Unions and collective bargaining in Australia in 2018

Abstract

There is a storm brewing over the roles of unions and collective bargaining in Australian employment relations. Unions, frustrated with what they see as practical and legislative restrictions on protection of workers’ rights, seek to ‘change the rules’. Employers, on the other hand, have been successful in restricting or rolling back bargaining rights, supported by their associations, the Coalition government and an assertive interpretation of the Fair Work Act. Add to this the impending federal election and the scene is set for a tempest that could bring industrial relations back to the centre of Australian politics in 2019. The review explores the various elements contributing to the coming storm, including trends in union membership, structure and strategy. It also surveys trends in the number and coverage of collective agreements, wage outcomes and industrial disputes. Two idiosyncractically Australian versions of collective agreement making are also discussed: cooperative bargaining facilitated by the Fair Work Commission and non-union collective agreement making.

Keywords

Collective bargaining Fair Work Act industrial relations labour law trade unions

Introduction

There is a storm brewing over the roles of unions and collective bargaining in Australian employment relations. As previous reviews in this journal have shown, the storm has been building for several years. On the one hand there are the unions. They are losing members. They are increasingly frustrated by what they see as the procedural restrictions imposed on them pursuing their members’ interests and the poor outcomes of bargaining for working people. Individual unions are developing strategies appropriate to their circumstances and they are collectively are putting pressure on the Labor Party to ‘change the rules’. On the other hand, industrially, employers increasingly seek – successfully – to avoid bargaining in order to advance a cost-conscious and often anti-union agenda. Their business associations lobby Coalition politicians, to defend, if not expand, the mechanisms by which they can pursue this agenda. The growing storm of adversarialism – which leaves little room for the occasional sunbeams of cooperation or compromise to shine through – seems likely to break during the next federal election campaign in a tempest that could bring employment relations back to the centre of Australian politics.

Unions

The year was again a tough one for unions. They were operating in an economy and labour market where their traditional strongholds were declining, and good economic performance has not been reflected in commensurate improvements in wages. They were also subject to relentless rhetorical, administrative and, where parliamentary support could be harnessed, legislative attack by the federal government. Employer attitudes and strategies were also unsympathetic at best and, most commonly, hostile. Despite the adverse pressures, new data suggests membership was holding firm, while union strategies were becoming more assertive.

Membership trends

The Australian Bureau of Statistics’ (ABS) biennial estimates of union membership as of August 2018 (ABS, 2018a) were released, showing total union membership at 1,535,700 and union density – the percentage of all employees who are union members – at 15%, both numbers broadly the same as in 2016. The industries with highest union density were: education and training (33%), public administration and safety (30%) and electricity, gas, water and waste services (29%). The three occupational groups with highest density were professionals (21%), machinery operators and drivers (19%) and community and personal service workers (18%).

A research article released by the Australian Parliamentary Library (2018) painted a picture of union membership consistent with the new data. In particular, it supplemented an analysis of the 2016 ABS data with membership numbers reported by individual unions. These latter data confirmed Nicholson et al.’s analysis that the few Australian unions recording positive trends in membership tend to be occupational unions (especially those recruiting professionals, like nurses, police and teachers) compared to the more negative fortunes of conglomerate or industry unions (Nicholson et al., 2017: 306–308).

Union strategies

In the face of membership stagnation or decline and the continued sluggishness and inequality of wage increases (discussed below), the strategies of individual unions and their peak bodies became more assertive during 2018. They were also energised by the possibility of a new federal government to address what they perceive a significant problems with the current legislative regime. However, the issues unions pursued and the tactics they adopted varied, reflecting the diversity of members’ interests. Some pursued amalgamation, like the two high-profile examples discussed below. Other unions confronting similar pressures (such as the AMWU, Transport Workers Union (TWU) and AWU) were reported as ‘looking to new occupational niches and rebuilding density in their existing coverage rather than mergers’ (Workplace Express 2018a). Some of the more innovative, including the Hospo Voice (part of United Voice), which launched a ‘digital union’, providing digital support and services to members at a fixed, low cost (Hospitality Magazine, 2018); and the Transport Workers’ Union (TWU), which claimed to have been influential in establishing the Victorian government’s Inquiry into the on-demand workforce. The Inquiry was chaired by former Federal Fair Work Ombudsman Natalie James (TWU, 2018). The Australian Council of Trade Unions (ACTU) also adopted an ambitious set of goals and strategies that will be explored below.

