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Category: Unions & Collective Bargaining

  • Lost at Sea

    Industry & Sector Policies, Unions & Collective Bargaining

    Lost at Sea

    An Assessment of the Productivity Commission’s Report on Container Port Productivity
    by Phillip Toner

    Author

    Phillip Toner

    New research from the Centre for Future Work challenges the methodology and conclusions of a recent Productivity Commission study of productivity in Australia’s container port system.

    The report, by economist Dr Phil Toner, suggests that the Commission’s exercise was ideologically motivated, and failed to properly interpret its own data.

    By several indicators, Australian container ports have demonstrated superior and globally competitive productivity performance, including:

    • 7.8% annual compound growth in number of containers handled.
    • 3.6% annual compound growth in containers handled per hour of work (more than twice average productivity growth in the broader economy).
    • 5.9% annual compound growth in equivalent container units handled per crane.

    The Productivity Commission’s claims that Australian ports are not ‘technically efficient’ rests on a faulty methodology which assumes that ports should minimise use of productive inputs (including land, capital, and labour) to meet any given volume of traffic. But in the real maritime logistics industry, other criteria – including ship turnaround time, and ability to respond to fluctuations in demand – are more essential for shippers.

    “Even the Commission’s own abstract modeling confirms that Australian ports can be as efficient, or more efficient, than global benchmarks,” said Dr Toner. “By more practical measures such as turnaround time, flexibility to accept fluctuations in volume, and safety, Australian ports are both efficient and productive.”

    The report was especially critical of the Productivity Commission’s blanket assertion that unspecified industrial relations practices in Australian ports are the source of purported ‘technical inefficiency.’’

    “The Productivity Commission report provides no hard evidence that workplace practices are reducing productivity in our ports,” Dr Toner added. “Its assertions are unbalanced, and reflect an ideological predisposition to blame unions rather than being based on careful empirical analysis.”

    Dr Toner’s 50-page report highlights numerous methodological problems and inconsistencies in the Productivity Commission’s analysis of port productivity. It concludes by urging the current Commonwealth government to reject the Commission’s draft recommendation to revise the Fair Work Act in order to restrict collective bargaining and industrial activity in ports and related activities.

    The Commission’s inquiry into port productivity was commissioned before the 2022 federal election by the former Coalition federal government. Its draft report was released in September.



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  • Going Nuclear: The Costs of Mid-Bargaining Termination of Enterprise Agreements

    Unions & Collective Bargaining

    Going Nuclear: The Costs of Mid-Bargaining Termination of Enterprise Agreements

    by Lily Raynes and Jim Stanford

    Authors

    Lily Raynes

    Anne Kantor Fellow

    Jim Stanford

    Media releases



    Deal on IR Reforms Sets Stage for Faster Wage Growth



    IR Reforms To Close Off The ‘Nuclear Option’ Will Protect Wages and Entitlements

    New research from the Centre for Future Work quantifies the dramatic risks faced by workers whose employers unilaterally terminate enterprise agreements during the course of renegotiations. This aggressive employer strategy, which became common after a precedent-setting 2015 court decision, would be curtailed by new industrial relations legislation proposed by the Commonwealth government.

    The paper reviews one dramatic example of this termination threat – dubbed the ‘nuclear option’ by labour law experts (because it ‘blows up’ years of collective bargaining embodied in existing enterprise agreements). Earlier this year, Qantas threatened termination of the EA covering its international cabin crew unless they accepted significant contract concessions.

    The new report confirms that losses from termination, if it had gone ahead, would have been enormous for the affected workers:

    • Hourly wage cuts between 25% and 70%.
    • Annual income losses up to $67,000 for the most senior staff.
    • Loss of superannuation contributions and investment income, totalling as much as $130,000 and dramatically reducing retirement incomes.
    • Painful retrenchment of many working conditions issues (including rest periods and accommodation).
    • From the company’s perspective, termination of the EA for just this group of its staff would save $63 million per year, and up to $1 billion over 15 years.

    This threat, backed up by an application for termination lodged with the Fair Work Commission, was sufficient to convince cabin crew staff to accept a new EA containing a two-year wage freeze, real wage cuts, and other compensation and conditions reductions. Staff had earlier voted 97% to reject that agreement. This reversal confirms the termination threat is a very powerful bargaining lever for employers.

