Australian industrial relations in 2013

Introduction

The annual reviews edition of the Journal of Industrial Relations provides an important opportunity to reflect on developments in the past calendar year and indicators of likely trends in the immediate future. In the context of the ongoing calls for change, mostly from employer lobby groups, it is essential that there be much more in-depth and holistic analysis of what the desired outcomes are and how these are to be achieved. Last year’s introduction to the reviews edition (Todd, 2013) noted that public debate on industrial relations (IR) in Australia was focusing narrowly on the regulatory environment, with the various parties lobbying for change in line with the interests of the constituents they represented. Given the interests represented by these opinion-makers, it is unsurprising that little has changed in terms of the IR issues that arise in the public domain and the narrow focus of them. This edition of the Journal provides a forum in which discussion can progress beyond this confined base.

This introductory article will commence with a brief overview of contemporary Australian IR, including likely changes in the foreseeable future, providing a context for the articles which follow. The latter half of the article will summarise the articles in this issue.

Contemporary Australian IR

The picture of current Australian IR is one of diversity rather than uniformity, but public debates tend to portray ‘employers’ and ‘unions’ as two monolithic blocs. Yet, in reality, there is diversity in the composition of the workforce, in employment arrangements, in economic contexts for varying sectors and in outcomes.

The labour market is performing well overall in comparison to other Organisation for Economic Co-operation Development (OECD) countries (see Healy, this edition), but outcomes are uneven by industry, gender, age and geographical location. Debates are ongoing about labour shortages, and the use of temporary migrant labour versus unemployment and the need to train local residents to ensure they partake in opportunities. Such debates, however, are too often positioned as lobbying by one party or another and lack consideration of long-term planning and outcomes.

Wages are set by a mix of individual and collective modes, with 42% of the workforce having their wages determined by a collective agreement (Australian Bureau of Statistics (ABS), 2013). There is a safety net in place with the minimum wage, National Employment Standards and modern awards, but rising earnings inequality is evident. Discussions about the appropriate amount for the minimum wage occur separately from debates about the growth in executive remuneration. Union density stands at 18.2% with the composition of the union movement undergoing change (see Bailey and Peetz, this edition). There is a very low level of industrial disputation, due in no small part to the tight restrictions placed on the taking of lawful industrial action.

There has been much legislative change over the past two decades, and this has been a particularly politicised process due to the alignment of the main political parties with the IR actors. The review articles note the major investment by the unions and employers/employer associations in the 2013 federal election, reflecting this enduring politicisation of IR policy formulation (Bailey and Peetz; Thornthwaite and Sheldon, this edition).

Future Australian IR

The change of federal government in September 2013 from Labor to the conservative Coalition parties was accompanied by anticipation that there would be legislative change in IR. The current Prime Minister, Tony Abbott, has not been seen to be a champion of IR ‘reform’ to the extent that his Coalition predecessor, John Howard, was; but as the leader of the conservative Coalition which received substantial electoral support from the business community, he is expected to introduce changes favourable to employer interests. In the lengthy lead up to the election, Abbott was keen to minimise discussion on IR by portraying a ‘minimal change’ stance for their first term in parliament. This strategy was shaped by the electoral defeat in 2007 in the face of union campaigning against Howard’s ‘Work Choices’ policy. Since forming government, the Coalition has maintained a similar position, keen to dispel expectations of major IR regulatory changes. The reaction of those employers and employer associations who are urging greater and speedier change (see Thornthwaite and Sheldon, this edition) contributes to this image of the new government only making modest changes. Yet the changes proposed, albeit within the boundaries of existing legislation, will serve to curb the actions of organised labour.

The new federal government has indicated its intention to have the Productivity Commission conduct an inquiry into IR, the Australian Law Reform Commission to review an array of Commonwealth legislation – including that pertaining to workplace relations, and has established a royal commission into ‘trade union governance and corruption’ (Abbott, 2014). Each of these inquiries will ensure the continued lobbying by employer and employee representatives on behalf of members’ interests as they perceive them, as well as absorbing these associations’ resources. The terms of reference for the Productivity Commission inquiry have yet to be revealed, and it is unclear as to whether they will be confined to the Fair Work Act or extend to include workplace practices and culture.

One area of employment where change will continue to occur in the immediate future is the public sector. Several of the articles (Bailey and Peetz; McCrystal, this edition) detail legislative changes by conservative State governments which have increased the managerial prerogative of those governments over their employees. In addition, programmes to reduce the number of public sector employees are being implemented at both federal and state level.

