The inequality crisis, industry bargaining and the future of the union movement

Jo Schofield

Look around this room and imagine it represents Australia. Ask yourself: Why is it that one in four people here – in this room – are being paid the barest legal minimum? In many cases that’s Australians earning a wage of less than $700 a week. That’s 700 bucks a week for tax, for rent, for clothes, for a car, for insurance, for food, for medical bills, for the kids’ footie boots – for everything.

Ask yourself another question: why is it that four in ten people in this room rely on insecure work – through casual shifts, gig economy contracts and the like? That’s 40 per cent of Australians not knowing from one day to the next whether they will work enough hours to put food on the table this week.

Answers to these questions are uncomfortable. They are uncomfortable for business. They are uncomfortable for Labor and conservatives alike. And the answers are uncomfortable for the union movement. The answers speak to a great failure, a failure that has left many workers facing impossible hurdles to provide a decent standard of living for themselves and their families.

I want to state today, as shown by the statistics affecting people in rooms like these, in this city, this state and this country, that the current industrial relations system has been nothing less than a disaster for many of the 120,000 workers represented by United Voice – as well as millions of others. That leads to only one conclusion: Our current industrial relations system has failed workers. Enterprise bargaining has failed workers. The award system has failed workers.

But I am not just here to talk about the disaster that has engulfed my union members. I am here to present a solution. Today I will explain why giving workers a genuine voice through effective collective bargaining is a solution to the wage crisis, a crisis that has hurt so many workers and has in turn led to an inequality crisis. I will explain what the practice we call industry bargaining would mean to United Voice’s members as they seek to address an imbalance in industrial power that has grown over almost three decades. And I will explain how a collective bargaining system for a modern economy must allow workers to bargain across their industries, as well as within their workplaces.

In doing so, I will give you the thinking behind United Voice’s demand to politicians of all persuasions ahead of the next federal election:  We want workers to be given real power after the failure of the industrial relations system; We want workers to have a real say in decisions that affect their job security, their wages and their lives; We want a commitment – from Labor and Liberal alike – that industry bargaining is the mechanism to give workers the voice they need to solve the current wage crisis.

And let me be very clear: United Voice is not talking about tinkering with sections of legislation, reviewing procedures or bandaging a failed system. We are talking about a new social contract between organised labour and employers that puts to rest the imbalance and the related abuses of the current system.

Let me give a brief account of what I want to talk to you about today. First, I want to speak about a shift in society, and how it has left workers so exposed. Second, I want to examine the historical context of how we got to where we are. And finally, I want to describe United Voice’s proposals for effective change.

Society

First, the shift in society that has occurred. The truth is that big business and successive governments have reshaped our economy and values so it is now considered acceptable that people who go to work every day should live in poverty or scrape out the barest of livings. Big business has trampled over that once great Australian belief that those who work should earn enough to clothe, feed and house themselves, and still have enough left over to spend on other life necessities for themselves and their children. Successive governments have presided over a system that has led to the subjugation of workers in the name of choice, competitiveness, shareholder value, the gig economy and good old fashioned greed.

As a proud trade union, we know that the institutionally powerful will always pursue this agenda to some measure. That is why we exist – to counter the greedy instincts of the few, balancing it with the collective voice of the many. That tension is regulated by law. Over time, those laws have changed and morphed into what has become our present-day industrial relations system. There can be little debate the scales in this system have tipped too far towards the interests of big business.

And in an environment in which union powers have been repeatedly eroded, a direct effect has been pressure on wages and an increase in inequality. The impact of the wage crisis on workers is clear, sustained and devastating. Good people, doing decent and meaningful work are living in poverty. Whole classes of workers experience regular and systemic exploitation. For example, exposés of wage theft in some of Melbourne’s best restaurants show us a hospitality industry where mostly young staff are systemically underpaid. Business models have been set up to deliberately rip off vulnerable groups in the labour market. For example, cleaners – many of them migrant workers – who worked for 30 years in Australia’s Parliament House recently faced the prospect of losing  their jobs when the cleaning contract changed.

We’ve all heard the words: minimum wage, casualisation, outsourcing, job insecurity. United Voice members live with these words in their lives every day. Take these recent accounts from workers responding to the recent 64-cent-an-hour increase in the minimum wage: This is Alison, a cleaner from NSW: Living on the wage of school cleaner, 88 per cent of my wage goes on RENT! Never mind paying any other bill or having a life. This is Shane, an early childhood educator in Queensland: I work as an educator in long day care, I earn $650 roughly a week after tax. If I miss a day because myself or my daughter is sick it means I cannot afford a bill the following week. And this is Georgina, a hotel worker in South Australia: I work weekends and nights till at least 4am. I’m then up at 7am for the school run. My pay has been dropping dramatically over the past few years. I’m still a casual, no sick pay, no paid holidays.

These stories put a real face on the broader shifts in Australian society which are clear in the statistics. As I said at the outset, almost 25 per cent of workers have been forced backwards on to the barest minimum conditions, either the minimum wage or an award. The reliance on bare minimums has happened relatively quickly. In 2010, it was only 15 percent of workers who were on the bare minimum. 

