What about collective bargaining?

The state of industrial relations
Chris Briggs, Rae Cooper & Bradon Ellem

The Workplace Relations Act, 1996 broke from one hundred years of tradition by introducing scope for individual agreements in the industrial relations system. The Coalition government claims its industrial relations policies enhance the choices and flexibility available in the workplace. The reality is something else: the systematic undermining of collective bargaining. The right for employees to choose to bargain collectively, and requiring employers to recognise this choice, is legally protected in all other OECD nations, even in the United States. The effect of the Workplace Relations Act has been to allow employers to evade and undermine bargaining collectively and force employees onto individual agreements. This situation will be made worse with the industrial relations changes flagged in 2005. In practice, the effect of the Coalition's policies on employees is less choice, less voice on workplace issues and worse outcomes.

This chapter sets out evidence on how collective bargaining and freedom of association have been undermined since 1996 and identifies the ways in which the upcoming changes in industrial relations regulation will worsen this situation. The discussion centres on three key questions. Why does collective bargaining matter? How does Australia's regime compare to international practice in relation to collective bargaining? How will the Coalition's 2005 'reforms' impact on Australian workers' collective bargaining rights?

Why does collective bargaining matter?

Collective bargaining is viewed as a fundamental human right under international law by the United Nations and the International Labour Organisation (ILO) (a tripartite body which might be described as the United Nations of labour relations). The right for employees to join a union and to have their wages and conditions collectively negotiated, if they so choose, holds a special place in the ILO's standards. Convention 87 Freedom of Association and Protection of the Right to Organise (1948) sets out workers' fundamental right to form and join independent union organisations and argues that this is a responsibility of national governments to facilitate. Convention 98 on the Right to Organise and Collective Bargaining (1949) sets out the rights of employees to collective bargaining and encourages countries to establish mechanisms to allow for the process and to ensure that workers are protected against anti-union employer activities. Both of these conventions were ratified by the Australian government in 1973. Thirty-two years later, the Howard government's legislation, policies and practices have rendered the rights that the ILO conventions confer meaningless.

Collective bargaining arises from the obvious and enduring truth - which no amount of spin can obscure for long - that most employees, most of the time, confront a power imbalance at work in dealing with their employer. The exact way in which this imbalance plays out varies from time to time, place to place, occupation to occupation. But exist it necessarily does. Employees can sometimes sort out issues individually with their employers but overall they face the imbalance of bargaining power at all stages of their working lives: when they seek employment, start a job, establish working conditions, when there are changes at work, when they have a grievance with the way their supervisors treat them, when they are retrenched. It is precisely for these reasons that the ILO has sought to ensure that employees can have access to union representation and engage in meaningful collective bargaining without fear of retribution from government or employers.

Much the same as the ILO's position, our defence of the merits of collective bargaining is not simply a matter of ideology. Collective bargaining does matter in a very practical way. It makes a real difference to the experience of work for employees and has rightly been recognised as a necessary precondition for social justice. There is ample evidence from scores of countries over many decades that employees do better collectively than individually. Academic research clearly illustrates that this is just as true of Australia today as it is historically and in other countries.

Ordinary workers' wages are higher under collective bargaining

Regardless of the spin the federal government seeks to put on wage outcomes from individual contracts, it is clear from the evidence that collective bargaining delivers better wages than individual agreements for ordinary workers. The raw data on wage outcomes suggests, at a cursory glance, that the wages of employees covered by individual contracts are higher than those on other arrangements. If, however, we remove managers and senior administrators - a good proportion of whom are direct employees of federal government departments and are compelled to sign Australian Workplace Agreements (AWAs) as a condition of employment - then the situation looks very different indeed. Australian Bureau of Statistics (ABS) data suggest that non-managerial workers on registered individual contracts (largely AWAs) receive an average of 2 per cent less per hour than workers on registered collective agreements. For different groups of workers the wage effect is even greater. For instance, women covered by collective agreements have a substantially higher hourly wage rate (11 per cent more) than women employed on registered individual contracts (see also Chapter 8).

Individual contracts offer one-sided flexibility

The federal government claims that individual contracts offer workers and employees the capacity to negotiate flexible outcomes tailored to the circumstances of individual employees and individual workplaces. The evidence on the impact of AWAs upon the working conditions since 1996 is, however, unequivocal; AWAs offer a one-sided flexibility to employers. Across industry, AWAs have been used to give employers 'flexibility' in the scheduling of employees' work. For employees this has meant the removal of loadings and penalties, less discretion over their working hours and lower pay.

