Abstract
For employers and employer associations, 2018 was in part a year of submissions to government inquiries, the 4-yearly modern wage review and the minimum wage review. Issues of numerical flexibility, including casual work, the gig economy and labour hire, also consumed much attention. It was also a year in which public discontent with the business world, particularly with big business, in relation to industrial relations and broader socio-political issues, and the questioning of its social licence to operate have escalated. In examining the major issues that concerned employers and their associations during the year, this article also discusses the pressures building for them in expressing and promoting their industrial relations agendas in response to a looming federal election, dynamic trade union campaigning and growing public discontent with the industrial relations system in its current form.
Keywords
This article continues themes previous authors of these reviews have highlighted in recent years (see notably, Barry and You, 2017, 2018). Some employer association (henceforth ‘association’) activities appear unending and ever-present. This includes the (first) 4-yearly Modern Award Review, which consumes vast association resources. Nonetheless, its very longevity provided some relief to the employer world by forestalling commencement of the second review, due in 2018. Also apparently ever-present are the frustrations of employers and their associations with insufficient federal government legislative action promoting their industrial relations (IR) agenda; court and Fair Work Commission (FWC) test cases that restrict or roll back pro-employer gains; and pro-employee regulatory initiatives from state governments (Grozier, 2018; McCauley, 2018a; Smith, 2018). Once again, core issues include the definition of an ‘employee’ and those work arrangements that fall outside traditional employment relationships.
During 2018, Australia’s IR framework, itself the product of longstanding association influence on federal (and anti-union) Liberal and National Party coalitions, continued to be very positive for employers, particularly large employers. Nonetheless, the framework has generated many negative outcomes for other IR parties, to the extent that their opposition now threatens important parts of it. In this sense, the ideological success of associations and other business lobbies since the late 1980s has now generated an ideological or at least values-based counter-movement.
Responses to these more challenging trends during 2018 included special inquiries, to which employers – and particularly associations – spent much time and energy responding. Indeed, for associations, 2018 was a year of submissions. National-level inquiries included the Senate Committee on the Future of Work and Workers, the Modern Slavery Bill and the Review of the Model Workplace Health and Safety (WHS) Bill. We examine these responses in the following. More broadly, associations continue to manage policy-making on climate change amid its disastrous effects on federal politics and strongly shifting opinions among some powerful corporations.
In recent years, research interest has grown in the diversity of interests, views and strategies among associations, whether large or small, organised by sector or region, single-level or peak bodies (e.g. Barry and You, 2017; Sheldon et al., 2016). Due to word constraints and the importance, in 2018, of these more fundamental IR challenges facing employers and their associations, we have focused on the larger policy issues and the major national associations as employers’ main representative policy voices.
These challenges have interlinked elements that all somehow focus on ‘fairness’ in ways that undermine the longstanding employer agenda. First, Coalition parties are in retreat, threatening preservation of the pro-employer, anti-union IR legislative framework. Second, the union movement and social movements are building effective mobilising campaigns that challenge corporate and association narratives about how a political economy and its IR system ought to operate. These link with Labor Party policy-making, as Labor develops electoral momentum across crucial parts of Australia with ‘fairness’ its campaign touchstone. Third, and most fundamental, is the growing cynicism or even hostility towards important sectors of (big) business, Conservative party policy-making in their favour and the business lobbying that supports it. This sentiment can be captured conceptually as a crisis in business’ ‘social licence to operate’. This crisis helps fuel campaigning by unions and social movements and Labor’s greater willingness to embrace policy planks from those campaigns as it moves into electioneering mode. This article will also examine these three phenomena and associations’ responses to them.
In focusing this review on some of these broader as well as more typical IR issues, we have extensively consulted recent academic research, corporate and particularly association submissions to hearings and inquiries, informational and public relations materials, media releases, and media interviews of their leading spokespeople. As well, we have interviewed a small number of key officials and used a range of media reports relating to important companies and associations. 1
This review begins by discussing the socio-political context for lobbying and publicity on pro-employer interests, before turning in to an analysis of employer and association political advocacy before government and FWC inquiries during 2018. Following this, developments in 2018 concerning the contested terrain of the ‘employment relationship’ are examined, after which the employer and business licence to operate is examined, including issues to do with ‘wage theft’, decarbonisation and just transitions.
