CHAPTER 13. INDUSTRIAL RELATIONS
13.1 Industrial relations can be regarded as the relationships and interactions in the labour market between employers and employees (and their representatives), and the intervention in these relations by governments, government agencies and tribunals (e.g. Fair Work Australia).
13.2 The field of industrial relations is complex and diverse and, for statistical purposes, is not easily measured. The ABS collects information on a number of topics to provide an insight into the state of the industrial relations environment. This chapter discusses statistics on: the different methods that are used to set pay of employees in Australia (such as award only, collective agreements and individual arrangements); trade union membership; and industrial disputes. Where they exist and are relevant, international guidelines relating to these statistics are also outlined. The chapter starts with a historical overview of industrial relations in Australia.
HISTORICAL OVERVIEW OF INDUSTRIAL RELATIONS IN AUSTRALIA
13.3 Historically, governments have regulated the Australian labour market to varying degrees. Changes to the structure or processes underpinning the industrial relations environment have generally followed changes in governments, and periods of social or economic change. For most of the last century, employee-employer relationships were shaped by highly centralised Commonwealth and state tribunal-based systems of conciliation and arbitration. However, since the late-1980s, the industrial relations environment in Australia has undergone significant change and is now characterised by more decentralised enterprise level arrangements.
13.4 Initially unions and employers opposed the establishment of a system of conciliation and arbitration. However, following a series of disastrous strikes in the 1890s, it was narrowly agreed at the Constitutional Conventions to include in the Australian Constitution powers of conciliation and arbitration for the prevention and settlement of industrial disputes that extended beyond the limits of any one State. The first legislation to put the Commonwealth's industrial power into effect was the Conciliation and Arbitration Act 1904, under which the Commonwealth Court of Conciliation and Arbitration (forerunner to the Australian Industrial Relations Commission) was established.
13.5 The Excise Tariff Act 1906, under which employers were granted tariff protection provided that a fair and reasonable wage was paid to their workers, proved attractive to both unions and employers. The first attempt to define a fair and reasonable wage was made in the Harvester case (1907). This case established the 'basic wage' and initiated an important principle of wage determination: that a fair and reasonable wage should be based on "the normal needs of the average employee, regarded as a human being living in a civilised community". The Harvester standard was used in making other awards; and the basic wage, with margin for skill, became the foundation wage rate.
13.6 The Federal system, with jurisdiction over matters extending beyond State borders, gradually became dominant over the individual State systems. By 1976 nearly 90% of the workforce had come under awards, of which nearly 40% came under Federal jurisdiction. By the mid 1980s there were over 9,000 separate awards with over 250,000 individual award classifications.
13.7 The nexus between tariff protection and the fair wage was weakened in 1973 when the then Labor government oversaw a reduction in overall tariff protection, in an attempt to open up the Australian economy to international competition.
13.8 The opening up of the Australian economy to international competition has continued since then. This in turn has resulted in a much greater emphasis being given to increases in productivity, improvements in work performance, the abolition of rules of demarcation, and workplace restructuring.
13.9 Coincident with these developments was an increased emphasis on agreement making and decentralised bargaining. Decentralisation related to movements away from centralised arbitration and conciliation arrangements (such as awards). These transformations have occurred in both the Commonwealth and State jurisdictions, although the timing and nature of industrial reforms have varied.
13.10 At the Federal level, the introduction of a series of bargaining principles (the Restructuring and Efficiency Principle, the Structural Efficiency Principle, and the Enterprise Bargaining Principle) by the Australian Industrial Relations Commission in 1991 provided a framework for decentralised bargaining and workplace reform. The Industrial Relations Reform Act 1993 encompassed provisions to better allow enterprise bargaining in non-unionised workplaces. The opening up of collective bargaining to workers not represented by unions meant that wages and employment conditions could be changed without unions being directly involved in negotiations. The Workplace Relations Act 1996 introduced further labour market reforms, enabling the development of individual worker agreements (Australian Workplace Agreements) as well as continuing collective worker agreements (Certified Agreements). The same legislation also facilitated the simplification of awards. At the same time, industrial reform also took place at the State level aimed at encouraging decentralised bargaining and workplace reform.
