HRM 603 – COMPARATIVE STUDIES IN

INDUSTRIAL & EMPLOYMENT

RELATIONS

Topic 6:
EMPLOYMENT RELATIONS
IN AUSTRALIA
 Lecture outline
• Key themes
• Context
• Shifts in patterns of employment
• Legal, economic and political background
• Legislative changes: Work Choices to Fair Work
• Unions, employers and the State
• Wage determination and industrial disputes
• Current issues: workplace productivity
• Unemployment and working hours
• Precarious employment
• Gender equality at work
• Conclusions
 KEY THEMES
• In recent decades the Australian employment relations system has
undergone:
– significant legislative changes

– significant structural changes

– significant declines in union density and power

– significant increases in non-standard forms of employment

– a shift away from a centralised industrial relations system to a decentralised

system focused on enterprise bargaining
 CONTEXT
• Australia has a population of 23 million people and a GDP
of just over US$1.5 trillion
• Of the 11.4 million people in the Australian labour force,
77% are employed in services and 18% in manufacturing
and construction
• Australia’s economy remains highly dependent on its
mining and agriculture industries, despite these industries
employing a mere 5% of the total workforce
• Australia has generally experienced strong economic
growth from the 1980s to 2007, with the exception of a
sharp downturn in 1990-91
SHIFTS IN PATTERNS OF EMPLOYMENT
• The structure of employment has changed
radically in recent years
–Decline in full-time permanent employment
–Expansion of various forms of non-standard
employment:
• casual work
• temporary jobs
• outsourcing
• use of agencies and other labour market intermediaries
–Part-time jobs have been the fastest growing area of
employment
 POLITICAL CONTEXT
• Since 1901 Australia has been a federation – a system of government
with a central federal government and six regional ‘state
governments’

• The federal government is limited under the Australian Constitution to

only make laws in relation to industrial relations with respect to:

“conciliation and arbitration for the prevention and settlement of

industrial disputes extending beyond the limits of any one state”
(Section 51, xxxv)
• All other industrial laws were initially the jurisdiction of the states

• However, judicial interpretation of the constitution over time has

meant that the federal government has been increasingly able to
make industrial relations laws under other heads of constitutional
power (namely the external affairs and corporations powers)
 LEGAL CONTEXT
• The Conciliation and Arbitration Act 1904 established the conciliation
and arbitration system which operated until 1988. The system was
technically limited to industrial disputes beyond the borders of
regional states
• yet the practice of unions serving logs of claim on employers from different states
(artificially creating an ‘interstate’ dispute) meant that it became the main avenue
for dispute settlement and award negotiation – most disputes were settled by
negotiation not arbitration
• The Hawke Labor government passed the Industrial Relations Act 1988

• Significant changes were also introduced in 1993 by the Keating Labor

government in the form of the Industrial Relations Reform Act 1993
• allowed federal non-union collective agreements to be certified for the first time
• incorporated a limited right to protected industrial action during a designated
‘bargaining period’
 THE WORK CHOICES LEGISLATION
• In 1996, the Howard Liberal-National coalition introduced the Workplace Relations Act
1996 which:
– limited the power of the AIRC
– made it possible to register individual contracts known as Australian Workplace Agreements
(AWAs)

• In 2005, the Howard Liberal government passed the highly controversial ‘Work Choices’
amendments to the WRA 1996 that had previously been rejected by the Senate, including:
– creation of a national system of industrial relations under the corporations power of the
Constitution (thus removing state control of industrial relations and allowing the federal
government to set minimum terms and conditions without recourse to awards for 85% of the
workforce)
– the ability for AWAs to undercut award/collective agreement conditions
– significant restrictions on union activities
– reduced role for the AIRC
– exempted businesses with fewer than 100 employees from unfair dismissal laws
– introduced 5 minimum employment conditions

• Work Choices was deeply unpopular in Australia and, combined with a strong union media
campaign called ‘Your Rights at Work’, contributed to Liberal-National coalition losing the
2007 election
 TRANSITION TO ‘FAIR WORK’
• After Labor’s election victory in 2007, the new Rudd Labor Government
pledged to ‘roll back’ Work Choices and implement a ‘fair and balanced’
industrial relations policy