The socio-political context for pro-employer interest lobbying and publicity
In order to understand the three interlinked challenges outlined above, requires an understanding of the terrain in which they arose is required. Over recent decades, neo-liberal policies (Cooper and Ellem, 2008) have produced a federal IR framework that restricts collective bargaining to enterprise level, greatly restrains employee access to industrial action, constrains union access to workplaces and hence workplace organising (Peetz, 2018), and specifically and more repressively regulates building and construction industry unionism. Fractured forms of work and work-based income in on-line platform and gig jobs join other faces of labour market exploitation within franchised businesses and business groups, supply chains and labour hire arrangements (Knox, 2018; Stewart and Stanford, 2017). This has added to a workforce structure where many job categories suffer great insecurity due to employer-focused flexibilities. Furthermore, the spread of non-employment forms of work engagement has removed, from businesses, a range of regulatory and financial responsibilities.
Outcomes of these developments include very low union density levels and greatly reduced union capacity to monitor workplace breaches (Gahan et al., 2018: 338–340; Peetz, 2018: 38–39). Partially linked is the continuing decline of enterprise bargaining coverage (Gahan et al., 2018: 344–346; Oliver and Yu, 2018: 307–308), the historically high share of national income going to corporate profits (and particularly financial capital), at the expense of wages and salaries, and the hugely increased income inequality within wages and salaries (Stanford, 2018). There is ongoing overall wages stagnation, despite a tightening labour market and rising labour productivity, which associations dispute (Australian Chamber of Commerce and Industry (ACCI), 2018c; Chamber of Commerce and Industry Queensland (CCIQ), 2018). Wages stagnation has also accompanied staggeringly large increases in executives’ remuneration, whose pay and bonuses ironically are reported under the ‘labour share’ (Oliver and Yu, 2018: 311–312; Peetz, 2018: 35–36; Schofield-Georgeson, 2018: 95–96).
Other outcomes of neo-liberal policy settings – like housing unaffordability and pervasive local tax avoidance by large IT corporations and other multinational corporations – reinforce a sense that Australia’s economy has departed from notions of fairness and equity. These issues are now widely acknowledged by associations and other business-related bodies as producing a threatening climate of opinion facing employers and particularly big business (Burn, 2018; Grozier, 2018). Indeed, an Australian Institute of Company Directors (AICD) and KPMG report (2018: 4) admitted that ‘(T)he problems of inequality, housing affordability and wage growth stagnation are real and front of mind in the electorate and in the workforce’.
Nonetheless, big business and leading associations are well aware that public discontent about such outcomes, in other countries, has flared into forms of angry left- and right-wing populism (Burn, 2018) hostile to important neo-liberal elements that underpin the main business agenda: free trade, and international labour and capital mobility. Neither populism warmly accepts foreign-based multinational corporations and both can be hostile to privatisations and government outsourcing.
Federal parliament: An increasingly difficult lobbying terrain
Overwhelmingly, associations have, in recent years, sought to rework an IR regulatory landscape already tilted decisively in employers’ favour (Patty, 2018b). Associations’ policy-making has spurred and supported Coalition IR policies. However, associations appear ever unsatiated and hungry for more, even as they also differ in emphasis and priorities (Barry and You, 2017, 2018; Sheldon and Thornthwaite, 2015).
They have had great success in demonstrating their IR policy-influence to members. This appears to contrast not just with the more positive, collaborative agendas of leading corporations and associations in Western European countries, for example on climate change transitions (European Round Table of Industrialists, 2018), but with how, for example, the Singapore National Employers’ Federation has collaborated with government and unions in trying to reduce pay inequality by improving pay and conditions in low-pay sectors (Ng et al., 2018). At the same time, Australia’s major associations’ policy successes have produced an oppositional environment that threatens some successes.
Barry and You (2018: 361) note how employer groups apparently ‘pragmatically narrowed the scope of their agenda’ during 2017, given federal parliamentary instability and coalition wariness of igniting another union-based mobilisation akin to that against work choices. During 2018, circumstances intensified as the federal Coalition government and conservative political parties lurched into crises across Australia’s three most populous states. In November 2018, Labor repeated its unexpectedly strong November 2017 Queensland state election victory, this time in Victoria. Between these events were the defenestration of (Coalition) Prime Minister Malcolm Turnbull by more right-wing colleagues, and disastrous Coalition by-election defeats in New South Wales (NSW) and Queensland. At time of writing, the Coalition no longer held a majority in either federal House of Parliament.
