Historical Perspective Industrial Relations In Australia
The 1890s and the Constitutional Conventions
The great strikes of the 1890s provided the context in which the constitutional
conventions considered a power in the proposed national parliament to
prevent and settle interstate industrial disputes. The founders were deeply
concerned about the extent to which the disputation had caused damage
to both industry and workers that were left without any protection.
This was first raised at the 1891 Constitutional Convention by Charles
Kingston, the Attorney-General in the South Australian Government who
had in 1890 unsuccessfully introduced a 'Bill for an Act to encourage
the formation of Industrial Unions and Associations, and to Facilitate
the Settlement of Industrial Disputes'. However, as in South Australia,
there was little Federal interest in the proposal.
In 1897, H B Higgins proposed a power to make laws with respect to 'conciliation
and arbitration for the prevention and settlement of industrial disputes
extending beyond the limits of any one State'. Again, the proposal was
rejected by the Constitutional Convention. Finally, at the 1898 Convention,
the same proposal was accepted. This power was the basis for the Commonwealth
Conciliation and Arbitration Act 1904 (the 1904 Act).
Conciliation & Arbitration Act 1904 & Development of the Award
System
The 1904 Act established the Commonwealth Court of Conciliation and Arbitration
(CCCA) with extensive powers to prevent and settle industrial disputes
by conciliation and arbitration. It was not the first piece of Australian
legislation to establish a system of conciliation and arbitration - both
WA (1900) and NSW (1901) had enacted legislation to establish such systems
prior to the Commonwealth legislation. South Australia followed in 1915
and Queensland in 1916.
Victoria and Tasmania had the slightly different system of wages boards
for a long period of time. These boards which consisted of equal numbers
of employer and employee representatives with an independent chair had
the power to fix wages and conditions in a trade or industry. Tasmania
abandoned the wages board system in 1984 while Victoria's movement away
was only completed in 1992.
Many of the central elements of the 1904 Act are still present in the
current Industrial Relations Act 1988 including an independent
tribunal with powers to conciliate and where necessary, compulsorily arbitrate
on industrial disputes and the provision of a system of voluntary registration
of employer and employee organisation. For the latter, giving the organisation
the right to represent groups of workers and to be heard by the Tribunal.
In the years immediately following its enactment, the effect of the 1904
Act was limited, for the most part due to narrow interpretations of the
legislation and the conciliation and arbitration power of the High Court.
However, by 1919, there were 96 Federal awards in force, half the workforce
was unionised and 80% of unionists belonged to Federally registered unions.
[1]
The Harvester Judgment and the Basic Wage
The 1907 decision made by Justice Higgins (in Ex Parte HV McKay
(1907) 2 CAR 1), is usually identified as the commencement of centralised
wage fixation. It involved a determination of what wages and conditions
of the employees were 'fair and reasonable' in the context of the Excise
Tariff Act 1906.
Higgins J, held that the test of determining a 'fair and reasonable'
wage was 'the normal needs of the average employee, regarded as human
being living in a civilised community'. Higgins took evidence as to the
cost of living in Victoria, food, rent, clothing etc to decide the fair
and reasonable wage.
Although the High Court subsequently found the Excise Tariff Act 1906
to be invalid, the approach taken by Justice Higgins was adopted by the
Court and the basic wage was awarded in every determination it made.
The Development of Wage Fixation
As discussed above, by 1920 all the States and the Commonwealth had adopted
systems of compulsory conciliation and arbitration (or very similar systems).
This approach has remained, until very recently, the predominant method
by which the basic terms and conditions of employment for the vast majority
of Australian employees are set.
The Federal system exerted a substantial influence on the State systems,
primarily through the operation of national wage cases. Applications to
review the wage rates in a number of key Federal awards would be made
via submissions by the key union and employer organisations, as well as
State and Commonwealth bodies. The resulting decision would then flow
on to other Federal awards and usually be adopted by the various State
tribunals.
In addition to the basic wage, Higgins also examined the wages to be
paid to skilled tradespersons. Inquiries into 'margins for skill' continued
until the mid-1960s. Through this process the Commission sought to ensure
that its determinations reflected the market conditions in relation to
these employees. In 1966, the Conciliation and Arbitration Commission
moved away from this approach to instead adopting a single 'total' wage
containing a minimum rate payale to all male adult employees [2].
This enabled the Commission to increase the take-home pay of the lower
paid workers without the increase flowing on to hight paid classifications.
The oil crisis of the 1970s and other inflationary pressures, led to
high inflation fueled by a price wage spiral. The Commission sought to
reassert its control of the wage fixing system by introducing a system
in which wage increases were indexed to the quarterly movements in the
consumer prices index. The system implemented in the Commission's Wage
Indexation Principles of 1975 continued, in a modified form, until 1981.
[3]
Initially, the Commission adopted full indexation across the board; but
from May 1976 until 1981, the Commission indexed in a variety of ways,
including full indexation, partial indexation and plateau indexation (and
a mixture of the three) In plateau indexation, workers earning below the
plateau might receive full indexation, while those above only partial.
