Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Protection

The articulation of the protective purpose of industrial relations laws has been constant and is often attributed to Sir Otto Kahn-Freund’s seminal text Labour and the Law:

“The main object of labour law has always been, and I venture to say will always be, to be a countervailing force to counteract the inequality of bargaining power which is inherent in the employment relationship”⁸

The fundamental rejection of freedom of contract as the sole determinant of the content of the labour-capital relationship has been evidenced in all iterations of federal industrial laws, including WorkChoices (albeit to a lesser degree)⁹. This rejection is founded on the premise that the bargaining power between a worker and their employer is inherently unequal. A worker’s labour is inseparable from them as a human being – it is not a commodity. The price paid for labour thus dictates the quality of the worker’s life. The protective purpose aims to address the bargaining inequality and the potential for exploitation. It does this through:

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  Providing a framework of rights that allows labour to act collectively in its bargains with capital;
  
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  Directly establishing minimum inalienable standards or rights from which each worker may benefit; and
  
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  Providing the infrastructure for minimum standards to be progressed in line with economic development.
  

Owens et al describe the following as desirable outputs of the protective purpose:

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  Fostering Social Cohesion: There is a wider social goal that all workers are treated fairly not simply in their relations with their employers but in the position relative to other workers. Minimum standards and rights provide such fairness and equality.
  
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  Social Citizenship: The protective purposes of labour law reinforce and extend the normative values of fairness and equality that underlie civilised society into the workplace, therefore reinforcing the social utility of work.
  
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  Human Rights: The protective purposes of labour law reinforce the responsibilities of States under human rights law. For example, the rights to freedom of association, just and favourable conditions of work, equal pay, to join and form a trade union and to “just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity”, all of which are expressed in the Universal Declaration on Human Rights are reflected to varying extents in our federal industrial relations laws, including through statutory causes of action.
  

Redistribution

The re-distributive purposes of industrial relations laws are the baldly economic expressions of its protective purposes. Labour and capital are in perpetual contest for the income generated by their productive endeavour. Capital seeks profit growth, labour seeks wages growth. Labour gains regulatory assistance to ensure a more equitable distribution of income between these factors of production. The remaining two purposes of industrial relations laws referred to by Owens et al are connected with this purpose.

Social Inclusion and participation: Because work is such an important determinant of how citizens are integrated into society, the availability of work and the pay and conditions attached to work are relevant considerations any redistributive framework. As we point out in later chapters, the relationship between employment and minimum conditions set through the framework is a complex one and certainly not as reducible as the phrase “social inclusion and participation” might suggest.

Fostering competition: Owens et al emphasise the modern pre-occupation in industrial relations law of providing business with “flexibility” to compete. They observe that the supposed benefits of competitive flexibility firstly assume an acceptance of freedom of contract and secondly rely on trickle down economics for their redistributive impact. From this observation they suggest this runs counter to some of the orthodox and longstanding purposes of industrial law. We would tend to agree on the issue of flexibility. However, we accept that fostering competition is a legitimate element in the redistributive function of the law insofar as reducing the scope for competition on wages and ensuring workers get a fair share of the benefits of increased productivity, industrial laws incentivise competition on the basis of innovation rather than on labour costs.

Extent versus extinction

The dual purposes of protection and redistribution are firmly associated with the political goals of 20^th century economic and social reform to redistribute wealth through the labour market and empower labour and its institutions¹⁰.

Respected authors including Creighton & Stewart, Howe, Johnstone and Arup have observed that these purposes and goals have, since the 1970s or at least the 1990s, ceased to be expressed as predominantly in industrial relations laws, but none claim those purposes have been abandoned altogether or assert that they should be¹¹.

The neo-liberal agenda that stands against the objectives of protection and redistribution is often described as “de-regulation”, which implies a return to a “natural order of things”¹² where market forces and private decision making are considered superior. The “superiority” of that model in absolute terms was tested against public interest grounds and failed more than 100 years ago. Among the cluttered field of lobbyists representing the interests of capital, only the HR Nicholls society has called for industrial relations laws to be abolished and only the Australian Mines and Metals Association had pursued a whole of industry exemption from the regulatory scheme (and even that model had some, albeit limited, safeguards to it).

What has been observed over time is that the “de-regulation” agenda has been accommodated by incremental reductions in the effectiveness with which our industrial relations law serve their primary objectives. This incremental reduction in effectiveness is the product of two causes:

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  Deliberate concessions by governments to the interests of capital (sometimes by more regulation rather than “de-regulation”); and
  
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  Inaction (or insufficient action) by governments in response to changes in the nature and organisation of work and the behaviour and organisation of capital.
  

Both of the causes have been aided by the deliberate shift in the constitutional basis of industrial law from the Conciliation and Arbitration power to the Corporations power. The latter provides the vehicle for the government to directly regulate what labour and capital must and must not do, even in the absence of any dispute. But the power has not been utilised in the current law to its fullest extent - by focussing on the relationship between a corporation and its employees, the framing of the current law necessarily disempowers organised labour that is not in a traditional relationship with a single employer. If one pauses to consider what might have been possible had the courts and the AIRC been left with given even only minor prompting from a benevolent legislature to continue to develop and evolve the law as to what could constitute an “industrial dispute”, a different result seems likely.

In the remainder of our submission, while responding to the PC issues papers as thoroughly as our time and resources have permitted, we direct particular attention to the effectiveness with which industrial relations law is currently meeting its objectives of protection and re-distribution.

2	The International Context