Governance, regulation and the shape of the union movement

Australia has always closely regulated the governance and internal affairs of its unions, but recent years have seen this expanding. There are two bodies involved. The first is the Registered Organisations Commission (ROC) established in May 2017. The scope of the ROC’s activities and the resources of the organisations within its jurisdiction – which of course includes employer associations as well as unions – could be seen in an observation in its annual report:

… 107 organisations were registered under the Fair Work (Registered Organisations) Act 2009 and consisted of about 376 reporting units … Organisations report they have over two million members, control over $2.8 billion in total assets and have combined revenue in the order of $1.5 billion. (ROC, 2018)

Amongst other things, the ROC recorded that 99% of reporting units lodged financial returns on time and discussed the expansion of its educational activities designed to support compliance. It also acknowledged the commencement of six inquiries and four investigations and the conclusion of six inquiries and three investigations, as well as the progressing of 11 referrals to it made by the Royal Commission into Trade Union Governance and Corruption. Finally, it reported three civil litigation proceedings in the Federal Court and the commencement of two further proceedings. All these actions were targeted at unions, with the ROC’s first action against an employer association – the Australian Hotels Association – announced in late November (Workplace Express, 2018b).

The second body with responsibility for regulation of registered unions is the Fair Work Commission (FWC). The General Manager’s report on the exercise of their powers and functions under the Registered Organisations Act focused mostly on matters dealt with by the organisations panel within the FWC, and summarised matters about union rules determined by the General Manager, appeals to the FWC over decisions by the Registered Organisations Commissioner, and applications lodged for right of entry permits. One of the more controversial aspects of union regulation involved amalgamations. In March 2018, following a successful ballot of the respective unions, the FWC granted an application for amalgamation of three unions – the Maritime Union of Australia (MUA); the Textile, Clothing and Footwear Union of Australia (TCFU); and the Construction, Forestry, Mining and Energy Union of Australia (CFMEU). The new ‘mega-union’ union – the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) – commenced operations on 27 March, with estimates of its membership ranging from 126,000 to 144,000 members and resources of $310m in assets and $147m in annual revenue (Workplace Express, 2018c, 2018a).

Some employer groups (specifically the AMMA and MBA) and the government opposed the merger through both legal and political action. With respect to the former, an appeal to the Full Bench of the FWC failed in June, and further proceedings instituted by AMMA in the Federal Court were dismissed in December. Before the December decision, AMMA vowed to take the issue to the High Court if necessary (Hannan, 2018; Workplace Express, 2018d). On the latter (political) front, the government responded to employer lobbying with proposed legislation (in the form of the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill), which aimed amongst other things to introduce a public interest test for union amalgamations and create greater opportunities for the deregistration of unions. While employers wanted the Bill passed in March, it was not introduced into the House of Representatives until mid-August and the Senate in October. A lack of support amongst cross-benchers suggested it was unlikely to become law (Workplace Express, 2018e, 2018f, 2018g).

Moves towards another major union merger – this time between United Voice and the National Union of Workers – also progressed, with ballots of members being anticipated for 2019. Like its CFMMEU counterpart, this amalgamation was largely a strategic response to declining union membership in traditional industries and the need for greater resources in the face of continuing government and employer attacks. Amalgamation is not, however, the only option (Workplace Express, 2018a).

The ACTU Congress

The year was also an important one for unions in that it saw the convening of the triennial ACTU Congress: on 17–18 July, over 800 delegates representing workers from every industry and sector in Australia attended the Congress at Brisbane Convention Centre. The ACTU’s leadership for the next 3 years was determined: the position of Sally McManus as Secretary (which she had held since March 2017) was confirmed; Michele O’Neil was elected as the new President (following the resignation of Ged Kearney); and the incumbency of the two Assistant Secretaries, Michael Borowick and Scott Connolly, continued, although Borowick retired in November. There were also rule changes clarifying the respective roles of Secretary and President (Workplace Express, 2018h).

The Congress adopted an ambitious industrial relations policy platform, which went well beyond the collective bargaining issues (discussed below) to advocate greater social and economic equality through the adoption of a living wage and decent working conditions; fair, simple and democratic rules for industrial action; enhanced family, life and family provisions; and better enforcement of minimum standards (ACTU, 2018a).

Collective bargaining and collective agreement making

The decline of collective bargaining and collective agreements over recent years has been the subject of increasing public commentary (Burns and Harvey, 2018; Pennington, 2018; Workplace Express, 2018i; Pennington, 2018). The anatomy of this institutional decline is provided by the chapters in two collections published during the year, one by some of Australia’s leading labour law and industrial relations scholars (McCrystal et al., 2018); and one by a strong multi-disciplinary group of scholars and commentators (Stewart et al., 2018). They make it easy to see why the storm is approaching.

