The Australian Industrial Relations Commission - Case Study Example

Industrial Relations Introduction Throughout the Australian history, the balance between individualism and collectivism in the employer- employee relationship has been arbitrated by highly centralized and state-based industrial tribunals (Barneveld, 2006). These employments related tribunals influence both wages and working conditions through “awards”. The awards are based working conditions, working hours and the applicable pay rates applicable to particular work in a given industry or occupation. The Australian Industrial Relations Commission (AIRC) is the federal tribunal that sets wages policy through national wage case decisions which are followed normally by state-based industrial tribunals (Waring and Bray, 2006). Collectivism is based on collective bargaining and places its priorities on a group, while individualism places priority on personal goals and self actualization rather than a group. Individualistic societies prioritize their own goals, as counter posed to collectivist model cultures in industrial relations which are especially concerned with relationships. The central concept of the collectivist model in industrial relations is that of collective bargaining. Alexander (2006) defines collective bargaining as a method of fixing the employment terms settling of arising grievances by negotiation between the employer(s) and the union(s). Flanders (1970) described collective bargaining as a rule-marking process whereby unions are interested in rising wages as well as regulating them in addition to other wider range of issues affecting their members working lives for the purpose of improving and maintaining their working conditions. In Australia, collective bargaining arose because of an imbalance in the powers of employer and that of individual employees during 19th century (Waring and Bray, 2006). In 1890s a series of industrial conflicts arose as the employers sought to hire at union rates but with’ freedom to contract’. This was meant to deplete unions of their power and eventually replace collective bargaining. Though employers eventually won those disputes, arbitration by the legislature was done to redress the imbalance arising from individual contracting and avoid further damaging conflicts. The collectivist model in Australia Whereas collective bargaining was central in industrial relations in most western countries, in Australia it was interposed with arbitration systems of industrial tribunals. This arbitration and compulsory wage conciliation system arose as a result industrial confrontations in the early 1890s when trade unions had suffered defeat. Workers unions sought intervention to protect them from the powerful employers’ onslaught. Protectionists introduced the Conciliation and Arbitration act in 1903 and amended by the minority government that followed, and further amended by the coalition of free traders and the conservative protectionists (Alexander, 2006). Though there were disagreements between major parties, this concept of arbitration had support of the majority parties. In most states and at the federal level, Australia had a tribunal collectivist model through out the 20th century that made the key decisions regarding employment terms, conditions and wages. Particularly in the pre war period, formal industrial tribunals made settlements for unresolved industrial disputes and mainly set the actual workers wage rates and terms of employment (Waring and Bray, 2006). Shift from collectivism to Individualism Although this system was set up to minimize the need for industrial action, strikes increased on contrary, reaching a peak in 1910s. Thus the system never achieved its goal. Public policy therefore sought to change the design of arbitration in the early 1990s by shifting to enterprise bargaining from tribunal-centered wage fixing collective model to bargaining-centered model. Industrial relations in the luxury hotel sector Service sector in Australia has been undergoing regulatory reform in order to enhance organizational efficiency and flexibility. In response to these issues, the government has sought to offer additional regulatory options to both employers and employees in an effort to better their individual needs and thereby providing what might be termed as regulatory choice. Employment regulation hotel sector in Australia Throughout the 1990s employment regulation underwent a series of changes that were marked by the introduction of individual and enterprise-level bargaining alongside with award simplifications. All of the reforms implemented over the past decade and a half were seeking to enhance both the employers’ and employees’ flexibility through the introduction of alternative agreement making method. Barneveld (2006) argues that the flexible tailored workplace practices and employment conditions will fulfill the requirements of individual firms as well as offer benefits to both employees and the employer, and the economy as a whole. Within the accommodation, restaurant and the hotel sector in general in award coverage dominated with about 61 per cent 2002-2003, while certified collective agreements covered a mere 6.7 per cent of employees according to ABS, Cat No. 6306.0. The others (32 per cent) were covered by individual agreements, with majority of them being unregistered. Data collected in 2004 shows a slight shift in making of agreement but award system remains