• The new policy was less of a recasting of the industrial relations system
and more of a retreat from the excesses of Work Choices

• This is partly explained by the fact that the Coalition and Independents
still controlled the Senate (upper house of parliament) and would have
been unlikely to pass radical reforms
 FAIR WORK ACT 2009
• The main features of the FWA include:
• Fair Work Australia being established as the new employment regulator along with the office of the
Fair Work Ombudsman to promote and enforce compliance with the new laws

• AWAs to be abolished but individual common law contracts remain

• Ten new National Employment Standards (NES) – minimum employment conditions for all workers
under the federal scheme

• New system of modern awards to provide an additional safety net

• Unfair dismissal extended to cover all employees except those working in a small business (15
employees or less) or on probation

• Employees earning more than approximately $100,000 to be on arrangements not based on an

award

• Employers and unions now required to bargain in good faith but are not compelled to reach an
agreement. However, FWA can issue a ‘workplace determination’ where a good faith bargaining
order is ignored

• Union officials able to enter workplaces to talk with employees provided that they hold a permit
issued by FWA and abide by conditions of the permit (including giving notice)

• Employees must be Better Off Overall (BOOT test) under an agreement than they would be under an
award in order for the agreement to be registered
 THE ABBOTT GOVERNMENT AND EMPLOYMENT
RELATIONS
• The Abbott Coalition government was elected in September 2013 promising
minimal changes to employment relations, despite some employers urging
reforms such as allowing greater scope for individual employment contracts

• The government appears to be wary of providing Labor and the union

movement with any grounds on which to argue that it is re-introducing aspects
of the unpopular Work Choices legislation and re-igniting the successful ‘Your
Rights at Work’ campaign by the unions

• The government introduced some minor changes through regulatory rather

than legislative means despite the Howard government’s successful use of the
corporations’ power to enact radical legislative reforms to industrial relations

• However, the government has established a Royal Commission into alleged

trade unions corruption and has initiated an inquiry by the Productivity
Commission into the impact of the Fair Work Act 2009 on various matters
including productivity performance
 AUSTRALIAN UNIONS
• Conciliation and arbitration encouraged the rapid growth of
Australian unions and, to a lesser extent, employer associations
during the early 1900s after the passing of federal legislation

• By 1921, approximately half of the Australian labour force was

unionised

• Australian union density has fluctuated since this time - dipping to

40% during the 1930s and then rising again to a peak of 65% in
1953

• Union density in Australia has been declining steadily over the past
two decades from 49% of the workforce in 1990 to 17% in 2013

• Union density was 42% in the public sector compared with 12% in
the private sector in 2013
 REASONS FOR UNION DECLINE
• The reasons for union decline are complex and varied
• A key factor has been structural change
– changes in the structure of the economy including the contraction of manufacturing employment
(traditionally strongly unionised)
– rapid growth of the services sector (weakly unionised)

• Decline in full-time employment

– increasing prevalence of non-standard forms of employment

• Other factors include:

– growing anti-unionism amongst employers
– removal of institutional arrangements which favoured unionisation under a centralised system of
arbitration
– hostility towards unions by employers and conservative governments
– internal union politics and policies (for example, union amalgamations did not achieve increased
membership as anticipated)
 AUSTRALIAN COUNCIL OF TRADE UNIONS
(ACTU)
• The ACTU is the main confederation for manual and non-manual unions in
Australia
• It was formed in 1927 and covers approximately 95% of all unionised workers
• This high level of coverage is the result of historical mergers with other
powerful peak union bodies
• During the 1990s the ACTU encouraged and facilitated union mergers –
achieving a reduction from 360 federal unions into 20 ‘super unions’
• Successful ‘Your Rights at Work’ campaign in response to Work Choices
• In recent years, the ACTU has focused on strategies to reverse union decline
– organising campaigns in order to become less dependent on the state
– joining community/social movements to support issues such as more secure
employment
 AUSTRALIAN EMPLOYER
ASSOCIATIONS
• Conciliation and arbitration system led to development of Australian employer
associations
• First peak employer group, Confederation of Australian Industry (CAI) was established
in 1977 (almost 50 years after the peak union body, the ACTU)
• Disunity and fragmentation have been ongoing problems for Australian employer
associations
• In 1992 the CAI merged with other peak employer bodies to form the Australian
Chamber of Commerce and Industry (ACCI)
• A similar merger resulted in the formation of the Australian Industry Group (AiG)
• In 1983, the Business Council of Australia (BCA) was formed – CEOs from Australia’s
largest corporations
• Most employer associations were vocally supportive of the Work Choices legislation,
with some bodies even funding pro-Work Choices media advertisements. But AiG
stood aside from these campaigns
• Recent shift from industrial advocacy to fee-based services for members
 THE ROLE OF THE STATE
• The Federal government’s industrial relations powers were restricted by
the Commonwealth constitution until the High Court ruled that Howard
Coalition government could use the corporations powers to widen its
jurisdiction. The state governments are now restricted to industrial powers
in relation to its own employees