The incidence and coverage of collective agreements

The overall trend in collective bargaining – specifically the declining number and coverage of collective agreements – has been evident since around 2012. For example, the Workplace Agreements Database (WAD) kept by the Department of Jobs and Small Business reported that the number of federally registered current agreements at the end of the September quarter 2018 was 10,989, which compares with 12,912 current agreements at the same time in 2017. This represents a one-year decline of 14.9% and clearly continues – if not accelerates – the longer-term trend revealed in Figure 1. Indeed, from the peak of 25,147 current agreements in the December quarter 2010 to the latest quarterly number, there has been a decline of 56.3%.

Figure 1.

Number of federally registered agreements, quarterly, current, December 1991–September 2018.

A contrary trend is apparent in the number of new agreements approved each year. During the year ending September 2018, a total of 3989 agreements were approved. This compares with 3850 in the previous year – an increase of 3.6%. This short-term trend is a little unexpected, given the steep declines over recent years shown in Figure 2. Indeed, despite the increase over the latest 12 months, the annual number of approved agreements is still below that of all years since the mid-1990s, when the enterprise bargaining system was in its infancy.

Figure 2.

Number of federally registered agreements, annual, approved, September 1992–September 2018.

As for the coverage of collective agreements, there were no new data from the Australian Bureau of Statistics. However, the WAD database estimated that the number of employees covered by current agreements at the end of the September quarter 2018 was 1,890,000. This compared with 1,759,500 in the same quarter in 2017. This was an increase of 7.4% – and again contrary to the long-term trend shown in Figure 3 – although the total was still lower than in all quarters before March 2017. Figure 3 also shows that the biggest movements have been in the private sector, although the relatively stable position of the public sector belies the challenges to collective bargaining. This is a feature of collective bargaining trends emphasised by Pennington (2018).

Figure 3.

Number of employees covered by current collective agreements, quarterly, December 1991–September 2018.

Figure 4.

Annual increase in Wage Price Index, calculated ending September quarter, 1998–2018.

There are potentially many broader causes for the conspicuous decline of collective bargaining since 2012. It is difficult not to attribute much of the decline to the peculiar provisions of the Fair Work Act that give employers the right to make key decisions in the bargaining process and the new ways in which employers are exercising that discretion (Chaudhuri and Sarina, 2018). When employers seek to avoid bargaining they may, for example, not initiate a bargaining process, and thereby allow expired agreements to continue. They may also seek to terminate awards through application to the FWC. When unable to achieve their objectives through negotiations, employers may simply put their own version of an agreement up for ballot by employees. Related developments were summarised by Creighton et al. (2018: 13):

It has also become clear that employers who are determined to do so can effectively resist having to engage in meaningful bargaining. This can be attributed to a number of factors, including: the fact that the FWC does not have the capacity to make orders to counteract ‘surface bargaining’; the fact that both the courts and the FWC itself have adopted a restrictive approach to the interpretation of the provisions that are meant to support bargaining, and those intended to protect people engaged in bargaining-related activity against ‘adverse action’ by reason of their having done so; and the emergence of new bargaining strategies, notably the practice of employers faced with difficult agreement negotiations of applying for the unilateral termination of agreements that have passed their nominal expiry date (as a way of exerting economic and psychological pressure on employees and their representatives).

Wage outcomes

The year began (as did previous years) with much commentary about low wages, with headlines like ‘Workers can’t bargain on a good pay rise’ (Janda, 2018) and ‘Wages growth anchored at all time lows’ (Letts, 2018) being typical. It was not until well into the second half of the year that the tone began to be more positive, albeit based on slender evidence.

In the year to September 2018, the Wage Price Index (WPI) rose 2.3% (ABS, 2018c). This compares with increases of 2.0% and 1.9% over the same periods for 2017 and 2016, respectively. The similar rate of increase in the Consumer Price Index over the same 12-month period suggested at best steady real wages (ABS, 2018e). There was, of course, much variation within these aggregate numbers. In original terms, for example, increases in the WPI to September 2018 ranged from 1.8% for the mining and retail industries to 2.8% for the health care and social assistance industry. By state, Western Australia and the Northern Territory both recorded the lowest increases, while Victoria, New South Wales and Tasmania recorded the highest (ABS, 2018d).

