The past and future of enterprise bargaining

Industrial relations reform was one of the great dramas of the 1983-96 Labor government. Labor started as a strong defender of centralized wage fixation and ended a champion of decentralized enterprise bargaining backed up only vague commitment to overall wage targets. By 1996 it was the Reserve bank which overshadowed wage-fixation with its commitment to low levels of inflation. A key driver of workplace reform during Labor’s term was the Business Council of Australia (BCA) founded in 1983 that represented the CEOs of Australia’s largest companiesThe BCA distanced itself from the anti-union rhetoric of the ‘new right’, and employed mainstream industrial relations academics such as John Benson to undertake research that supported its advocacy of enterprise bargaining. At the time the shift to enterprise bargaining was unpopular among most on the left outside the trade union movement, defense of centralized wage-fixation, often on equity grounds, was a left rallying call. Michael Pusey makes more of rather unclear opinion polling on the issue in his attack on the dark side of economic reform. Recently I read the 1975 publication Australian labour Economics: readings. It is noteworthy how many of the articles in this book from the late 1960s and early 1970s are doubtful about the viability of arbitration in an environment of full employment: unions in profitable and high productivity industries negotiated pay increases which then flowed onto workers in other industries with inflationary consequences.  Suggestions to solve this problem through greater state intervention made by some contributors appear illiberal. Enterprise bargaining tried to solve this problem, it is not clear what response its critics on the academic left would have made to this. Did they show an excessive faith in the power of incomes policies? Today even the modest moves of Fair Work Australia to encourage good faith enterprise bargaining an inspiring a frenzy of conservative opposition in which negotiation is presented as inherently ‘adversarial’. Business opinion is divided one one hand we have the backswoodsmen of the Institute of public Affairs with their diehard defense of mangerial progroagive as the capacity to manage index (note this astroturf exercise on this topic here). The BCA has been more cautious. It has commissioned a paper by Monash academic and former trade union legal advsior Anthony Forsyth. At least to me the conclusions in the paper on the potential role of FWA in fostering workplace coperation seem very largley disconnected from the vaguely alarmist supporting statment by BCA president Kate Lahey:

“The Fair Work Act is based on an assumption that workers and employers will come together and bargain around new enterprise agreements in ‘good faith’,” Ms Lahey said. “But the Act leaves a lot of room for this term to be misunderstood or misused.At a time of economic uncertainty and significant global challenges, there is a real risk of a return to strongly adversarial approaches as new workplace agreements are struck. Such a development would threaten the capacity to link productivity and rewards at the enterprise level. This would undermine the ability for Australia to maintain or raise the living standards we expect relative to other countries around the world.

In the run-up to the next election will the BCA develop a more explicit critique of the good-faith bargaining provisions of FWA? Will this be taken up by the federal Opposition? How will Labor respond? More interesting questions than Turnbull’s leadership. if you believe that the shift to enterprise bargaining was a pragmatic response to economic management challenges you would suggest that Labor is unlikely to shift ground significantly as the economic management challenges of the 1980s are now past.

2 thoughts on “The past and future of enterprise bargaining

  1. Geoff, this is a very thoughtful piece. As you may know I think a hybrid of the social wage is needed. Tax is now a greater driver of potential fairness than significant minimum wage uplift. This is a 1980′s concept come back back for another difficult economic period. More flexibility on labour price is needed at the low end but I’m no scorched earth weirdo who thinks that labour conditions should be left solely to the market. I think we should embrace taxation changes as the deliverer of fairness – in which case he could retain more labour market flexibility without harming low paid workers.

  2. Jackie says:

    Is fair work act decentralised system of contracts or a centralised system? Also, is workchoices centralised or decentralised?

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