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Workplace challenges facing Australia: speech to the ACT Industrial Relations Society.



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“WORKPLACE CHALLENGES FACING AUSTRALIA”

SPEECH TO THE ACT INDUSTRIAL RELATIONS SOCIETY

ROBERT MCCLELLAND MP SHADOW ATTORNEY-GENERAL AND SHADOW MINISTER FOR WORKPLACE RELATIONS

15 OCTOBER 2002

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The last decade has seen an unprecedented level of change in Australian workplaces. There can be little doubt that Australia’s capacity to undertake such an intense program of microeconomic reform has been crucial to our nation’s economic success.

It is important to appreciate that while there have been many opportunities that have been opened up for some there have also been many losers.

It is also important to appreciate that while the process of change originally commenced as a co-operative exercise between employers and organised labour, over the past 5 years there has seen a complete shift in that approach.

The essence of what I wish to emphasise is that unless we appreciate the dynamics of the change that has occurred and how that it has impacted on the lives of average Australian families then we are limiting our nation’s capacity for future success.

At the end of the day effective change only comes with broad community support. Unless the impact of change is appreciated and dealt with, there will be not only reluctance for further change, but a strong opposition to it.

Earnings inequality

The growing disparity between ordinary earnings and executive remuneration is now the subject of daily discussion.

In the popular press, under the headline, “Fat cats lapping up 30 times average salary”, it was recently reported that the average package for Australian CEOs was, at $1.3 to $1.4 million per annum, 30 times higher than average yearly earnings. In 1976 this multiple stood at only 6.1 This week, it was also reported that executive remuneration has increased by almost 30% over the last 2 years—nice if you can get it.2

1 M Denholm, “Fat cats lapping up 30 times average salary”, The Daily Telegraph, 8 October 2002. 2 F Leydon, “Top execs extract 9pc salary rise”, Sydney Morning Herald, 14 October 2002.

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This trend is borne out by a more comprehensive analysis. Over the period 1975-1999, a male with earning at the lowest decile has experienced a real increase in earnings of half of one per cent, while at the top decile the increase was 32.5%.3

While those at the top prosper, life for many is a struggle.

ABS figures show that 1.2 million wage and salary earning households are described as suffering financial stress and the ABS household expenditure survey data indicates that some 30 000 working households went without meals or could not afford to heat their homes.4

Eighty-seven per cent of jobs created during the 1990’s paid less than $26 000 per year and 48% of new jobs paid less than $15 600 per year.5

Other figures to note are the fact that 23% of workers rely solely on the minimum wages set by the award system. These 23% are paid only 12% of the national wages bill.

These are the sorts of disparities that tear at our social fabric. The Australian perception that we are an egalitarian nation is central to our stable political climate. However, as wealth polarises in a very public fashion, the sense of disconnection that many feel with their institutions will grow.

Insecure employment—the growth in precarious forms of employment

It’s not just incomes that cause concern for workers. Jobs today are more precarious than ever, the majority of jobs created during the last part of the 1990s consisting almost entirely of part-time and casual jobs.6

Insecure employment, either through casual employment, short-term fixed contracts or independent contracting arrangements are now becoming the order of the day.

It is now the case that a quarter of working Australians are employed as casuals and those arrangements are becoming long term with 60% of casual having more than 12 months’ service with an employer.7

Moreover, it appears this trend is accelerating. The most recent government report on workplace agreements, Agreement making in Australia under the Workplace Relations Act 2000-01, tends to reveal an alarming increase in the casualization of jobs over the past 2 years.8

3 J Borland, B Gregory and P Sheehan, Work rich, work poor, Centre for Strategic Economic Studies, 2001, p 7. 4

ABS, unpublished data from Household Expenditure Survey, September 2000. 5 Note 3, pp 13 et seqq. 6

Ibid, p 4. 7 ABS, Career Experience, Cat no. 6254.0. 8

The Department of Employment and Workplace Relations and the Office of the Employment Advocate, Agreement making in Australia under the Workplace Relations Act 2000-01, 2002.

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The report reveals the proportion of enterprise agreements which provide for the use of casual labour has rocketed from 43% to 71% in the last two years.