apparently dominant. About 60 per cent of the employees in the hotel and hospitality industry solely relied on the relevant award for their wages determination (ABS, Cat. No. 6306.0), while approximately 12 per cent of employees were under by collective agreements. The remaining 26 per cent were covered by mainly unregistered individual agreements (van Barneveld 2004). The hospitality industry has made greater use of Australian Workplace Agreements (AWAs) with its employers being the third largest users, after the business services industries and retail property and in the preceding three years, since December 2005 as compared to others. It has been suggested that workplace size is a possible determinant of employment regulatory decisions (Barneveld, 2006). For example, an enterprise bargaining is quite common among larger establishments as compared to smaller ones. As the organization size increases, the bargaining likelihood also increases. According to Thornth- Waite and Sheldon (1999), large firms mainly involve unions in enterprise bargaining. In comparison, medium sized organizations were found to adopt a more varied bargaining pattern as compared to large sized firms, depending on whether their workers are unionized or not (Sheldon and Thornthwaite 1999). Individualism management in Australian mining industry Mining and smelting industry is a major employer in Australia. Most of its blue-collar workforce has been represented by a large amalgamated union known as (Australian Workers Union (AWU) / Federation of Industrial, Manufacturing and Engineering Employees (FIMEE), which covered operational workers. Other unions covering skilled workers and craft are the AMEU (Automotive, Metals and Engineering Union) and the Forestry, Mining and Energy Union (CFMEU). Major mining companies have restructured in an effort to achieve increased employees productivity. This has been done through implementation of workplace reform where union avoidance approach was considered a prerequisite to workplace and organizational restructuring (Jaques, 1982). In a “requisite organization” employee’s worth is based on a two dimensions individual accountability which is connected to: the time span (time required to perform the tasks) and complexity (discretion). By early 1991 nearly all employees at the mining and smelting plants had adopted individual contracts. Management was able to harness employees’ job insecurity and also replaced a union tradition with an organizational narrative linking individualism to the economic success of the company. The narrative targeted the workers’ union as a barrier to ultimate company-preferred solution. The employees acceptance of individual contracts was based on a genuine believe that staff contracts offered more role scope and responsibility, which offered a chance to better oneself. They also believed that offered a better pay through the opportunity to perform a wider variety of work (Jaques, 1982). This however did not happen without union resistance and operations in Australia mining industry remained a mixture of staff contracts and award conditions for a time. Eventually, resultant union breakdown saw the management in this industry exude unions and dealing directly with employees. Discussion: Benefits of individualized contracts in hotel and mining industries Introduction of the individualized systems is not just about sharing power or empowerment but it’s a step towards workplace reform and increased control through unilateral decision making and greater individual accountability. This could only have been achieved through rejecting third parties collective bargaining and trade unions in industrial employment relationship. Personalized accountability allows individual performance to be determined more clearly and compared to business objectives. Increased employee productivity may also give an alternative explanation for overtime reduction and absenteeism. Cons of individualized contracts in hotel and mining industries However, individual contracts has a disadvantage in that they can reduce bargaining choices of an employee and eventually pave way for a later deterioration of work conditions. Managers may also lose as individual contracts reduce employee commitment and loyalty if managerial control is too overt in the employer-employee relationship. References: Australian Industrial Relations Commission (AIRC) (1995), Aluminium Industry CRA [Comalco] Bell Bay Case, Appeal by CRA, Full Bench Decision of the Federal Industrial Court, 61 Industrial Reports 455-86 Australian Bureau of Statistics (ABS) (2000) Employee earnings and hours. Cat No. 6306.0. Canberra: Australian Government Publishing Service (AGPS). Australian Mining and Oil Guide (1996), Sydney Alexander R (2006) Understanding Australia industrial relations (6th Ed) Work Choices update. Melbourne: Thomson. Jaques, E. (1982), Free Enterprise, Fair Employment, New York, NY: Crane Russak Macken J (2006) Macken on Work Choices. Sydney: Law book Co Porter, M. (1990), The Competitive Advantage of Nations, London: Macmillan, Sheldon P and Thornthwaite L (1999) Employer Matters in (1998) Journal of Industrial Relations 41: 152–169 Waring P and Bray M (2006) Evolving employment relations: Industry studies from Australia. Sydney: McGraw- Hill Irwin Van Barneveld K (2006) Hospitality, in: Waring P and Bray M (Ed) Evolving employment relations: Industry studies from Australia. Sydney: McGraw- Hill Irwin Read More