Employers – particularly large ones – and major associations are already reckoning with the likelihood, by mid-2019, of a federal Labor government, and perhaps Labor victory in NSW. With so much IR legislation now within the federal jurisdiction, this is the key battleground for influencing and persuasion for the Ai Group, ACCI, Business Council of Australia (BCA) and Australian Mines and Metals Association (AMMA). With its wide policy brief beyond IR, NSW Business Chamber (NSWBC) is focused on NSW elections (Sheldon et al., 2016). Ai Group has long prided itself on its non-partisan stance, having worked closely for decades with Coalition and Labor governments on IR policy. Other associations have been more closely aligned with the Coalition, through ideology and a revolving door of senior officials between association and Coalition parties or governments.
In facing the threat of Labor victory, AMMA (2018b: 1) appears to have embarked on a two-prong strategy: working closely with key members to project its IR influence through engagement and advocacy; and targeting persuasion more directly at Labor, ‘regarding plans to overhaul workplace relations, including excessive regulatory national labour hire licencing policy and the likely push for collective industry wide bargaining’. The BCA has also geared up for electioneering, hiring coalition-linked publicists and lobbyists. It plans to mount television advertising campaigns, sponsored panel discussions on Sky News and, mirroring GetUp!, ‘town hall-style meetings in some of the most marginal seats in the country’ (Tingle, 2018).
These electorally related developments and growing zeitgeist about societal unfairness have emboldened the IR policy ambitions of Labor and an otherwise besieged union movement. One indication has been union initiatives to embed in IR regulation social policy priorities such as paid leave for victims of domestic violence. While employer associations already manifested strong disquiet at losing public and media debates about IR in 2017 (Barry and You, 2018: 362–363), this only intensified during 2018. Nonetheless, it should be noted that this disquiet did not alter employers’ collective approaches to the FWC annual minimum wage review, at which, despite growing awareness of the slow pace of income growth, they presented a traditional front, calling for wage restraint and a maximum increase of 1.8–1.9%, substantially lower than the 3.5% awarded (ACCI, 2018c; CCIQ, 2018; Ai Group, 2018e).
The ACTU’s ‘Change the Rules’ and other campaign challenges
Another more fundamental challenge is the Australian Council of Trade Unions’ (ACTU’s) ‘Change the Rules’ campaign (ACTU, 2018; Fernyhough, 2018). Highlighting dissatisfaction with pervasive job and income insecurity, stagnant wages and difficulties facing working women, it seeks legislative change to strengthen unions’ capacity to recruit, bargain, take industrial action and block ‘race-to-the-bottom’ tendencies among employers. Key campaign objectives are removing legislative restrictions to multi-employer bargaining, for example at industry level, more closely defining and limiting casual employment, providing a framework of job (and representation) rights for ‘gig economy’ workers and overhauling labour hire/temporary employment agency arrangements to block their use for undercutting unionism, bargaining and employment standards (see also Knox, 2018). Worryingly for employer groups, federal Labor has clearly embraced many of these proposals.
Ai Group and ACCI recognise the decline in enterprise bargaining and have made suggestions to make the process less complicated, legalistic and time-consuming for employers. They argue this will improve employer engagement with it. However, together with the BCA, they oppose any return to industry-level bargaining (Grozier, 2018; McCauley, 2018b; Smith, 2018). The NSWBC has repeatedly spearheaded expansive and dynamic pro-business mobilisations and, in leading the ACCI world, in part to counter ACTU and GetUp! campaigns (Sheldon et al., 2018a). During 2018, ACCI itself became more engaged in this thinking (Grozier, 2018).
Leading associations have taken particular aim at Change the Rules. Ai Group put out ‘fact sheets’ on casual and part-time employment and company profits, arguing for the common interests of employers and employees (see e.g. Ai Group, 2018f; Smith, 2018). AMMA (2018b: 16) has also developed an information kit to help members counter the ACTU’s campaign, particularly during the upcoming 2019 federal election campaign.
Policy and IR advocacy in a year of submissions
With a host of government inquiries taking place through 2018, some spanning several years, much association energy went into crafting submissions. National inquiries included the Senate Select Committee on the Future of Work and Workers, the Modern Slavery Bill and the Review of the Model WHS Bill. The first 4-yearly Modern Award Review also continued to consume resources.