Despite consistent increases in worker productivity, wage growth has stalled at the worst rate since 1991. And while wage growth has been at 20-year lows, corporate profits hit an all-time high in the first quarter of this year. Even amid anaemic wage growth, the minimum wage is failing to keep pace with incomes in the economy more generally. And inequality is rising faster in Australia than anywhere in the developed world. Endemic wage theft is no accident. Attacks on trade unions are not an accident. The winding back of our rights to organise and bargain is no accident. The rise of profit-gouging business models and downward pressure on wages is no accident. Targeting penalty rate cuts at some of Australia’s lowest-paid workers is no accident.

These things represent the fracturing of a long-held consensus. The consensus was that the rights of workers to act collectively to gain a fair share from the rewards of their work was to be respected and upheld in our industrial relations system. To address this fracture in society we must restore the voice and the rights of workers through the reforms that my union is proposing.

History

Let’s now look at the path that has led us to where we are today: Why has a system adopted with every hope of success failed to live up to early expectations? A quick look at the history might be helpful.

In 1991 Australia’s then Labor government embraced enterprise-level bargaining. Enterprise bargaining was supported by Labor and the ACTU as part of the Accord, on the basis that the existing system was too centralised. The new model saw workers bargaining at the workplace level, within a safety net of minimum standards provided by tribunals setting awards. But, for reasons I am about to discuss, millions of workers in their workplaces have not seen reasonable, reliable or sustainable gains under enterprise bargaining. In fact, they’ve lost out. The result is more and more workers are dependent on the awards system to maintain their wages and conditions. Remember, awards were designed to be a ‘safety net’ of wages and conditions, underpinning wages growth and acting as a fallback in the rare instances enterprise bargaining did not occur. For reasons I am about to discuss, the award system is no longer a floor but a ceiling.

Awards have effectively placed a cap on workers’ wages and conditions across a quarter of the workforce, and this number is growing. The safety net has transformed into a cage. A key tenet of the enterprise bargaining system was that parties would be able to bargain and expected to do so in good faith. That trust in enterprise bargaining was misplaced and ultimately very damaging to many workers.

Since the early 90s labour markets have been splintered by forces that have reshaped our members’ lives.

  • Whole areas of work such as cleaning, security and prisons and detention, facility management and catering, have been exposed to private companies, who often sub-contract their workforce from even leaner, meaner 'labour hire' companies. Many do this deliberately to avoid and undercut pay and conditions set by an agreement.
  • Other companies have engaged in a 'race to the bottom' to win contracts for government services, such as cleaning, which were previously not privatised. Companies that want to pay decent wages soon lose out to the bottom-feeders that undercut tenders using minimum award rates, or worse.
  • Work previously undertaken on a public good, not-for-profit basis, such as early childhood education and care and aged and disability care, has been exposed to market forces with often questionable outcomes for workers and the public.
  • And companies embracing new business models – or simply looking to game the system – have pushed responsibilities and risk on to individuals: calling them 'contractors' and circumventing the legal protections of an employer-labour relationship altogether.

These 'race to the bottom' business models, conservative legislation enabling these practices and eroding workers’ rights, and low or even illegal wages, have all effectively imported terms that were once rightly foreign to Australia: 'the precariat. The working poor. The underclass'. In these conditions, enterprise bargaining based on a stable, well-represented workplace has fallen far short of its original lofty ideals. Enterprise bargaining has become so dispersed, workers have been unable to level the playing field between employer and labour in areas of fierce market competition, egregious business models and fragmented labour markets.

Ask yourself this: What bargaining power do two or three security guards really have when they are employed by a multinational private contractor and not the facility they patrol? What bargaining power do two or three cleaners really have, when a wage increase above the award will likely result in their employer – a subcontractor – being undercut at the next tender? What bargaining power do early childhood educators really have to seek higher wages from their employer when sector funding is almost exclusively determined by government, and educators know parents can’t afford to pay more?

The answer is none. The simple truth is that the enterprise bargaining system simply doesn’t work for many United Voice members. It is worth pointing out that Australia’s system for bargaining is at the extreme end in terms of its level of decentralisation. Most other OECD countries have a more moderate mix of co-ordination and decentralisation. And having spotted this power imbalance, many employers have exploited it.

The failure of the current bargaining system is also evident in the statistics. In the year to June 2017, the number of enterprise bargaining agreements endorsed by the Fair Work Commission was the lowest number since 1995. Not only are there fewer agreements being made, covering fewer workers, the average wage increase under agreements has steadily declined in the past three years, down to just 3.1%.1 

Effective change

This brings me to my final point: a roadmap for effective change. The failings of the current system are why we are arguing for industry bargaining as a solution to a failed system. At United Voice we fight hard for the rights of our members. Tens of thousands of workers are better off due to their union vigorously arguing their case. But – caught in the grip of a failed industrial relations system – the wins are incremental. In some cases they are wins to hang on to the rights that we have. They are, frankly, wins in fights we should not even be having: Fights to prevent businesses sub-contracting their core work to labour hire companies on lower wages and conditions. Fights to mirror reasonable pay and conditions from one similar workplace to another. Fights to prevent contract changes throwing out workers who have worked at the same site for decades.