    The report recommends reforms to the Fair Work Act to limit employers’ ability to apply for unilateral termination during renegotiations. Current legislation in Parliament (the Secure Jobs, Better Pay Bill) would put new restrictions on employers’ ability to terminate EAs during renegotiation.



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  • Collective Bargaining and Wage Growth in Australia

    Unions & Collective Bargaining

    Collective Bargaining and Wage Growth in Australia

    by Jim Stanford, Fiona Macdonald and Lily Raynes

    Authors

    Jim Stanford

    Fiona Macdonald

    Acting Director, Centre for Future Work

    Lily Raynes

    Anne Kantor Fellow

    Media releases



    Deal on IR Reforms Sets Stage for Faster Wage Growth



    Restoring Collective Bargaining Coverage Would Boost Wage Growth: Research Report

    The reforms proposed in the Secure Jobs, Better Wages bill represent important but incremental steps in restoring a better balance of bargaining power between workers and employers, and lifting wage growth back toward a normal and healthier pace.

    The measures provided here will not suddenly transform Australia in the image of leading OECD countries, where centralised and coordinated collective bargaining covers most workers, and wage outcomes are much more equal as a result. But they would support a gradual restoration of collective bargaining coverage, consistent with practices in other countries where bargaining still occurs mostly at the enterprise level – but where some broader bargaining and coordination is possible. On that basis, and over several years, this should result in a partial restoration of bargaining coverage lost over the past decade, and a corresponding (but still incomplete) recovery in wage growth.



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    Factsheet
    Paying for Collective Bargaining

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  • New International Research Exposes Australia’s Missed Wage-boosting Opportunities

    Unions & Collective Bargaining

    New International Research Exposes Australia’s Missed Wage-boosting Opportunities

    by Alison Pennington, Jim Stanford, Andrew Scott and Andrew Dettmer

    Authors

    Alison Pennington

    Senior Economist

    Jim Stanford

    Andrew Scott

    Convenor, Nordic Policy Centre

    Andrew Dettmer

    National President, Australian Manufacturing Workers Union

    Media release



    As collective bargaining erodes in Australia, solutions from other countries could strengthen bargaining and lift wages 

    New research on international collective bargaining systems, released today in a special issue of the peer-reviewed journal, Labour and Industry, finds that Australia’s industrial relations system is rapidly losing its ability to support wages in the face of numerous challenges (now including the Omicron outbreak).

    On the heels of new data showing further erosion of Australia’s collective bargaining system, researchers and practitioners from five countries have identified best practices from other countries that could strengthen collective bargaining and lift wages.

    Key findings of the research include:

    • The Ardern government in New Zealand has implemented a new sector-wide bargaining system (called ‘Fair Pay Agreements’) that could be a model for similar changes in Australia. It would enhance workers’ ability to win more stable jobs and higher wages in highly fragmented industries (like security, cleaning or child care).
    • New Zealand-style reforms could also improve the effectiveness of Australia’s pay equity legislation. Recent changes in New Zealand’s pay equity system prove that wider scope for bargaining can address persistent gendered pay discrimination. One recent enterprise agreement in Australia (covering public sector workers in Victoria) has already applied that model here.
    • Nordic and continental European countries have used coordinated sectoral bargaining systems to enhance vocational training and technology adoption. Australia could learn from that experience to better integrate skills programs with secure job pathways.
    • In Germany, a combination of sector-wide bargaining over wages and other core compensation, combined with workplace-level consultations (under that country’s ‘works council’ system), produces employment outcomes that are both flexible and fair.