As usual, wage increases through collective agreements continue to be higher than the generalised numbers reported as the WPI. The latest available data – for the September quarter 2018 – revealed an average annualised wage increase (AAWI) in newly approved enterprise agreements of 3.2%, up from the previous two quarters of 2.7% and 2.6%. For agreements that were current in the September 2018 quarter, however, the AAWI was 2.7%, down slightly on previous quarters (DoJ&SB, 2018b).

The slight increases in the later WPI numbers were greeted very positively by the federal government. The Liberal Chair of the House of Representatives Standing Committee on Economics, Tim Wilson, saw them as a sign that wages had ‘turned the corner’ (Workplace Express, 2018j), while the newly appointed Coalition Minister was trying to make the best of the wage story by arguing that real wages had increased over the last decade (ABC, 2018). Others were more critical, arguing during the year that the sluggishness of wage increases – which have only just matched inflation, and failed to keep pace with productivity and increased inequality – represented a serious problem (Jericho and Hutchens, 2018; Keating, 2018).

A variety of causal factors were said to potentially contribute to wage stagnation, from globalisation and changing technology and skills to tax loopholes, weak productivity growth, spare labour capacity, employee pay policies and the low level of voluntary job turnover (Australian Industry Group (AIG), 2018a; Debelle, 2018; Karp, 2018b; Leigh, 2018). Many commentators, however, focused on institutional reasons (e.g. Jerico, 2018; Stanford, 2018). The venerable Professor Joe Isaac (who must be the oldest and wisest scholar ever to participate in such debates) summed up these arguments well:

… The institutional mechanism that in the past provided the necessary pressure for wages to take up its share of productivity growth has lost much of its power. This has resulted in good part from the progressive changes in our industrial relations laws. (Isaac, 2018: 186)

Industrial disputes

In the year to June 2018, the general picture is that industrial disputes, as reported by the ABS (2018b), declined compared to the previous year, thereby continuing the long-term trend presented in Figure 5. There were only 164 industrial disputes in Australia over the year 2017–2018. This was considerably fewer than the previous year (202 disputes) and remained below the average for the previous decade of 211 disputes per year. These disputes involved 110,000 working days lost (WDL), which is 20% less than that reported for the same period last year. The number of employees involved in disputes was 41,000, which was again significantly less than the previous year’s total of 107,500 employees. The data show that industrial disputes in 2018 were slightly longer but involved fewer workers. On average, industrial disputes lasted for 2.2 days (compared with 1.9 days in 2017 and 1.28 days in 2016) and involved 250 workers (compared with 490 workers in 2017 and 316 workers in 2016).

Figure 5.

Industrial disputes, year ending June quarter, 1985–2018.

Variations between the states showed that Queensland and New South Wales had the highest working days lost per 1000 employees, with each recording 13.1 and 6.7, respectively. Again, for Queensland, this is significantly down from the 22.2 days totalled for the year ending June 2017. Victoria recorded 5.7 WDL per 1000 employees this year (down from 19.5 days in the previous 12-month period). This is followed by Western Australia (4.8 days), the Australian Capital Territory (1.4 days), South Australia (0.8 days) and Tasmania (0.1 days). There is no data available for the Northern Territory.

The coal mining industry accounted for over half of all WDL over the year to June 2018 – 52.9%, up from 12% of all WDL in the year to June 2017. This was followed by construction (18%); manufacturing (metal and other) (12.3%); education and training; health care and social assistance (8.3%).

An interesting article came out during the year, linking the long-term decline in industrial disputes with many of the topics already discussed here. Stanford’s (2018) analysis lacked sophisticated quantitative analysis, but it was entirely plausible, even if his conclusions were unpalatable to some:

Our review of the historic patterns of industrial disputes and wage determination show that these trends are clearly connected. In order to correct the current lopsided trajectory of Australia’s labour market (producing stagnant wages, a falling labour share of national output, and strained household finances), workers must be able to impose a collective cost of disagreement on their employers as part of normal, healthy collective bargaining. Until their basic rights are meaningfully restored, we can expect these negative labour market trends to continue.

A selection of industry developments

The retail industry continued to provide a cauldron of collective agreement activity and controversy, especially surrounding the application of the BOOT. After earlier successful challenges to and termination of previous enterprise agreements with major retailers (see Gahan et al., 2018: 347), efforts proceeded in 2018 to remedy past problems and negotiate new enterprise agreements. Coles agreed in 2017 to back pay employees who had been disadvantaged by earlier agreements and negotiated a new agreement, which won the support of its estimated 80,000 employees in a ballot in February, despite opposition from the unregistered Retail and Fast Food Workers’ Union (RAFFWU). It was approved by the FWC in April (Patty, 2018).