Much of the public debate has focused on the federal legislation and, as Giudice AO (this edition) notes, that is largely concerned with employer associations or unions advocating for the removal of constraints upon their actions or alternatively the increase in constraints upon the other party’s capacity to take action. This limited focus denies the complexity associated with achieving good workplace relations and, to a certain extent, shifts the responsibility for such an outcome away from employers and employees (and their representatives) to governments.

At this stage, there is clearly a need to reframe IR discussion in Australia to break the cycle of conflicting claims and counter-claims. The existing debate reflects the multiplicity of interests, often with differing goals, involved in IR and therefore the need for a pluralist framework. The recognition that contemporary IR issues in Australia are as much about job security, working hours and the need for the job to fit with caring responsibilities as about wages and other economic benefits, points to the importance of a framework that takes account of economic and social interests and outcomes. Such a framework presumes that if ‘good IR’ is to be achieved, it will require ongoing consultation and negotiation in the workplace and changes beyond legislation.

Summary of articles in this review edition

The majority of the articles in this review edition examine particular aspects of Australian IR during 2013. The contributors, leading scholars and practitioners, submitted their articles to the journal in late 2013. In line with the past few review editions, an internationally focused academic article is also included; Bellace’s (Wharton School, University of Pennsylvania) article on the responsibility of business to observe human rights is very relevant to Australian IR as well as providing an interesting analysis of more general problems around work and law.

Shae McCrystal (University of Sydney), in her review of Australian industrial legislation in 2013, notes that at the federal level there has been minimal legislative activity compared to the 2012 calendar year. McCrystal details the amendments to the Fair Work Act 2009 introduced by the Fair Work Amendment Act 2013; these include ‘family friendly’ measures, expanded right of entry provisions, options to address workplace bullying and expanded provision for consent arbitration in relation to termination disputes. As McCrystal notes, the success of most of these changes will be dependent upon adjustments in workplace culture. An extensive part of the article is devoted to legislative changes in the States, in particular in New South Wales (NSW) and Queensland. Details are provided of the large-scale changes to public sector legislation passed by the NSW Parliament, as well as the new controls introduced by the Queensland Parliament over the setting of awards, the creation of agreements and the regulation of industrial organisations. The author notes that these developments expand the level of control of both State governments over the management of their own workforces.

Joshua Healy (Flinders University) commences his review of the Australian labour market by noting the state of the Australian economic context, that is, that while the Australian economy was performing favourably by international standards, the growth rate in 2013 had slowed compared with 2012. Healey presents an interesting comparison of the Australian labour market with that of the OECD as a whole, in which it is shown that participation and employment rates in Australia are considerably higher, unemployment rates lower, part-time employment and under-employment more prevalent. He includes evidence of labour supply having become more abundant relative to demand in much of the Australian labour market during 2013. Of much concern is his data relating to youth unemployment. Healey also presents evidence confirming the ongoing phenomenon of women’s strengthening employment in contrast to that of men. The tables included in the article provide detail on changes in employment by industry, state, employment type and number of hours worked. The article concludes with a brief analysis of earnings and the extent of earnings inequality within the employee workforce.

Michael Byrnes and Julian Arndt (Clayton Utz) document a number of significant decisions handed down in 2013 by a variety of courts and tribunals impacting on Australian IR, including the High Court, the Federal Court, the Fair Work Commission (FWC) and the Local Court of NSW. Among the cases they consider is the Barker case, confirming the existence of an implied term of mutual trust and confidence in an Australian employment contract. Several other cases are documented which are important in shaping the implementation of the Fair Work Act: the Mammoet case relating to whether accommodation provided to ‘fly in/fly out’ employees constituted ‘payment’ during a protected industrial action, the Warrell case concerning the right to representation before the FWC, and the Ryan case with respect to payment of annual leave upon termination. One of the amendments to the Fair Work Act which has been the subject of much commentary by practitioners is the introduction of the Commission’s new anti-bullying jurisdiction. Byrnes and Arndt include an informative discussion of the Harris case as an insight into the approach that the FWC might take on this subject in the future.

Charlesworth and MacDonald (Centre for Work and Life, University of South Australia), in their review of women, work and IR in 2013, conclude that the past 12 months have led to ‘a somewhat improved but still patchy framework of gender equality regulation and infrastructure’. They commence with a brief assessment of progress in terms of women’s employment participation and the size of the gender pay gap. They then proceed to analyse regulatory and policy changes in relation to equal pay, working time, workplace gender equality reporting, paid parental leave, pregnancy and childcare. Charlesworth and MacDonald note the impact of the change of federal government during the year; on the one hand, the promise of a more generous paid parental leave scheme but, on the other hand, the scrapping of former Labor Government initiatives to increase pay to employees in the child and aged care sectors where providers had enterprise agreements in place.

