THE INDUSTRIAL RELATIONS DEBATE 2006-2007

The stakes are high for employers in the ‘collective bargaining’ campaign.
_____________________________________________________________

Employers should brace themselves for a heated Industrial Relations debate in the lead up to the next federal election – because the freedom to negotiate with employees is again under threat.

Policy announcements by the ACTU and the ALP in September 2006 about plans for a new collective bargaining system (bargaining over wages and employment conditions with unions) are of profound concern to Australian industry.

The compulsory bargaining agenda

Unions want to replace the basic rights of employers and employees with powerful new union rights to force their demands on workplaces. So far, the ALP seems to be going along with it. For its leader Kim Beazley, the starting point is:

“if workers want a collective agreement, they will be
able to get it”.

This completely ignores the need for mutual consent, which is the normal principle that underpins the making of agreements in employment matters or other commercial contracts.

Greg Combet, the ACTU secretary, admitted on 22 September that:

“…under WorkChoices, most collective bargaining in Australian workplaces occurs by mutual consent between employers, employees and unions”.

This is an accurate statement of the current industrial relations system under WorkChoices. He also admits that collective bargaining under WorkChoices occurs with unions.

But the unions want more. They want compulsory union bargaining. Under the union plan, if they demand a union agreement and claim half your employees back them, you will be forced to negotiate the union demands under threat of arbitration. According to the 158-page ACTU plan released in September, you wouldn’t even need a majority.

Australians, including Australian employers, accept voluntary unionism and voluntary bargaining – but forced union bargaining interferes with basic freedoms of choice. It also ignores the modern realities:

• Only one in ten workplaces has union members
• Less than one in five private sector employees are union members
• One million non-union agreements have been made between employers and employees over the past ten years (with more than half a million of those still operational).

There is also a danger that industrial tribunals would be made “much more powerful” – so powerful that they would be able to force people to ‘agree’.  This is an unfair and genuinely extreme approach to industrial relations.

Collective bargaining can only earn the respect of employers when it respects the rights and interests of individuals. It is supported by employers only when it:

• is freely entered into
• reflects the real interests of the parties
• is not the exclusive form of employer/employee engagement over wages and working conditions.

Both the ACTU and ALP plans breach these principles. The basis of their approach is that:

• collective bargaining will be compelled
• outcomes will be determined by powerful third parties
• collective bargaining will override every other form of bargaining (including Australian Workplace Agreements (AWA’s) – which will be ‘torn up’).

This fundamentally distorts the basic freedom to say ‘no’ to union demands and ‘yes’ to direct discussion between employers and employees.

The importance of voluntary bargaining

In contrast to the ACTU and ALP warnings about the dangers of freedom, a voluntary system of agreement making is not anti-union – but it is pro-choice.

Freedom of choice has no place in the unions’ worldview. They admit they would prohibit an employer from reaching an agreement with an employee on terms that differ from the collective agreement.

To make up for this prohibition, Mr. Beazley has said that employers and employees can reach individual common law agreements. But these agreements are:

• an inflexible option because they don’t help keep down unjustified labour costs or promote productivity
• simply employment contracts requiring award or over award payments and conditions
• only able to operate if they do not differ from the terms of an award or a collective agreement
• incapable of having inefficient and restrictive work practices and unacceptable conditions in awards and collective agreements set aside or varied.

One million individual AWA’s have been made since 1996. Tearing them up and not allowing any other type of agreement would be an unnecessary and ideological approach representing the heavy hand of government acting under the influence of unions.

There is also another good reason why individual bargaining rights should be kept as part of the choice offered for setting wages and employment conditions – even in a unionised business. The fact that an employer or employees in that business could at any time invoke individual bargaining options has an impact on existing employer/union negotiation over collective agreements, and makes it more likely that those agreements address inefficient work practices.

Abolishing that option would give unions the whip hand in negotiations as few other alternatives would be available to employers. As a result, inefficient work practices would only disappear as and when unions agreed to bargain them away.

Collective bargaining without individual bargaining rights is also a recipe for over-regulation. Compulsory collective bargaining on top of compulsory awards imposes a level of regulation, and over-award labour costs, previously unknown in Australian law.  It will make Australia the most regulated labour market in the world.

International comparisons relied on by unions are flawed. Unlike other countries where awards setting minimum standards do not exist, collective bargaining in the Australian context means bargaining above minimum standards (i.e. bargaining market rates, not minimum rates, of pay and conditions).

An employer in Australia would no longer be free to give people jobs in compliance with minimum standards set by law. They could be forced to pay more – and to bargain with unions for more.

This clearly has major implications for labour costs, commercial freedom and business planning. Australia has never previously had a system requiring employers to reach agreements with unions for payment of wages and conditions above award minimum standards – which are already well-developed and extensive.

Such an approach could also be said to be an extension of the proper role of government, which has historically been concerned with minimum labour standards. A government should not establish laws to enable it or third parties to regulate the labour market above minimum standards.

None of this is good for jobs. Past experience suggests that compulsory union bargaining and compulsory arbitration:

• inhibit flexibility
• make it difficult to remove restrictive work practices
• raise labour costs
• restrict the creation of more jobs.

The dangers of ‘roll-back’

The collective bargaining plans of the ACTU and ALP will effectively roll back thirteen years of industrial relations reform – not just the past six months of WorkChoices.

The economic and social consequences of rolling back a decade of workplace reform would be devastating. The last time unions and powerful industrial tribunals were the centrepiece of industrial relations, real wages fell and almost one million Australians lost their jobs. The labour market was just not flexible enough to cope with an economic downturn.

The ALP now needs to be wise enough to ditch the union plan, but the signs are not good.

For employers, the stakes in the current debate that will continue up to the 2007 general election could hardly be higher. Employers First™ will continue to:

• oppose forced collective bargaining as being a denial of fundamental freedoms
• support the freedom to determine the level at which bargaining (collective and individual) occurs
• support voluntary collective bargaining together with individual bargaining rights, freedom of choice and minimum standards.

After a generation of effort, Australia’s unemployment rate is at record low levels unthinkable a few years ago. Having achieved this, we should do everything to keep it that way. The last thing we should do is tear up the workplace laws that help make it possible, or deny our basic workplace freedoms that now exist.

Contact the Employers Hotline™ on (02) 9264 2000 if you need to know more.