13.11 The level of trade union membership has been generally declining, coinciding with the industrial changes noted above. For most of the last century the proportion of employees who were union members ranged between 42% and 62%. However, the 1990s witnessed significant reductions, to 26% in August 1999 and 18% in August 2010.
13.12 For most of the last century the combined effects of State and Federal industrial relations legislation encouraged unionism. One of the aims of the Conciliation and Arbitration Act 1904 was to facilitate and encourage the organisation of bodies of employers and of employees and the submission of industrial disputes to the Court by organisations. Unions played a critical role in the centralised tribunal based system - indeed the only parties that could request the settlement of a dispute by the Court under the Act were 'registered organisations', that is, unions of employers or employees. The granting of preference clauses in awards for engagement and retrenchment, to unionists over non-unionists, further promoted membership in unions.
13.13 In more recent times the roles of unions under State and Federal industrial relations legislation have been less pivotal. The emphasis on decentralised bargaining and the opening up of both collective and individual bargaining to workers not represented by unions have reduced the role of unions in the wage negotiation process. Restriction of the content of Federal awards to certain allowable matters has further encouraged workers to bargain for wages and other employment conditions outside of award provisions. Other reasons for the decline in union membership include the exclusion of union preference clauses from awards, changing public sentiment towards unions, declines in employment in industries that traditionally were highly unionised, and the emergence of new industries that are less unionised.
13.14 The level of industrial disputation in Australia has also decreased in recent years, with significant declines in strike and lockout activity since the 1980s. Traditionally, awards were the mechanism used by industrial tribunals to settle and prevent disputes, with unions bringing disputes (both 'actual disputes' and 'paper disputes') to the tribunals to improve the wages and other conditions of employment of their members. However, few disputes are now brought before the industrial tribunals for resolution. Those disputes that are brought before the tribunals tend to be of a longer duration and involve fewer workers. The majority of disputes tend to be short (one day or less in duration) and involve many workers.
13.15 Under decentralised bargaining systems, industrial action is only legal during the period in which employees and employers bargain on wages and other conditions of employment, so long as the action is supporting or advancing claims in relation to the enterprise bargaining, and that the existing agreement has passed its nominal expiry date. Accordingly, neither party may legally engage in industrial action when an agreement is in place (except over Occupational Health and Safety issues). However, disputes sometimes occur outside these periods.
13.16 More recent times have seen significant changes to the workplace relations landscape in Australia. The introduction of the Workplace Relations Amendment (Work Choices) Act 2005 represented a movement towards a single, unified system of labour law, through the use of the corporations powers of the constitution. Work Choices resulted in key areas of change in the workplace relations environment, such as new arrangements for setting minimum wages and conditions, award simplification and rationalisation, a changed role for the Australian Industrial Relations Commission and the creation of the Australian Fair Pay Commission, increased regulation of industrial disputes, and changes to unfair dismissal laws.
13.17 The Fair Work Act 2009, which took effect on 1 July 2009, replaced the Workplace Relations Amendment (Work Choices) Act 2005. While the new legislation has resulted in considerable change to the workplace relations landscape, the general structure of a unitary national system for workplace relations, based primarily on the powers of the constitution, has remained. In addition, all states and territories, except Western Australia, had already or have now referred their workplace relations powers with respect to sole traders and partnerships to the Commonwealth as of 2011 (while Victoria, Northern Territory and Australian Capital Territory did not have a state workplace relations system in operation). This has seen the proportion of employees who are in the federal jurisdiction rise to 87% in 2010. As well as the introduction of modern awards, a set of minimum National Employment Standards were introduced from early 2010. The Fair Work Act 2009 also established Fair Work Australia to operate as the body responsible for setting minimum wages and conditions for employees in the national workplace relations system.
