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How do Australian unions maintain standing during adverse periods?

How do Australian unions maintain standing during adverse periods?

Australian unions are organized on a craft or occupational basis, much more than along industry or enterprise lines as in the United States. Because unions typically enroll members from more than one industry, workers in a medium-sized factory of 500 or so typically will be covered by 5 to 10 unions: the production or process workers gravitate to 1 or 2 unions, white-collar and clerical people go to another, and maintenance personnel join a further group of unions. Also, supervisors and front-line managers increasingly have been joining trade unions, primarily from fears generated by increased redundancy and corporate rationalization, but also as a defense mechanism against the growth in industrial democracy practices which supervisors often perceive as a challenge to their own job territory. Overall, 320 unions are registered within the tribunal system.

Australian trade unionism has continued to be a numerical force in the past decade, although the two main sets of official statistics indicate marginally contradictory trends. One set of data is based on a labor market survey of employees in 1976 and again in 1982. Unionization declined slightly from 51 percent to 49 percent, with women maintaining a rate at 43 percent and that for men decreasing from 56 percent to 53 percent. The alternate official series, with statistics collected annually from the trade unions themselves, shows that the overall union participation rate increased slightly from 56 percent in 1975 to 57 percent in 1982.

Unionization by industry

An analysis of industry shift in unionization between 1976 and 1982 reveals that, as in some other industrialized market economies, the manufacturing sector is in some difficulty with a drop of 3 percentage points, entailing a loss of some 45,000 unionists. Debate over the causes covers many possibilities, including deindustrialization through crowding out by the nonmarket sector or through the influence of multinational companies; the Gregory Thesis of booming minerals sector deindustrialization; and the Cambridge Effect, involving exports and balance of payments problems. These lines of argument have little to do with unions directly, although two other schools of thinking do: the rise of inefficient protection policy which itself is linked to wages policy that emphasizes standardization and uniformity; and the real wage overhang effect through which many wage rises in the past decade have outstripped appropriate productivity movements. Whatever the primary cause, unionism in its most important sector has lost ground. However, this is almost offset by a 3-percentage-point rise in the incidence of community services employment. Unionism has made distinct gains in the wholesale/retail area, and has held its own in the finance/insurance business services sector. In both cases, negotiation of compulsory unionism agreements has been important. For example, the union participation rate in the private banking industry had been 57 percent in 1973, but toward the end of that decade it had risen to 84 percent with the introduction of a closed shop arrangement.

The labor market

The unionization picture is particularly noteworthy in the light of movements in Australian unemployment figures. From a rate of 2.4 percent in 1974, unemployment peaked in 1983 at 9.9 percent, thereafter dropping to 7.9 percent in 1985. As one researcher points out, few Australian unions provide advantages that would encourage displaced workers to maintain membership:

. . . unlike some United States unions . . . few Australian unions act as employment centers; nor do they provide unemployment or other benefits. This, together with the fact that most forms of . . . union shops are confined to a small number of industries, means that unemployed workers usually see little point retaining union membership.

However, Australian unions have held their membership coverage despite considerable erosion of their recruitment base by unemployment. Indeed, a leading school of thought contends that unions have preserved their position at the expense of the unemployed, particularly the hardest hit category of youth, whose rate of unemployment rose from 5.8 percent in 1974 to 22.6 percent in 1983.

The age profile on unionization trends is important in the sense that disenchantment among the young could herald future difficulties. At first sight, Australian unions might well be concerned on this score, as the membership incidence varies sharply with age cohort: the figure in 1982 for youth (15 to 19 years) was 31 percent, compared with 44 percent for young adults (20 to 24 years) and 53 percent for adults (25 and over). However, up to 5 percentage points of the gap between youth and adult unionization may be accounted for by the fact that apprentices (an avenue through which 25 percent of all boys enter the labor market) traditionally are nonunionized. Another factor is the tendency for youth to concentrate in low unionized sectors, such as wholesale/retail trade and entertainment: "If manufacturing is excluded, differences in the employment composition between teenagers and adults account for half the difference in their unionization.' Finally, high turnover rates among young employees, who in adulthood presumably will settle down, is also a significant factor for lower youth unionization rates.

Wages and conditions

The Australian system of industrial regulation is based on the process of conciliation and arbitration which entails government-appointed tribunals determining wages and other conditions of employment. Because the industrial tribunals have official standing and operate in a semijudicial environment, the propensity for standardization and centralization is strong. These pressures have been particularly pronounced in the past decade.

