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Beef-up bargaining to retain fairness for workers

By Krystian Seibert and Alex Collins - posted Thursday, 29 December 2005

The passing of John Howard's industrial relations agenda will please some, but as rank and file members of the Liberal and Labor parties, we are opposed to a policy that won't deliver benefits for all: businesses, workers and unemployed people. We acknowledge the importance of economic reform, but believe a different direction for industrial relations change is needed to keep the system flexible and fair.

In this age of small government and economic rationalism, it is difficult to identify an overwhelming objective for government policy, but the fundamental objectives should be the dispersal of power. Unfortunately, the changes go against this trend. They transfer power from employees and concentrate it with employers by dismantling the award safety net and placing emphasis on individual bargaining at the workplace level.

It is obvious the award system is not perfect. It imposes uniform terms and conditions on all parties, restricting flexibility to negotiate terms and conditions that suit particular workplaces. It also places an administrative burden on businesses. But, by effectively dismantling the safety net without reinforcing collective bargaining, employers are in a significant position of power when negotiating conditions.


The five basic terms and conditions in the Fair Pay and Conditions Standard will be all that remain of the safety net. With the emphasis on individual bargaining, employers will be able to dictate unilaterally terms and conditions not protected by the standard. Given larger businesses have many employees, they effectively have economies of scale enabling them to hire human resources consultants and lawyers to assist with their negotiations.

Take the example of Kemalex, a plastic components maker. It hired workplace relations expert Ken Phillips to advise on its independent contractor arrangements and engaged highly paid lawyers to argue its case when employees took industrial action.

Workers generally have only themselves and their union to represent them. It is unlikely workers on the minimum wage will be able to hire lawyers to negotiate for them. That is why collective bargaining is so important. It equalises bargaining power for a fairer outcome.

It is also important to ensure bargaining actually takes place, rather than employees being presented contracts on a take it or leave it basis.

The Federal Government acknowledges such differences in bargaining power. Why else would it support legislation that allows small businesses to bargain collectively with big businesses (note that unions will be specifically excluded from this process). But for some reason the government is less supportive of collective bargaining when it furthers the interests of employees.

New policies are needed to reinforce collective bargaining. First, the system in the United States needs to be implemented in Australia. In the US, at any workplace where more than 50 per cent of employees want to bargain collectively, their employer is required to bargain in good faith. In Australia, the employer can simply refuse to negotiate.


Second, collective agreements need to be recognised for what they are - contracts. The new industrial relations changes will allow employers to offer individual agreements to employees covered by a collective agreement, effectively undermining the collective strength of the employees. Besides being unfair, it also contradicts the basic principles of contract law that state if you make an agreement you have to stick to it.

We recognise that to maintain strong growth and productivity Australia requires a flexible industrial relations system. But we also understand the realities of uneven bargaining power and the need to reinforce collective bargaining to ensure fair outcomes for workers.

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First published in The Age on December 7, 2005.

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About the Authors

Krystian Seibert is a public policy professional based in Melbourne. He has worked as a policy adviser to two Australian Ministers and studied regulatory policy at the London School of Economics.

Alex Collins is a student of law and commerce. He is a member of the Australian Liberal Party.

Other articles by these Authors

All articles by Krystian Seibert
All articles by Alex Collins

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