Unions and Their Impact on Work and Industrial Relations in Australia - Case Study Example

Running Head: UNIONS AND THEIR IMPACT Unions and Their Impact on Work and Industrial Relations in Australia [Name of Student] [Institution] Trade unions have for many years been the main representatives of Australian workers. However, they have been experiencing a decline in membership. At the same time, there have been calls for better governance and employer accountability in workplaces (Gollan, Markey & Ross, 2007, p. 26). According to Hunt & Provis (2007, p. 41), one of the suggested ways through which this may be achieved is the adoption of a European-style Works Council system in Australia. Although the councils are considered to be an alternative to unions, they have many benefits and may be a source of hope for the declining unions. This paper discusses the future prospects of trade unions and the possibility of adopting European style Works councils in Australia. For over ninety years, the Industrial relations system in Australia was founded on state and federal tribunals. As from 1983 to 1996 there was great dependence on several accords that were arrived at between the government and the umbrella Union of the country, the Australian Council of Trade Unions (ACTU). The situation changed when the John Howard-led Liberal-National Party coalition came to power in 1996. It proposed the Workplace Relations and Other Legislation Amendment Bill to parliament. This established the Australian Workplace Agreements (AWAs). Through these, workers could select a bargaining agent that could be but was not necessarily a trade union. The bargaining agent could enter negotiations on their request or they could negotiate individually (CCH Editors, 2009, p. 12). There have been changes in the union climate in Australia in the last five years. When the Liberal- National Party coalition won its fourth term in 2004, there arose the opportunity to effect some reforms. It began modifying industrial laws in ways that undermined the bargaining power held by unions. There was eventually the passage of Work Choices Legislation of May 2005 (Briscoe & Schuler, 2008, p. 66). According to Dabscheck (2006, p. 90) the Work Choices legislation had a number of implications on unions. It limited the access of unions to workplaces. Strikes could only take place if the majority employees supported it. In addition, collective agreements had to be forwarded to an Employment Advocate instead of the Australian Industrial Relations Commission (AIRC). The AIRC would lose its power and be a mere conciliator. It could now only arbitrate on issues only if all the parties were in agreement with them. The Minister for Workplace Relations was granted powers to veto any part of union-negotiated agreements that he considered to be going against government policy. This implied that unions could not claim a legal guarantee for negotiated agreements. When the Liberal- National Party coalition government left office in 2007, there were newly legislated changes such as the outlawing of Workplace agreements. The Work Choices Act was replaced by the Fair Work Act of 2009 (Hunt & Provis, 2007, p.44).Unions are relevant in Australia. They are more popular amongst full-time employees, who comprise 21% of active members as compared to 15% for part-time employees. 4 out of 10 teachers and public servants are union members. In the private sector, 14 % of workers are unionizable (CCH Editors, 2009, p. 9). Collective bargaining through unions may be losing ground. The past seems to have been rough for the unions, both due to unfavorable legal provisions and a decline in membership. The effects of the work choices act indicate the important role that the legal environment plays in ensuring the healthy functioning of trade unions. However, it comes out that general trends in democratization are a significant contributor to the declining relevance of unions. The common trend in management is to explore Japanese models. It would however be wise to look at European forms of works councils because of their democratic element. Gollan et. al. (2002, p. 42) argue that the main shortcoming of union movements in the past has been dealing with indicators of alienation and exploitation through negotiating for only working conditions and wages. They rarely criticize ineffective management systems. Although the wage issue has boosted employee welfare, the main underlying workforce problem namely alienation has not been fully addressed. There is currently a fast-expanding and very significant combination of workers and leaders who conceive unions as being an inevitable component of personal democratic rights. They always actively look for and engage employers who are interested in offering their support to workers’ unions. Strategies by Unions The decline in union membership has been a matter of concern to all stakeholders. The unions have therefore had to audit the current union practices so as to identify the best strategies to be adopted to reverse the trend. According to Bray (2005, p.11), a number of such strategy proposals have arisen. Some of them have been implemented by individual unions and others via the ACTU. The strategies include the utilization industrial bargaining, union amalgamations and greater application of Information Technology. In addition to these, the unions have applied the traditional strategies in achieving their objectives for instance strikes and arbitration. The taking of modern strategies is commendable. This is because the industrial climate has changed a lot from the past. It would for instance be wise to adopt information technology as this is the boost information dissemination and mobilize union members more easily. The other strategies also have instances where they are the best possible alternatives. Strikes are a good way of pressuring employers into reaching agreements. Arbitration is also a progressive strategy in the attainment of union objectives. This is because it enables unions to formulate stronger workplace organization, in addition to being more responsive to the needs of members. This is helpful as it may enable unions that are relatively weak to serve passive and smaller memberships. However, it is worth noting that the strategy may at times not be effective. In cases where unions depend on arbitration for supplying resources which enable them to meet their goals, it is likely that any change in the legal support for such unions and possible limitation of their application in compulsory arbitration can lead to a further decline in membership. This is because it compromises union effectiveness. In order to remain relevant unions should exploit all opportunities for achieving constructive dialogue. They should be keen on continuously discussing emerging issues with employers, for instance the changes relating to the high