By 1981, the Commission formally abandoned its wage indexation principles
with unions and employer negotiating substantial increases outside the
system. Wage increases were then negotiated by the parties at an industry
level; however, there was significant disparity in the level of wage increases
across industries. In mid-1982, with the Australian economy in recession,
the Commonwealth and States agreed to a wage freeze which was implemented
by the Commission. [4]
In 1983, the ALP and the trade union movement negotiated a 'Prices and
Incomes Accord' which sought the re-introduction of centralised wage fixation
to enable all workers to maintain and improve living standards. The Commission
agreed to adopt a centralised system based on prima facie full indexation.
[5] In this system, the bulk of wage
increases were to come from national adjustments (CPI movements and national
productivity). In return, unions had to give firm no extra claims commitments
(both award and overaward).
Equal Pay [6]
Justice Higgins determined the basic wage as that payable to an adult
male worker supporting a non-working wife and two children. Initially,
women (who it was assumed did not have dependents) received only 54% of
the male wage.
Thus, from 1907 until 1969, employers were entitled to pay women less
than their male colleagues for performing the same work. In 1969, the
Commission adopted the principle of equal pay for identical work which
meant that women performing the same tasks as men under the same award
had to be paid the same award rate. [7]
In 1972, the Commission expanded the principle to require equal pay for
work of equal value entitling women who performed the same tasks as (but
under different awards) had to be paid the same. [8]
In 1993, the AIRC was given the power to make orders to ensure equal
remuneration for work of equal value. These provisions were based on a
number of international instruments to which Australia is a signatory,
including ILO Convention 100 (Equal Remuneration) and the United Nations'
Convention on the Elimination of All Forms of Discrimination Against Women.
The AIRC is able to make orders to ensure that men and women receive
equal remuneration (including overaward payments) for work of equal value.
The Commission can make such orders on application by an employee, a relevant
trade union or the Sex Discrimination Commissioner. However, if it considers
that there is an alternative and more appropriate means to ensuring equal
remuneration for work of equal value (for example, under a State law),
the Commission may refrain from dealing with an application.
The Hancock Inquiry
In 1983 the Government commissioned Professor Keith Hancock to examine
the operation of the existing industrial relations system and to make
recommendations as to its future direction. The consequent 'Report of
the Committee of Review into Australian Industrial Relations Law and Systems'
was presented to the Government in 1985. The report provided a comprehensive
assessment of Australian industrial relations and made a large number
of recommendations regarding changes to the system.
The Hancock Report's general conclusions about Australia's system of
conciliation and arbitration were that:
- the abandonment of the existing conciliation and arbitration system
would be fraught with great difficulties predominantly arising from
the attitudes and practices of the parties, public opinion and the complexities
of Federal /state relations and any attempt to do so would be strenuously
resisted;
- the conciliation and arbitration system is, to a significant degree,
adaptable and can accommodate different practices and policies if the
parties so desire;
- attempts to move from a collective system would be difficult and undesirable;
- it affords a mechanisms of wage policy which is a useful instrument
for pursuing macroeconomic objectives, such as curbing inflation and
reducing or avoiding unemployment;
- the wage fixing system was helpful in that it affords a mechanism
for a centralised wages policy, which assists in curbing inflation and
contributes to a reduction and avoidance of unemployment;
- public interest in wages policy requires that tribunal have regard
to economic consequences of awards;
- definite and decisive advantages in an alternative system would have
to be demonstrated to justify moving from a conciliation and arbitration
system (which, in the Hancock Committee's view, had not been done);
- there was little or no evidence that the award system with effects
on wage relativities had had damaging micro-economic consequences, including
the promotion of an inflexible job market;
- arguments about deregulation of the labour market did not allow for
imperfections and concentrations of power in the labour market; and
- advantages claimed for systems devoid of conciliation and arbitration
were speculative (and the Hancock Committee had no confidence that they
would eventuate).
In relation to registered organisations and the requirements for registration,
the Hancock Committee sought a balance between the interest of employees
and employers in being able to have bona fide associations registered
and the need for representation of employees and employers to be on an
orderly and stable basis. The Hancock Committee therefore recommended
a wider statutory test, but incorporating the concept 'conveniently belong'.
This is discussed further in Chapter 7 (Paragraph 7.8).
Many of the Hancock Committee's recommendations, including some of the
more controversial ones such as the establishment of a Labour Court and
new enforcement provisions, were adopted by the Industrial Relations Bill
1987 which was introduced into Parliament in May 1987. However, with the
subsequent dissolution of Parliament, this Bill lapsed and a revised Bill
(the Industrial Relations Bill 1988) was introduced after the Government
was returned. The revised Bill became the Industrial Relations Act
1988 and did not differ much in substance from the previous Act.
Footnotes
[1] Plowman, DH 'Forced March: Employers and
Arbitration', 1989, p. 152.
[2] Basic Wage, Margins and Total Wage Case
1966 (1966) 115 CAR 93.
[3] National Wage Case 30 April 1975
(1975)167 CAR 18.
[4] National Wage Case 1982 (1982) 287
CAR 82.
[5] National Wage Case 23 September 1983
(1983) 291 CAR 3.
[6] This material is drawn primarily from McCallum
R and Pittard M, Australian Labour Law: Cases and Materials (1994).
[7] Equal Pay Case 1969 (1969) 127 CAR
1142.
[8] National Wage and Equal Pay Case 1972
(1972) 147 CAR 172.