Australian Labor-Relations Sell-Out

By Baird, Charles W. | Freeman, October 2005 | Go to article overview

Australian Labor-Relations Sell-Out


Baird, Charles W., Freeman


In mid-March, at the behest of the H.R. Nicholls Society, I traveled to several Australian cities speaking on the subject of the American labor market and the lessons that it might have for labor-law reform in Australia. Along the way I discovered that Australian labor-relations regulations are much more irrational, contradictory, and oppressive even than our own National Labor Relations Act.

Since early last century relations between employers and workers in Australian workplaces have been subjected to "awards" by a quasi-judicial body, the Australian Industrial Relations Commission (AIRC). Collective bargaining as we know it in the United States did not exist at least until the late 1980s.The AIRC's awards, not agreements, determined the terms and conditions of employment. Employees and employers were regarded as insufficiently knowledgeable to come to sensible agreements, even collective agreements, at the enterprise level. Employees were assumed to have far less bargaining power than employers, so any agreements between them had to harm workers. Only the anointed wise men of the AIRC could know what was proper and just.

While there were some baby-step reforms in the late 1980s and the 1990s, the awards system still dominates industrial relations in Australia. A union or a group of unions representing workers in an industry or sector of the economy presents its demands to the AIRC, and an employers' organization representing employers in that industry or sector takes the other side of the "dispute." The AIRC grants a detailed, prescriptive award in the dispute that, by force of law, is imposed as a minimum standard throughout the industry or sector. The unions and employers' organizations are assumed, respectively, to represent all workers and all employers in the industry or sector. Before 1996 individual workers and employers were not permitted to opt out of either the representation or the awards.

Opting out is still difficult. Because the AIRC accepts the hoary bargaining-power disadvantage myth as an article of faith, unions exert much greater influence on awards than employer organizations, which often feel impelled to make concessions. This tripartite arrangement, not dissimilar to that of fascist Italy, is known in Australia as the "industrial relations club."

Awards are typically hundreds of pages long and they prescribe in infinite detail what can and cannot happen in covered industries and sectors. In addition to wages and salaries, all rules for work, breaks, leaves, promotions, demotions, transfers, layoffs, terminations, holidays, and even jury duty are prescribed. Once an award is made, a union has a right of entry into workplaces, even where none of its members are employed, and even in unionfree workplaces, to ensure the award is being applied. Once the AIRC imposes an award it may adjust other awards in other industries and sectors to preserve appropriate "wage justice and fair relativity." Before the late 1980s the high prices for labor that emerged from this system were supported by tariffs and other barriers to competition in product and services markets. Except in the underground economy, market considerations were irrelevant.

In the 1980s, because of increasing globalization of commerce and competition, it became clearer that this dirigiste arrangement harmed almost all consumers, employees, and employers, not to mention the unemployed and the underemployed. Like their neighbors in New Zealand, Australians implemented liberalizing reforms in financial, product, and services markets, but only very marginal ones in labor markets. The myth of labor's bargaining-power disadvantage held even the reformers in its thrall. New Zealandcrs cast the myth aside in 1991 when they enacted the Employment Contracts Act (EGA), which almost completely liberalized their labor markets.

Australia legalized union-based collective bargaining at the enterprise level in 1988 and union-free collective bargaining at the enterprise level in 1993. …

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