Ordinary workers on AWAs are less satisfied

Ordinary workers on individual contracts are less satisfied with a range of workplace issues than ordinary workers on other types of agreements. Non-managerial employees covered by AWAs are less satisfied with their pay and working conditions than workers covered by other agreements. Ordinary AWA employees report having less control over their working hours. They find the intensity of work more difficult to deal with, and they report experiencing greater difficulties in balancing work and family commitments than do other workers.

It is clear that collective bargaining delivers better wages, conditions and 'say' in the workplace than do individual agreements. The available evidence suggests that the gains from AWAs have been of greater benefit to employers than employees and have been used specifically to reduce the ability of trade unions to effectively regulate work and to represent employees. It is precisely because collective bargaining delivers practical gains that the Commonwealth government wants to undermine it. It is the very virulence of the attack on collective bargaining that tells us that this is so.

How does Australia compare? (or why Australia does not meet international standards on collective bargaining)

The Coalition and sympathetic media commentators sometimes claim that collective bargaining is 'outdated' and that measures to encourage individual contracts are necessary for our economy to compete internationally. The reality is quite the opposite. In other nations with decentralised bargaining systems like ours - the United States, United Kingdom, Ireland and Canada - there is a ballot process to allow employees a genuine choice as to whether they wish to be represented by a union. If the ballot verdict is affirmative, the employer is required by law to respect workers' wishes and bargain with their chosen union representative. A legal guarantee of an employee's right to collective bargaining - where that is their preference - is standard practice internationally.

In Australia, by contrast, the Workplace Relations Act is based on the principle that individual and collective agreements should be 'treated equally', with no preference for either. In so doing, this act turned on its head a hundred years of labour law, which said that collective bargaining should be encouraged to modify the imbalance in bargaining power and to give employees a voice in the workplace. Collective agreements were retained in the Act but the way was eased for employers to introduce individual contracts (AWAs).

This may sound fair, but in practice means that unscrupulous employers can bully, frustrate and evade the preference of their employees for collective representation. Take for instance the case of gaming employees at a Gold Coast casino. The employees spent six years trying to get their employer to negotiate an agreement. Their take-home income actually declined as minimum wage increases were less than the loss of conditions under 'award simplification'. The employees did not go on strike but began wearing badges in protest. The response of the casino management was to escort the gaming employees from the workplace, many of whom were long-serving, and to lock them out without pay. In the absence of legal processes to direct unreasonable employers to respect the wishes of their employees to bargain collectively, there is little that employees without bargaining power, like these gaming workers, can do in these circumstances.

At the time AWAs were introduced, the Liberal-National (Coalition) government responded to extensive criticisms of their fairness by claiming it had instituted statutory protections which would prevent managers unfairly pressuring employees into signing individual contracts. In the second reading speech accompanying the introduction of the bill, the then Minister for Workplace Relations, Peter Reith, said:

The government accepts that greater emphasis on flexibility and self-regulation under AWAs must be accompanied by appropriate employee protections and sanctions against those who abuse the flexibility we are providing Â… the use of duress to obtain an AWA will, where complaint is upheld, lead to its invalidation.

Simultaneously, however, the government legislated to create loopholes in the protection against duress.

The first loophole was to allow take-it-or-leave-it AWAs. Employers can legally make signing an AWA a condition of employment when employees start a job. Sign the AWA, agree to this wage and these conditions, and sign away any right to collective bargaining, or you don't get the job. This practice is well established in the Australian public service. There is no better illustration than the Howard government's treatment of ex-Commonwealth Employment Service employees upon the establishment of Employment National in 1996, when workers were compelled to sign an AWA as a condition of employment. What's more, if the employee changes jobs within an organisation, the employer can also make continued employment contingent on signing an AWA. In telecommunications, employees have been denied access to transfers and promotions for refusing to sign an AWA. There is no genuine choice for employees in these circumstances, and there is no protection for their collective rights.

Perhaps the most obvious breach of the promise that AWAs would be voluntary was legislating for 'AWA Lockouts'. Other OECD nations either specifically prohibit lockouts or permit them only under exceptional circumstances, where an employer is considered to suffer from an imbalance in bargaining power. In no other OECD nation are employers allowed to lock their employees out to coerce them into signing an individual agreement and to undermine their preference for collective bargaining. AWAs are meant to be voluntary agreements between employers and individual employees, but a series of long lockouts, some running for as long as 6-9 months, have occurred in regional areas to force employees to sign AWAs. In one case, an individual worker was locked out for two and a half months to try to force him to sign an AWA.

