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Industrial disputes in Australia.



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The Hon. Peter Reith, MP

Minister for Employment, Workplace Relations and Small Business 

Leader of the House of Representatives
 

Parliament House, Canberra ACT 2600

 

25 March 1999

34/99

 

INDUSTRIAL DISPUTES IN AUSTRALIA

 

I am today releasing a paper “Industrial Disputes in Australia” which analyses the impact of the Workplace Relations Act on industrial behaviour.

The industrial dispute figures since the WR Act commenced prove that the ACTU’s claim that industrial disputation would increase under a Coalition Government is completely wrong. It once again demonstrates just how out of touch the old style union bosses of the ACTU are with rank and file unionists.

Australia’s previously high levels of industrial disputation have long been a cause of concern as a constraint on economic and employment growth. In the past Australia’s average number of days lost to disputes was up to ten times higher than for some our major trading partners, such as the United States and Japan.

Today, the level of disputes is only around a sixth of what it was twenty years ago. In 1997, following the introduction of the WR Act, and again in 1998, the number of working days lost per thousand employees was the lowest since at least 1913.

Despite the overall reduction in disputation in Australia, in industries such as coal and construction, the levels of disputation are dramatically and unjustifiably higher than levels in the rest of the community.

The amount of productive time lost to industrial disputes in the coal industry is extraordinary. For the 12 months ending December 1998, which was a relatively low year, 60 400 working days were lost to industrial action. This is equivalent to an average of nearly 3 days for every employee per year. This average is 38 times higher than the national average and 119 times higher than that for the rest of the mining industry.

In the figures for December 1998 released yesterday by the Australian Statistician, the coal industry again stands out as a black spot, with 40 per cent the working days lost for that month attributed to the coal mining industry.

In the construction industry, 210 900 days were lost to industrial action during the 12 months ended December 1998. From an industry that provides less that 8 per cent of Australia’s employment, this represents over 40 per cent of all working days lost to industrial action during this period (Chart 8).

The current WR Act provides a fairer balance between the interests of employers, employees and the community as a whole and establishes effective measures which assist in ensuring that unjustified and unlawful industrial action can be stopped or prevented. Clearly, however, whatever the advancements there have been in recent years, there is still plenty of room for improvement.

For further information contact: Ian Hanke on 0419 484 095.

 

 

 

Industrial disputes in

Australia

 

 

Issued by the Hon Peter Reith MP,

federal Minister for Employment, Workplace Relations and

Small Business

 

 

Marc h 1999

“If they want a fight, if they want a war, then we’ll have the full symphony, the full symphony, all the pieces, all the clashes and all the music.

 

“I’m not sure it will be the 1812 Overture, but I tell you what, Paul (Keating), it won’t be Mahler either.”

 

Bill Kelty, addressing a meeting of 1000 shop stewards during the 1996 election campaign.

 

 

Despite Bill Kelty’s war cry, industrial dispute figures show that the Workplace Relations Act 1996 (WR Act) has had a significant effect in reducing industrial disputation:

 

  • For the second successive calendar year Australia has recorded the lowest number of days lost due to industrial disputes since 1913.

 

  • In 1998, there were 72 working days lost per thousand employees - the least number of days lost for at least 86 years. Over the same period to December 1997 there were 75 working days lost per thousand employees.

 

  • The number of industrial disputes for the calendar year ended December 1997 is the lowest since 1939, with 447 being recorded.  In 1998 the n umber of disputes is the second lowest since 1939, with 514 being recorded.

Introduction

 

Australia’s previously high levels of industrial disputation have been a cause of concern as a constraint on economic and employment growth.  The number of days lost to strikes and other forms of industrial action seriously affected the eff iciency, quality and reliability of Australian industry.  It has also been identified by our trading partners and by Australian employers as a major disincentive to investment and to improved export performance.

