03/08/2004 - 22:00

The politics of industrial relations

03/08/2004 - 22:00

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The approaching Western Australian and Federal elections have the industrial relations lobby groups and political IR policy makers hard at work. 

The agenda will probably not be too different from previous elections. It will include issues such as a single IR system for Australia; individual employment contracts; and the position of small business within the IR environment. All are interrelated. It is therefore an opportune time for all those subject to the end result of this lobbying and politicking to review the conventional and traditional positions of business.

The call for a single IR system in Australia has been around for some time. Those who support this approach generally rely on the proposition that the multitude of State and Federal systems, each with its own rules, processes and forms of employment regulation, are too expensive and complicated for Australian business. But whether a system is complicated or too expensive is not caused by the existence of multiple systems. It is caused by the design of the systems themselves.

At present, with the dominant Labor influence on State IR systems, business looks to the Federal system. But that system is only as attractive as its political designers wish to make it.  A change in Federal government will herald a vastly changed IR environment at that level.  Similarly, a change of government at the State level would produce a similar but ideologically opposite result.

Is, therefore, the option of one of two systems a bad thing for business?

A single IR system could be introduced in a number of ways, the most obvious being the removal of State IR systems in favour of the Federal. The abolition of the Federal system in favour of independent State systems would be contrary to a core concept of the Federal constitution, being a system created for dealing with IR issues extending beyond the boundary of one State. However, having seen the creative use of the foreign affairs and corporations powers by the Commonwealth, anything is possible.

A third option is the alignment of the State and Federal systems and processes. In fact, IR tribunals and legislators are already encouraging that approach through such mechanisms as shared lodgement facilities and legislative provisions that encourage co-operation between tribunals.

If we examine the reasons put forward for a single IR system, it is only the alignment of the State and Federal systems that can provide a potential option. A single IR system based on the selection of one system over another is only realistically going to be the Federal system. That system is overly legalistic and complicated in its processes, and relatively expensive. It is also likely to radically alter with each significant change in the political landscape.

The interaction of the current State and Federal systems provides employers with choice and balance. One can imagine the anguish if there was only one system that did not include individual employment contracts or that did not give business the ability to flee from one to the other. The expense and cost of operating within two systems is not a product of the existence of dual systems but the complexity of one or the other or both. 

A complicated single system without an ability to choose an alternative is worse than multiple State and Federal systems.

The other great benefit that a multiple-choice system gives to the IR environment is the encouragement of innovation. A single Federal system would be harnessed to an inherently conservative public service and the government ideology of the day.  That would discourage innovation and the ability of the system to react quickly and incrementally to changes in the IR environment. 

Lack of innovation leads to a greater ‘pendulum’ effect as the IR system and processes change with changed political ideology. The ability to observe and evaluate different systems in different jurisdictions is lost.

The next issue related to that of a single IR system is the continued availability of individual employment contracts. The focus of employers is on the continuation of this system. Why then is the Federal Government doing little to protect the integrity of these arrangements?

It was patently obvious that Western Australian Workplace Agreements would not have survived a change in government due to the opposition of the Labor Party that was, at least in part, fuelled by the absence of a need to meet a minimum ‘safety net’ standard. 

Some sectors of Western Australian industry used Workplace Agreements to encourage increased productivity, deliver higher earnings and build a better employment relationship that focused on the business and the market in which it operated.

Other sectors used Workplace Agreements to avoid the safety net and reduce earnings. While there may have been valid reasons that drove this logic, and in particular the lack of relevance of applicable awards to the current industry environments, the cause of the problem was not treated – only the symptom. 

Instead of developing well planned attacks to replace outdated award conditions with those that recognised the current manner in which these industries operated, the problem was sidestepped by opting out of the award-regulated systems and into the formalised systems of individual employment contracts. But this approach of continuing to avoid the core problem may eventually come to an end.

For any individual employment contract system to survive it must be supported by the major political players and that will only occur when their constituents send them the appropriate message through the ballot box and lobbying.

Both employers and employees must let their representatives know that they are comfortable with individual contracts that deliver a reasonably equitable result for both parties.  That involves meeting and challenging the influence of organised labour. 

The Federal Government is doing itself no favours by influencing the approval of Australian Workplace Agreements that might satisfy legislation but not the simple concept of the ‘no-disadvantage test’. The Federal Government could do more by promoting the concept of individual employment arrangements among employees – business doesn’t need to be sold on the concept. 

It also needs to take action to combat the bad perception among the voting community that some sectors of industry are creating.

Finally there is the issue of the position of small business in the IR environment.  According to the Australian Bureau of Statistics, small business at the time of the last review in 2000-2001 represented 97 per cent of all private sector businesses.

 If we narrow the view to non-agricultural private sector businesses, small business employed 46 per cent of wage and salary earners. The corresponding statistics for wage and salary earners indicated that small business employed 33 per cent.  Whichever way it is viewed, that is a substantial proportion of the employment environment. 

Why then is such a large proportion of business seeking exemption from certain significant provisions of employment legislation? Surely it is nonsense that just less than half of Australian non-agricultural private sector employers are seeking those exemptions and that such approaches are getting sympathetic ear from both sides of parliament.

Logic would demand that effective legislation must be able to be equitably applied to the vast majority of those that is purports to cover.

Some of the benefits that State and Federal IR legislation was supposed to deliver were low cost, easily accessible, fast reacting and non legalistic systems that could assist employees and employers with the resolution of disputes, initially by conciliation but backed up by compulsory arbitration. It is arguable whether such a system ever existed as intended and it certainly doesn’t today.

The reality of the cost effectiveness of commercially driven settlements, quite divorced from merit and the absence of easily accessible consequences for frivolous claims, has supported a culture of having a go to see what ‘drops out of the system’. 

The increasingly litigious approach of employers and unions to industrial disputation has often brought victory to those with the biggest wallet.

The increasingly legalistic approach to dispute resolution sees an early focus on legal gymnastics before the tribunals rather than a pro-active focus on fixing real issues.  Those who thumb their nose at the system often appear to be rewarded rather than disadvantaged. This has incorrectly resulted in criticism of systems and those who must work within them rather than the legislation that creates the problem.

The future of equity in the IR environment for all business, whether small or large, is enabling legislation that supports the efforts of employers and employees to work within that environment, not those who play the systems or those who seek exemption.

The future of a robust and equitable IR environment in Australia will depend on the continued existence of healthy State and Federal systems that are aligned but that provide real choice to the majority of employers and employees, not choice dominated by lobby groups representing sectional and ideological interests. Those systems need to be supported by simple systems that get back to a focus on disputes and not the mechanics of those systems.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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