The targets of lockouts are usually blue-collar production workers who often have limited savings and few alternative employment options. Employees who are locked out cannot claim unemployment benefits. A Federal Court judge has described the financial devastation and personal and psychological impacts of a long-running lockout following the resumption of work. He noted the workers were in 'precarious financial circumstances' leading to 'mounting unpaid bills' and 'struggling to survive financially'. They were 'experiencing stress' because of being paid 'substantially less' than other employees, their financial circumstances leading some into 'poor mental health as a consequence of the situation in which they have been placed'. Unions have supplied testimony in lockout cases of workers having to sell their house, marriage breakdowns, children unable to get needed medications and financial ruin. Journalists have reported workers in the midst of a lockout 'hunting rabbits' in 'a scene reminiscent of the Great Depression'. The consequences for the individuals and the families who have to endure protracted lockouts can be devastating. These cases may be rare. But so long as employers are free to lockout their employees for months and months to coerce them into signing individual agreements; there is no authentic right to collective bargaining in Australia.

The Workplace Relations Act (Part XA) sets out the right of individuals to associate or not to associate. No employee can be 'victimised, injured, dismissed or discriminated' on the basis of union membership (or non-membership) and an employer cannot induce an employee to leave a union 'by threats or promises or otherwise.' At first sight this seems to constitute an effective protection of an employee's right to associate, in line with international standards. And the resolution of the highest profile fight over unionism in the Howard years thus far - the waterfront dispute of 1998 - seemed to confirm it. Here, the Federal Court found that there was an arguable case that Patrick Stevedores had conspired to thwart the freedom of association clauses in the Act. Since that time, the hope which this decision inspired among unionists has proved as groundless as the employer and government fears it provoked. The judicial authorities have developed narrow, individualistic constructions of the Act so as to almost empty the provisions of effective meaning. These decisions have been quite at odds with a common sense reading of the clauses.

Nowhere was this clearer than in the dispute which followed the offer of contracts by BHP to its iron ore workers in Western Australia's Pilbara. The unions argued that the company was 'injuring' workers in their employment because they were members of a union and was offering 'inducements' for them to resign their membership. The Federal Court ruled the position of the employees was not prejudiced on the basis of union membership because they were not individually 'singled out' (the offer was to all employees), those who did not sign remained on the same wages and conditions and there was no inducement to leave the union because individual employees could still remain a member after signing an individual agreement. In this case, the Federal Court separated membership from the purpose and activities of a union. Central to these activities of course is collective bargaining. The response of the ACTU was that this was like saying you could belong to golf club, but not use the course.

These examples clearly show that while freedom of association clauses remain in the law, they have been rendered almost meaningless in the absence of obligations on employers to recognise collective bargaining rights. Since the Federal Court's decision, the full impact of individualisation has become clear right across the Pilbara's iron ore sites. Initially, the weapon of choice in this assault on collective bargaining was the Western Australian state government's version of AWAs, the Workplace Agreement, or 'woppa' as it became known. Like most such contracts, the woppas gave management direct control over work and removed effective collective representation from the workplace. At BHP it was no secret that this was the intention. Company executives had told the Federal Court in 2000 that if they 'could exclude third parties, i.e. the unions, there was the prospect of getting better flexibilities and therefore greater productivity'.

Rio Tinto, the other company mining the Pilbara, 'offered' its workers federally registered AWAs after the incoming state Labor government repealed the Western Australian woppa legislation. Offering is one thing; acceptance another. At first employees were very wary and indeed voted down a non-union collective agreement. The company was in a strong position. New starts of course had no choice about signing AWAs, while existing employees were ceaselessly 'consulted' and 'informed' about the gains which AWAs would bring their way. The company added to the pressure and the uncertainty that surround these complex matters of work regulation by insisting that employees had to sign up right away. For their part, activists trying to re-unionise Rio had their own plan - and that was to seek to bargain collectively with the resource giant while arguing there was no reason to sign up so quickly. Although there are, of course, no requirements to bargain in good faith under the Workplace Relations Act, there are such provisions under the Western Australian state legislation, so the unions sought to have a state agreement or award made. Such escapes from enforced individual arrangements will no longer be possible if the Commonwealth takes over the states' powers (see also Chapter 1). In this case the unions were thwarted by strategic uncertainties on their own side, but the underlying problem, as it is for so many employees, was the pressure the company was able to mount by arguing that employees had to sign AWAs to be part of the 'team' - and, critically, that they had to sign them promptly.

Finally, it must also be remembered, and the Pilbara story makes this very clear, that making an AWA a condition of employment puts ongoing and relentless pressure on unions. Their membership is likely to dwindle regardless of how well they are doing their job, as labour turnover brings new employees under individual contracts into the workplace. This erosion of collective bargaining sanctioned by law thus appears as somehow inevitable, sparing management the need for an open confrontation with a unionised workforce.