METHODS OF SETTING PAY
13.18 Statistical measures relating to how employees' pay is set (such as award only or through an agreement) are used to monitor the effects of industrial and workplace relations reforms and wages policy.
Concepts and International Guidelines
13.19 International guidelines on the production of statistical measures on how pay is set concern collective agreements (ICLS 1926) and relate to the numbers of, contents of, and employee coverage of collective agreements. A collective agreement is defined as "a written agreement concluded between one or more employers or an employers' organisation on the one hand, and one or more workers' organisations of any kind on the other, with a view to determining the conditions of individual employment, and in certain cases, to the regulation of other questions relative to employment".
Definitions used in ABS surveys
13.20 The ABS does not collect statistics on the numbers or contents of collective agreements as defined by ICLS guidelines described above. However, data about pay setting methods are collected in the ABS Survey of Employee Earnings and Hours (footnote 1). The definitions associated with these methods are outlined below.
13.21 The survey identifies the main method used to set pay for employees in Australia, and estimates the proportion of employees who had their pay set using each method. The methods used to set pay identified in the survey are:
- award only;
- collective agreement; and
- individual arrangement.
13.22 Employees who have their pay set by an award or pay scale only had their rate of pay specified by an award or pay scale and were not paid more than that rate of pay. Awards are defined as legally enforceable determinations made by Federal or State industrial tribunals or authorities that set the terms of employment (pay and/or conditions) usually in a particular industry or occupation. Awards have been the traditional way of setting minimum pay and conditions in Australia and provide a safety net for employees. Employees on 'over-award' pay (i.e. paid at a certain amount or percentage above the rate of pay specified in an award) are classified as having their pay set by an unregistered individual arrangement. Under the current workplace relations system established by the Fair Work Act(2009), Fair Work Australia determines the minimum pay and conditions of employees in the national workplace relations system (federal jurisdiction) through modern awards. The minimum wage of each modern award is reviewed annually.
13.23 Employees who have a collective agreement with their employer which sets the main part of their pay are classified as having their pay set by a collective agreement. A collective agreement is defined as an agreement between an employer (or group of employers) and a group of employees (or one or more unions or employee associations representing the employees). A collective agreement sets the terms of employment (pay and/or conditions) for a group of employees. Collective agreements are further classified as registered or unregistered, reflecting whether they are registered with a Federal or state industrial tribunal or authority.
13.24 Employees who have an individual agreement, contract or other arrangement with their employer which sets the main part of their pay, or are a working proprietor of an incorporated business, are classified as having pay set by an individual arrangement. An individual arrangement is defined as an arrangement between an employer and an individual employee on the terms of employment (pay and/or conditions) for the employee. Common types of individual arrangements are individual contracts (which are not allowed to be made under the Fair Work Act), letters of offer and common law contracts. An individual contract (or letter of offer) may specify all terms of employment, or alternatively may reference an award for some conditions and/or in the setting of pay (e.g. over-award payments). Working proprietors of incorporated businesses are regarded as having their pay set by an individual arrangement, and are identified separately in the individual arrangement category.
13.25 There are some differences between the international definition of collective agreement and that used in the Survey of Employee Earnings and Hours:
- the definition of collective agreements outlined in the international guidelines is broader than the definition used in the survey. The international definition encompasses both collective agreements and awards as defined in the ABS survey; and
- the definition of collective agreements outlined in the international guidelines is restricted to written agreements, whereas the survey definition includes both written and oral agreements.
13.26 Statistics on the characteristics of employees, their earnings and how their pay is set, for each of the methods of setting pay (award or pay scale only, collective agreement, and individual arrangement), are currently produced from the biennial ABS business survey, the Survey of Employee Earnings and Hours. For more information on the content and collection methodology of this survey, refer to Chapter 30.