At Woolworths, the RAFFWU took legal action to terminate the 2012 enterprise agreement, arguing that it had been approved by the FWC on the basis of inaccurate data provided by the giant retailer (Workplace Express, 2018k). Negotiations over a new enterprise agreement for Woolworths workers progressed in parallel, leading to a draft agreement endorsed by the SDA, the AWU and the AMIEU (but opposed by the RAFFWU) being put to a ballot of employees in October. The ballot produced a positive vote by 93% of the 62% of employees who voted. Approval of the new agreement, however, was delayed as a result of the need to first resolve the litigation (Workplace Express, 2018l), but finally approved in early 2019.

Negotiations over a new enterprise agreement in the Western Australian alumina industry between Alcoa and the AWU began in December 2016. The EA covered around 1500 employees, working across three bauxite mines and two alumina smelters. The company was trying to introduce significant change to work arrangements as well as to the previous EA (of 2014) in order, it was claimed, to be competitive in dramatically different market conditions (Workplace Express, 2018m). Failure to reach agreement led, in March 2018, the parties working with the FWC using interest-based bargaining to resolve their differences. However, no agreement was reached by the end of August, with the company claiming the union was ‘unresponsive’ and the union protesting the lack of employment security given to workers in the company’s proposed agreement. Workers went on an indefinite strike and Alcoa applied to the FWC to terminate the existing agreement. If successful, this would have effectively put employees onto award conditions, although it seems it was largely a tactic to overcome employee and union intransigence. A draft agreement was finally negotiated, endorsed by the AWU and put to a ballot in October. However, the draft agreement was rejected by employees, leaving the company and the union re-start negotiations (Workplace Express, 2018n).

The federal public sector continued to see fraught relations over enterprise bargaining during 2018. As recounted in earlier annual reviews (e.g. Gahan et al., 2018), the bargaining round that began in 2014 was marked by highly centralised coordination on the employer side through the close implementation of the Workplace Bargaining Policy by the Australian Public Service Commissioner (APSC). The APSC’s strategic objective was (and still is) to ‘modernise the APS employment framework’, through three activities: developing and implementing workplace relations policies to support the workforce of the future; implementing changes to the employment framework to reflect the future of work; and promoting contemporary termination practices (APSC, 2018a: 16–17).

The progress of bargaining in the first round was troublesome, and the consummation of enterprise agreements in the various departments and agencies very uneven, resulting in what the CPSU called a ‘wage freeze’ of 3–4 years for many APS staff. By December 2017, most APS agencies had completed agreements, leaving only 3% of staff without; these were finalised in early 2018 (CPSU, 2018). In one agency (the Department of Home Affairs), however, this required a rare Workplace Determination by a Full Bench of the FWC rather than by collective bargaining. Moreover, the June 2018 determination was for wages only, to be followed by a final decision (FWC, 2018b).

The second round of enterprise bargaining began in early 2018, with a new sequence because the expiry dates of the existing enterprise agreements varied considerably; indeed, many are not due for renegotiation until 2020. The government released a new ‘Workplace Bargaining Policy 2018’ in February (APSC, 2018b), which the APSC insisted was substantially the same as its predecessor, despite the CPSU’s belief that it advocated more strongly the adoption of individual flexibility arrangements (Workplace Express, 2018o). At the time of writing, eight agencies had successfully submitted agreements to a vote of employees and been lodged for approval by the FWC. Two agreements (for the APS Commission itself, and for Treasury) had been approved and commenced operation in November.

Cooperative collective bargaining

In the midst of the growing adversarialism of collective agreement making generally, there was some evidence of cooperation between employers and unions, especially as a result of the FWC’s New Approaches (NA) programme (for background, see Bray et al., 2017). As the FWC’s Annual Report (p. 80) said:

The New Approaches program enables the Commission to work with parties to:

promote cooperative and productive workplace relations through interest-based approaches to bargaining for enterprise agreements

develop new ways of resolving conflict or disputes at the workplace, using interest-based problem solving

support the introduction of change, innovation and productivity improvements through new ways of collaborating, outside of the bargaining cycle and before a dispute occurs.