 

In the past our reputation as a strike prone nation was often well justified: the average number of days lost to disputes in Australia was up to ten times higher than for some of our major trading partners, such as the United States, and around 100 times higher than for Japan (Chart 1). 1 In a country with a workforce of only around 8 million employees, we lost an average of over 1 050 000 working days each year to industrial disputes between 1987 to 1995. 2

 

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International comparisons

 

The reduction in disputes that occurred in Australia over the course of the 1980s and early 1990s, as shown in Chart 1, has largely reflected international trends.  Despite the decline, when the performance of our trading partners is considered, Australia has not done as well as it could have. For example, Australia’s relative position within the OECD regarding disputation levels actually worsened during the 1980s and 1990s.  Over the period 1982-86 Australia was ranked twelfth out of the 20 OECD nations. 3 During 1992-96, our ranking fell to thirteenth. 4

 

In addition, Australia did not manage to keep up with the rate of reduction experienced in other countries, including those which already had levels of disputation lower than Australia’s, such as the USA. While the average number of working days lost in Australia between 1982-1986 and 1992-96 fell by 62 per cent, both the United Kingdom and New Zealand, for example, experienced reductions in working days lost of over 90 per cent (Chart 2).

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Characteristics of industrial disputation

 

The overwhelming bulk of industrial action occurs in unionised workplaces. Survey evidence shows that there has been only a small reduction in the number of unionised workplaces experiencing industrial action in recent years. 5 In 1990, 21 per cent of unionised workplaces with 5 or more employees experienced industrial action, and 5 years later this proportion had fallen by only 3 percentage points, to 18 per cent.  In comparison, less than half of one per cent of non-unionised workplaces in 1995 experienced any form of industrial action. 97 per cent of those which experienced industrial action were unionised.

 

This remarkable difference is most evident in some of the more highly unionised industries, such as coal or construction (discussed below).

Current industrial disputation

 

In contrast to previous legislation, the WR Act supports a more direct relationship between employers and employees, with a reduced role for third party intervention.

 

Since the commencement of the WR Act, industrial disputation has changed in two significant ways. Firstly, the number of disputes has dropped to record low levels. Secondly, the nature of industrial action taken has changed dramatically.

Levels of industrial disputation

 

The level of disputes in Austral ia today (year ending December 1998) is only around a sixth of what it was twenty years ago.  In fact, the number of disputes recorded in each of the years since 1995 has been lower than in any of the years since 1940.  In 1997, following the introduction of the WR Act, and again in 1998, the number of working days lost per thousand employees was the lowest since at least 1913. 6 (Chart 3)

 

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Every Australian State and Territory has experienced a reduction in disputation levels (Cha rt 4).  In all States and Territories, significant reductions in working days lost per thousand employees occurred between 1987-1988 and 1997-1998.  In fact, the Northern Territory (94 per cent), Tasmania (82 per cent), New South Wales (81 per cent), the ACT (81 per cent), South Australia (80 per cent) and Queensland (75 per cent) all recorded reductions greater than the national average (71 per cent) over this period.

 

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Source:  Industrial Disputes Australia,  ABS cat. No. 6321.0

Nature of disputation

 

The nature of disputation in Australia is changing, both in terms of the average duration of action and the type of action.

 

During 1987 and 1988, 50 per cent of disputes lasted for one day or less, 36 per cent lasted between one day and five days and 14 per cent lasted for more than five days.  In contrast, between 1997 and 1998, the proportion of disputes lasting one day or less had increased to over 62 per cent, while those lasting between one day and five days had decreased to 28 per cent and those lasting more than five days had decreased to less than 10 per cent (Chart 5).

 

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Where industrial action is being taken, the type of action has changed.  For example, prior to the WR Act commencing, unions were more easily able to take illegitimate industrial action. This meant that unions with no direct interest in a dispute were able to shut down whole industries, inflicting crippling damage on the economy. This has changed dramatically and unions are more likely to confine industrial disputation to their own “patch”. Most industrial action is now about issues at the workplace, rather than broader political issues. This is consistent with the Government’s policy of supporting more direct relationships between employers and employees at the workplace level.

For example, the secondary boycott provisions can be credited with limiting the extent to which the 1998 waterfront dispute resulted in wider industrial action.  Indeed, much of the stevedoring industry continued to operate during the dispute, ensuring that the impact of the dispute on the community was less than would have otherwise been the case. This would not have been the case pre 1997.