While our wins have shown us we need stronger collective bargaining rights to effectively represent our members – our losses have shown us exactly the same thing! The failure of the system to enable us to prosecute our case for an equal remuneration order for early childhood educators, despite the manifest gender injustice of their wages. The fact that multi-enterprise agreements covering scattered workplaces are cumbersome, almost impossible to renegotiate and give workers almost no bargaining power. Innovative United Voice programs that attempt to arrive at better industry-wide treatment of workers – and there have been several, including Cleanstart for cleaners and Safeguard for security workers – these programs falter when a lowest-common-denominator employer undercuts the rest.

Both our wins, and our losses, have convinced us that it is time for United Voice to embark on a new fight for industry bargaining. And United Voice is proud to be a leader in this fight. United Voice has long held the view that industry-wide settlements are a necessity in industries we cover. Over 20 years ago we warned that the continued devolution of wage fixing to the enterprise level would 'gut' the award system and drive wages down – and it has.  We argued that our members in contracting and government-funded sectors of the economy would not be able to access bargaining in a 'one-size-fits-all' enterprise bargaining framework – and we were right. And we expressed our concern that enterprise bargaining would put women at a relative disadvantage to men – and it has. 

It is entirely consistent with our long-held advocacy that we pick up our decades long fight for Australia’s collective bargaining system to be transformed into a system that allows workers’ voices to be heard across industries. As one of the most diverse unions in the country, we mean ALL workers’ voices must be heard. Irrespective of where they work. Irrespective of their gender, age, nationality or race. Irrespective of the nature of their employer or industry.

United Voice proposes some simple principles to bear in mind when establishing an industry based collective bargaining system:

  • It must be universal: it must meet the needs of workers who have fallen through the gaps in the current system.
  • It must be accessible: ALL workers must be able to benefit from a system designed to be a tide that lifts all boats.
  • It must give workers a real voice and restore their power to determine their living standards.

In short: Workers need to be able to have a say about their pay, their conditions. Workers need to be able to have a say in the kinds of jobs they want to live happy, fulfilled lives. So cleaners, not in one office block, but in all office blocks can bargain together, jointly and collectively with their employers to secure a fair deal. A stronger collective voice means a stronger union that is able to represent the needs of its members effectively across the reshaped economy.

The current industrial relations system has failed our members. And it has failed our country. The costs of low pay, underemployment, unemployment and exploitation extend beyond a workplace or an industry. They extend into the home and the family. They have a corrosive impact on social inclusion, on trust, participation, attitudes and overall well-being and happiness.

United Voice is calling on politicians of all stripes to support industry bargaining as a just and reasonable solution to the wage crisis. If the industrial relations system can’t meet the needs of United Voice members, then it is not a fit-for-purpose system in the modern economy. 

The politics

Finally, a few words on the politics of what we are talking about. Our current broken system has both Labor and Liberal fingerprints on it.

Whether fashioned by good intentions or sinister ones – the results are clear. Both parties bear responsibility and now have an obligation to remedy. We are of course an affiliate of the ACTU and we strongly endorse and support the important work that is being done in the Change the Rules campaign. And our union enjoys a special relationship with the Labor Party, a deep and enduring history of mutual co-operation. All strong relationships involve give and take, compromise and meeting of the minds. But on this issue, let me once again be very clear. Baby steps are not an option. Wallpapering over the cracks is not an option. Special measures for ‘deserving cases’ are not an option.

I am encouraged by Labor’s progressive and ambitious proposals on matters like negative gearing and dividend imputation. Labor sees the need for structural economic change. We want Labor to take the opportunity now to embrace industry bargaining as a further tool in its arsenal against inequality and in pursuit of the fair go agenda. And we will work enthusiastically to flesh out the detail and intricacies of a new system. But for United Voice, this is too important an issue – and the consequences too serious – for inaction. We will use all the options at our disposal to make it happen. 

I trust today that I have set out the need for change, and how we can achieve it. We have set out to begin a public discourse about industry bargaining to emphasise the need to re-set the system so workers have a genuine voice in their workplaces. So we can bargain across industries to win jobs we can count on that provide security and decency of treatment. Where the dignity of work is rewarded with decent pay and conditions. And where our laws and institutions are not stacked against workers, but instead embody and proudly assert the great Australian value of the fair go for all, and hold respect for working people at their core.


This is the text of the address 'The inequality crisis, industry bargaining and the future of the union movement', presented by Jo Schofield at the Sydney Mechanics’ School of Arts on Monday 18 February 2018. Jo Schofield is the National Secretary of United Voice. The address was hosted by the Evatt Foundation and chaired by the President, Christopher Sheil.


See also:

Suggested citation
Schofield, Jo, 'The inequality crisis, industry bargaining and the future of the union movement', Evatt Journal, Vol.17, No. 2, June 2018.<https://evatt.org.au/papers/inequality-crisis-industry-bargaining-and-future-union-movement.html>