IR Vision: Re-inventing the Social Compact

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A Vision for an Industrial Relations System based on Fairness and Cooperation

As I write this piece, the Australian Parliament is poised to pass the Workplace Relations Amendment (Work Choices) Bill 2005. This legislation will be the final nail in the coffin of Australia’s century-old experiment with state-sponsored conciliation and arbitration – a system for ordering workplace regulation that was founded on unique Australian values of egalitarianism, and the notion of a ‘fair go’.

That system has been under sustained attack since the mid-1980s. Amending legislation throughout the 1990s diluted its potency as a force for the protection of employees from harsh workplace outcomes. But the cornerstones of the system have essentially remained in place – independent determination of disputes by a statutory institution respected by all parties; award conditions that, through the ‘no disadvantage test’, provided an effective safety net for bargaining; and recognition of the representative rights and enforcement role of trade unions.

All that is about to change. In its place, we will have a workplace relations system premised, not on harmony and cooperation (as its proponents claim), but on conflict. The ‘WorkChoices’ legislation has been about conflict from the beginning. Conflict in the processes adopted by the Federal Government to foist these new laws on the States (i.e. the hostile ‘takeover’ of State IR laws), and the Australian people (i.e. the aggressive, taxpayer-funded advertising campaign). Conflict within workplaces – by substantially strengthening the bargaining power of employers, e.g. enabling them to introduce individual workplace agreements when collective deals are already in place, or to unilaterally terminate agreements on 90 days’ notice. Conflict between workplaces – by positioning firms that seek to take advantage of the ‘flexibilities’ offered by the new system as market leaders in the ‘race to the bottom’ on wages, working hours, and other employment conditions. And finally, conflict between the major actors in the system – by arming employers with new weapons to undermine the capacity of unions to effectively represent workers’ interests; and by setting up new regulatory bodies and other actors, e.g. the Fair Pay Commission, the Award Review Taskforce, and private dispute resolution providers, in competition with the Industrial Relations Commission (IRC).

I have been asked to look beyond the ‘train wreck’ that these new laws will visit upon Australian workplaces – and to consider how the industrial relations system might look, or should look, 10 years from now. This is how I imagine it …

It would be a truly national system of workplace regulation, based on negotiation and agreement between the Commonwealth and the States; and between the ‘social partners’, – governments, employer representatives, unions, welfare groups, and the like. It would fully cover all Australian businesses (private and public sector, of all sizes) and their workers (employees, contractors, full-time, casual, and so on).

At its core, the system would be founded on several key principles, including: fair minimum standards – awards as we have traditionally known them will no longer exist, but comprehensive minimum conditions for all workers will be fashioned by an independent statutory body, rather than being at the whim of the legislature; restoration of the industrial ‘umpire’ – the IRC would be reconstituted with full powers, reflecting continuing community support for impartial, third party resolution of workplace disputes; good faith bargaining – parties could negotiate collective or individual agreements, using processes that require them to, for example: recognise and meet regularly with the other party’s bargaining representative, promptly respond to each other’s proposals, disclose relevant information, and act openly and honestly; additional safeguards for workers would apply in the individual agreements stream; support for collective representative bodies of workers and employers; protection from arbitrary termination, with avenues of redress for all workers in cases of unfair dismissal or contract termination.

In addition to these principles of fairness, the defining feature of the industrial relations system would be cooperation. Legislation would ensure that businesses implement arrangements based on the ‘floor’ of rights and protections set out above. However, various other regulatory measures would be adopted to encourage and enable firms to introduce cooperative, workplace-level mechanisms for enhancing business innovation and competitiveness.

This consensus-oriented approach could be realised, for example, through the establishment of structures for involving the workforce in strategic business decisions; and providing staff with the information they need to fulfil this role, including information about firm performance, future investment plans, and restructuring proposals. It would require Australian managers to place a much greater degree of trust in their workers than they have in the past. Equally, it would necessitate compromise on the part of workers and their representatives – a recognition that job security and working conditions into the future will be won as much through collaboration and commitment to the needs of the enterprise, as through adversarial bargaining.

Employers and workers would receive strong government support to facilitate the transition from conflict to cooperation. This would also involve a significant shift from traditional ‘command and control’ regulatory techniques, to forms of regulation that are more responsive to the needs of business, such as: information, training and other educational programs; incentives (e.g. subsidies, tax breaks, opportunities to tender for government contracts) to firms that adopt innovative strategies to align the interests of workers, unions and management around major productivity and workforce issues such as skills development, training, working time, work/family balance; funding for trials of ‘partnership’ strategies within firms – for example, the UK Government’s ‘Partnerships at Work’ fund has assisted many private and public sector businesses to implement contentious workplace change and restructuring measures, through constructive processes for dialogue with employees and unions, leading to improvements in employee recruitment and retention, business profitability, and company safety and equal opportunity practices; and other regulatory ‘enablers’ – for example, a benchmarking mechanism that ranks firms against specified criteria, such as high-level consultative arrangements with the workforce, and transparent provision of business information.

Complementary changes would also be made to the framework for corporate regulation – to allow companies to re-design the institutions of company management in a way that reflects the new, cooperation-focused orientation of the workplace relations system. These changes would encourage companies to introduce schemes for worker representation on boards (and board committees); enhance workers’ voting and participation rights at company meetings; and require directors to prioritise the interests of workers ahead of those of shareholders in certain situations (e.g. when restructuring proposals are being considered that would substantially prejudice workers’ interests).

The 1904 ‘social compact’ (to borrow from Paul Munro) that was compulsory conciliation and arbitration will be demolished by the Federal Government’s ‘WorkChoices’ legislation. However, the concepts of fairness and equal treatment on which our traditional IR system was based, will be harder to eradicate from the Australian psyche. These concepts, combined with a new focus on collaboration and consensus, should be the defining features of Australia’s workplace relations system in 2015 and beyond.

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