 

In February 1996 the ACTU claimed that industrial disputation would increase under a Coalition Government. 7 This assertion has clearly been proved wrong.  The previous two and a quarter years demonstrate that industrial disputation has reached record low levels and that, where industrial action is taken, it is of a very different nature under the WR Act.

Industrial action and compliance provisions

 

The changes in industrial disputation have been largely driven by the legislative provi sions concerning industrial action and compliance.  The legislative scheme provided in the WR Act and the Trade Practices Act 1974 (Trade Practices Act) strikes a fair and effective balance between the rights of those affected by industrial action. 

 

Under the WR Act, parties bargaining for a single business certified agreement have a limited right to take industrial action in support of their claims.  This is called ‘protected’ action because it is free from civil liability  for damages. Protected action may be undertaken if a bargaining period has been notified, and at least three days written notice of the action is given. 

 

The Australian Industrial Relations Commission (the Commission) has the power to suspend or terminate a bargaining period if, for example:

 

  • the party taking the action is not genuinely seeking to reach agreement, or
  • if a party is not complying with Commission directions or recommendations, or
  • the action relates to a significant extent to a demarcation dispute, or
  • if the action is threatening to endanger people s health and safety, or is causing significant damage to the Australian economy.

 

During 1997, the TWU organised and initiated an industrial campaign prior to entering negotiations with a Queensland transport company. The employer applied to the Commission to have the bargaining period suspended. The Commission found that the union was not genuinely seeking agreement and suspended the bargaining period.

 

Once an agreement is formalised, industrial action is generally prohibited for the term of the agreement.

 

Industrial action relating to demarcation disputes or action by unions designed to force employers to engage only union members is unlawful. Under the WR Act, a union must not take, or threaten to take, industrial action to force employers into employ only union members.  This type of action is likely to breach the freedom of association provisions of the Act. Where this action is taken, the Office of the Employment Advocate (OEA) can assist by providing advice and investigating breaches.

 

Successful legal action by the OEA led to the lifting of bans and boycotts by the Construction Forestry Mining & Energy Union (CFMEU) designed to coerce companies in the mobile crane industry in NSW into entering a particular certified agreement promoted by the union.  In July 1998, the OEA began proceedings in the District Court of New South Wales, seeking injunctive relief against the CFMEU and certain of its officers. The CFMEU then agreed to give undertakings to the Court not to take action, or threaten to take action against companies in the industry in the form of bans, boycotts or other action contrary to the WR Act.

 

Another significant provision introduced in the WR Act is that it is now unlawful for a union to take industrial action to pursue strike pay and it is unlawful for an employer to pay strike pay.

 

The strike pay provisions have proved useful in limiting the use of work bans by prohibiting payment of wages where there are work bans or limitations imposed. Although work bans had been a preferred industrial tactic of public sector unions in the past, since the commencement of the WR Act the imposition of work bans in the Australian Public Service has virtually ceased.

 

The Government has also established effective means for preventing illegitimate industrial action.  Firstly, the WR Act enhanced the powers of the Commission to make enforceable orders to stop or prevent industrial action.  Secondly, secondary boycott provisions of the Trade Practices Act have been restored.  These two initiatives on their own have made a major contribution to the swift resolution of industrial disputes and prevented local strikes escalating into national disputes. 

 

Orders made by the Commission to stop or prevent inappropriate industrial action provide a simple means of getting striking employees back to work. The Federal Court is able to enforce these orders by injunctions. Where an injunction is breached the court is able to award damages and sequester funds.

 

One of the earliest uses of return to work orders was at the German Creek coal mine site in Queensland.  When employees took strike action in January 1997, an order was made for them to return to work within a day of the company making an application to the Commission.  As part of the order, the Commission required employees not to undertake further industrial action for three months.

 

At 31 December 1998, over 510 applications for return to work orders had been made by employers.  In most of these cases employees returned to work without the need for t he orders to be made, although in at least 60 cases orders were issued. At least 7 applications have been made for Court injunctions to enforce return to work orders.  These figures demonstrate that applications for such orders play a useful role in cessation of industrial action.