As of 5 November, there had been 68 NA files since 2014, with 18 commencing in 2018. As the FWC’s summary above suggests, many begin with the parties jointly requesting a member of the FWC to facilitate negotiations over the making of an enterprise agreement. The successful negotiation of a new EA often – though by no means always – leads to deeper forms of cooperation either in the implementation of the agreement or on new issues. Irrespective of the type of issue addressed, NA files invariably involve training in interest-based bargaining processes – usually delivered by the tribunal member – because the skills required are so different from more traditional distributive or adversarial bargaining. In taking this ‘new approach’, the parties can tap into benefits which result from better information, participation in identifying and solving problems of mutual interest, and improved workplace relationships (Bray et al., 2017).

One example of successful NA file during 2018 involved Macquarie University and the NTEU. This was remarkable because of the entrenchment of adversarialism elsewhere in the higher education industry. In contrast, the parties decided to invite DP Booth to facilitate interest-based negotiations for a new agreement covering academics. According to those involved, the process was ‘very robust’ and far from ‘conflict free’, but it enabled the parties ‘to see common ground and understand each other’s interests’ and to ‘come up with options that we wouldn’t have thought about’ before starting negotiations (see FWC, 2018a: 81–82). In October, the academic enterprise agreement achieved 95% support of the 48% of staff voting and was subsequently approved. At the time of writing, the university was working through a similar process with the CPSU to produce a new agreement covering professional staff.

The range of parties pursuing the New Approaches option, however, remains relatively modest despite the potential gains. This is unsurprising given the broader context of adversarialism, in which employers are increasingly ambitious in their goals and aggressive in their strategies, and unions are increasingly defensive. There are also examples, like that of Alcoa discussed earlier, where the parties commit to the process but fail to achieve their objectives, falling back on more traditional hostilities.

Non-union collective agreement making

Among the more remarkable aspects of Australian employment relations are the legislative provisions allowing the making and approval of collective agreements without unions involved. These provisions were first inserted into the Act in 1993 (see Coulthard, 1996) and continued in the Fair Work Act (see Coulthard, 2012). Despite their longevity, non-union collective agreements get remarkably little attention from scholars or those engaged in policy debates. It is noteworthy, for example, that the most widely used source of data about the coverage of collective agreements in Australia – namely, the biennial ABS ‘Employee Earnings and Hours’ survey (Catalogue Number 6306.0) – does not distinguish between union and non-union agreements. The most recent data from this source (May 2016) suggested 36.4% of Australian employees had their wages determined primarily by collective agreements, but we have no idea whether these agreements are union or non-union.

Some indication of the incidence of non-union collective agreements – although it is questionable how accurate an indicator it is – is the number and proportion of agreements that do not formally ‘cover’ a union (under section 183 of the FW Act). These are recorded in the Department of Jobs’ WAD and reported in the quarterly ‘Trends in Enterprise Bargaining’ bulletins.

Annualised data from this source shows that the total number of new non-union collective agreements approved each calendar year between 2011 and 2017 averaged 1608, which represented around 28% of all new agreements each year. The total number for the first three quarters of 2018 was down on this average, at 688, but they were up as a percentage of all agreements, at 29.4%. These new non-union agreements, however, were generally smaller than union agreements, covering an average annual total of 60,000 employees each year (compared to 801,000 for all collective agreements), or 8% of the coverage of all agreements. The 2018 numbers so far indicate smaller non-agreements than average – they covered only 19,000 employees or 3.7% of all employees covered by collective agreements.

Non-union agreements are even more significant when the focus is on current collective agreements: on average over the years 2011–2017 there were 7765 such agreements in operation (in the December quarter each year), or 41% of all current collective agreements, while they covered on average an annual total of 275,000 employees, or 12% of all employees covered by collective agreements.

So, non-union collective agreements are a major part of the Australian system, although seldom mentioned in the public discourse that is the subject of the next section of this review. A lack of public discussion and academic research also means that little is known about how employees are represented or the processes by which these non-union agreements are made.

The public policy battle over collective bargaining

The evidence presented so far in this review suggests that collective bargaining is in trouble in Australia. It is declining as a method for determining wages and working conditions, in terms of the number of agreements each year and the number of employees covered. Industrial disputes are rare. There are many who argue that the decline of collective bargaining has contributed materially to the modest and very unequal wage increases received by Australian employees over recent years.

In this context, the unions have been mounting an increasingly intense campaign arguing that the ‘the system is broken’ and there is a need to ‘change the rules’. For example, ACTU Secretary Sally McManus told an academic conference that ‘Enterprise bargaining under the current system has run its course. It is dying a natural death’ (McManus, 2018a). This was a message she repeated many times during the year (e.g. McManus, 2018b, 2018c) as well as with her new presidential colleague (Workplace Express, 2018h).