Also, the figures strongly suggest that the newly casualized workers enjoy fewer protections.

The proportion of agreements which protect workers by regulating the hours, wages, and numbers of casual employees has dropped from 16% to 6%.

The proportion of agreements which provide for a casual loading (or a more generous loading than the relevant award) has barely risen - from 25% to 29%.

Casual workers have no access to paid leave or holidays to look after their families and, with no guarantee of continuing work, find it almost impossible to secure a loan to buy a car or a home.

It appears that the dream of a secure job is quickly becoming a distant memory for many more families.

An increase in job insecurity—redundancy and retrenchment

Today a permanent job is anything but; ABS figures show that between 1998 and the year 2001, about 600 000 Australians were retrenched. This represents 6% of the workforce. 9 Around 80% or 480 000 of those employees were retrenched from full time jobs.

The average period of unemployment after redundancy is 22 weeks and in the case of people over 45 years of age is 96 weeks - or almost 2 years. This is at a time when mortgage payments are at their highest. There will be a demand for school fees there will be a demand for kid’s braces and there will be a start of other health challenges.

We would all like to think that Australian workers are entitled to dignity and a fair go all round, yet a quarter or 150 000 of these retrenched employees received less than one day’s notice of their termination. Clearly, Australia is not meeting its international obligations under the ILO Termination of Employment Convention, and more could and should be done in this regard.

The growth of independent contracting

Another phenomenon we must continue to monitor and address is the growth in contract labour, which is increasingly displacing the traditional employment relationship.

9 ABS, Retrenchment and Redundancy, Cat no. 6266, May 2001 and D Peetz, Job tenure, employment status and labour market disadvantage, May 2002.

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Again, the Government’s Agreement-making in Australia report is revealing. Since 1997, the percentage of enterprise agreements which provide for the use of contract labour has risen from 12% to 35%, while the percentage of those which restrict contract labour has grown from 9% to only 16%.

While everyone would recognise there is a legitimate role for contract labour it is incumbent on government to ensure that contractual relationships are not manipulated to exploit vulnerable workers.

The capacity of contractual arrangements to undermine workers’ access to compensation for work-related injuries was highlighted yet again in evidence by the Department of Employment and Workplace Relations to the current parliamentary inquiry into workers’ compensation.10

Regrettably it is an issue the Federal Government has chosen largely to ignore - a failure manifested for example in its inadequate proposals to address the situation of outworkers in the Victorian textile, clothing and footwear industry.

Working hours

The recent decision by the Australian Industrial Relations Commission in the Reasonable Working Hours Test Case showed that Australians work among the longest hours of any OECD nation.

• 1.8 million Australian - 31% of all full-time employees - work more than 48 hours a week - hours that would be unlawful in Europe:

- more than half of these are non-managerial wage and salary earners; - one-third of them (300 000) work more than 60 hours a week;

• Adjusted for full-time/part-time proportion of the workforce, Australia is only surpassed by Korea within the OECD in terms of the average number of hours worked;

• Australia has the highest proportion of workers working 50 hours or more per week in the OECD;

• Average hours of work for full-time employees have been steadily increasing since 1980; and

• The proportion of the workforce working in excess of 45 hours per week has increased by 76% since 1981.

10 Transcript of hearing, House of Representatives Standing Committee on Employment and Workplace Relations, Inquiry into Aspects of Workers’ Compensation, 25 September 2002.

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Subsequently, September’s JOB futures / Saulwick Survey found 47% of full-time employees and 37% part-time and casual employees normally work unpaid overtime.

As part of its complete opposition to the Reasonable Working Hours Test Case, the Government argued -

Claims that there is widespread incidence of unpaid overtime being worked are greatly exaggerated. (Commonwealth Submission, April 2002)

This is despite the fact that the Government has not undertaken even basic research into this issue as indicated by the Minister’s response to a recent question on notice.

The Department has not conducted any research in respect of the proportion of employees that are working unpaid overtime. (Answer to Question on Notice, 16 September 2002.)

This is a totally unsatisfactory response and quite frankly demonstrates a callous disregard for the effect that Government policies are having on the quality of working life, and consequently, the quality of family life for working Australians.