 

The boycott provisions of the Trade Practices Act prohibit secondary boycott conduct for the purpose of causing substantial loss or damage or a substantial lessening of competition. The legislation also prohibits both primary and secondary boycotts affecting overseas trade or commerce involving the movement of goods. 

 

Indications are that the provisions of the Trade Practices Act are being used where necessary. Between 1 January 1997 and 31 December 1998, at least 12 applications had been made under section 45D and/or section 45DB of the TP Act.

 

 

In one case, the Australian Competition and Consumer Commission (ACCC) sought an order that the Transport Workers’ Union (TWU) cease certain alleged boycott action, pay compensatory damages to the companies suffering losses and implement a trade practices compliance program.  The ACCC also sought an interim injunction to restrain the alleged boycott conduct.  Ultimately, the application for an interim injunction was not pursued as the TWU gave an undertaking to the Court regarding four of the major transport companies involved.  The practical effect was that the boycott conduct ceased, and the matter has now been settled.

 

In addition, access to common law remedies is available. Current ly, before taking action in tort, a certificate must be issued by the Commission. A maximum of 72 hours can pass before a certificate is issued.

Disputation in Australian industry

 

Despite the overall reduction in disputation in Australia, in industries such as coal and construction, the levels of disputation are dramatically and unjustifiably higher than levels in the rest of the community (chart 6).

 

image Source:  Industrial Disputes Australia.  ABS Cat. No. 6321.0

 

As can been seen in Chart 7, the amount of productive time lost to industrial disputes in the coal industry is extraordinary. Despite the evident decline in disputation levels, the current levels are still unacceptably high.  In December 1998, for example, around 20 100 working days were lost to industrial disputes in this industry alone. 

 

For the 12 months ending December 1998, which was a relatively low year, 60 400 working days were lost to industrial action. This is equivalent to an average of nearly 3 days for every employee per year.  This average is 38 times higher than the national average and 119 times higher than that for the rest of the mining industry.

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Similarly, in the construction industry, 210 900 days were lost to industrial action during the 12 months ended December 1998.  From an industry that provides less that 8 per cent of Australia’s employment, this represents over 40 per cent of all working days lost to industrial action during this period (Chart 8).

 

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In both the coal and construction industries, a substantial proportion of time lost to strikes had little, if anything, to do with matters at the workplace. Much of the industrial action taken in these industries in 1998, for example, was of a political nature relating to coal prices and the award simplification process. The legislation provides employers in these industries the scope to respond to these circumstances. 

 

Return to work orders have been a powerful lever in several disputes in the coal industry. These provisions have also contributed to a shortening of the typical period of time lost due to strikes in the industry. As highlighted above in the German Creek case study, coal industry employers were among the first to make successful use of these provisions.

 

The prohibition on payment to employees who are engaged in industrial action, including action which falls short of strike action, provides a real tool for discouraging local bans and limitations.  Arguably, this power could be more widely used in such industries as construction.

 

The capacity to sue in tort has also been valuable.  In a recent construction industry dispute, the CEPU cut off the electricity supply to a site and ignored Commission orders to restore the supply.  In response, and having gained the relevant certificate from the Commission, the employer took the matter to the Victorian Supreme Court.  When confronted with this, the union relented and gave undertakings to stop the action.

 

This particular outcome highlighted that, even in those industries where strong unions engage in unprotected industrial action, a firm response by employers who are willing to use the legislation can make a real difference.

 

Another consequence of the compliance provisions in the coal and construction industries is that national stoppages in relation to issues in other industries or workplaces have become rare.  In addition, in industries where industrial action related to freedom of association is most common, such as the construction and coal industries, the OEA has been readily available to appear on site to investigate alleged breaches. This appears to have had a positive effect in minimising disputes of this type.

 

The experience of employers in coal and construction, however, also serves to highlight the need for further reform to ensure that illegitimate industrial action does not occur.  Some employers have been concerned that short, sudden stoppages are difficult to respond to under the current provisions.

 

In contrast to coal and construction, the ABS ‘Other industries’ group 8 experiences a low incidence of industrial disputation. For example, this group recorded only 7 working days lost per 1000 employees for the 12 months ending December 1998 (Chart 9).  This industry grouping makes up around 55 per cent of employees in Australia, but was responsible for only six per cent of the time lost to industrial disputes.

