Workplace relations: developing an alternative based on 21st century social democratic values


Despite John Howard’s claims that WorkChoices is only a moderate reform, the fact is that WorkChoices is a radical reshaping of our workplace relations system. One of the key consequences of the WorkChoices package is a substantial shift in power from employees to employers. The Labor Party has been vigorously opposing the introduction of WorkChoices, and at the moment it is developing its own alternative policy, which will embody the Labor Party’s vision for workplace relations in Australia. In doing so, it has an opportunity to develop an alternative policy firmly grounded in 21st century social democratic values.

You may ask, what are 21st century democratic values? Well basically, they are not the values which characterised social democracy through most of the 20th century. Those values were about big government and public ownership of everything from banks to airlines, and they were about heavily regulating everything that wasn’t publicly owned. But that era has passed. The collapse of the communism and the struggling world economy of the 1970s and 1980s showed us that such a system simply can’t sustain itself. Given this change, what alternative avenue can social democracy pursue? That alternative is to focus on the way power is dispersed in our society and to use that a guide when developing government policy.

Obviously, this is a vague statement in need of clarification. When addressing the distribution of power in our society, it is not about looking at insiders and outsiders as Mark Latham did, because that is an inherently divisive approach to take. Rather it is about looking broadly at our society, its structure and its institutions and seeing where and how power is concentrated.

Why the focus on the distribution of power? Because when power is concentrated in any one institution, this often has negative consequences for society in general. For example, when government has too much power we often see a stifling of enterprise and choice in our society. When corporations have too much power we often see the exploitation of employees or the lessening of competition which is a key driver of economic efficiency. When unions have too much power, we often see unreasonable wage demands which do nothing to improve the standard of living of their members. And when regulatory bodies have too much power we often see them use this power to restrict entry and competition.

In the context of the debate about WorkChoices, what is relevant is the power imbalance between employers (who are mainly corporations) and employees. It is a fact that employers, on the whole, have a significantly higher level of power than their individual employees. As pointed out by Professor David Peetz in his new book Brave New Workplace, corporations are collectives of capital whereby the owners of capital unite for their common benefit. One of the reasons for this is that it gives the owners more power, especially negotiating power. This isn’t only relevant when negotiating with employees but is also relevant in other situations, such as when negotiating with the suppliers of products they purchase. Just think of the example of a major supermarket versus a corner store — a major supermarket is able to negotiate much better prices from the suppliers of its products than a corner store.

Another reason that owners of capital do this is that it provides economies of scale.

Larger corporations can have many hundreds or even thousands of employees.

With so many employees, they have the ability to employ human resources professionals to coordinate their relations with their employees. The management of smaller corporations with 10 or 20 employees are likely to have more experience with negotiating than the employees themselves and the effect of this should not be underestimated.

The fundamental problem with WorkChoices is that it further increases this difference in power between employees and employers, concentrating it in hands of employers. The fact that industrial action by employees (strikes) is highly regulated but that industrial action by employers (lockouts) is largely unregulated is but one example of this. Another example is that in situations where employees do have significant negotiating power, the law now prohibits the inclusion of terms relating to matters such as unfair dismissals procedures in agreements with employers.

Given that the focus of social democracy is the distribution of power in society, reforms such as WorkChoices which concentrate power must be opposed. And, if the opportunity arises, a social democratic party such as the Labor Party must roll back WorkChoices and develop an alternative industrial relations framework which restores the balance in our society. This is what the Labor Party looks set to do, although it has yet to release a detailed industrial relations policy other than stating that it will “rip up” WorkChoices. What definitely needs to be done is to develop a completely new industrial relations system. That’s because the old system had significant flaws, flaws which have been recognised by prominent members of the labour movement such as Greg Combet and others. The award system was unduly complex and restrictive, limiting flexibility which is not just necessary from an employer’s point of view, but most importantly from an employee’s point of view – because a flexible economy is likely to be a strong economy that provides more jobs.

However, rather than simply concentrating power in the hands of employers and calling that flexibility, we need to provide flexibility that balances the needs of employees with those of employers. And this is where a good faith collective bargaining system provides an answer. Such a system basically involves a bit of workplace democracy, whereby employees take a vote on whether they would like to pursue a collective agreement with their employer. If a majority of employees vote in favour of such a course of action, then the employer is bound by law to participate in negotiations with the employees or their representatives.

Whilst both parties are required to negotiate in good faith, there is still obviously the possibly of non-agreement and therefore dispute resolution mechanisms need to be in place, similar to those undertaken by the Australian Industrial Relations Commission. And although the focus of the system would be on collective bargaining at a workplace level, there would still be a need for a safety net of minimum terms and conditions, especially in cases where employees cannot bargain collectively. Whilst awards are intended to provide a safety net, there is no reason why we can’t provide a detailed legislative safety net as an alternative to awards. The current Fair Pay and Conditions Standard contains only 5 minimum terms and conditions, which is not sufficient to protect the position of vulnerable employees (such as those who do not have the ability to collectively bargain in workplaces). If this were extended to 10 minimum terms and conditions which apply to all Australian employees, it is arguable that this would provide an adequate safety net.

A system like this would reflect the values of 21st century social democracy by tackling the power imbalance at an enterprise level, and protecting the vulnerable without an unduly complex or restrictive set of regulations.

Obviously there would be strong opposition to such a policy from some parts of our society, particularly business groups. Nobody who has experienced preferential treatment likes being put back on an even footing. But we expect governments to rule for the benefit of society as a whole, not to cater to a few narrow interests. And for social democratic governments, that means taking responsibility for tackling the concentrations of power that build up in society over time. That might be difficult, but reform that brings about genuine progress is never an easy task.

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