What has happened to collective bargaining since the end of WorkChoices?

The Rudd government came to power in 2007 with a mandate for industrial relations reform. There was an expectation on all sides that its Fair Work Act, introduced to replace the previous Howard government’s WorkChoices, would bring collective bargaining back to the centre of Australian employment relations. Labor and the unions hoped for it. The Coalition and employers feared it.

The Fair Work Act delivers a much more peculiar system of collective bargaining than many realise. It has outcomes that contradict the hopes and fears of both sides of the debate.

What has happened to collective bargaining?

The trends in the Fair Work Act’s early years (2009 to 2012) appeared to confirm expectations of more collective bargaining. The average annual number of new agreements lodged during these years increased to nearly 8,400 from a plateau of around 7,000 during the previous decade (from 1998 to 2008).

Similarly, the period 2009 to 2013 produced an average of nearly one million employees covered by these new agreements each year. This is much higher than the long-term average of around 780,000 (from 1994 to 2008).

The first Australian Bureau of Statistics survey after the Fair Work Act’s introduction, in 2010, found the percentage of all employees whose wages were determined by collective agreements had increased to 43.3%. This was the highest figure since the surveys began in 2002. The 2012 figure remained high at 42%.

However, these trends have reversed since 2012. The number of collective agreements lodged in 2013 fell to 6,696 and then to 5,673 in 2014. This was the lowest annual number since 1997.

Coverage also fell dramatically to 803,851, close to the long-term average. The percentage of workers whose wages were determined by collective bargaining fell to 41.1%, similar to the numbers for 2006 and 2008.

So, there has been no significant increase in the incidence or coverage of collective bargaining. And the trajectory is downward.

Increased union power and influence?

Employers and Coalition MPs repeatedly claimed that the Fair Work Act unfairly advantaged unions and allowed them to use collective bargaining to damage employers and the economy.

It is hard to see evidence of this – for four reasons.

First, union density (that is, membership as a proportion of the total workforce) continues to decline. After initially stabilising around 18% in the years 2010 to 2012, density fell to 17% in 2013 and 15% in 2014.

Second, as with its predecessors going back to the Keating government’s 1993 legislation, many collective agreements under the Fair Work Act do not involve a union. These non-union agreements declined in number and coverage in 2011 and 2012, bottoming out at 22.5% of all collective agreements and 5.7% of employees covered.

However, non-union agreements are on the rise again. In 2014, nearly one-third (31.1%) of all new collective agreements were non-union. Coverage was back up to 8.6%. Without a union, it is likely that most of these agreements are not “bargained” at all, but simply drafted by employers and put to a vote.

Third, within the – increasingly rare – industries where unions remain relatively strong (such as airlines, coal mining, construction and the public sector), there is little evidence that unions have gained much power, despite consistent employer complaints to the contrary.

The Coalition government’s amendments to the Fair Work Act have augmented the already extensive restrictions on unions’ ability to initiate industrial action designed to force employers to engage in bargaining.

It has been argued that unions have been able to use the Act to expand their bargaining agenda and to attack managerial prerogatives. However, there is little evidence that this is widespread.

Finally, the number of industrial disputes is tiny.

Exaggerations of union influence and the failure to acknowledge how the Fair Work Act assists employer power make the allegations (or, for supporters, the promise) of a substantial increase in union power implausible.

Has co-operation in the workplace flourished?

The former Labor government argued that the Fair Work Act’s collective bargaining provisions would deliver greater workplace co-operation and corresponding improvements in productivity.

The main part of the Act that was supposed to promote co-operation was the set of obligations imposed on unions – and especially employers – to bargain in “good faith”. Somehow, it was expected that forcing the parties to bargain with each other would magically result in them co-operating to improve relationships and productivity.

There is no evidence that this is happening.

Good-faith bargaining provisions have brought some previously recalcitrant parties to the bargaining table and improved the civility, process and orderliness of bargaining.

But this is lowest-common-denominator stuff. The bargaining process is distributive and adversarial, rather than integrative and co-operative. To build genuine co-operation, greater support is required than just good-faith bargaining.

Some movement in this direction has been achieved by the Fair Work Commission’s New Approaches agenda, in which tribunal members have worked intensively with disputing parties and brought them together. Events at Sydney Water and Orora Fibre Packaging are two good examples.

What now?

These admirable and novel developments, however, require far more resources than the Fair Work Commission can throw at them.

Perhaps more importantly, they require governments to recognise that achieving genuine co-operation in Australian workplaces is difficult, and provisions like good-faith bargaining – as useful as they may be – are insufficient.

We are unlikely to hear much about the reality of collective bargaining under the Fair Work Act in the shrill debates about industrial relations laws and policies over coming months. More’s the pity.

You can read other pieces in the series here.