 

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Conclusion

 

While the WR Act has helped reduce industrial disputation in Australia to record low levels, any disputation is disturbing. But the figures only tell part of the story.  What they do not show are the effects that strikes and other industrial action have on other enterprises. The ABS dispute figures are not able to pick up the lost production that occurs as a result of bans or limitations of various kinds.  For every working day lost from a dispute, say on a construction site or in the coal industry, scores of other employers and their employees face delays, loss of orders and loss of pay and profits.

 

Just as importantly, our reliability as an exporting nation is called into question every time firms in a major expor t industry, such as coal, fail to meet their contracted deliveries on time because of unnecessary and unjustified industrial action. 

 

The current WR Act provides a fairer balance between the interests of employers, employees and the community as a whole and establishes effective measures which assist in ensuring that unjustified and unlawful industrial action can be stopped or prevented.  Clearly, however, whatever the advancements there have been in recent years, there is still plenty of room for improvement.

 

Further reform of the system

 

Australia must continue to look at lessons learnt by other countries and draw on international workplace relations experience. We need to re-examine our system for the betterment of all Australians. 

 

Decisions to take (or not to take) protected industrial action ultimately impact on the job security of all Australians.  The Government’s objective is to retain the right for unions to take limited protected industrial action for the purpose of making collective agreements, but ensure that limited immunity against civil action is used to foster a constructive bargaining environment and not as a guise for punitive industrial action or for ulterior purposes. Damaging protected industrial action does not substitute for genuine discussions about making an agreement. To that end, employees, not union officials, will be accountable for, and to have the final say, in decisions on taking industrial action.  Secret ballots of workers will provide a fair and democratic process for determining employee support for industrial action.

 

The Government will ensure that protected action cannot commence until employees have been able to express their wishes by way of a secret ballot. Ballots authorising industrial action will need to be accompanied by prescribed notices to employees, such as notices drawing employees’ attention to the fact that the Act prevents the payment of wages during industrial action, and to the coercion provisions of the Act relating to an individual employee’s decision to take or not to take protected action.   In addition, earlier notification of an intention to take industrial action will be required so employees, unions and employers have a genuine opportunity to discuss the matters subject to a claim before any potentially damaging industrial action commences.

 

Cooling off periods and mediation options will be introduced in circumstances where protected industrial action during the making of workplace agreements is protracted or costly. The strike pay provisions of the Act will be tightened to further deter recourse to industrial action. Formal legislative recognition will be given to the provision of mediation services in industrial disputes, for use on a voluntary basis, as an alternative or supplement to the quasi-legal processes of the Commission.  Mediation services will be provided by bodies or persons external to the Commission, with an accreditation system recognised by statute.

 

The Government will also examine ways to improve access to injunctions and common law remedies against unprotected action.

 

These legislative reforms will provide further support to the development of more direct relationships between employers and employees at the workplace.  The need to encourage employers and employees to adopt a  more consensual and constructive approach to agreement making is an important issue for all Australians.

 

 

1 Number indicative only because of differences in data collection methodologies.

2 See Labour Market Trends April 1998, ILO Yearbook of Labour Statistics 1998 and ABS Catalogue No      6321.0 - Industrial Disputes Australia.

3 For which information on average days lost to industrial disputes was available.

 

4 Although comparisons of international industrial dispute statistics should be used with caution due to differences in data collection methodologies, information on changes to the levels of international disputations overcome most of these problems by reflecting the changing relativities between countries.

5 Survey results are taken from the Australian Workplace Industrial Relations Surveys 1990 and 1995.  For  details on these surveys see Changes at Work: The 1995 Australian Workplace Industrial Relations Survey 1995, A Moorehead, M Steele, M Alexander, K Stephen, L Duffin .

6 1913 is the earliest recorded data available.

 

7 ACTU media release (19 February 1996)

 

8 This group covers the Agriculture, forestry and fishing; Electricity, gas and water supply; Wholesale trade; Retail trade; Accommodation, cafes and restaurants; Finance and insurance; Property and business services; Government administration and defence; Cultural and recreational services; and Personal and other services industries.

 

 

 

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