5TH EDITION
INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS
Globalisation and change
Edited by Greg J Bamber,
Russell D Lansbury and Nick Wailes
CHAPTER 5
Employment Relations in Australia
Russell D. Lansbury and Nick Wailes
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Lecture outline
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Key themes
Context
Shifts in patterns of employment
Political context
Legal context
The Work Choices legislation
The Fair Work Act 2009
Australian unions
Australian employer associations
Strikes
Unemployment and working hours
Gender equality at work
Employee participation in decision-making
Conclusions
Chapter 5:
2 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key themes
• Since the 1990s the Australian industrial relations
system has undergone:
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Significant legislative change
Significant structural change
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
Chapter 5:
3 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Context
• Australia has a population of 21 million people and a
GDP of just over US$1 trillion
• Of the 10 million people in the Australian labour force,
75% are employed in services and 20% 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
Chapter 5:
4 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Shifts in patterns of employment
• Structure of employment has changed radically in
recent years
– Decline in full-time permanent employment
– Expansion of various forms of non-standard
employment
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Casual work
Temporary jobs
Outsourcing
Use of agencies and other labour market intermediaries
– The majority of all jobs created during the 1990s were
casual, while part-time jobs were the fastest-growing
area of employment
Chapter 5:
5 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
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 making 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)
Chapter 5:
6 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
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
• However, 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
• In 1988, the Hawke Labor government passed the Industrial Relations Act
1988
• More significant changes again were 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’
Chapter 5:
7 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
•
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The Work Choices legislation
In 1996, the Howard Liberal-National coalition introduced the Workplace Relations
Act (WRA) 1996 which:
– Limited the power of the Australian Industrial Relations Commission (AIRC)
– Made it possible to register individual contracts known as Australian Workplace Agreements
(AWAs)
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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
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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
Chapter 5:
8 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
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 (the Fair Work Act 2009) 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
Chapter 5:
9 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Fair Work Act (FWA) 2009
• The main features of the FWA were:
– Fair Work Australia was 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 were abolished but individual common law contracts remained
– Ten new National Employment Standards (NES) were established as minimum
employment conditions for all workers under the federal scheme
– The introduction of a new system of modern awards to provide an additional safety net
– Unfair dismissal protection was 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 per year were now able to be on
arrangements not based on an award
– Employers and unions are 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 are 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
Chapter 5:
10 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Australian unions
• The establishment of conciliation and arbitration systems
encouraged the rapid growth of Australian unions and, to a
lesser extent, employer associations
• 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
– In 1990, union density was 49% of the total workforce
– In 2007, it was 19.5%
• Union density is much higher in the public sector (44% in
2007) than in the private sector (15% in 2007)
Chapter 5:
11 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Reasons for union decline
• The reasons for union decline are complex and varied
• A key factor has been structural change in the economy,
including
– The contraction of manufacturing employment (a sector with
traditionally strong unionism)
– The rapid growth of the services sector (a sector with historically weak
unionism)
• A related change has been a decline in full-time employment
and growth of forms of non-standard employment
• Other contributory factors include:
– Growing anti-unionism amongst employers
– Removal of institutional arrangements under the centralised system of
arbitration
– Internal union policies
Chapter 5:
12 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
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
• The general trend during the 1990s was for unions to merge – from
360 federal unions into 20 industry-based ‘super unions’. This was an
ACTU-directed attempt to stop the decline in membership density
• The ACTU organised the successful ‘Your Rights at Work’ campaign in
response to Work Choices
• In recent years, the ACTU has focused on strategies to reverse union
decline
– Focus on organising to become less dependent on the state
– Focus on engaging in community/social movements
Chapter 5:
13 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Australian employer associations
• The early growth of unions led to development of Australian employer
associations
• The 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 in 1998 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
• There has been a recent shift from industrial advocacy to fee-based services for
members
Chapter 5:
14 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Strikes 1
• The historical system of conciliation and arbitration
proceeded on the basis that conciliation would be
exhausted before arbitration took place – the key aim
of this system was to render strikes unnecessary
• Under the conciliation and arbitration 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 Prices and Incomes Accord (‘the Accord’)
Chapter 5:
15 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Strikes 2
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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, if there was little chance of settlement or if
intervention 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, as
employers attempted 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
Chapter 5:
16 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Determination of wages
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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 introduced wage principles to give them effect
The Accord was a trade-off – unions would promise not to see 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
Under Work Choices the responsibility for setting a federal minimum wage
shifted from the AIRC to the newly established Australian Fair Pay Commission
(AFPC)
Now minimum wages are set by a Minimum Wages Panel under Fair Work
Australia, replacing the AFPC
Chapter 5:
17 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Unemployment and working hours
• After experiencing full employment and labour shortages for
almost a decade, the unemployment rate in Australia 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 as well
• 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
Chapter 5:
18 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Gender equality at work
• Women comprise 48% of the paid workforce in Australia
• Women’s wages are generally lower than male wages and their
employment is concentrated in low-paid areas of work
• Gender pay gap was 16% in 2007 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 allows FWA to make orders requiring
equal remuneration for work of ‘equal or comparable value’ –
replacing the more limited ‘equal pay for equal value’. The
legislation also removed need to prove discrimination causing
the gender pay gap
• The new low-paid bargaining stream might also have positive
outcomes for women
Chapter 5:
19 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
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 they 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
Chapter 5:
20 Australia
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Conclusions
• The 1990s were a period of significant change for
Australian industrial relations. They saw
– significant structural change
– significant legislative change
– a shift away from the centralised system of the past towards
enterprise bargaining
– significant declines in union density and power
• The 2005 Work Choices legislation radically reformed the
Australian industrial relations system with continuing
consequences
• There are ongoing questions about the role of collective
bargaining, unions and other forms of employee
representation
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.