Growing pressure on families

Even those with relatively secure jobs are finding additional pressures. Again, the Agreement-making report suggests the Federal Government’s approach to industrial relations is creating additional pressures on those who are struggling to balance work and family responsibilities.

The Government’s own report reveals:

• A decrease in the percentage of workplace agreements containing flexible starting and finishing times for ordinary hours of work (4% in 1998-99 to 3% in 2000-01).

• A decrease in the percentage of agreements providing for family and carer’s leave (28% in 1998-99 to 27% in 2000-01).

• A decrease in the percentage of agreements providing for paid maternity leave or primary carer’s leave (10% in 1998-99 to 7% in 2000-01).

• No growth in the percentage of agreements containing flexible annual leave (static at 6%), paid family leave (3%), regular part-time work (7%), family responsibilities provisions (3%) and childcare provisions (1%).11

11 See n 8.

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While this deterioration is partly attributable to six years of Government indifference, in some instances the increased pressure on workers with families is a necessary outcome of the Government’s policies.

Take the example of weekend work. A recent ACIRRT report has revealed that around a quarter of enterprise agreements now allow workers to be required to work on weekends at ordinary rates of pay.12

Before the 1996 election, when confronted with the claim that penalty rates for weekend work would disappear under a Howard Government, Peter Reith insisted,“it is a complete lie. It is a complete, blatant and absolute lie.”13

Yet in 1997 Reith actually boasted of “the scope of flexibility and innovation provided by the [Workplace Relations] Act, including variations to the ordinary hours of work to include work on weekends without the payment of penalty rates.”14

The thousands of mothers and fathers who can now routinely be asked to work weekends at ordinary pay, instead of caring for their families, know the reality of the Government’s approach to workers with family responsibilities.

While John Howard was recently pictured standing around the barbecue talking about the need for policies on work and family, all the evidence suggests that his workplace laws are putting ever more pressure on workers with family responsibilities.

The effect of these pressures

As I said earlier, growing economic disparities have the potential to undermine the social cohesion we enjoy in Australia. Take for example the industrial dispute in the Hastings region of Victoria earlier this year.

This region was found in a 1999 Jesuit Social Services Report found to be among the most socially deprived regions in Victoria.15 When a dispute erupted at the BHP Western Port facility over contracting out, with the potential for lay-offs for hundreds of workers, significant industrial action broke out. Of course, the industrial action came close to closing the nation’s car industry at a cost of millions of dollars.

Industrial disruption in a vital industry is clearly not in the national interest but we cannot ignore that the underlying cause of the dispute was concern about job security. That concern led to a substantial reaction in the form of rebellion against workplace change and in particular contracting out of work. Clearly, if you lose your

12 See www.acirrt.com. 13 Hansard, 27 September 1995. 14

Speech to National Press Club, 27 September 1997. 15 T. Vinson, Unequal in Life: The Distribution of Social Disadvantage in Victoria and New South Wales, Ignatius Centre, 1999.

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job in a region such as Hastings then the future prospects of yourself and your family may be pretty limited.

Managing future change

It would be naïve to fail to recognise that ongoing workplace change will be an inevitability. The challenge for us surely becomes: how do we promote economic growth for the purpose of raising the living standards of working Australian families?

Regrettably the present Federal Government seems less interested in fostering employee consultation than in restoring rigid management prerogative. As the former Minister Peter Reith complained:

Many enterprise agreements essentially predetermine many matters which would normally have been regarded as the prerogative of management decision-making.16

In that respect the Government’s policies are a throw back to a past age. As the High Court, in the famous case of Re Cram, said in regard to the scope of matters that can be the subject of an “industrial” dispute:

The idea probably echoes in some respects what was received doctrine at an earlier time - that it was the prerogative of management to decide how a business enterprise should operate and whom it should employ, without the workforce having any stake in the making of such decisions … Over the years that climate of opinion has changed quite radically … No doubt our traditional system of industrial conciliation and arbitration has itself contributed to a growing recognition that management and labour have a mutual interest in many aspects of the operation of a business enterprise. Many management decisions, once viewed as the sole prerogative of management, are now correctly seen as directly affecting the relationship of employer and employee and constituting an ‘industrial matter’.