The future of work
Employer responses to the Senate Select Committee on the Future of Work and Workers focused on current and likely future impacts of technological development on the nature and location of work, skill requirements and the additional flexibility businesses needed to meet likely challenges. The BCA suggested that ‘a workplace relations framework that encourages collaboration and productivity’ (Westacott, 2018: 3) was needed, the implication being that the current system was failing. Other associations called for change to Australia’s ‘overregulated’, ‘overly complex’ and ‘rigid’ IR system. According to AMMA, for instance, the resources and energy sector needs minimum standards stripped back, through abolition of modern awards, a simpler safety net and, channelling ‘work choices’, reintroduction of statutory individual bargaining without third-party intervention (AMMA, 2018b: 14).
ACCI criticised the ‘one size fits all’ centralised IR system (ACCI, 2018a: 35) and its ‘outdated terms and conditions’ (p. 38). ACCI echoed AMMA’s call for the freedom to negotiate ‘mutually beneficial’ arrangements at the individual level (p. 37). Curiously, ACCI framed this as a workers’ rights issue, claiming that individual employees were the most harmed by lack of access to individual agreement-making (p. 37).
Ai Group took a different stance: rather than arguing for a further individualisation of IR, it argued against the need for greater regulation of workers’ entitlements in the non-employment labour market. Ai Group cautioned that ‘public policy debate about the future of work must not become a vehicle for imposing restrictions on Australia’s labour market’ (Ai Group, 2018c: 3). Ai Group stressed that, contrary to union and media reports of widespread sham contracting and low-wage worker exploitation, the existing legal framework provides extensive protections for Australian workers. To the extent that change is needed, Ai Group argued, legislation is required to help established businesses to compete against ‘digital disruptors’, by removing restrictions on outsourcing, hiring of contractors, and business restructuring, while also rejecting claims for portable entitlements (p. 31).
Linked to the employer group appetite for enhanced freedom to contract is a growing dissatisfaction with the enterprise bargaining system that employers had sought so vociferously in earlier decades. While this dissatisfaction has been expressed over a number of years, the specific focus of employer criticisms has varied (Thornthwaite and Sheldon, 2012). In 2018, ACCI argued that enterprise bargaining is now a ‘stale and bureaucratised process’, ‘utterly robbed of its original vision of being a driver of productivity’ (ACCI, 2018a: 37). Other associations complained that it has become overly complicated, the BOOT test is increasingly unworkable, and individual flexibility arrangements are achieving little (Grozier, interview).
Review of model work health and safety laws
Safe Work Australia’s review of model WHS laws drew many employer responses. Here again, ACCI, for instance, supported a more voluntarist approach, with a simplification of existing regulations, and a diluted application of the primary duty for WHS for those parties which, in reality, ‘genuinely’ lack control over hazards and risks (ACCI, 2018b: 2–5). ACCI’s preference is for a ‘light touch’, ‘economic nudge’ policy approach to WHS laws, a key focus being firm opposition to any increase in penalties for employer non-compliance, including suggestions in the policy space to harness criminal law to heighten the deterrence effect of sanctions (ACCI, 2018b: 43–46). This followed the Queensland government’s introduction in 2017 of industrial manslaughter provisions pertaining to workplace fatalities. The Master Builder’ Association (MBA 2018: 39) and NSWBC (2018b: 3–7) similarly argued that introduction of an industrial manslaughter offence more broadly was unwarranted, the NSWBC cautioning against politically opportunistic responses to what it called ‘penal populism’, in this case meaning calls for increasingly severe criminal liabilities in the health and safety landscape.
Another particular concern of some associations, including ACCI and the MBA, is the cumbersome and overlapping nature of WHS regulations both within and between industries, caused by a multiplicity of regulations and exacerbated by federalism, which while burdensome for all employers, is particularly vexing for small enterprises (ACCI, 2018b: 12–14). The MBA cited the plethora of often inconsistent federal and state Acts, regulations, codes, guidelines and standards concerning WHS in the building and construction industry, which it described as a ‘smothering’ of WHS relations obligations (MBA, 2018: 25).