• The Howard government advocated deregulation of the labour market but

‘re-regulated’ employment relations, reducing the powers of the federal
tribunal and expanding the role of the federal government

• While the Rudd and Gillard Labor governments enacted legislative changes
to strengthen the unions’ collective bargaining rights and enabled
employees in small enterprises to appeal to the tribunal against alleged
unfair dismissal, this did not reverse all aspects of ‘Work Choices’

• In contrast the pre-1996 legislation, the Fair Work Commission has limited
powers to intervene in disputes unless its services are sought by both
parties
SETTLEMENT OF INDUSTRIAL DISPUTES
• The historical system of conciliation and arbitration
proceeded on the basis that conciliation would be
exhausted before arbitration took place – key aim of this
system was to render strikes unnecessary

• Under the C&A system, striking was illegal until 1930 when
this provision of the Act was removed - yet Australian
workers only received a protected right to strike in 1993

• During the 1980s and 1990s, average working days lost

through disputes per 1000 employees halved due to
– changing macro-economic conditions
– the Accord
 DISPUTE SETTLEMENT (CONTINUED)
• Following 1993, workers could strike during a designated ‘bargaining period’ and the
industrial regulatory body could intervene and determine disputes if the parties were
not acting in good faith. There was little chance of settlement or if it was in the public
interest

• In 1996, the Howard government retained this provision in its reforms although in a
more restricted form

• The strike rate continued to decline during the 1990s and after 2000 – it remained
above the OECD average but was significantly lower than the levels of the 1980s

• After 2000, there was an increase in employer-initiated industrial action in attempts

to introduce non-union collective agreements in traditionally unionised industries

• The 2005 Work Choices reforms further eroded the role of the industrial regulator, the
Australian Industrial Relations Commission (AIRC), removing its compulsory arbitral
power

• Under the Fair Work Act 2009, the regulator Fair Work Australia, can only intervene
where there is a breakdown or intractable negotiations between parties or where the
negotiations are causing significant economic harm to the parties
 DETERMINATION OF WAGES
• The relevant federal tribunal has set a ‘minimum wage’ in some form since 1907

• From 1986-1996 the dominant mechanism for setting the wage was through a
social compact called the Prices and Incomes Accord (‘the Accord’)

• Under the Accord the government and the ACTU would present a joint submission
to the National Wage Case – in most instances the AIRC would accept the
recommendation and introduce wage principles to give them effect

• The Accord was a trade-off – unions would promise not to make extra claims in
wage bargaining in return for increases in the ‘social wage’ and a range of industry
policies

• The election of the Howard Liberal government ended the Accord and its role in
shaping wages policy – the AIRC continued to set a minimum wage

• Under Work Choices, the responsibility for setting a federal minimum wage shifted
from the AIRC to the newly established Australian Fair Pay Commission (AFPC)

• Following the Fair Work Act, minimum wages are set by a Minimum Wages Panel
under Fair Work Australia
CURRENT ISSUES: WORKPLACE
PRODUCTIVITY
• Advocates of labour market decentralisation argued that enterprise
bargaining would stimulate increased productivity

• Although there was an upsurge in both labour and multifactor

productivity after the introduction of enterprise bargaining agreements,
there were also other factors involved such as micro-economic reforms
and greater utilisation of technology during this period

