30 Years of Change in Industrial Relations
You are here:This article is one of three exploring the history of industrial relations regulation in Australia over the last 30 years, to place the changes that have eventuated in the context of the current uncertainty in the world economy and particularly the problems being experienced by Europe. This article focuses on changes in the award system. The other articles look at calls to increase the involvement of Fair Work Australia in arbitrating collective bargaining disputes in the aftermath of the Qantas dispute, as well as continuing declines in union membership.
Australia-Europe Economic Comparisons, 30 Years Apart
Our dollar was floated in 1983 under then Treasurer Paul Keating, to increase the competitive pressures of the world economy on our local economy and reduce distortions caused by lingering tariffs, which were to be eventually eliminated.
During the mid-1980s, Australia was confronted by a balance of payments crisis (remember Paul Keating’s famous ‘Banana Republic’ comment from 1986?Hello, Europe...), with our traditional reliance on national commodities trading no longer sufficient to offset our demand for manufactured goods.
Our Aussie dollar dropped below US$0.60 (it had reached its lowest in April 2001 when AUS$1 bought only US$0.4775, a far cry from today’s parity. In contrast, in December 1973, AUS$1 bought US$1.4885). The image below shows movements in our dollar against the GBP, US$ and Trade Weighted Index over the last 50 years.
A significant proportion of our economy was now in services, and manufacturing industries were under significant pressure to become competitive with imports.
Crisis Leads to Change in Australian IR
This economic situation led to changes to our industrial relations system. PM Hawke’s early 1980s centralised experiment with The Accord was jettisoned in favour of a more decentralised system, firstly within the existing industrial relations legislative framework.
After the then Australian Industrial Relations Commission (AIRC) was criticised for obstructing moves towards enterprise bargaining, its ability to reject agreements was curtailed in the early 1990s and the ability to enter into non-union agreements was introduced in 1993 under PM Keating.
In 1996, the Howard Coalition Government was elected. Amongst other changes, Australian Workplace Agreements (AWAs) were introduced, albeit their take up was not to be significant until some years after with Work Choices. It is ironic that in 2009, Julia Gillard’s Fair Work Act rolled back even that early change, under the mask of redressing the wrongs introduced by the 2006 Work Choices legislation. Unions feel threatened by AWAs.
The Award System
Throughout this early period of change, the AIRC retained a strong role in establishing a minimum safety net of conditions under awards, generally through applications by the ACTU for test case provisions to apply across all awards, and also via regular national wage cases or Safety Net Reviews, as they came to be known.
In 2006, Work Choices was introduced, ending the Federal Commission’s virtually unlimited ability to continue to add new conditions to the minimum award safety net, or to ultimately compel outcomes on parties to disputes via arbitrated outcomes, in the event they could not reach agreement themselves.
Just prior to Work Choices, the AIRC proposed to insert new award provisions extending redundancy provisions to employees of small employers. This was largely overruled by Work Choices, although it remained a legacy provision in a number of awards. An economic rationalist would say that redundancy pay is intended as a financial discouragement to major business restructuring, and the Howard Government didn’t want this extended to small businesses.
Significantly, Work Choices – in a somewhat sneaky way that wasn’t immediately apparent from a read of the legislation – prevented any new employer from being covered by awards (from 27 March 2006). Additionally, any employer entering into a formal workplace agreement would no longer return to the former award system.
The intent of Work Choices was thus to undermine the award system and replace it with almost total reliance on negotiated agreements, together with legislated minimum conditions that were less likely to be added to than under awards. With the union campaign against Work Choices leading up to the 2007 Federal election, there was something of a reversal of the worst excesses of Work Choices under Howard and IR Minister Joe Hockey, including creation of a Fairness Test that compared any new agreements against the relevant award.
The eventual amended Work Choices was actually not that far from the current Fair Work Act in overall effect on employment conditions, although matters of detail in other areas continue to irk employers.
Conclusion
The exchange rate ultimately acts as a measure of a nation’s wealth. The last 30 years has seen a fairly dramatic change in our national mentality, from a nation dependent on exploiting wealth from commodities, to a much more diverse, efficient economy. The lessons of Europe show what the alternative is to ongoing reform of our whole economy.
Industrial relations institutions have been forced to adapt to support this national economic reform process, via decentralisation towards the individual enterprise.
As a nation, we can take credit for avoiding the social unrest that has occurred overseas, but we can’t stop the process of adaptation.
BIBLIOGRAPHY
Russell Lansbury, Workplace Change and Employment Relations Reform in Australia: Prospects for a New Social Partnership?, The Drawing Board: An Australian Review of Public Affairs, Vol.1, No. 1, University of Sydney, July 2000.Related Articles:
