When you must 'conveniently belong'

In addressing the question about whether unions are still relevant one must also ask two further questions. To whom are they, or were they ever, relevant; and is it possible to discuss relevance when for the vast majority of union members their membership was simply not voluntary?

For instance most workers would rationalise the purported benefits of a union membership even if that membership was an involuntary requirement of the job. But if they were in fact given a real choice in the matter of whether they would part with their hard earned cash, would they in fact do it? And if they wouldn’t, should we take their view into account in addressing the question of relevance?

It is an interesting, and indeed endearing, quirk of the Australian character that people are very supportive of protections real or imaginary for other workers who they perceive as less able to look after themselves, while happily dismissing the need for the same protections for themselves.

The most violent and vehement opposition to WorkChoices in general, and AWAs in particular, came from the groups to whom they would never apply. The half million or so workers on AWAs before it was all stopped by Minister Hockey had very few genuine complaints.

Accordingly any discussion of the relevance of unions must surely be made in the context of only those for whom union membership is genuinely voluntary.

We know that from studying history - in times where union memberships were genuinely voluntary and surveys over time - the level of genuine voluntary union membership is in the order of only 5-6 per cent of the workforce. These are the workers who so value their union membership and what they perceive are the benefits of it that they would happily write out a cheque or authorise a payroll deduction to be a union member.

We have seen in industries where union membership can no longer be enforced, and workers have a genuine choice in the matter that union membership has almost completely dried up.

So the matter of the viewpoint of the workers who make up the difference between the 5 per cent who really value their memberships and the 18 or 19 per cent who actually are financial union members, but who are so involuntarily, must be taken into account in any assessment of its past or future relevance.

Let’s not get misty eyed here. Although there was significant industrial upheaval in the early 1890s, at the time of the post gold rush economic depression, the actual levels of workforce union membership at the time of the Federation when the membership was truly voluntary was only about 5 or 6 per cent of the workforce.

It was only with the introduction of the first Federal Industrial Relations Act in the second parliament, that unions were granted a monopoly which they have since successfully exploited to build unions memberships to levels of more than 60 per cent of the workforce in the 1950s. But as the ability of the unions to use their monopoly to enforce memberships has declined so also have the memberships. Today they have declined to levels now substantially less than even the number of independent contractors in the workforce.

Of course in the 50s and 60s in Australia, ironically under the Menzies Government, the unions became the past masters of the secondary boycott. An hotelier for instance would find that unless they ensured that all their staff were enrolled and fully paid up in the union, then the Transport Workers Union would stop the delivery of beer and the Post Master General PMG would simply cut off the phone. This was all done with total impunity until John Howard stopped it with amendments to the Trade Practices Act in the late 1970’s.

But as effective as the union thuggery was in enforcing union memberships, the real compulsion came from employers not unions and still does today.

You see the monopoly granted to the unions was that employees were prohibited from negotiating the conditions of their workforce arrangements with their employers. An employer, however, could either do it themselves or engage an “employer association” to negotiate for them. But only a union could negotiate on behalf of an employee. Furthermore the Industrial Relations Acts, because all the state and federal Acts were virtually mirrors of each other, further entrenched this monopoly with a further “you beaut” provision called “the conveniently belong” rule.

The effect of this rule was to stop the formation of new unions, because workers could “conveniently belong” to an existing union. This carved up the union territory so that neither workers nor employers had any choice as to who they could deal with. So if an employer and the employee wanted to change work conditions, then it couldn’t be done unless the relevant union were prepared to agree to it.

More than anything else this provision has been the under pinning of the involuntary union membership model because it enabled the unions to extract a monopoly rent. "Yes we will agree to a change, and since you can’t get the changes you want without our approval, the price of approval is union membership."

The basis of our system is that every industry and the work within it is covered by an Award, which is the minimum set of conditions that applies to the worker’s employment. There are hundreds of them, they are all very similar and they are all dysfunctional. You will be pleased to know that the Rudd Government is currently rationalising all this so that instead of hundreds of dysfunctional awards, we will soon only have 21 dysfunctional awards. The original awards were written in the times past when the social community model in Australia centred on the concept of a 40-hour week, worked 9am-5pm Monday to Friday, with a bonus Saturday 9am-12pm.

So strong was this view, and so widely supported in the community, that employers were expected to be punished if they required their employees to work at night time, Saturday afternoons, Sundays or god forbid, on a public holiday. The punishment for employers who required work done outside of “ordinary time hours” was that they had to pay a penalty rate of double time or double time and a half on public holidays. This was to discourage them from employing people at what were universally regarded as anti social times.

Please note that the penalty rate was never meant as a reward for workers. It was designed to stop employment, not reward it.

But today we live in 24-hour, seven-day a week 52-week a year world. Our standard of living is hugely higher as a result of it. We demand and expect to utilise the services in the health, hospitality, tourism, transport, retail mining and manufacturing industries at any time. It is no coincidence that it is in these sectors where trade unions memberships are highest.

All of the work done in these sectors are governed by Awards which mandate, as they did 60 years ago, that they should only operate for about 40 hours a week from Monday to Friday during ordinary time hours. Yet we know that these industries go all the time and we know the people working in them are not earning double time at night times and on weekends. What is happening?

Well here is how it really works. Take the example of Coles or the Woolworths Groups for example. No criticism of them is implied in this example because they have simply responded rationally to a dysfunctional system and what they have done is, in my view, in the interests of their employees. Between them they have nearly 200,000 employees. They have done a deal with the union which allows them to largely avoid paying penalty rates for weekend and night work. At most they pay time and quarter, not double time, for some employees only on Sundays. This is tremendous advantage to these retail oligopolies.

Their smaller competitors are stuck on Award conditions and have much less flexibility with their rosters. But it comes with a price. Try getting a job at Coles and Woolworths and not join the union. This deal with the union means that it is in Coles’ and Woolworth’s interest to ensure that everybody joins the union. But it is not Coles or Woolworths which pays the price, it’s the workers who involuntarily pay the union membership.

More or less the same situation occurs in all the major employers in all the 24:7:52 industries mentioned before. That is why the majority of current union memberships are clustered in these industries. The employers need to do deals with the unions to allow workable rational workplace arrangements and in return they ensure that workers join the relevant union. The workers have no choice in the matter.

The Building and Constructions industry was a little different in that the major construction firms in each state - who did the lions share of the State Labor Government tendered work - all made it a condition of contract for their subcontractors that all employees on the building sites join the relevant union.

Every one denies this of course, but it was, and still is, an implied condition of tender of the Labor State Governments that all these sites are union sites. Who do you think pays the election expenses of Labor politicians? Mind you when non Labor governments occupied the Treasury benches, they were reluctant to change the status quo, even though the effective compulsory union membership money only ever went to their political opponents.

Although the Howard Government tried to address this problem, in the clumsiest of ways, whether future state conservative governments will stop this practice is moot.

In summary, apart from a brief moment in the WorkChoices era where the union monopoly was at least addressed - if not stopped, the future relevance of the union movement will be entirely related to the extent that unions can continue to gain the involuntary membership of workers through legislative fiat.

In my opinion it is looking good for them. The Rudd Government is entrenching the dysfunctional Award standards with all the penalty rates under which no modern business can possibly operate. The approval of all variations to that standard looks like it is going to be the exclusive preserve of the Industrial Relations Commission under whatever new name it will be given.

There will be two sets of rules. A simple set for unions and a complex and largely unworkably expensive set of rules for those employers who will be deluded into thinking they can alter the Award dysfunctionalities without the unions. This was how it was before WorkChoices. Most large employers will find it easier to use the union system to gain workable arrangements in return for making their employees join the union.

The small employers will just continue to breach the Awards as they have always traditionally done.

Apart from the 5-6 per cent of workers who would join a union voluntarily, in what way can the unions be relevant to those who join involuntarily because their employer has made it a condition of employment. The relevance of unions in my view has not changed. They were never relevant to those who were involuntary members.

All that is happening is that the incidence of involuntary membership has been slowly declining. Whether it continues to decline will be determined by what special privileges are accorded the unions to allow them to extract their monopoly rents from the unwilling workers of Australia.