The Practical Effects of Enterprise Bargaining Reforms in the Workplace Relations Act 1996
Teresa Dwight
The 1996 Workplace Relations Act (WRA) was brought in with the vision of encouraging more stable and reliable workplace agreements in order to restore a “strong, growing and competitive economy,” (Reith, 1997:1). In order to do this, the changes of the WRA are focused on unfair dismissal, reducing industrial strikes, encouraging a form of deregulation in workplace agreements, and reducing union power (DEWRSB, 1997:1). Reduction in union power is encouraged by the prohibition of compulsory unionism and union preference clauses, a reduction in the number of members required for a union to be registered, and limitation of a unions right to investigate award breaches (DEWRSB, 1997:1). In order to deregulate workplace agreements, the WRA further encourages the development of Enterprise Bargaining by the introduction of Certified Agreements (CA) and Australian Workplace Agreements (AWA). Certified Agreements are made with a group of employees and can be union or non-union. To the extent of any inconsistency, they are given preference over any other award (Deery, Plowman and Walsh, 2001:35). AWA’s, on the other hand, are negotiated with an individual employee, which means they do not include a union (Deery, Plowman and Walsh, 2001:35). AWA’s are the more strongly desired agreement as they are given preference over both Certified Agreements and ordinary Awards (Deery Plowman and Walsh, 2001:34).
There is strong evidence supporting the benefits of the WRA for employers. Changes in the international economy have meant an increased importance for competition and productivity within Australian industry (Reith, 1997:3). The increased functional and numerical flexibility offered by the WRA in agreement making enables employers to make agreements which create workplace conditions that can be more efficient and more productive (Reith, 1997:2). However, Loundes et al (2003:1) argue that there is little evidence to support the proposition that the increases in productivity are attributable to enterprise bargaining. On the other hand, Moore (1999:1) explains that approximately two thirds of economic growth cannot be explained statistically. It is also possible that many intended advantages of WRA have not been realised do to the lack of employers who actually use the opportunities available to them (Skeffington 1997: 12). Nevertheless, there is a common consensus that enterprise bargaining has increased productivity within businesses that make use of the opportunities (Loundes, Tseng, and Wooden 2003:249).
Furthermore, reducing industrial dispute activity has meant that production is less likely to be interrupted (Wooden 2000:15). Since the introduction of the WRA, the number of workplace disputes reduced to 447 in 1997, which according to the Australian Bureau of Statistics, is the lowest number of disputes reported since the 1940s (ABS Cat No. 6322.0). The number of days lost due to industrial disputes has reduced from over 500 000 in June 1996 to a little below 200 000 in June 2001 (DWERSB, Workplace Relations Act Monitor June 2001:1). Despite fluctuations in the reduction of Industrial Disputes between 1996 and 2001, the statistics give a positive representation of results for employers. However, (Wooden 2000:15) argues that Industrial Disputes in Australia have always been short and only ever lasted a few days. Nevertheless, the evidence suggesting the effectiveness of the provisions seems to be convincing as the number of Certified Agreements and AWA signed has increased since 1997 (Skeffinton 1997:11).
WRA provisions aimed at reducing union power were intended to protect production and negotiation processes from being interrupted by uninvited unions (Reith 1997:3). This allows more freedom for businesses to negotiate market favourable agreements (Moore, 1999:1). The amount of employer support for AWA and Certified Agreements without unions suggests that these provisions are favourable to employers (Lourdes, Tseng and Wooden, 2003:249).
Finally, employers benefit from unfair dismissal provisions that are intended to be fairer in their application. Minister for Industrial Relations, Peter Reith (1997:2), reveals that this was aimed at stopping “undeserving claims from being brought against employers”. Since 1996 the amount of unfair dismissals lodged have reduced rapidly (Reith 1997:3). These results make it clear that advantages arising from the result of much of the legislation are intended to be for employers and business. It is an unchallenged proposition that by increasing flexibility within workplace agreement making, the WRA has benefited employers and business. However, the controversy over the WRA arises in respect to whether these positive outcomes in flexible bargaining extend to employees.