Modern Slavery Bill
After extensive consultation, the Modern Slavery Bill entered parliament in June 2018 and was enacted in December 2018. Modern slavery manifests in several sectors of Australia’s economy, including horticulture, domestic service, hospitality and construction (Business and Human Rights Resource Centre, 2018). The Bill proposed the imposition of reporting obligations on domestic and foreign companies operating in Australia with an annual revenue of $100 m or more, although smaller businesses could choose to voluntarily submit reports. Critics argued the Bill lacked ‘teeth’, the only sanctions being reputational (McCarthy, 2018).
Associations essentially accepted the political necessity of the modern slavery regulation, but sought a nudge approach. The BCA argued the law should ‘encourage companies’ to investigate slavery in supply chains rather than requiring ‘a more prescriptive or punitive approach’ (BCA, 2018: 2). Similarly, Ai Group favoured a non-punitive reporting regime (Ai Group, 2018a: 3) and the Australian Retailers Association (ARA) called for ‘reasonable, flexible and light-touch’ regulations ‘to ensure that the complexities associated with reporting are minimised and easily achievable’ (ARA, 2018: 2).
Employer groups supported the reporting entity threshold of $100 m, which will narrow the legislation’s impact to fewer than 3000 businesses in Australia, on the basis that larger firms have the capacity and resources to tackle slavery, and that their reporting compliance will trickle down through supply chains (Ai Group, 2018a: 3; ARA, 2018: 4). The proposed federal legislation more closely fitted employer preferences than the similar new legislation in NSW, the Modern Slavery Act 2018 (NSW), which covered businesses with an annual turnover of only $50 m and included such sanctions as referrals to police or relevant government agencies, court orders and financial penalties. Whether the national reporting regime does trickle down through auditing requirements to small employers will remain a topic for future research.
The Modern Award Review
As noted earlier, the first 4-yearly Modern Award Review continued to consume vast resources, with one Ai Group spokesperson referring to it as ‘relentless’ (Smith, 2018). Through 2018, the FWC dealt with a range of specific award issues and common matters, including plain language redrafting, casual conversion issues, payment on termination and part-day public holidays. A key common issue in 2018 concerned the National Employment Standards (NES) entitlement to request flexible work arrangements, and whether the FWC should expand the ‘right to request’ through modern award provisions.
This inquiry stemmed from an ACTU claim for new entitlements concerning flexible work arrangements under the FW Act (s. 65). Arguing that existing provisions were inadequate and unfairly favoured employers, whose decisions to reject applications were neither appealable nor reviewable, the ACTU called for an enforceable right to request flexible arrangements. While rejecting that proposal, the FWC determined that modern awards should be varied to incorporate a model term that would better facilitate access to flexible arrangements.
The provisional model term proposed to require that employers first confer with an employee who has applied to change their working arrangements and genuinely try to reach agreement on a change, and second, provide a written response comprehensively explaining any refusal of a request. The FWC also proposed to expand the right to request beyond the existing group of parents and carers to include, for instance, workers aged 55 years and over. Employer responses were somewhat divided on the FWC’s proposed model term (FWC, 2018). For instance, ACCI endorsed the proposals and accepted that ‘there was no cogent reason not to extend those obligations to other categories of s.65 requests’ (ACCI, 2018b: 8–9). Others challenged the perceived encroachment on management prerogatives. The National Road Transport Association (2018) claimed the model term would unnecessarily increase the regulatory burden on business. Ai Group, concluding that there was no persuasive evidence to warrant change to the existing NES (Ai Group, 2018b: 11), took issue with ACCI’s position, arguing that neither party appears to identify a compelling reason why the expanded scope for the model term would be necessary… The main thrust of ACCI’s submission appears to be that, although it does not resile from its position that the existing statutory regime is functioning satisfactorily, it cannot identify a reason for not expanding the scope of the proposed model term. (Ai Group, 2018b: 11)
The contested terrain of the employment relationship
For employers and their associations, another common theme in 2018 has been simmering tensions over the legal definition of an ‘employee’, which has such important implications for the entitlements of workers not deemed employees, an issue at the centre of growing fairness campaigns discussed earlier. Rejecting the need ‘to disturb the line between an employee and independent contractor’ (Smith, 2018), Ai Group also opposed any stronger regulation of employment relationships, arguing that existing regulations on sham contracting, phoenix activities and outsourcing were sufficiently strong, given also the Frontier Works Organization’s (FWO’s) effectiveness (Ai Group, 2018d). Similarly, Ai Group also opposed calls for a new worker category – such as ‘dependent contractor’ – claiming this would disturb the ‘important legal distinction’ between employees and independent contractors (Ai Group, 2018c: 31). For Ai Group, existing regulatory effectiveness is evidenced by the fact that few legal claims have been brought under sham contracting and related laws (Smith, 2018).