The more specific changes demanded by the ACTU were set out in the ‘Fair Bargaining’ section of its Industrial Relations Policy (ACTU, 2018a) under the following headings, the content of which we summarise:

Our bargaining agenda: makes a general commitment to ‘a bargaining system that delivers to working people the power they need to adequately balance the power of employers’ and introduces some of the themes developed later in the policy.

Freeing up bargaining: focuses on eliminating restrictions on the issues that can be included in collective agreements.

Scope of bargaining: strongly advocates the need to expand bargaining beyond the individual enterprise to include the industry and sector levels, supply chains and labour hire arrangements.

Parties to agreements: seeks to end the opportunity for collective agreements to be made for individual employees or small numbers of employees.

Improving the bargaining process: in any bargaining process, workers have a right to be informed and effectively represented.

Good faith bargaining: proposes that good faith bargaining should more effectively prevent employers from avoiding bargaining, especially through the option of conciliation and arbitration of bargaining disputes by the FWC.

Termination of agreements: calls for changes to s. 226 of the FW Act to ensure that agreements can only be terminated in exceptional circumstances, while pre-FW Act agreements can be terminated on the application of unions.

The union peak body moved to build pressure by holding rallies around the country to support their agenda, beginning in Perth on October and ending with Brisbane and Canberra on 20 November (ACTU, 2018b). The unions also challenged the Labor Party to remedy the problems identified by the unions (Workplace Express, 2018p).

The Labor Party was left with some tricky policy dilemmas: given their front-runner status in the polls, how much detail should be included in industrial relations policy platform for the next election? Specifically, how much of the union agenda could they adopt without exposing the Party to the inevitable taunts of Conservative forces that they are captive to the unions?

Opposition Leader Shorten and IR Spokesperson O’Connor revealed a number of individual policy statements during the year, but they were understandably piecemeal. The Labor Party released a Consultation Draft of its national policy platform in April, in anticipation of its national conference originally scheduled for July. Subsequently, the National Conference was postponed to December because of the ‘Super Saturday’ by-elections. The new date was reportedly seen as important by ‘key unions’:

While Bill Shorten and the shadow workplace relations minister, Brendan O’Connor, have shown every inclination in public to deliver on the lion’s share of a detailed union wish list for policy change, key unions want commitments locked in as platform amendments and are concerned their window of opportunity closes if the conference is pushed out beyond this year. (Murphy, 2018)

A ‘Final Draft’ of the Australian Labor Party's (ALP) National Platform was subsequently released before December (ALP, 2018). It included a range of proposals and commitments, the most important for collective bargaining being the embrace of multi-employer (especially, but not only industry-level) bargaining (see clause 90), an increased role for the independent ‘umpire’ (see clauses 89, 94 and 95) and the curtailment of various employer tactics that are seen to frustrate genuine bargaining (see clauses 58 and 66).

Despite support for these provisions at the conference when it was held in December – and therefore their insertion into ALP policy – Shorten and O’Connor remained guarded about how fulsomely the parliamentary wing would embrace the issues, especially the unions’ advocacy of industry-wide bargaining and industrial action (Hannan, 2018).

Employer responses to the unions’ policy agenda and the Labor Party’s announcements were often fierce, but they were also critical of the Coalition government for not sufficiently advancing employer demands. The proposal to introduce industry-level bargaining attracted special criticisms, with a report that ‘employers have angrily rejected union demands to expand bargaining from the workplace to the industry level, warning it is a recipe for them to “make unreasonable claims and cripple whole industries”’; indeed, AIG Chief Executive Willox was quoted as saying it would return Australia ‘to the bad old days of the 1960s and 1970s when industrial action was rife’ (Karp, 2018b, 12 April). AIG later offered a more detailed critique of the industry-based bargaining agenda, labelling it as ‘self-serving’ (AIG, 2018).

More generally, one journalist reported on a speech in April by Willox, and at the same time summarised the ‘rising frustrations’ felt by business (Marin-Guzman, 2018). The former lamented the ‘stagnation on industrial relations reform’ over the previous 3 years. Former Patricks head, Chris Corrigan, warned of ‘economic deterioration if governments continue to put industrial relations reform in the “too hard basket”’; while ‘conservative MPs, the AMMA and the MBA also took swipes at the Turnbull government for failing to prioritise promised legislation that would have blocked the merger of the militant construction and maritime unions’. The types of reforms these conservative critics were seeking included ‘a reduction in unions’ powers to strike over the content of workplace agreements; the reintroduction of individual workplace contracts for high-income earners’; and the abolition of ‘the award safety net, which sets conditions for 2.3 m workers and provides a floor below which conditions of collective agreements cannot fall’ (Karp, 2018b).