Numbers and contents of collective agreements
13.27 The ABS does not collect statistics on the numbers or contents of collective agreements as defined by ICLS guidelines described above. However, information of this type is available from other sources for collective agreements available under various State and Federal industrial relations jurisdictions. The amount and type of information available vary significantly, and readers should note that statistical measures produced are not necessarily consistent with international statistical guidelines or other ABS measures of the economically active population.
13.28 Measures of numbers of awards and collective agreements that have been arbitrated, certified or registered with industrial tribunals are often published in the annual reports of the various State and Federal industrial relations tribunals. They are generally restricted to the numbers of award or pay scale only and collective agreements registered over a given reference period, and may also include details of the numbers of award or pay scale only and collective agreements currently in force and not replaced, and details of employees covered at registration date. Details of the numbers, employee coverage, wage outcomes and contents of certain types of collective agreements are also available from the Australian Centre for Industrial Relations Research and Training, the Federal Department of Education, Employment and Workplace Relations (Federal certified agreements) and, from time to time, the equivalent State government departments.
TRADE UNION MEMBERSHIP
13.29 Union membership in Australia has declined since the mid 1970s. The changing workplace relations environment is one of the key factors in the decline in trade union membership. Another factor is the change in the composition of the labour market, with a decline in jobs in the industries and types of employment (full-time permanent) that were traditionally highly unionised. An article entitled 'Trade union membership' published in Australian Labour Market Statistics, July 2010 (cat. no. 6105.0), provides further information on the decline in trade union membership.
Concepts and definitions
13.30 A trade union is defined as "an organisation consisting predominantly of employees, the principal activities of which include the negotiation of rates of pay and conditions of employment for its members".
13.31 There are no international recommendations or guidelines relating to statistics on trade union membership. However, numbers of employees who are members of a trade union are collected by the ABS annually in a supplementary survey to the Labour Force Survey, the Employee Earnings, Benefits and Trade Union Membership Survey.
13.32 Estimates of the number and proportion of employees who are trade union members, and the duration of and time since an employee was previously a trade union member, are produced annually from the Employee Earnings, Benefits and Trade Union Membership Survey. Readers should refer to Chapter 21.2 for more detail on the content and methodology of this survey.
International concepts and guidelines
13.33 International guidelines (ICLS 1993) define labour disputes as "a state of disagreement over a particular issue or group of issues over which there is conflict between workers and employers, or about which grievance is expressed by workers or employers, or about which workers or employers support other workers or employers in their demands or grievances". Labour disputes comprise strikes, lockouts and other types of action in which workers may be involved. Involvement may be direct or indirect: for example, workers may participate directly in a strike by stopping work, or indirectly if they are prevented from working because of the strike. Secondary effects of action due to labour disputes are excluded from measures of disputes.
13.34 Strikes are defined in international guidelines as "a temporary work stoppage effected by one or more groups of workers with a view to enforcing or resisting demands or expressing grievances, or supporting other workers in their demands or grievance". Lockouts are defined as "a total or partial temporary closure of one or more places of employment or the hindering of the normal work activities of employees, by one or more employers with a view to enforcing or resisting demands or expressing grievances, or supporting other employers in their demands or grievances". Other types of action are defined as "actions effected by one or more groups of workers or by one or more employers, with a view to enforcing or resisting demands or expressing grievances, or supporting other workers or employers in their demands or grievances, in which there is no cessation of work". Other types of action include work bans, go slows, work limitations etc. Secondary effects are "the effects on other establishments where workers are prevented from working or their work is disrupted, or the effects on other groups of self-employed workers who are prevented from working or whose work is disrupted". Examples of secondary effects include stand-downs because of lack of materials, disruption of transport services, and power shortages.
13.35 The international guidelines recommend a core set of statistical measures of disputes be collected, and that these be supplemented or extended by additional measures as appropriate. The core set of statistical measures should cover all strikes and lockouts, and all employees directly involved. Other types of industrial action and the self-employed are not core and should only be included where relevant. Measures of strikes and lockouts that should be collected include: numbers and duration of strikes and lockouts; and both numbers of workers involved and amounts of time lost by workers involved. Where possible, data relating to strikes and lockouts should be collected, compiled and presented separately.