The NSWBC and Ai Group spokespeople contend the campaign for regulatory change to improve protections for on-demand workers is overstated, based on public misperceptions about the prevalence and growth of such employment arrangements. They claim that the gig economy accounts for only 1% of the workforce and is not growing rapidly (Grozier, 2018; Smith, 2018).
A somewhat contrasting development, at least in terms of accepting increased voluntary regulation, was the signing of memoranda of understanding by Coles and the Transport Workers’ Union (TWU) in May 2018. In these, Coles made commitments first to promote fair pay and conditions for on-demand workers, and second, to ensure transparency and accountability for safety and fairness for transport workers throughout the supermarket supply chain (Patty, 2018c). The TWU also forged a global charter with Toll Group, committing to safety and fairness in supply chains. The efficacy of such alternative forms of alternative agreement-making by a major national union with lead retail and transport firms will be an interesting development to follow.
In the context of growing political discourse on the legal entitlements of workers in different employment arrangements, the Full Federal Court decision in the WorkPac case 2 in August 2018 created a furore among employers. The Court ruled that a dump truck operator, hired by Workpac to work at a Rio Tinto mine on a FIFO basis, was a permanent team member. Accordingly, he was entitled to payment for accrued annual leave because he worked regular, predictable hours, despite receiving extra (casual) loadings in lieu of those entitlements. Steve Knott, AMMA chief executive, claimed the decision ‘massively fails the pub test … [and] shows how absurdly complex Australia’s workplace relations legislative environment has become’ (Patty, 2018d). James Pearson, chief executive of ACCI, called the decision ‘a king hit on the livelihoods of Australian employers and employees’ (Patty, 2018d). The decision meant that ‘casual’ employment arrangements would come under increasing scrutiny, and potential class actions to redress underpayments of entitlements, particularly where employers provided regular systematic employment, with set hours and continuity associated with permanent employment (Patty, 2018a; Marin-Guzman, 2018a).
Ai Group’s immediate concern was with the uncertainty the decision created for employers about potential financial liabilities concerning permanent, full-time ‘casuals’ (Patty, 2018b; Smith, 2018). Ai Group argued for legislative change to (re)-define the term ‘casual employee’ and restate their entitlements under the FW Act. Adopting a different strategy, the NSWBC applied to the FWC to vary five awards in order to create a new category of employee – a perma-flexi. The NSWBC claimed this would enable employers to engage permanent employees on a flexible (‘casual’) basis, by paying a 10% flexible loading instead of the present 25% casual loading, while also enabling employees to accrue paid leave in accordance with the national safety net. The NSWBC confined the claim for award variation to awards covering industries such as retail, aged care and call centres, in which casual employment is prevalent and flexible rostering ‘necessary’ (Grozier, interview; NSWBC, 2018a). Meanwhile, in October, Workpac filed a test case pertaining to another casual worker, Robert Rossato, essentially challenging the earlier WorkPac decision, arguing that casuals’ ‘loaded’ rates should offset any permanent entitlements such as annual leave loadings. The Commonwealth government joined the case as a party, a move welcomed by the ACCI Chief Executive, and other associations are following closely (Marin-Guzman, 2018b; Smith, 2018).
Employers and business’ social licence to operate: The context
In our introduction, we mentioned growing cynicism towards or challenges to business’ ‘social licence to operate’. This concept apparently emerged in mining and oil/gas industries across the world where sustained instances of corporate misbehaviour or lack of consultation with affected stakeholders undermined local support and acceptance of mining operations (Moffat, 2014: 61; Knight, 2018). It has similarities with longstanding notions of corporate social responsibility (CSR) and the ‘triple bottom line’. However, spurred by the global financial crisis from 2008 (Burn, 2018), in Australia today it carries a collective notion pertaining to entire industries or big business rather than simply individual corporate strategies. Thus, an AICD and KPMG report (2018: 11) noted that the idea of social licence ‘acknowledges the active role that people and communities play in granting ongoing acceptance and approval of how companies – or entire industries – conduct their business’.