    The final published versions of all articles in the Special Issue are available through Labour and Industry, or through your local library. Links to the following articles are available free access for 3 months (ends March 2022):

    Introduction, by Alison Pennington and Jim Stanford

    Sector-wide bargaining: problems and prospects in the Australian case, by Tom Roberts

    Rebuilding worker power in Australia through multi-employer bargaining, by Tim Kennedy, Ben Redford, Renee Burns and Anthony Forsyth

    Bargaining for pay equity: an NZ-inspired approach to gender equality in Australia, by Alison Pennington and Megan Wenlock

    International approaches to solving the ‘free rider’ problem in industrial relations, by Jim Stanford

    Collective bargaining’s contribution to employment skills and transitions: lessons from the Nordic countries, by Andrew Scott

    The Ghent system of social insurance: a model for Australia?, by Russell Lansbury

    Industry 4.0 in Germany and Australia: digital choices, human responses, by Andrew Dettmer

    Unions and the evolution of trade and industry policy under the Ardern government, by Bill Rosenberg

    Comment from authors:

    “Australia’s workplace relations system is failing to address rising insecure work, record-low wages growth, and a persistent gender pay gap. Collective bargaining system retrenchment compounds risks in Australia’s uncoordinated, fragmented skills system. We’re failing to facilitate the millions of jobs pathways and transitions our economy needs now, and in the future,” said Alison Pennington, Senior Economist with the Australia Institute’s Centre for Future Work.

    “The pandemic has deepened the structural drivers behind the gender pay gap in low-paid, insecure work. Australia has much to learn from the labour policy settings implemented in neighbouring New Zealand to meaningfully address the gender pay gap, including Fair Pay Agreements and pay equity bargaining.”

    “Australian workers need an effective system of collective bargaining that goes beyond the legal entity that directly employs them. This is a vital mechanism to ensure workers have greater control over the safety of their work, across sectors, industries, franchises, labour hire arrangements, supply chains – or however work is configured,” said Tim Kennedy, Secretary of the United Workers Union.

    “Australia is currently deprived of the skill formation benefits that arise from strong sectoral collective bargaining between social partners observed in Nordic nations. It’s exacerbating serious deficiencies in our skills training arrangements, evident in high rates of misalignment between jobs and skills. Australia can learn much from the Nordic countries’ superior economic and social policy outcomes that arise from well-integrated skills and collective bargaining systems,” said Andrew Scott, Professor of Politics and Policy at Deakin University and Convenor of The Australia Institute’s Nordic Policy Centre.

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  • Ideas Into Motion

    Unions & Collective Bargaining

    Ideas Into Motion

    Progressive Economics and Social Change Movements
    by Jim Stanford

    Author

    Jim Stanford

    Our research at the Centre for Future Work is motivated by a deep commitment to improving the jobs, working conditions, and living standards of working people in Australia and around the world. We combine our knowledge of economics, our quantitative and qualitative research, and our connections with trade unionists and social movements to develop arguments and evidence that supports campaigns for decent work, stronger communities, and sustainability.

    Our Director, Dr. Jim Stanford, was recently asked to contribute his ideas on the links between progressive economics and real-world social change movements for a forthcoming collection: The Handbook of Alternative Theories of Political Economy, edited by Frank Stilwell, Tim Thornton, and David Primrose, forthcoming in 2022 from Edward Elgar Press in the UK.

    In the essay, Jim reflects on his own experiences trying to integrate progressive economic theorising and research with on-the-ground campaigns for economic, social, and environmental justice. While there is a natural synergy between progressive economics and social change organising, there are also challenges and barriers to more effective partnership between these two worlds. The essay proposes several ‘best practices’ that both researchers and activists can consider as they try to forge stronger cooperation.



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  • How Non-Union Agreements Suppress Wage Growth – And Why the Omnibus Bill Will Lead to More of Them

    Unions & Collective Bargaining

    How Non-Union Agreements Suppress Wage Growth – And Why the Omnibus Bill Will Lead to More of Them

    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Media releases



    Business Council of Australia Research Confirms Centre for Future Work Research



    Omnibus IR Bill will Further Reduce Wage Growth

    The federal government’s omnibus Industrial Relations bill proposes sweeping changes to labour laws which will generally enhance the power of employers to hire workers on a just-in-time basis, and will put further downward pressure on Australian wages (already growing at a record-low rate). One outcome of the bill will be an acceleration of enterprise agreements (EAs) written unilaterally by employers, without negotiation with any union. These non-union EAs will be favoured for several reasons if the omnibus bill is passed: EAs will be exempted from the current Better Off Overall Test, employer-designed EAs will be subject to less scrutiny at the Fair Work Commission, and employers will have less stringent tests to ensure their proposed EAs are genuinely approved by affected workers. All of these changes will lead to a significant increase in employer-designed EAs that reduce compensation and conditions, rather than improving them – signalling a return to the WorkChoices pattern of EA-making.