Employer association activity in 2013 is analysed by Louise Thornthwaite (Macquarie University) and Peter Sheldon (University of NSW). They detail employer dissatisfaction with a number of industrial law reforms introduced by the former Federal Labor Government, including the amendments to the Fair Work Act 2009, the establishment of a new anti-bullying jurisdiction within the Fair Work Commission and amendments to impose additional requirements on employers sponsoring 457 visa recruits. They note that the Modern Awards Review continued to consume considerable time for employer associations, with some expressing disappointment at the narrow scope of the Review. Thornthwaite and Sheldon identify the election of the Federal Coalition Government as giving rise to expectation of an IR climate more favourable to employer interests, and contrast the irritation of those employer voices wanting more rapid change with those indicating awareness that ongoing major legislative change incurs costs. On some matters, employers are, however, united. They note the strong support by all employer groups for the Coalition’s decision to re-introduce the Australian Building and Construction Commission. Thornthwaite and Sheldon consider briefly the somewhat contradictory stances of employer representatives on remuneration, with cost concerns about increases in the minimum wage contrasting with their muted position on ever increasing executive remuneration packages. Finally, in their consideration of social policy issues raised by employer associations, they applaud the interest shown by some in addressing mental health issues in the workplace.

Given the current high profile discussion about the role of unions in Australia, including the Prime Minister’s announcement in February 2014 of a royal commission into union governance and corruption, the review by Bailey and Peetz (Griffith University) of unions and collective bargaining provides a very topical overview of union activity during the past 12 months. They report a small decrease in union density and reflect on the significant changes occurring in the composition of the Australian union movement. Their review includes a brief comparison of collective bargaining across a number of industries, concluding that agreement coverage continues to be stable and bargaining less volatile. The number of working days lost due to industrial action declined by 60% in the year under review. Much union activity was channelled into federal election campaigning during 2013, the outcome of which would have disappointed the unions. Bailey and Peetz also note that some key developments for unions – some detrimental, others not – occurred in courts and tribunals rather than in the workplace, particularly for the construction sector unions. Other campaigns and activities noted by the authors related to wages in the child care and aged care sectors, and junior rates of pay.

We are pleased to include an edited version of an address given by The Honourable Geoffrey Giudice AO in which he advocates the need for a more stable regulatory system of IR. Giudice outlines briefly the major legislative changes of the past 20 years and identifies the goal of limiting the action of employers and/or employees and their representatives as the driving force for ongoing change. He then points out the downside to ongoing legislative change: significant transaction costs, distraction from more productive pursuits, and the repetitive element associated with issues such as union right of entry whereby different governments ‘flip-flop’ between varying positions due to an inability to achieve an agreed solution. Giudice attributes part of the problem to the politicised policy formulation process and concludes with a recommendation for a common pursuit of a more stable system.

Janice Bellace’s article focuses on a subject that receives insufficient coverage in the Australian IR community: the responsibility of business to recognise human rights. Bellace outlines the developments throughout the years as parties have sought appropriate mechanisms for international standard setting – the notion of ‘appropriate’ varying markedly between employers’ and workers’ representative bodies. It is observed how the debate has moved from basic ‘labour standards’ within the International Labour Organisation’s (ILO) domain to ‘human rights’ with a multiplicity of actors involving themselves. The most prominent actors have been the ILO and the United Nations, but other bodies such as the European Court of Human Rights and the Court of Justice of the European Union are also playing a role in regulating corporate behaviour. Some companies have responded to the human rights at work pressures by articulating values in corporate social responsibility statements and/or codes of conduct, resisting anything that might be binding or enforceable. Bellace concludes that the UN Guiding Principles on Business and Human Rights adopted in 2011 have changed the landscape by placing responsibility on companies to conform to internationally recognised human rights, rather than being able to set their own parameters of social responsibility – a fact, she says, that employer groups may be less than accepting of if their behaviour at the 2012 International Labour Conference is an indicator.

In conclusion, it is hoped that the analysis and commentary in the articles in this edition provide opportunity for the readers to reflect on contemporary Australian IR. We aim to inform discussion in the public domain and provoke consideration about future Australian IR beyond the existing narrow focus on the federal legislative context.