Some very public examples of breaches of the trust and expectations inherent in this notion have recently emerged from Australia’s IR and wider political economy. These have engendered increasingly critical – even derisory – public and media responses related to business’ malfeasance, its exploitation of the weak and vulnerable, and the constant rent-seeking for business at the expense of broader society. Examples here include continuing evidence of conscious underpayment of wages – or ‘wages theft’ (Patty, 2018f, 2018g). Then there are many examples of management use of key performance indicators (KPIs) and linked performance pay to engender unscrupulous and even illegal employee behaviour – most evident in the banking and insurance industries (Yeates and Danckert, 2018), and demands for tax reductions for big business as ‘guarantor’ for wages growth for the low paid. Other less widely appreciated issues include ‘sham’ contracting and the misuse of labour hire/temporary employment agencies to undermine unionism, bargaining, employment security, pay and conditions (Knox, 2018).
Among the most shocking examples have been the major banks and insurance companies, whose managerial goals and practices reflect an apparently insatiable and uncontrollable combination of greed, hubris, self-entitlement and lack of moral self-awareness, including in consciously deceiving industry regulators. As the (Hayne) Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (2018: 1) into these industries has acknowledged, ‘Banks searched for their “share of the customer’s wallet”. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales’.
Particularly egregious in compromising big business’ broad social licence has been the ever-increasing executive (and board) greed for remuneration. This continues unabated even as public, media and Royal Commission evidence demonstrated executives’ contributions to company malfeasance, poor performance, losses of ‘brand value’, and heavy financial penalties (Danckert, 2018; Yeates, 2018).
The AICD and KPMG (2018: 11) report warns that ‘[A]ggrieved and cynical communities can withdraw the social licence of organisations that lose or exploit their trust’. This withdrawal of social licence in relation to IR outcomes may help create such impacts as a 2019 federal election win for Labor, the ACTU’s Change the Rules agenda gaining success under a Labor government and a roll-back of the employer world’s IR legislative achievements. This has intensified pressure on employer representatives and particularly on big business.
During 2018, involved Ai Group members held a number of major, even passionate discussions on the policy implications of anti-business sentiment. Indeed, at quarterly meetings of its IR National Executive Advisory Council, they discussed how their association could do more regarding business mis/behaviour and to increase its CSR messaging (Burn, 2018). We now look at some responses to core issues like wage theft, just transitions and decarbonisation policy.
Wage theft
The public exposure of pervasive, systemic wage theft formed leading media stories during 2017 (Rawling and Schofield-Georgeson, 2018: 380). In 2018, a new wave of wilful wage underpayment cases has shamed leading restaurant, cafe and fast food groups (Danckert, 2018; Patty, 2018c and 2018e; Schneiders, 2018a, 2018b). Evidence of the phenomenon in other sectors is also growing, particularly regarding migrant workers (Clibborn and Wright, 2018; Macdonald et al., 2018; Patty, 2018g).
Associations have reacted in different ways to this phenomenon. Ai Group argues that wage theft is: an overly emotive term … [which] effectively labels all employers, large and small, as potential ‘thieves’. It is a divisive attempt by the unions to indulge in old fashioned warfare. (Ai Group, 2018d: 5)
Citing Lush Cosmetics and Maurice Blackburn Lawyers, Ai Group also observed that underpayments were often the result of genuine misunderstandings, to which the complexity of workplace regulation contributed (Ai Group, 2018d: 6). Maurice Blackburn, which erred in overtime payments for up to 400 employees, and Lush, which blamed payroll system errors for underpaying more than 5000 employers, were thrust into the limelight in July 2018 (Ferguson, 2018) as examples of ‘best practice’ firms also guilty of non-compliance.
In their early years, many associations marked themselves off as organising and representing the ‘fair employer’. This could mean confronting unfair employers (‘the sweaters’) by ‘taking [unfair] wages out of competition’. It seems that associations believe this strategy is no longer possible, given the logic of an enterprise-level collective bargaining system and many employers’ preferences to avoid collectivism or regulation entirely. For Ai Group, too, the greatly increased financial penalties facing franchisors, strengthening of accessorial liability provisions and reversal of the onus of proof included in the 2017 Protecting Vulnerable Worker amendment to the FW Act (Rawling and Schofield-Georgeson, 2018: 380, 382–383) provide sufficiently strong regulatory disincentives for corporate wrongdoing (Smith, 2018)
As association officials said to us, the unfair employer does not tend to spend money joining an association (Grozier, 2018; Smith; 2018). Associations therefore propose better enforcement of statutory requirements. Indeed, their own business models – through their selective and elective goods – are heavily based on helping companies meet statutory requirements, and members, perhaps by virtue of being better informed, tend to support improved regulation of bad corporate behaviour (Burn, 2018; Grozier, 2018; Sheldon et al., 2016). However, should Labor win federally in 2019, and should it be able to enact a return to multi-employer bargaining, associations may well recover, unwillingly, those collective powers on behalf of the fair employer.