road economy in Australia. In order to survive further into the future, unions have to take up every opportunity they get to constructively discuss with employers about the future prospects for economic productivity. Their long-term objective should probably be the arrival at more substantial agreements whenever the government will be willing to help in the achievement of the objectives (CCH Editors, 2009, p.12). Industries in Australia may be having a rather decentralized form of collective bargaining. This is because available unions represent workers considerably enterprise levels. Because of the ingrained tradition of unions, councils may be viewed by some people as being inferior. They could be seen as limiting collective bargaining. It is also possible that management may view them as being more disruptive than unions and that they may easily infringe on the rights of management. According to Hall (2006, p.36), constructive engagement is in many instances a better approach in trying to attain higher living standards and productive outcomes. If unions continue seeking constructive engagement, they are likely to continue surviving in future. Its outcomes are likely to lead to the creation of an equitable and productive society. Unions have typically sought to promote workplace egoism while workers actually support enterprise initiatives. For instance, a company that is faced with market or financial hardship can convince its workers that they have to become flexible in order to survive. They might therefore suggest more working hours. Campling & Gollan (2005, p. 66) observes that Australian unions justifiably focus on the inappropriateness of labour laws. They also champion a restoration in democratic rights through unions. They should however also come out as a factor in the improvement of business performance. This may be done through intensively bargaining for management issues that arise from industry and organizational agreements. It is quite difficult to transform trade unions into a force that will precipitate improved productivity. According to Gollan et. al. (2002, 18), it would be unwise to underestimate the challenges that exist in the present cultural and political settings. In the long-term, it is up to the unions themselves to determine their own failure or success. Although the state has its role in strengthening unions, it is unlikely to play a major part. Trade unions have to continuously implement their own independent strategies rather than depend on the government (Briscoe & Schuler, 2008, p.67). The Challenge Posed by Union Decline The sharp reduction in Australian union membership has led to the creation of a representation gap. This may easily be partially filled through a contemporary system of employee representation. One of these is the Works Council System. A Works Council System involves institutionalized bodies that bridge communication between management and the workforce of individual workplaces. There are a number of tested benefits that can result from the adoption of such a system. These include an improvement in information exchange within organizations. It also promotes freedom and democracy for employees and boosts the enforcement of regulations within organizations. Works Councils provide employees and management with encouragement to raise their levels of skill hence greater productivity (Hunt & Provis, 2007, p.43). Works Councils are a new concept in Australia. Because of this, the law that is formulated needs to simply encourage the setting up of the works councils. Such encouragement may be provided through offering tax concessions. Tax concessions are quite effective. A trial period of probably three years should be put in place. In case the council concept succeeds, the national parliament could then consider making it mandatory for firms with a hundred or more workers to set up elected works councils (Gollan et. al., 2007). Strengths of the Works Council System From observation of work councils in Europe, the German model appears to be the best for Australia. It is extensive, legislative and has provisions for both rights and structures to be adopted by the councils. Most significantly, it tries as much as possible to uphold integrity of the councils and keeps them separated from unions and employers. There is therefore the generation of high levels of trust among the groups. The adoption of the German structure has a number of merits in the Australian case. First, it will be helpful in promoting decentralization of Industrial Relations processes to enterprise levels. This is a common objective in Australian public policy and has the net effect of maximizing efficiency and flexibility. Such decentralization has since 1988 been considered an ideal in public policy (Hall, 2006, p.37). According to Hunt & Provis (2007, p.42), another significant advantage of the model to Australia is that it provides a systematic and major way of ensuring that the employee’s voice is heard in the workplace. It also protects employee interests in the course of change at the workplace. This is currently a very critical issue in the country. There has been a major decline in Australian union membership, to a figure of about 27%. The implication of this is that a vast majority of organizations do not have mechanisms to ensure protection of employee interests. The decline also implies that the traditional Swedish systems in which only unions are relied on to facilitate employee participation is no longer appropriate for Australia. The adoption of European work councils has the advantage of taking away change-related negotiations from trade unions and leaving them with the councils. This will mean that worker representatives get a chance of involvement in organizational decision-making. This is important as they are the most affected and continuously have to cope with workplace conditions. Adoption of the councils helps in maximizing the employees’ job security. This is important, especially in seeking flexibility and adaptability to change. In the present Australian IR context, organizational change negotiation is usually countered by stiff opposition from employees and union officials. This is because many employees have associated changes in the workplace with the loss of jobs (CCH Editors, 2009, p.12). Campling & Gollan (2005, p.66) observe that within the works council system, there is the provision for consultation that is likely to minimize the chances of job loss because of restructuring. The increased emphasis of co-determination is therefore likely to promote employee support for the institution. Fear of losing employment will be minimized. Employees will accept restructuring and individual productivity will go up. The system differentiates wage bargaining as a process from flexibility and change efforts. Organizational change is known to impact on wage