• Lower rates of national productivity in recent times are also due to a

range of factors including a decline in investment in the mining sector

• Studies have indicated that productivity growth at the industry level has
been higher since the introduction of the Fair Work Act than under
Work Choices. But changes to employment relations policies appear to
have had little tangible impact on national productivity outcomes
UNEMPLOYMENT AND WORKING
HOURS
• After experiencing full employment and labour shortages for
almost a decade, the unemployment rate rose from 4.3% in mid-
2008 to 5.3% in mid-2009

• Substantial government spending was credited with preventing

the unemployment rate from rising beyond this point

• Under-employment is a growing problem

• Working hours are also increasing – one in five workers is

employed for more than 50 hours per week

• Under the Fair Work Act 2009, workers can request ‘flexible
working arrangements’ but employers have no obligation other
than having to respond to the request
 CURRENT ISSUES: PRECARIOUS
EMPLOYMENT
• While unemployment appears to have been lower in Australia than most other
OECD countries in recent years, there has been a large increase in
underemployment and non-standard work

• In 2010, 23% of the Australian workforce were employed on a casual basis, 13% on
permanent part time arrangements and 4% on fixed term contracts

• Approximately 53% of female workers were in casual, contract or permanent part-

time jobs compared with 28% of male workers. Younger workers were over
represented in this category compared with older workers

• Non-standard employment is concentrated in sectors where unionisation is

weakest. The ACTU commissioned an ‘Independent Inquiry into Insecure Work in
Australia’ in 2012 to publicise this issue and seek government reforms but to no
avail

• Both Labor and Coalition governments have used temporary work visas to address
persistent labour shortages in particular jobs and industries (e.g. the agriculture and
service sectors), but this continues to be a contentious issue in terms of alleged
exploitation by employers
 GENDER EQUALITY AT WORK
• Women comprise 48% of the paid workforce in Australia (lower than Canada, New
Zealand and some northern European countries)

• Women’s wages are generally lower than male wages and their employment is
concentrated in low-paid areas of work

• The ender pay gap has widened from 16% in 2007 to 17.5% in 2013, although this
varies between states and industry sectors

• In the past, major advances in pay equity were achieved through test cases in the
AIRC but this stalled after Work Choices

• The Fair Work Act 2009 allowed FWA to make orders requiring equal remuneration
for work of ‘equal or comparable value’ – replacing the more limited ‘equal pay for
equal value’ – also removed need to prove discrimination

• The Abbott government scrapped initiatives by the Labor government to improve

pay equity for women in low paid sectors (e.g. child care and aged care). It also
abandoned its proposed paid parental leave scheme
 EMPLOYEE PARTICIPATION IN DECISION
MAKING
• There was some evidence during the 1990s that the
numbers of joint consultative committees were increasing

• There is no legislation that mandates works councils

• The merits of statutory work councils continue to be

debated in Australia, including whether it would address
the current representation gap or increase managerial
prerogatives in the absence of a broader ‘social
partnership’ framework

• There is growing concern about the lack of employee

consultation generally in the context of declining unionism
 CONCLUSIONS
• There was some evidence during the 1990s that the numbers of joint consultative
committees were increasing
• Significant changes in recent decades include
• significant structural changes
• significant legislative changes
• a shift away from the centralised system of the past toward enterprise bargaining
• significant declines in union density and power

• The Work Choices legislation radically reformed the Australian industrial relations system with
continuing consequences despite a change of government

• The Fair Work Act redressed some of the excesses of Work Choices but may be reversed by the
current government

• There are ongoing questions about the role of collective bargaining, unions and other forms of
employee representation

• There is no legislation that mandates works councils

• The merits of statutory work councils continue to be debated in Australia, including whether
it would address the current representation gap or increase managerial prerogatives in the
absence of a broader ‘social partnership’ framework

• There is growing concern about the lack of employee consultation generally in the context of
declining unionism
 References
• Bamber, G., Lansbury, R., Wailes, N & Wright C (2015). International and
Comparative Employment Relations: National Regulation, Global Changes
(6th ed.). UK, London: Sage Publications Ltd.

• Bamber et al (Ed), 2004, International and Comparative Employment

Relations, Allen & Unwin, NSW.
 
• Deery, S and Plowman, D, 1985. Australia Industrial Relations, 2nd edn,
McGraw-Hill Book Company, Sydney.