This Government again and again fails to do anything to empower workers to better deal with change in the workplace. Not only do they cling to antiquated views of management prerogative, but they carry-on mindlessly with their aggressively anti-union line.

Labor recognises the constructive and effective role unions can take, not only in advancing the interests of their members by securing improved wages and conditions, but acting as a conduit for improved communications between workers and management. The Government’s line is that consultations should occur directly between employees and managers. Yet if the Government were genuine, it would acknowledge that the non-union enterprise agreements it has aggressively promoted

16 The Hon. Peter Reith MP, Speech to the Australian Chamber of Shipping, 6 November 1997.

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are much less likely to provide for employee consultation or representation. The Agreement-making report reveals:

• Only 46% of non-union agreements provide for employee consultation, compared with 77% of union agreements.

• Only 20% of non-union agreements provide for employee representation, compared with 81% of union agreements.

In short, under the non-union agreements advocated by the Howard Government, employees are much less likely to be consulted about important decisions affecting a business.

At worst, lack of consultation through an effectively functioning collective bargaining system is a recipe for on-going industrial strife. The point was succinctly made by the Chief Justice of the Industrial Relations Court of Australia in respect to the long running and somewhat infamous Vista Paper Products dispute. The opening words of his Honour’s decision were:

Presumably, this is the final phase of an industrial trench-war that has proved costly to all participants; perhaps disastrous for some. The war has included an orgy of litigation. Its history shows the importance of industrial disputants accepting the umpire's decision. Perhaps more importantly in a time of widespread workplace change, it also demonstrates - yet again - that structural workplace reform and elimination of undesirable work practices can be achieved only by co-operation; not by confrontation.17

The Government’s aggressive union-busting policies move in precisely the opposite direction to the rest of the world. I can hear the voices saying, “well that’s all very well but our economic growth is superior to most of the industrialised world.”

There are two points that I would make in respect to such a statement. The first is that I don’t think any informed commentator would deny that any economic benefits we are now obtaining from enhanced productivity are a result of two decades of change.

The second is that surely our aim should be to maximise long term, sustainable and on-going productivity improvements. How can that be achieved when workers are resistant to change? Too often I have heard workers say, “I am only in a job because they haven’t found a way to replace me yet” or “if I agree to these changes I am just going to do myself or a workmate out of a job” or “all I’ll end up doing is working under more pressure for longer hours with little or no extra pay and when all is said and done I am going to have even less time to spend with my family.”

17 PKIU and Ors v Vista Paper Products, IRCA, 14 December 1994, per Wilcox CJ.

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More workplace consultation and training is essential if Australia is to have sustainable productivity growth. These are fundamental, structural long-term issues for the economy.

As the former European Commissioner responsible for Employment and Social Affairs, Padraig Flynn has said, there are two basic facts of modern industrial life:

One is that constant industrial change and corporate restructuring is an inevitable part of remaining competitive in the world.

The second is that, if this constant industrial change and corporate restructuring is to meet its objective — if it is to be a positive factor in our competitiveness — then it needs to engage the workforce, as an integral and a formal part of that process.

This cannot happen if information and consultation is an afterthought, a postscript to decision making. That way, we succeed in only creating, at worst, a culture of conflict, at best a culture of cynicism.

To nurture globally productive companies and workforces we must aspire to the quite opposite effect. We need to create a culture of anticipation, to actively engage the workforce in the process of change. If information and consultation mean anything, it means informing and consulting in advance, before a decision is taken.18 (Emphasis added.)

Conclusion

Economic growth is an important goal but growth for growth’s sake, without enhancing the dignity and quality of lives of Australian families does little for a better society. The workplace is where much of our prosperity is generated, and it is where most of us will spend a significant proportion of our lives. With the right policies based on respect for the dignity of all Australian workers, the objective of economic growth can mean a better quality of life for all Australian families.

That is what Labor will seek to achieve, free from the ideological obsessions that shackle this Government.

18 Speech by Padraig Flynn, formerly European Commissioner with responsibility for Employment and Social Affairs, “European Works Councils: Practices and Development”, Brussels, 28 April 1999.