On the verge of an IR deluge

Batten down the hatches, and get ready for more strikes and industrial disputes than we have seen for some time.

Qantas, Baiada and the nurses’ dispute in Victoria are inklings of a coming storm, with both sides shaping up for a fight in a time of economic stress, and a stack of enterprise bargain agreements covering an estimated 130,000 employees due to expire in 2012.

Some industrial relations lawyers are even getting nostalgic, talking about a return to the 1970s – the days when industrial relations was run by a club and there was a beer and petrol strike every Christmas. They also reckon it’s a test of the Fair Work Act.

There’s a bit of hyperbole in both claims but there’s no doubt the ground is shifting.

These disputes are less about money than about a challenge to employment relations. It’s about the fundamental tension between management’s right to manage the business and union control over issues like security of employment. As one migrant worker at the Baiada picket line was reported saying, we will not give up until they respect us. Qantas workers and nurses would say the same thing.

The unions are getting traction with their members because everyone is so scared about what’s happening with the economy and overseas. The problem is that companies feel the same way. That’s what makes these disputes so unusual.

Still, this doesn’t signal a return to the 1970s. Unions are now struggling to remain relevant with their membership shrinking from 40 per cent in 1992 to just 18 per cent in 2010. Unions were more powerful, some would say more relevant, back in the 70s. And there is less industrial disputation now. In the 1980s, some 1.4 million days were lost to industrial dispute but now, it’s just 150,000. That’s hardly a sign of a powerful labour movement.

And the claim that these industrial disputes are a test of the Fair Work Act ignores one little thing: the federal government will be reviewing the Act next year.

Indeed, the government’s timing is exquisite as 2012 will be the year of disputes. Analysis by Deutsche Bank shows that agreements covering Telstra, Woolworths, Coles, Ramsay Healthcare, Fairfax, OneSteel, Toll Holdings, Caltex, Goodman Fielder, Origin and Virgin are all up for renewal next year. So are the agreements for the short haul flight crews and flight attendants at Qantas.

There’s a simple reason why it’s happening. In the weeks before passage of the Fair Work Act in 2009, many employers signed agreements to avoid the provisions of the new legislation which had been extensively canvassed. What we’re seeing now is those agreements expiring. In a sense, the first part of this Labor government under Rudd was insulated from the fallout from industrial disputation. Time’s up.

Significantly, official figures show there were fewer strikes and working days lost due to industrial disputation in the June quarter compared to the same period last year but there was a small uptick for that quarter over the previous quarter.

The combativeness now on both sides is striking in the face of a tight economy and globalisation putting pressures on businesses and job security. As a result, we have seen everything from the grounding of aircraft, the use of police to break up the Baiada picket line, the treatment of nurses as waterside workers to the nurses defying the order from Fair Work Australia to reopen hospital beds and long-haul pilots filing proceedings in the Federal Court seeking a review of Fair Work Australia’s ruling.

And this time, it’s the employers who want arbitration. You can see why – they know arbitrators rarely tell managers how to run their business.

Getting a clear reading of what lies ahead is difficult. So far, all the commentary has either come from the far right or the far left. Unions will push at the ALP national conference to consolidate their position and demand Fair Work Australia get a bigger role in bargaining. Employers are lobbying to make it harder to strike.

Which way will the government go? It’s anyone’s guess. Workplace Relations Minister Chris Evans says businesses will have to prove that they have been adversely affected by the industrial relations regime but he could be posturing. If you were taking bets, you would punt on this government clearing the decks before the next election, as governments do, and changing the legislation.

The political reality is that Australia has been subject to two massive experiments in industrial relations, one from the right with WorkChoices and the other from the left with the Fair Work Act.

WorkChoices created a massive bureaucracy, but dismantling it created massive compliance headaches for SMEs coping with new awards and wage rates. One of the biggest beefs from managers about the Fair Work Act is that it is so hard to find out what their legal obligations are when awards are unclear.

And with both, there is nowhere to go when there is a dispute. Good faith bargaining, under the Fair Work Act, is about process, that’s all. It’s setting a framework for discussion, not outcomes. It’s not designed for determinations by Fair Work Australia, quite the reverse. The unions and the employer have to slug it out. As with WorkChoices, there is no scope for arbitration unless it is having a significant impact on the economy, which was the case with Qantas, or if it is affecting the health and safety of the community as is the case with nurses and the child protection workers. Bad luck if you’re a widget maker in West Melbourne – unless you’re supplying critical widgets to Qantas.

If the government were to change the legislation, a good first step might be to set a time limit on good faith bargaining. After that, it could go to arbitration.

But then, this is what happens when you dismantle industrial relations laws; it creates more work. The experience of WorkChoice and the Fair Work Act showed us that when reformist governments take things down, they have to put up unwieldy scaffolding.

The pressure is on managers to connect with their workforce, to head off any trouble and try to come to an agreement. With increased disputation ahead of us, driven in part by economic pressures, that could be a competitive advantage.

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Yet another article that fails to nail the prime reason for the recent rise in industrial disputation. There are certainly issues of respect that need addressing, but the financial strain on the average PAYE worker is now at breaking point (On the verge of an IR deluge, November 24).
We've had fifteen years of massive credit growth and a CPI measurement that fails to truly capture real inflation. With wages often negotiated on the basis of ABS CPI, at two to three percent, the living standards of the average worker have been continually eroded against real inflation of in excess of five percent. It's an even bigger issue for those who have entered the property market in the last five years, a commodity whose inflationary impact just happens to be missing from the CPI.
What we're currently witnessing is proof that you can't cook CPI data and ignore basic mathematics in the long run.
The big sleeper in IR is productivity. We are much less productive as a nation today than we were ten years ago (On the verge of an IR deluge, November 24). This is not on the unions' agenda and in a collective bargaining environment that has been forced on us, hard to measure. Only when we have a Fair Work Act that is equal and fair to both parties will we see some progress. At the moment that is not the case.
The cost price index is based on the average cost of purchasing all goods and services available. Unfortunately there are variables which limit the effectiveness of the reality of the CPI. For example goods that you may purchase every 5,10 years etc being included in calculations every year. Some items you may never buy at all. Another example is the ticket size of the item you purchase. If this item has come down in price it potentially reduces the average (On the verge of an IR deluge, November 24).
I have always argued it has never been a true reflection of rising cost of living/inflation. That's why the gap between the cost of living and real wages is narrowing. A true test would be the inclusion of essential items only, but to define essential items would be impossible, due to varying life styles.
Would you include house prices as an essential item? Prices have dropped 10 per cent/20 per cent over the last 12 months, did you buy a house?
While I can sympathise with workers and their need to balance the household budget, every time they get a pay rise, we the consumers pay for it through higher prices. Than we get a pay rise to bring us up to par and on goes the cycle.
An interesting segment on ACA last night portrayed a international company allegedly price gouging by charging the Australian public up to 150 per cent above that paid for the same item in other countries.
If proven, we should be focusing our attention in this area. Our regulatory authorities need to be proactive. We have to stop being like a dog chasing its tail.