rates due to change in skill requirements and arrangement of job classes. Although works councils may help in boosting representation, it is possible that they will raise some challenges. One may ask for instance about the possibility of conflicts arising from the allocation of time to the respective council members. It may be difficult to give each of them equal hearing. In addition, it is possible that the productivity of members may be lowered. This is because their work will have to be interrupted from time to time for the meetings. The Need for Strong Works Council Legislation In order to maximize the involvement of employees in corporate governance, government should establish a law that will promote European-style works councils comprising of elected members. This should apply to all organizations that have a hundred or more employees (Crosby2005, p89). The councils could for instance be involved in consultations with employers about currently pressing labour issues. These include workplace amenities, technological change and fostering arrangements. As a system, works councils are dependent on a lot of integrative bargaining and consensus among all the parties involved. However, in Australia, the IR culture that characterizes most workplaces is adversarial. Consensus is not a traditional aspect in any decision-making relating to workers issues (Hall, 2006, p. 36). In Australia, the only guaranteed way of developing generalized works councils is through founding them on labour legislation. There is need to set up a legislative structure that will guarantee and define its composition and powers. If this is not done, works councils are likely to be deficient in immunity from union or managerial interference with their independence. Even if they do not lack the security, they might appear to be. This will have the effect of reducing the level of trust existing between the participants. This will in turn lower their effectiveness in championing their members’ interests (Hunt & Provis, 2007, p. 41). According to Gollan et. al. (2007, p.51), an appropriate legislation will make sure that every works council is exposed to the same constraints and opportunities. The statutory system has powers to push the at times reluctant unions and management towards consultative and cooperative relationships within the workplace. It also has a crucial role in making sure that all participative structures remain neutral. This makes the entire work system free from possible impositions by parties which may be favored by situation of balance in industrial power. Issues to be considered in Setting up the System It is appropriate to adopt the European model of Works councils in Australia. According to Hall (2006, p.37) however, it is often difficult to copy industrial relations institutions from one national context and implement it in the other. An institution might be functioning in a different Industrial Relations context and culture, thereby leading to completely different outcomes. The council members have to be truly representative of the employees. For instance, it would be unwise to have a workforce that is mainly female being represented only by males. Works councils should seek support from the government, especially in the training of council representatives. Related legislations will need to consider the expansion in casual, part-time and agency employment. . The adoption of councils will not really lead to the extinction of unions. In spite of the negative effects, unions can still be able to thrive if proper checks and balances are developed. Even in Europe, many works councilors still belong to unions even while a minority of workers is unionized. If this is the case, then unions still exert some indirect influence upon the councils. From the European experience, works councils operate as partners with unions, mostly with regard to data. Unions on their part can manage to reach a broader scope than that of its membership alone. Australian unions stand to gain from the setting up of works councils hence should support the idea (Briscoe & Schuler, 2008, p.67). The use of works councils elsewhere has pointed to the ability of unions to partner with them and in so doing ensure that the interests of all workers is protected, irrespective of whether they are unionized or not (CCH Editors, 2009, p. 13). The fact that many employees seem to have abandoned unions make works councils the next best alternative. However, organizations are nowadays rather complex. Individual bargaining cannot work. Individual employees are unable to negotiate on enterprise-wide matters for instance training, health and safety or technological change. It therefore becomes necessary to develop another form of collective mechanism if employee involvement is to be achieved. Otherwise, the other options would be to either put up with unilateral management decisions or just get out of employment. The traditional model of industrial management in Australia is indeed essentially adversarial. Considering the current trends in Human Resource Management, it is not surprising that it has been subjected to a lot of reflection. New approaches typically advocate for more employee involvement as a way of dealing with conflict. Trade unions have the essential role of giving workers a stronger position to demand a fair share of the fruits of their work. From the discussion, it is highly sustainable to maintain an economy in which workers get adequate rewards and can raise adequate incomes to purchase commodities. Unions have a major role in ensuring this. The declining trends in unions however imply that workers will not be very likely to get better rewards for their productivity. The other alternative, namely works councils needs to be urgently adopted. Conclusion Trade unions still have a role to play within the labour markets. They are one of the most powerful forces in employee representation. However, changes that have occurred in the past have almost made them obsolete. This is because of the declining membership of workers to Australian unions. The trend towards extinction is likely to continue into the future. However, it is possible to revive them and increase their role in the years to come. This may be done through revitalizing their bargaining efforts and linking them up with work councils, which are the next best course in worker representation. To maintain such support, there will however be need to establish clear distinctions between management, works councils and management. There are several advantages to be gained from the system. Basing on the experience of Europe with work councils, it is possible to conclude that their adoption will be effective in the Australian context. References Bray M. (2005) .Works Councils: the Overseas Experience and Lessons for Australia. 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