Commencing in March 1975, the Australian Conciliation and Arbitration Commission (hereafter Arbitration Commission) has awarded wage increases to closely reflect movements in the Consumer Price Index, the main indicator of inflation. Of the 19 National Wage Case decisions in the Indexation Era, the Arbitration Commission awarded full CPI adjustments on 7 occasions, with the remainder producing either partial percentage adjustment or some plateauing arrangement in which only those from lower paid classifications received real wage maintenance. Inevitably, this led to compression of skill margins, particularly as it was the stronger unions covering such groups as transport workers and open cut coal miners rather than those covering trade classifications which managed to breach the Arbitration Commission's "substantial compliance' guideline, and negotiated privately to achieve wage increases beyond the national minima. In the end, too many groups were running outside the national guidelines, and in July 1981, the Arbitration Commission abandoned the Indexation Era, leaving the parties to a form of disheveled bargaining.

Indexation had been introduced in 1975 to help spike wage expectations which at that time were beginning to run rampant. Fears were held of a repetition in 1982, and with all parties increasingly cautious in light of a forthcoming election, the Federal Government managed to sell the idea of a wage pause. So crucial are industrial relations issues to political fortunes in Australia that the subsequent success of the Australian Labor Party in the March 1983 election owes much to its deal with the Australian Council of Trades Unions to re-introduce an orderly wage fixing arrangement. The Prices and Incomes Accord provided the way for a return to centralized wage fixing, and by September 1983, the Arbitration Commission had worked out a set of guidelines to put the arrangement into operation. This virtually guaranteed full CPI wage adjustment, although now the interdiction on groups negotiating private deals beyond the national standard became much more effective. Even so, classification creep and some increase in overtime enabled average weekly earnings to keep ahead of inflation. The period between 1971-72 and 1982-83 saw substantial wage increases, with money wage aggregate growth of 129.9 percent well outstripping the aggregate CPI growth of 111.1 percent.

A significant development in the decade to 1985 has been the growing authority of the Australian Council of Trade Unions in national wage policy. In the mid-1970's, this peak union body resisted, unsuccessfully, maneuvers of the Whitlam Labor Government and the Arbitration Commission to locate wage fixing back within the Arbitration Commission. Initially, wage indexation meant holding wage increases below their recent trend line; 10 years later, with rising unemployment and the salutory effect of the economically awkward Whitlam years (1972-75), the council came to see considerable merit in CPI-linked wage adjustment, particularly as it became the joint-administrator in the transformed central system.

These developments hardly suggest a labor movement losing ground in the face of economic adversity, as much as theory might suggest such would be the outcome. What is perhaps more important, the growth of real wages in such difficult times was not achieved through trading off other conditions: not since the early 1930's have the industrial tribunals attempted to meet unemployment concerns with across-the-board reductions in industrial conditions, and only in isolated instances do they now roll back provisions for particular firms in trouble. Indeed, over the past decade, unions have made gains in various nonwage conditions, which further reflect unionism's enhanced standing. Perhaps most important has been the 35-hour week campaign. Begun in the mid-1970's, shorter hour gains were widespread by the early 1980's, although many groups eventually had to settle for 38 hours as their new regular working week. This is now the standard accepted by the Arbitration Commission, although cost savings through revised work practices are a mandatory quid pro quo. This arrangement-- the linking of work efficiency to further reduced hours--is perhaps one of only two developments in the formal industrial relations system over the past decade with appeal to employers. The other is the emergence of the no-further-claims clause by which unions agree to hold the line on wage claims for a designated period, and in other ways, to abide the agreements.

Several other sets of improved conditions should also be mentioned. While Australia lagged much of Europe in the provision of job protection, advance notice of redundancy, and compensating termination packages, a 1984 decision of the Arbitration Commission in the Termination Change and Redundancy Case, changed the picture somewhat. Also, as part of its accord commitments, the Australian Government in 1984 established the National Occupational Health and Safety Commission to "develop national standards and priorities, upgrade research and training efforts, and provide a basis for unions and employers to work together to make workplaces safer.' Another development linked to the accord is the program to more widely infuse industry with the precepts and practices of industrial democracy, although here the main initiatives will be in the Accord Mark II (1985-87) more than in the Accord Mark I (1983-85). The same can be said for the introduction of nationwide super-annuation schemes, due to start in July 1986, where all unionists will have 3 percent of their wages paid by their employer into the pension fund of the worker's choice. The arrangements for pension trust management, yet to be finalized, could give unions the basis for further enhanced standing.
COPYRIGHT 1986 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986 Gale, Cengage Learning. All rights reserved.

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Author:Niland, John
Publication:Monthly Labor Review
Date:Jun 1, 1986
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