How will the 2005 'reforms' impact on collective bargaining rights?

If the past decade has seen a dilution in the ability of Australian workers to bargain collectively, the Coalition's recently announced industrial relations package will only make matters worse.

Firstly, the government is using funding to coerce employers and state governments into taking up AWAs. In higher education, the government has made $280 million of future funding for the already cash-starved institutions contingent upon meeting the so-called 'Higher Education Workplace Relations Requirements'. In order to access Commonwealth grants scheme funding, universities must offer, and actively promote, AWAs to all current and future staff, as well as put in place a number of other measures which would undermine union presence on campuses across the country. Despite the fact that the package is actively opposed by the employer body in the sector, the AVCC (Australian Vice-Chancellors' Committee), the government has signalled that it will push ahead with the changes. Similar coercion is being applied by the federal government to its reticent state counterparts in the funding of vocational education. Here, federal funding to state-based institutions such as TAFE has been made contingent upon the offer of AWAs and the implementation of other changes in employment regulation. These strategies fit neatly with the decade-long activist intervention of the government into well-organised industries to force employers to break union bargaining and to undermine union rights and effectiveness. The government's plans do not stop in higher education. There have also been Commonwealth threats to link state funding for roads and water projects with taking up of its 'reforms' for the building industry.

Secondly, awards will no longer be used as a benchmark for AWAs. These individual contracts will only have to meet five legislated minimum standards: the minimum wage, some leave entitlements (personal, parental, annual) and maximum ordinary working hours (how many is unspecified at this stage). Common award conditions which could now be 'stripped out' include overtime rates, shift penalties, casual loadings, leave loadings, on-call allowances, payments for dangerous work, redundancy pay, long service leave, study leave and lunch/tea breaks. The gains for employers in moving their employees off awards and collective agreements onto AWAs will be enormous. Furthermore, once some employers get a competitive advantage, others will be under even greater pressure to follow suit to survive.

Thirdly, bargaining power will be tilted towards employers to assist them in moving their employees onto AWAs. Further restrictions will be placed on unions taking industrial action whilst lockouts are explicitly exempt from these changes. Unions, for instance, will have to undertake a bureaucratic secret ballot process which could take months to complete whilst employers will remain free to lockout their employees with three-days notice, no questions asked. Placing constraints on unions whilst still allowing employers to deploy AWA lockouts obviously severely tilts bargaining power.

Fourthly, the process for making an AWA will be greatly simplified. Hitherto, AWAs have been scrutinised by the Office of the Employment Advocate (OEA) to ensure they meet the 'no disadvantage test' - that is, workers are not to be worse off overall than they would be under the award. As the award safety net will no longer be the benchmark, there will effectively be no scrutiny as the agreement merely must have the five minimum standards.

The effect of these reforms will be to cajole, empower and facilitate employers into moving their employees onto individual agreements, irrespective of whether this is the preference of their employees.

Conclusion

Individual contracts mean less pay, worse conditions, less control over work and lower work satisfaction for ordinary Australian employees. Collective bargaining allows workers to negotiate their terms and conditions of employment on a more equal footing with their employer, and this makes a real difference to the working lives of employees both in Australia and abroad. It is for these reasons that the ILO has established standards which enshrine employees' rights to join unions, to bargain collectively and to protect these choices against employer attack. In keeping with these standards, a legal guarantee of employees' collective bargaining rights is now accepted international practice. Not so in Australia. The Workplace Relations Act systematically undermines collective bargaining by allowing individual contracts to override collectively determined agreements. The federal government argues that it seeks to provide 'choice' in workplaces. In establishing a system which allows employers to single out, harass, victimise, and lockout employees who seek to exercise their right to collective bargaining, however, it has severely undermined employee choice. The recently proposed changes to the regulation of bargaining, which will make it easier for employers to force employees onto individual contracts, will undermine the standards which individual contracts must meet and hamstring the ability of the collective to resist the changes. These proposals are bad news for Australian workers. They can mean nothing but the further undermining of wages, conditions and human rights.


This is one of the five specially invited chapters on the State of Industrial Relations from the Evatt Foundation's new book, The State of the States 2005. Chris Briggs is a Senior Research Fellow with acirrt at the University of Sydney, Rae Cooper is a lecturer in Work and Organisational Studies in the School of Business at the University of Sydney and a Vice-President of the Evatt Foundation, and Bradon Ellem is an Associate Professor in the School of Busines at the University of Sydney. Note that the extensive references for the chapter contained in the book have not been reproduced in this website version.


See also: