will encourage productivity. The more that costs in any establishment can be lowered the more, other things being equal, the profitability of that establishment will increase and the better the prospects of the enterprise union improving the wages and working conditions of its members. In short, the benefits of greater worker efficiency will be immediately obvious to all employees of any enterprise. Under the present centralised bureaucratic structure, any worker benefits must be paid irrespective of industry occupation, or area. There is no way such benefits can be related to specific instances of increased worker productivity. Nor do union executives really have any interest in raising productivity, simply because there is nothing in it for them. On the contrary, they really have an interest in reducing productivity. For the imposition of restrictive work practices (argued for and awarded under the guise of improved working conditions) are a standard weapon in their armoury (although they may from time to time be 'sold' in return for wage increases). And since the benefits of such restrictive work practices are obvious and the costs to the workers themselves usually appear negligible, it is not surprising that they should be strongly supported by rank and file trade union members.

A system of enterprise unions would result in far fewer and much less disruptive industrial disputes. The decision to strike or not to strike would be a matter for the members of each enterprise union to make independently. Even where industry-wide action is proposed, the members of the relevant enterprise union would vote separately on the proposal. Thus the parties who will suffer directly from any industrial dispute---employers and employees are the ones, and the only ones, who will determine whether such disputes do in fact eventuate. Under the present centralised bureaucratic structure, the decision to strike or not to strike is either determined or strongly influenced by the trade union executives. And these individuals normally suffer no economic loss whatsoever from strikes. The workers might be getting further and further into debt, the employer may be facing bankruptcy but the union officials still draw their weekly salaries. Nor is this all, for it can be plausibly argued that periodic industrial disputes are advantageous to trade union officials. It not only projects them into the public limelight but it also gives them a chance to exercise substantial power. Further, they make future negotiations with employers easier since the ever-present threat of industrial action will make even the most powerful captain of industry proceed circumspectly. From time to time militant trade union leaders who are involved in socially disruptive industrial disputes become the targets of widespread public hostility. The real blame, however, lies not with the individual union official but with the centralised bureaucratic structure which confers on a few individuals so much potential power. Thus, perhaps the most politically attractive feature of enterprise unions is that they will remove this present concentration of power in the hands of a tiny minority.Whether or no, by limiting the responsibility for industrial disputes only to those who stand to suffer direct economic loss from them, it will, at the very least, greatly reduce their frequency. As a consequence, the oft-quoted goal of industrial tribunals---the promotion of industrial peace will have been realised by the simple expedient of decentralising trade union power.

Finally, a system of enterprise unions will reduce inflationary pressures in the economy. Under the present centralised Australian system of industrial relations, increases in wages and other labour costs are granted without any direct reference to productivity. Essentially they reflect the economic power of trade unions and the readiness of industrial tribunals to appease them. In such circumstances it is hardly surprising that, for the economy as a whole, labour costs should continually be rising faster than output and that the labour market should be continually injecting inflationary pressures into the economy. Under a system of enterprise unions any rise in labour costs will be a reflection of the productivity and profitability of industrial establishments. In such a situation there is no necessary reason why national labour costs should outstrip the national growth in productivity and no reason therefore for labour costs to an ongoing source of inflation.

Obstacles to enterprise unions

The problem with good ideas more often than not arises from the difficulties involved in their practical application. Thus despite the obvious economic and social advantages of labour market negotiations being conducted directly between employers and employees there are no major obstacles to the establishment of enterprise unions in Australia.

  • opposition of vested interests; and
  • distraction of voluntary agreements.

Opposition of Vested Interests

During the present century, and especially since the end of World War II there has grown up in Australia a sizeable industrial relations industry. Central to this industry are of course the trade unions but associated with them are a wide range of Federal and State industrial tribunals and industrial associations of employers. And beyond these again are those sections of the media and the tertiary educational establishment which specialise in industrial relations matters.

Regardless of their disagreements on day-to-day issues, all members of the Australian industrial relations industry have a common interest in the maintenance of the present bureaucratic centralised system for they equate this with the preservation of their own jobs and career prospects. The possibility of a system of enterprise unions being established will be seen as a threat to the comfortable monopoly they presently enjoy. Consequently they may be expected to close ranks and unite to stifle this potential competitor.

The options open to the Australian industrial relations industry seeking to stifle the emergence of enterprise unions are many and varied. To begin with, their present status as 'industrial relations experts' gives them a 'head start' in enlisting public opinion on their side. Directly or indirectly, they can denigrate the idea of enterprise unions by raising hypothetical difficulties and by exaggerating the 'teething problems' inherent in the introduction of any new organisation, posing all the while as public spirited citizens concerned with the welfare of the community at large.