    In a new report, Centre for Future Work Senior Economist Alison Pennington assesses the major ways in which the IR bill will accelerate non-union EA-making, and considers three specific ways this in turn will undermine wage growth in Australia compared with existing collective bargaining laws.

    Main findings of the report include:

    • The omnibus bill’s proposals to exempt agreements from the Better Off Overall Test (BOOT), reduce scrutiny by the Fair Work Commission (FWC) and weaken employer obligations to demonstrate that their staff have genuinely agreed to the EA will increase the number of non-union employer-designed EAs.
    • Wage increases under non-union EAs are consistently and significantly lower than in union EAs – on average 1-percentage-point lower than for union-covered EAs since 2010.
    • Alarmingly, the majority of non-union EAs approved 2006-19 did not specify any wage increases at all, instead linking wage increases to non-legislated measures like CPI, minimum wage decisions by the FWC, or entirely to employer discretion.
    • In addition to lower (or no) wage increases, the average duration of non-union EAs is longer than for union EAs, locking in their inferior wage outcomes for longer periods of time.
    • Australia’s experience under WorkChoices when similar policies were implemented demonstrates that if the proposed measures are introduced, both the number of non-union EAs will increase, and the share of EAs without any specified wage increases will grow.
    • Since the majority (66%) of the current EA stock consists of higher-wage union agreements, any increase in the number of lower-wage, non-union EAs would increase their proportion within the total EA stock, reducing rather than lifting wages and conditions delivered through EAs overall.
    • Importantly, non-union EAs delivered significantly worse wages outcomes even while the BOOT was in place. The government’s proposal to exempt EAs from the BOOT will open the floodgates for employers to rush the approval of EAs that undercut Award wages, further suppressing wages growth in 2021 and beyond.
    • The BOOT exemption is proposed for a period of two years, but in reality, the terms of EAs negotiated under the BOOT exemption could stay in effect for many years afterward. This is because EAs continue to apply after their formal expiry date unless they are renegotiated or terminated.
    • The overall share of workers covered by EAs will likely increase if the measures pass. But since more of those EAs will consist of sub-standard, lower-wage deals, Australia’s current record-low wage growth will get worse, not better.



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  • Collective Bargaining “Reform”

    Unions & Collective Bargaining

    Collective Bargaining “Reform”

    What Does Business Want? And What Would Actually Fix the System?
    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Media release



    Business Council of Australia Research Confirms Centre for Future Work Research

    Coalition leaders hardly mentioned industrial relations topics during the recent federal election campaign, but now that the party is back in power, an aggressive and wide-ranging agenda for changing Australia’s labour laws has been quickly assembled—with the enthusiastic backing of business lobbyists.

    In a new report, Centre for Future Work Senior Economist Alison Pennington has compiled the various proposals advanced by employers, and shows that together they would constitute a thorough reorientation of Australia’s collective bargaining system. The end result would be a situation (very similar to the Work Choices regime of the late 2000s) whereby employers have unilateral power to determine terms and conditions, wages can be locked in for very long periods of time (contrary to employer’s calls for greater “flexibility”), and the scope for true workplace negotiations is compressed.

    Main findings of the report include:

    • The share of private sector workers covered by enterprise agreements (EAs) has now been halved since 2013, to only 11%.
    • This decline reflects three simultaneous negative trends: declining agreement renewals, sharp decline in new agreements being negotiated, and high rates of agreement termination.
    • Only 917 new private sector EAs were negotiated in 2018 (down on 7,623 in 2009).
    • The changes to industrial relations rules now being proposed by business broadly signal a return to the Work Choices pattern of unilateral employer wage-setting power in enterprise agreements.
    • The changes to enterprise bargaining proposed by business lobbyists include: weakening or removing the Better Off Overall Test; weakening scrutiny of non-union EAs; diminishing the scope of matters employees may negotiate with their employers; and blocking bargaining altogether through introduction of “whole of life” greenfields agreements.
    • Based on the experience of the Work Choices era, when similar measures were in place, we can expect a resurgence of non-union EAs if those proposals are accepted.
    • It is possible that EA coverage might increase, but on the basis of non-union EAs that are motivated primarily by the desire of employers to evade minimum conditions in Awards (a perverse strategy that would be facilitated by the elimination of the BOOT test and watering down of EA scrutiny & approval processes).
    • In short, employers are aiming for a collective “bargaining” system that has little room for actual bargaining – it would instead be characterised by employers with increasing power to unilaterally set the terms and conditions of work.
    • The growth in non-union EAs would come at the expense of both genuine collective bargaining and Award coverage, and would produce a decline in average wage increases for EA-covered workers (since wage increases in non-union EAs are consistently lower than for EAs negotiated with union involvement).
    • Simulations project a slowdown in average wage growth across all private sector EAs of at least 0.4 percentage points. That is just the direct effect of the changing make-up of EAs (with more lower-wage non-union deals); the indirect effect (weakening unions’ ability to negotiate better wages in their EAs) would be even worse.

    The loss of wages resulting from that slowdown slowdown in (already-weak) wage growth could cost an average private sector EA-covered worker over $2000 in lost income over just the first three years.

    PLEASE NOTE: This posted version of the paper corrects a previous error arising from a data coding problem which resulted in an inaccurate allocation of newly approved enterprise agreements between new and renewal agreements.



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  • Submission to the Senate Standing Committee on Education and Employment

    Unions & Collective Bargaining

    Submission to the Senate Standing Committee on Education and Employment

    Inquiry into Proposed Amendments to the Fair Work Act (“Ensuring Integrity”)
    by Jim Stanford

    Author

    Jim Stanford

    Despite its deafening silence on industrial relations issues during the recent election, the re-elected Coalition government is charging ahead with an aggressive plan to change Australia’s labour laws. And business lobbyists are lining up to endorse its direction. First out of the gate is a plan to amend the Fair Work Act, in the cynically mis-named “Ensuring Integrity” bill, to introduce harsh new sanctions on unions and union officials.

    Our Director Dr. Jim Stanford was recently invited to testify before the Senate Standing Committee on Education and Employment on the bill, and its likely economic and social consequences.

    The bill contains 4 substantive sections, which would extend the scope of permissable actions in the Federal Court to disqualify union officials (including elected leaders) from their posts, place unions under court administration, and deregister unions altogether. These severe actions can be sparked by a wide range of supposed offences: including civil court matters, matters not related to officials’ role with their unions, and activities (like organising strikes and protests) that are considered normal and legitimate in most industrial countries. The bill would also empower the Fair Work Commission to prohibit union mergers on vague “public interest” grounds.

    It is hard to fathom that in an economic context marked by unprecedented stagnation in wages, growing polarisation of income and opportunity, and a looming potential recession, the measures contemplated in this Bill have somehow become the top labour market priority of the country’s government.



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  • Union Organising and Labour Market Rules: Two Sides of the Same Coin

    Labour Standards & Workers’ Rights, Unions & Collective Bargaining

    Union Organising and Labour Market Rules: Two Sides of the Same Coin

    by Jim Stanford

    Author

    Jim Stanford

    International evidence is clear that there is a strong, positive correlation between a country’s protection of labour freedoms, and the organising success and economic influence of unions. Improvements in basic labour rights and freedoms tend to be associated with increases in union membership (as a share of total employment). And stronger union membership, in turn, is associated with broader collective bargaining coverage, less poverty among working people, and less inequality.

    Australia has a poor record of protecting basic worker and labour rights and freedoms: including rights to assembly, rights to organise, rights to due process, and rights to strike. According to the World Economic Forum (a generally business-friendly international policy organisation), Australia ranks 5th last among OECD countries in protecting worker rights.

    A new study from the Centre for Future Work documents the correlation between workers’ rights and union organising – and shows they are two sides of the same coin. And that correlation between workers’ rights and the success of unions suggests that unions in Australia will need to continue their campaign to “Change the Rules” of Australia’s labour market (including improving basic rights for workers to organise, bargain collectively, and take industrial action). Winning better legal and regulatory protections for workers seems essential to workers’ ability to build stable, influential unions, and use those unions to improve their lives.

