Academic journal article The Economic and Labour Relations Review : ELRR

Award Restructuring Possibilities and Portents

Academic journal article The Economic and Labour Relations Review : ELRR

Award Restructuring Possibilities and Portents

Article excerpt

1. Introduction

In 1967 the Commission ushered in a new era of wage determination, that of the Total Wage. Discarding the bifurcated system which had operated since 1907, it moved to "work value" the benchmark Metal Trades Award with a view to establishing appropriate relativities between awards and award classifications for total wage determining purposes. The work value exercise degenerated into an absorption exercise--the absorption of over award payments into award rates.

The outcome was the breakdown of the Commission's authority, the move to "collective negotiations", and wage anomie; developments which led one commentator (since appointed to the Commission) to predict the "demise of a notable experiment in the art of government" (Hancock 1975). The Commission's demise did not eventuate. Its actions of 1967, however, and in particular its appallingly executed restructuring work value exercise, led to an era of cost-push inflation and industrial relations conflicts.

The 1967 experience is recalled because of its parallels with contemporary wage developments. Since 1987 the Commission has sought to introduce an era of administered flexibility. The Efficiency and Restructuring Principle has increasingly become the modern-day counterpart of the 1967 attempt to establish "appropriate" relativities between awards and award classifications. National wage determination has increasingly moved in the direction of bifurcation and absorption, issues of importance in the 1967 experiment.

As with the movement to the Total Wage, the current developments have the potential to confer enormous benefits on the Australian economy. Conversely, they may presage another lost opportunity for bringing about an award system relevant to contemporary needs. In the final analysis whether the efficiency and restructuring exercise facilitates award structures compatible with a more flexible and competitive workforce or results in one set of institutional rigidities replacing another; in competitive wage outcomes or another demise of wages policy; will be determined by the way in which a number of conflicting tensions are resolved. These include:

a. administrative control versus wage flexibility considerations;

b. equity versus efficiency considerations;

c. cost of living versus productivity considerations;

d time served versus skills acquired considerations;

e. the harmonizing of wage outcomes between cost-plus industries and competitive industries;

f. the harmonizing of wage outcomes between paid rate and minimum rates awards;

g the system's capacity to devolve negotiations to the enterprise level;

h the capacity to develop mechanisms to counter comparative wage justice in its new "national framework or blueprint" guise;

i the system's capacity to minimize the cost impact of non-wage out comes;

j. the system' s capacity to minimize wage costs associated with the "suspender" effect.

In the following discussion a number of these related issues are treated under the one heading.

2. Administrative Control and Wage Flexibility

Australia has a wages system which is predisposed towards centralism. This has been recognized as a source of wages and labour market inflexibility (Blandy and Sloane, 1986). Labour market inflexibility, in turn, has been seen as an impediment to economic growth (Hawke, 1986; OEDC, 1986). Thus, on economic grounds, it could be argued that the removal of the forces for centralism (in particular the Industrial Relations Commission (the Commission)) has merit.

From a labour relations perspective, however, wages do more than allocate labour between competing groups. Particularly in an environment where comparative wage justice is an important normative force in wage determination, complete wage flexibility carries with it the risk of wage rates outstripping productivity, engendering inflation and/or unemployment, and creating major problems for fiscal, monetary and external policies. …

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