The Coalition government’s response to all this has generally been to vociferously attack the unions and the Labor Party, sympathise with employers and pursue anti-union legislative change where it could get parliamentary support. The rhetoric throughout took no prisoners. In March, the Coalition’s response to the ACTU proposals was to label it as ‘left-wing lunacy’, while business condemned them as ‘a job killer’ (Hannan, 2018b). In April, for example, the Minister for Small and Family Business, the Workplace and Deregulation, Craig Laundy, echoed employer arguments by claiming that ‘the ACTU’s plan for industry-wide bargaining would “paralyse entire industries” and its aim to increase the minimum wage would “drive hundreds of thousands of small and family businesses to the wall”. He also warned of ‘a “dark future” if Bill Shorten became prime minister, claiming that the Australian Council of Trade Unions secretary, Sally McManus, would in effect become the workplace relations minister. “The effects would be devastating for your business and for your employees,” he said’ (Karp, 2018b).

In July, Minister Laundry continued in a similar vein, calling on Opposition Leader Shorten to reject ‘the “extreme changes” to workplace law sought by the unions’, which he said ‘include a return to industry-level bargaining, removing secret ballots before strike action and expanding unfair dismissal laws to tie up small and family businesses’. This would, he said, ‘cripple the economy and take Australia backwards to a level of confrontation and chaos not seen since the 1970s, when the rate of industrial action was more than 40 times higher than today’ (Workplace Express, 2018h). He finished with some history: ‘Labor leaders including Hawke, Keating, Rudd and Gillard have rejected such extreme union demands, but Bill Shorten is the puppet of the most militant lawbreaking unions and doesn’t have the ticker to stand up to them’ (Workplace Express, 2018h).

Not to be outdone, the new Minister for Jobs and Industrial Relations (appointed on 28 August), Kelly O’Dwyer, wrote about the ACTU protests (described above) in these terms:

Today we are being given a glimpse of the bleak industrial relations landscape future in Australia were there to be a change of government next year. Thousands of construction and other workers will have walked off work sites, in many cases ordered to leave their work sites, to take part in a protest designed to overturn the laws that govern Australia’s workplaces. What do they want? They want there to be no rules. No regulator. And no check on their power. The ACTU wants a return to the dark days of mass union militancy, it wants workplace division and disruption, it wants the ability to flagrantly break any industrial laws it doesn’t like, and it demands union officials be given the power to subject businesses up and down the country to their every demand, regardless of the capacity of those businesses to accede to those demands. (O’Dwyer, 2018)

Conclusion

It is not hard to see the storm brewing. The landscape for unions and collective bargaining has been changing – union membership and the number and coverage of collective agreements continue to decline. The causes are in dispute, the evaluations differ dramatically and the proposals for the future – whether they are considered remedies or catalysts – are in almost complete conflict. Moreover, the tempest is not confined to the traditionally adversarial arena of Australian politics. It is also happening in workplaces and the courts, as employers find new ways to exclude unions and avoid collective bargaining and unions become increasingly defensive and frustrated. Wages are struggling to match inflation and failing to keep up with productivity. Inequality is growing. The glimmers of cooperation and compromise rarely shine through the clouds. Predicting the future is perilous, but the forthcoming federal election campaign widely anticipated for May 2019 seems to be the place where the storm will break.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship and/or publication of this article.

Footnotes

Biographical notes

Mark Bray has held the Foundation Chair in Employment Studies at the University of Newcastle, Australia, since 1997. He has published widely on Australian industrial relations, including co-authoring the popular textbook Employment Relations: Theory and Practice, (McGraw-Hill). He was President of the Association of Industrial Relations of Australia and New Zealand (AIRAANZ) in 2000.

Johanna Macneil is a senior lecturer in the Business School of The University of Newcastle, Australia. Between academic posts, she spent several years working as an industrial relations consultant, including as a third-party facilitator of interestbased negotiations between Australian management and unions. She has also published on the role of government in promoting workplace cooperation.

Leslee Spiess completed her PhD in the Newcastle Business School at the University of Newcastle. She currently teaches comparative employment relations systems and her research interests include the structures and processes surrounding labour regulation, management strategy and employee representation.

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