On the other hand, the National Retailers Association (NRA) argues that exploitation of workers is not a failure of law, ‘but a failure of the wider system to educate workers in their rights’ (NRA, 2018: 5; Zimmerman, 2018). That is, the NRA claims, because enforcement agencies like the FWO can only enforce reported non-compliance; they depend on employees recognising and raising employer breaches. To remedy the widespread lack of knowledge among workers about their entitlements, the NRA proposed that schools should teach students their industrial rights. The NRA stated: we know of no formalised attempt to educate young people about their rights under the Fair Work system, even in formal traineeships and apprenticeships . … investment in formalising education in workplace rights for: [a] young people … and [b] new arrivals to Australia … will have a significant effect in improving the effectiveness of the current legislative provisions. (NRA, 2018: 5)
Decarbonisation and just transition
Malcom Turnbull was the latest prime minister torn down amid bitter conflicts over climate change transition policy, particularly for energy generation. The conflicts have also increasingly divided the views of employers and their associations. Thus, while decarbonisation itself is not directly an IR issue and most large employers and associations were hostile to Labor’s 2009 attempts at a carbon tax, major corporations like BHP, AGL, RioTinto, Woodside and BlueScope now actively accept climate science and its implications for their operations (Toscano et al., 2018; Toscano, 2018). Ai Group, which hosts an Energy and Climate Leaders’ Group that includes renewable energy companies, continues its longstanding, pragmatic, science-led understanding and policy on the issue. In this, it has in recent years worked more closely with the BCA (Burn, 2018; Reed, 2018; Willox, 2018). Both, together with other more specialised associations, strongly supported Turnbull’s proposed National Energy Guarantee (NEG) scheme in late 2017. For BCA chief executive Jennifer Westacott, the NEG could be ‘a circuit breaker for the stale energy debate, which has paralysed investment in the energy sector’ (Latimer, 2017). A year later, the BCA, Ai Group and other associations alongside major energy companies and users expressed deep disappointment when new Prime Minister Scott Morrison suddenly dropped the NEG (Macdonald-Smith and Ludlow, 2018).
Decarbonisation becomes relevant to IR in two ways. First, when companies publicly pressure their associations to shift from climate change denial or passivity, and sometimes threaten to disaffiliate on that issue. In part, this is corporate realpolitik given rapid developments in climate science and decarbonisation policy internationally. It also reflects the effects of sustained social movement campaigning on major shareholders, including superannuation (pension) funds, universities, third-sector organisations and others (Gray, 2018; Slezak, 2018; Williams, 2018), which is mostly an implicit if not explicit notion of social licence investing.
Second, in November, federal Labor accepted union movement proposals for a ‘Just Transition’ policy framework that brings together decarbonisation of energy production and advanced planning for structural adjustment policies that include labour market interventions in favour of displaced workers and dependent communities (Sheldon et al., 2018b). Ai Group, for one, has long recognised Australia’s weaknesses with structural adjustment for manufacturing industries and is putting more emphasis on just transitions (Burn, 2018). Together with unions, environmental groups and social welfare groups, it is a member of the Energy and Climate Round Table.
Conclusions
If 2017 was an underwhelming year for employers and their associations (Barry and You, 2018: 299), the 2018 experience has been characterised more by a growing recognition that the pressure on employers is ramping up. With a federal election looming, major union and other social movement campaigns being launched and public discontent with the business community growing, in response to the ‘wage theft’ scandals, the Hayne Royal Commission, wage stagnation and other developments, there is acknowledgement within big business and employer association circles that getting their IR agendas met may be about to become tougher. Nonetheless, and despite considerable attention being given to election preparations, much of the business of associations has continued as usual. While there are significant differences between association positions, in policy advocacy, they largely continue to pursue an agenda to preserve existing managerial prerogatives, maintain ‘light touch’ regulation and individualise bargaining.
Footnotes
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.