Advocates of the WRA claim that employees have benefited from the opportunity to negotiate more flexible agreements with their employers (Reith, 1997; Wooden 2000; Moore, 1999). This flexibility is said to be particularly beneficial for women, low paid workers and workers with families (Reith, 1999:1). However, taking into account the view that employees have unequal bargaining power compared to employers, it appears that Reith (1999:1) is comparing these workers as against other workers and not employers. Employers would benefit more from flexibility because, in the current economic climate, flexibility is not only an option for a workplace agreement, it is often a requirement in some industries (McGrath-Champ, 2003:3). Furthermore, despite the fact that the amount of people seeking non-standard employment is increasing, there is still a larger percentage of the workforce who are in standard employment compared to non-standard (Wooden 2000:3).
The claim that AWA’s have increased the ability of workers to balance work and family is based on the assertion that employees with families prefer part time or contract work (Reith, 1999:1). In this sense, AWA’s help balance work and family so long as balancing work and family requires an increase in non-standard work and a peripheral workforce. Provided that this is the case, and in view of the upward trend in part time hours in the last decade, it can be argued that AWA have allowed workers these more flexible options (Wooden, 2000:2). However, these trends are occurring to accommodate economic changes that affect business (Skeffington 1997:3), and part time work has been available and on upward trend since before the WRA provisions (Deery et al 2001). The trends are not, as Wood (2000:2) implies, a new thing, and they have not occurred as a result of WRA provisions for the benefit of employees.
In addition, there is evidence to suggest that AWA’s include more family friendly provisions (Reith 1999:1) and gives examples of such provisions as parental leave, carer’s leave, and ordinary hours of work prescribed. McGrath-Champ (2003:1) believes that enterprise agreements are used more often to provide employee benefits than in the early 1990s. However, for AWA’s that don’t contain these provisions the average award provides a limited safety net due to the WRA reduction to ’20 allowable matters’ (Toten 2001:2). Therefore despite the fact that certain AWA may contain more ‘family friendly’ provisions, it is a limited benefit. Furthermore, AWA provisions that provide employee benefits are necessary due to the reduction in the scope of ordinary awards (McGrath-Champ 2003:1). It can therefore be argued that employees have not receive more benefits as a result of the legislation, there has simply been a change in mechanism for providing them (Toten 2001: 2).
Despite the well-evidenced proposition that flexibility within workplace agreements are intended to be used to the advantage of employers (Bramble 2000 in McGrath-Champ 2003), any form of flexible arrangement would not be possible without Certified Agreements and AWA’s (Reith 1999:1). But apart from allowing for increased flexibility, the WRA does not otherwise appear to assist with the balancing of work and family commitments. For, as the ACTU (1997:1) points out, balancing work and family is a much more complex matter, requiring other legislative changes. However, the legislation does enable skilled employees with stronger bargaining power to negotiate flexible conditions with employers in industries where this kind of flexibility is desired (Reith 1999:2).
In view of the beneficial outcomes of the WRA for both employers and employees, the proposition that the WRA provides the opportunity for negotiation of terms and conditions that are relevant to the business needs of employers and the lifestyle choices of employees is essentially correct. Despite this, it is evident that employers have benefited more from the legislation. Furthermore, the ability for employees to negotiate more flexibly does not mean that they have necessarily benefited from the Act, nor that they have not suffered any detriment.
It is argued that there are costs for all parties involved, including business (Deery, et al 2001:39). Due to the ability of skilled workers to bargain for better conditions, employers are forced to compete for skilled employees (Deery, et al 2001:37). However, current labour force participation rates and unemployment levels would suggest that due to the amount of labour supply outweighing demand, employers would, in reality, not be affected by this (DEWRSB 2001:1). Otherwise, there is no other statistical evidence to support this claim. Individual agreements mean that a larger amount of resources must be spent on making the agreements (Toten 2001:1). Nonetheless, Certified Agreements are still available for larger businesses where negotiating individually is impractical (Toten 2001:3). Skeffington (1997:3) suggests that industrial reform costs employers relatively little, particularly when weighed up in the long run.
It appears that, despite suggestions, employers do not suffer any costs from WRA provisions due to their natural level of bargaining power and the fact that the legislation is aimed at improving business productivity (Reith, 19991:1). Nevertheless, Wooden (2000:2) strongly refutes the ACTU’s (1997:1) suggestion that employers have the ability to begin to dictate conditions to the detriment of the workforce. He argues that not only is there lack of evidence to support this assertion but more productive and efficient workplaces and ultimately a more competitive and prosperous economy, would be of long term benefit to both parties and couldn’t possibly detriment the workforce (Wooden 2000:2).
