The Hospitality Industry and Determination: A Case Study of Registered Clubs in New South Wales

Article excerpt

Abstract

Wage(1) flexibility is of particular importance for the hospitality industry, since wages are usually its largest single cost item. The payment of penalty rates is another important issue facing the industry. The critics of Australia's centralised industrial relations system, such as the Business Council of Australia (BCA) (1989) and the Confederation of Australian Industry (CAI) (1990), would argue that the hospitality industry should be a major beneficiary from the decentralisation of the system that has occurred during the 1990s.

These critics have assumed that awards and the involvement of the trade union movement in wage determination have resulted in the prescription of above-market wages for individual enterprises. The critics assumed that release from these constraints, through formalised enterprise bargaining, would result in considerably improved competitiveness for Australian enterprises.

This paper, using data from a study of registered clubs in New South Wales, examines wage determination in the hospitality sector and the impact of awards, trade unions and enterprise bargaining on the process. The study found that no registered club had entered into formal enterprise bargaining. Despite the absence of formal enterprise bargaining the existence of awards and the presence of trade unions, registered clubs undertook a lot of informal bargaining and had a high degree of wage flexibility.

Keywords: Industrial Relations, Club Management, Enterprise Bargaining, Registered Clubs

Introduction

Wages are an important issue for the hospitality industry since they are the major component of operating costs and thus a key determinant of business viability. Wages are especially critical for the hospitality industry because they are `closely related to the distinctive character of the industry's labour process, which are continuous' (Lafferty 1998, p.22). The payment of penalty rates, which is strongly related to wages, is another important issue confronting the hospitality industry.

The requirement for flexible wage determination mechanisms in industries such as hospitality resulted in substantial criticism of Australia's centralised industrial relations system (for example, see BCA 1989; CAI 1990). The centralised system refers to the federal and state industrial tribunals and the concept of conciliation and arbitration administered by the tribunals. During the late 1880s, Australian states created their own tribunals. With federation in 1901, the federal government created its own tribunal. Despite the formation of the federal system, the states also retained their tribunals. This resulted in the establishment of a dual industrial relations system.

Another important feature of the centralised system was awards. Awards are legally binding documents setting out some of the employment rights and responsibilities of both employers and employees. The existence of awards was seen as restricting workplace wage flexibility (the ability for business to alter wages to suit the prevailing economic conditions) and resulting in uncompetitive businesses. This argument was seen as particularly relevant for industries like the hospitality industry that operated outside of non-standard hours and whose largest single cost item was wages. The pursuit of wage flexibility, through the introduction of formalised enterprise and individual bargaining, has been an important factor in the drive to decentralise Australia's industrial relations system throughout the 1980s and 1990s.

This paper uses information gathered from a survey of registered clubs in New South Wales, an important sector of the hospitality industry, to examine the extent to which wage flexibility has been inhibited by the centralised system. The paper also outlines the scope and impact of formal enterprise bargaining in the sector. In addition, the methods of wage determination and the impact of awards on wage flexibility are examined, as is the perceived impact of penalty rates. …