    Australian trade unions are contemplating the after-effects of the Coalition’s surprising victory in the 2019 federal election. The union movement and other social advocates built a successful public campaign to “change the rules” of Australia’s labour market – including lifting the minimum wage (to a living wage level), preserving other labour market protections (like penalty rates), limiting the spread of insecure work, and strengthening collective bargaining freedoms. The Coalition government is not sympathetic to that agenda; and though it barely discussed labour policy issues during the campaign, it may now try to shift labour policies even further in favour of employers.

    However, despite an unreceptive political climate for advocating labour reforms with the present federal government, the evidence presented in this report suggests that the broad campaign for an expansion of both labour market rights and union capacity should continue. The efforts of Australian unions and their allies since 2017 have been effective in strengthening public awareness of labour market injustices, and building support for obvious remedies. They have even led to incremental changes in policies by governments and institutions at all levels (even including, to a modest extent, the Commonwealth government). Most importantly, the international evidence is clear that eventually winning changes in the rules of labour market and industrial relations will be essential, as a complement (not a substitute) for unions’ continuing efforts to expand membership, extend collective bargaining, and lift wages.

    This analysis suggests that Australia faces a dual challenge: improving protection of workers’ basic rights and freedoms, and strengthening workers’ collective ability (given those rights and freedoms) to achieve better economic outcomes (like wage increases and job security). International evidence is also clear that societies in which the benefits of economic growth are shared more broadly across working and middle-income households demonstrate better economic and social outcomes. Rebuilding the labour practices and institutions necessary for more inclusive and stable prosperity will require progress along both of those tracks: greater respect for basic labour rights, and stronger unions and collective bargaining systems.



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  • Workplace Policy Reform in New Zealand

    Labour Standards & Workers’ Rights, Unions & Collective Bargaining

    Workplace Policy Reform in New Zealand

    What are the Lessons for Australia?
    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Australia can learn much from the policy leadership of the Ardern Government in New Zealand and its reforms to address stagnant wages and rebuild a more inclusive workplace relations framework, according to new research from the Centre for Future Work at the Australia Institute.

    As Australia’s debate over wages and workplace rights heats up ahead of this year’s federal election, important changes in labour policy are also being implemented right across the Tasman Sea. Under the Labour-Green-NZ First coalition government which came to office in New Zealand in 2017, several progressive changes in labour law have already been enacted. Others are in development.

    Economist Alison Pennington reviews the policy reforms underway in New Zealand, and considers their relevance for Australia, in a new paper published by the Centre for Future Work.

    Pennington provides a timetable and analysis of seven specific reforms in New Zealand, including:

    1. a landmark pay equity judgement and development of a bargaining principles approach to facilitate pay equity claims and settlements economy-wide;
    2. the introduction of industry bargaining agreements;
    3. restoration of employee and union rights to collectively bargain;
    4. legislation tabled to extend greater protections against unfair dismissal to labour hire and agency workers, and new collective bargaining rights;
    5. government commitments to significant annual increases to the minimum wage;
    6. the establishment of broad civil society alliances in a campaign for a “living wage”; and
    7. the passage of legislation for a universal employee entitlement to 10 days paid domestic violence leave.

    Together they represent an ambitious and multi-dimensional effort by the new government in New Zealand to address low wages, inequality, and poor job quality. In every case, Pennington notes, the reforms emphasise the importance of collective representation and unions: not just to lift standards directly through collective bargaining, but also to play a central role in implementing other reforms (such as pay equity and domestic violence leave).

    New Zealand’s experience with these reforms holds several lessons for the Australian debate over workplace policies. The ambition and scope of the New Zealand reforms certainly confirms that there is great potential for national governments to act forcefully to respond to growing public concern over work, wages, and job security.

    “Australians have been touched by the tragedy in Christchurch, and impressed by the compassionate and effective response from the Ardern Government. And it seems there are other areas where we could learn from our New Zealand neighbours, including their new workplace policies,” said Pennington.



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