However, the long-term effects of enterprise bargaining are highly contested (Lourdes et al 2003:1), as are the costs for employees and the extent of these costs. Waring (2000:2) argues simply that if bargaining power is to shift toward employers this would ultimately mean detriment to the labour force. To the other extreme, Moore (1999:11) even goes so far as to deny the existence of the inherently weak bargaining position of employees. In the traditional view, there is more evidence to suggest that in an individual agreement, employees are disadvantaged due to their relatively limited bargaining power and their lack of skill and knowledge of the bargaining process (ACTU, 1997:1). In this sense, the only form of bargaining power available to employees is their level of skill, ability to limit their labour or to bargain collectively (ACTU, 1997:1). Although the percentage of union membership is still 28% (Wooden 2000:2), similar to what it was in 1996 (Reith 1999:1), the ACTU (1997:1) argues that the legislation undermines union power as a force for collective bargaining. WRA, on the other hand, advocates claim that freedom of association is beneficial for both parties, however apart from the fact that employees are protected by anti-discrimination legislation for being in a union, (Reith 1999:1) and (Wooden 2000:2) fail to explain how freedom of association benefits employees in their bargaining position.
Legislation on industrial action could also be viewed as being detrimental to the workforce in the sense that limiting the ability for employees to withdraw their labour adversely affects their bargaining power (Waring, 2000:2). However, Reith (2003:2) points to evidence that suggest a reduction in covert conflict such as absenteeism and turnover in workplaces with successful AWA’s. This suggests that employees have not been detrimented by limits to industrial action otherwise discontent would manifest itself covertly (Felice 2000:4). Furthermore, the legislation bounds employers, who are not allowed to lockout during the period of the contract (Reith 1999). However, it can be argued that employers have a much stronger bargaining position without the need for industrial action (Felice 2000:2).
The Government takes the view that the Employment Advocate is specifically assigned to assist disadvantaged workers (DEWRSB 1997:1). Furthermore it is argued that it is in the benefit of employers to attempt to provide safe and happy workplaces and employers will thus act responsibly during negotiations (Work and Business 1996, 1997 in Reith 1999:1). However, this form of thinking is derived from what is known as the ‘soft HRM approach’ (Roan, Bramble and Lafferty 2001:391). There is more evidence to suggest that the foundations of the WRA are buried in a hard HRM approach.
Advocates of industrial relations reform legislation tend to be employer orientated and take a conservative, hard HRM approach towards industrial relations. (Roan et al 2001: 129) suggest that the deregulated agreement making process advocated by the WRA is ‘win-win’ and that employers will act justly and fairly in negotiations. However, this approach assumes a unitarist view of industrial relations, as it requires the assumption that employers and employees do not seek competing interests (Deery, Plowman and Walsh, 2001:39). In the case where an employer is seeking a numerically flexible workforce and where the employee is seeking flexible hours, this view leads to successful results (Reith 1999:1). However, the ACTU (1997:1) points out that employers will seek to minimise costs, which means reductions in wages and conditions. Further evidence of the unitarist view occurs within the idea that unions as catalysts for industrial unrest. Provisions limiting union activity and power appear to be ultimately aimed at stopping disruptions in productivity (Reith 1997:2). This approach ignores the power imbalance between employees and employers (ACTU 1997:1). It is therefore a logical argument to suggest that, despite the lack of solid empirical evidence towards the suggestion that the workforce has been detrimented (Wooden 2003:1), the entire approach of the WRA is employer orientated.
The debate over the controversial 1996 Workplace Relations Act divides the arguments between the Act as an opportunity for increased flexibility allowing benefits for both employers, at the enterprise level, and employees for their specific and individual lifestyle choices, or, as a tool empowering employers to dictate the conditions of employment to the detriment of the workforce. While there is evidence to support the possibility that flexibility in workplace agreements can be beneficial for both employees and employers, the benefits appear to be stronger for employers, whilst the costs are borne by the work force. This is likely a consequence of the unitary assumptions undertaken in drafting the legislation, and the result is that the WRA equips the employer, not the employee with the tools to respond to the market and control contractual conditions. However, despite strong theoretical arguments against the possibility, the workforce does not appear to have suffered detriment as a result of the Howard government’s legislation. Nevertheless, as the Howard government continues to reform the industrial relations system with the view of increased competition and benefits for the economy, there will be less emphasis placed on the interests of individual employees.
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copyright, 2003