A second set of options would involver using existing industrial relations legislation to restrict the role of enterprise unions or alternatively emasculating them by bringing them within the present centralised system.

Then again there are a wide assortment of 'pressure tactics' available, ranging from discreet suggestions in the course of after-work hotel gatherings to a continuing rash of industrial disputes on apparently unrelated issues.

All these approaches can of course be used simultaneously. Furthermore, the industrial relations industry has another potential weapon. Via departments and ministers of labour, it not only has direct access to the ultimate policy-making authority in the community---the cabinet of the ruling political party---but usually also an advocate for its views.

Distraction of Voluntary Agreements

The problem with the present move for voluntary agreements is that it concentrates attention upon the wrong issue. What is important is not the concept of voluntary agreement as such---after all these are already quite common in the form of registered industrial agreements---but rather with whom the voluntary agreements are to be made. Given that labour market negotiations are still to be conducted between the employer on the one hand and his employees as a group on the other---the existence of some recognised representatives of the employees is required with whom the employer can in fact negotiate. And as things stand at the moment, those representatives will be drawn mainly, if not indeed wholly, from existing union shop stewards.

There are two major objections to such a situation. The first is that it is likely to lead to an increase in overall trade union power. After all, the most common tactic of trade unions in industrial negotiations is 'divide and conquer'---pick off one employer at a time. Under a system of voluntary agreements, the dividing will have already been done by the employers themselves---the unions will thus be able to concentrate on conquering. Indeed I should imagine that the more astute trade union executives would secretly welcome the prospect of voluntary agreements because of the opportunities for bargaining advantages they would offer, although for a number of tactical reasons they would refrain from publicly expressing their enthusiasm.

Incidentally, it is for this very reason that many employer associations and especially those which engage in industrial negotiations are lukewarm if not actually hostile towards the idea of voluntary agreements. They know from experience that a united front against trade unions will in the long run be far more effective than individual bargaining by each employer independently.

A second major objection to the idea of voluntary agreements with existing trade unions is that the ultimate benefits are likely to be very much less than its advocates presently imagine. The fact that more flexible working arrangements will be of benefit to employers, employees and the community generally does not mean that trade unions will necessarily support them. They are, from their background, conditioned to view such changes in terms of improved working conditions rather than of increased productivity. Then again if they do agree to more flexible arrangements, it will always be at a price---the highest price they can extract in the circumstances.

Finally, there is a basic difficulty with the idea of voluntary agreements between employers and existing trade unions which goes beyond industrial relations or, for that matter, economics. It is the inherently unstable nature of any agreement between organisations which lacks a community of interest. Like it or not, the average trade union has little direct interest in the prosperity of any particular enterprise. As with any organisation, it is concerned to maintain and, if possible, expand its place in the scheme of things. In so far as the continuing prosperity of any enterprise contributes to this goal by maintaining or increasing its total membership, well and good; but where objectives no longer correspond as, for instance, in the case of demarcation disputes, the prosperity of the enterprise is expendable.


In view of the foregoing obstacles, it would be unduly optimistic to expect that enterprise unions will emerge spontaneously. From time to time instances of trade union tyranny lead to the establishment of informal organisations within an enterprise which may determine wages and working conditions, varying to some extent from current award provisions, but these organisations affect only a microscopic sector of the labour force and attract attention simply because they are in fact exceptional. The emergence of enterprise unions on any significant scale must be preceded by the establishment of a central co-ordinating body available to advise and assist employers and employees who wish to establish such organisations and, at least in the early stages, able to protect them from the various overt and covert attempts to undermine them which the apparatchiks of the present industrial relations industry may be expected to make.

In this context there is scope for some elaboration of the present Federal Opposition's industrial relations policy. In general terms, that document represents a major advance on its predecessors. In particular it embodies a coherent philosophy---'to return the primary responsibility for industrial relations ... to employers and employees at the workplace' (2.1). In other words, subject to constraints imposed by legislation, management and workers should be able to make whatever agreements suit them free of any outside interference. In pursuance of this philosophy, the policy document speaks in section 7.5 of 'facilitating the consolidation of single enterprise bargaining units'. However, given the obstacles to the establishment of enterprise unions, a more positive approach is essential. Earlier in the policy document, in discussing voluntary agreements (2.4), the promise is made that 'we will publish guidelines on their drafting and contents and will publish model forms of agreement that may be used by employers and employees. The same groundwork, however, needs to be done for enterprise unions. Perhaps behind the scenes it is presently beijing done. One would certainly hope so.

Why HR Nicholls?