Definitions used in ABS industrial disputes collection
13.36 Statistics on industrial disputes are collected by the ABS on a monthly basis in the Industrial Disputes collection and released for a quarterly reference period. Statistics on disputes in this collection are, as much as possible, based on the concepts and definitions outlined in international guidelines. The term 'industrial dispute' is defined more narrowly than in the international guidelines and refers to only 'strikes' and 'lockouts'. An industrial dispute is defined as "a state of disagreement over an issue or group of issues between an employer and its employees, which results in employees ceasing work. Industrial disputes comprise strikes, which are a withdrawal from work by a group of employees; and lockouts, which are a refusal by an employer or group of employers to permit some or all of their employees to work".
13.37 The ICLS definitions of strikes and lockouts (paragraph 13.35) explicitly mention the temporary nature of the stoppage or closure, and disputes in support of other workers. However, while neither of these issues is explicitly included in the ABS definition, both are applied in the collection of statistics. Statistics on industrial disputes are restricted to stoppages of work of ten working days or more and exclude both 'other forms of action' and the 'self-employed'. The number of working days lost is defined as the total amount of ordinary time lost by employees on strike or locked out, regardless of the length of the stoppage. Statistics include direct and indirect involvement at the locations where the stoppages occurred, but exclude secondary effects of industrial action (e.g. stand-downs at other locations because of lack of materials).
13.38 Diagram 13.1 illustrates the criteria used to include or exclude industrial disputes from ABS statistics.
13.1 Types of disputes included in the ABS industrial disputes collection
13.39 Other data collected in the Industrial Disputes collection include:
- Cause of dispute - relates to the main cause of stoppages of work and not necessarily all causes that may have been responsible for work stoppages. Initially, the classification of 'Cause of dispute' identifies whether a dispute occurred during a process of workplace/enterprise bargaining. Disputes are then further classified according to the main cause of the dispute. Causes include: remuneration; employment conditions; health and safety; job security; managerial policy; and union issues.
- Working days lost per employee involved - for an individual dispute, defined as the average number of working days lost per employee involved in the dispute. It is calculated by dividing the number of working days lost in the dispute by the number of employees involved (both directly and indirectly).
- Employees directly involved in a dispute - those who actually participated in the dispute in order to enforce or resist a demand or to express a grievance.
- Employees indirectly involved in a dispute - those who were stood down at the location where the dispute occurred, but who were not themselves parties to the dispute. Employees who were stood down at locations other than those where the dispute occurred are excluded.
- Employees newly involved in a dispute - for a new dispute, comprises all employees involved and, for an ongoing dispute, those involved for the first time.
- Total employees involved - comprises employees newly involved and, for an ongoing dispute, those who continue to be involved. Total employees involved for any period of time is obtained by adding together the number of employees involved in each dispute for the period.
- Reason work resumed - relates to the reason(s) for ending the stoppage of work and not necessarily to the reason(s) for settling all matters in the dispute. Reasons include: negotiation without intervention of a third party; State legislation; Federal legislation; pre-determined return to work; resumption without negotiation; and mediation.
- Working days lost - refers to working days lost by employees directly and indirectly involved in the dispute. Estimates of working days lost per thousand employees are calculated for a quarterly period by dividing the total number of working days lost in the period by the total number of employees in the Australian workforce in the period (obtained from the ABS Labour Force Survey) and multiplying by 1,000.
13.40 ABS statistics on industrial disputes are released each quarter in Industrial Disputes, Australia (cat. no. 6321.0.55.001). Readers should refer to Chapter 26 for more detail on the content and methodology of this collection.
13.41 For further details contact the Labour Market Statistics Section in Canberra on (02) 6252 7206 or email <firstname.lastname@example.org>
1. Data on methods used to set pay are only available from Surveys of Employee Earnings and Hours conducted biennially from May 2000 onwards. <back