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

Trading restrictions in industrial agreements

The origin of the trading restrictions provisions of the Competition and Consumer Act was also a desire by the government of the day (i.e. 1980) making choices to limit the sphere of activity of organised labour, out of a perception that the secondary boycott provisions that had been introduced in 1977 did not go far enough.

The position then taken by the government was an ideological one and was in response to a specific national crisis: Union members had prevented a fuel delivery contracts from being fulfilled, a boycott campaign that targeted a non-union employer. The result was widespread fuel shortages in the Eastern States. The dispute was resolved by a member of the C&A Commission (acting on a questionable basis jurisdictionally) and resulted in fuel supplies being restored, including to the contractor against whom the boycott campaign had been targeted. Whilst the precise terms of the resolution are unknown (save that the contractor concerned discontinued his secondary boycott proceedings against the union), it seems inconceivable that all parties walked away from the discussions without having agreed to make some compromises. This result – a negotiated compromise - was one that the government of the day was not prepared to accept. It therefore legislated such that it became unlawful for a business to make a contract, arrangement or understanding with a union that prevented or hindered the continued supply or acquisition of goods and services or made such continued supply or acquisition subject to conditions.

To date, the trading restrictions provisions have not resulted in enterprise agreements, or negotiations for enterprise agreements, being met with a sanction. This fortuitous outcome has been more the result of technical considerations as a court is not a suitable body to pick a winner in the rather obvious policy collision at play between the underpinning objectives of industrial relations laws to facilitate collective bargaining, and the competing agenda to constrain the scope of collective bargaining in a manner that segments workers’ lawful collective power into less effective silos.

An exemption without exception

Australia is not the only country where there has been some contention between competition policy and industrial relations policy. In our view, the latter should prevail and note this regard that the European Court of Justice has reached the same conclusion (topically, on the issue of sectoral collective agreements concerning compulsory contributions to particular pension fund):

It is beyond question that certain restrictions of competition are inherent in collective agreements between organisations representing employers and workers. However, the social policy objectives pursued by such agreements would be seriously undermined if management and labour were subject to Article 85(1) of the Treaty when seeking jointly to adopt measures to improve conditions of work and employment.

It therefore follows from an interpretation of the provisions of the Treaty as a whole which is both effective and consistent that agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article 85(1) of the Treaty.

The next question is therefore whether the nature and purpose of the agreement at issue in the main proceedings justify its exclusion from the scope of Article 85(1) of the Treaty.

First, like the category of agreements referred to above which derive from social dialogue, the agreement at issue in the main proceedings was concluded in the form of a collective agreement and is the outcome of collective negotiations between organisations representing employers and workers.

Second, as far as its purpose is concerned, that agreement establishes, in a given sector, a supplementary pension scheme managed by a pension fund to which affiliation may be made compulsory. Such a scheme seeks generally to guarantee a certain level of pension for all workers in that sector and therefore contributes directly to improving one of their working conditions, namely their remuneration.

Consequently, the agreement at issue in the main proceedings does not, by reason of its nature and purpose, fall within the scope of Article 85(1) of the Treaty.”³⁴
The Competition and Consumer Act presently contains a limited exemption from its provisions for “..any act done in relation to, or the making of a contract or arrangement of the entering into of an understanding, to the extent that the contract, arrangement or understanding, or the provision, relates to the remuneration, conditions of employment, hours of work or working conditions of employees”.³⁵ This exemption is limited because of the exception it does not apply to the secondary boycott provisions or the trading restrictions provisions. The exception is tacit recognition that both the secondary boycott provisions and the trading restrictions provisions engage with the conditions of employment of employees – were this not the case the exception would be entirely unnecessary from a drafting point of view. We are firmly of the view that the exemption should be without exception and in fact should be broadened in the manner it was broadened in 1974, in response to Australia ratifying CO87 the previous year.

4	Labour Market Trends in the 21^st Century: Australia and beyond.

Modern industrial relations policy makers often try to maximise both economic efficiency and fairness, an impossible task. This is not to say that there is a zero-sum game here—the flawed logic of Okun’s ‘efficiency equity trade-off ’—but rather to say that compromises are always the order of the day in the real world. As the latter discussion will show, the achievement of greater flexibility in the labour market—providing employers with increased economic efficiencies—has been bought at considerable cost to the workforce, particularly those workers engaged in non-standard employment (NSE). Getting the balance right ultimately involves sticking to first principles while also setting rules to judge economic outcomes on the basis of both their efficiency and their fairness.

The single employer workplace has been the traditional locus of concern for industrial relations, and yet the modern labour market must grapple with problems that transcend single workplaces. Workers engaged in non-standard employment often span multiple employers over short periods of time and/or work side by side with workers in a single workplace employed by a different entity and on different conditions. There are other groups who may be formally covered by industrial relations regulations, but who in reality slip through the cracks all the time, such as the self-employed, dependent contractors, foreign workers on 457 visas and international students with working rights.

The workplace is also not the primary site for some of the major labour market issues in the 21st century which revolve around life cycle transitions. These include problems of youth unemployment, long-term unemployment, workers with young family responsibilities and others charged with caring for aged parents or relatives. Many of the 20th century assumptions about education and work have fallen apart in the 21st century: increased higher education participation has not seen a boom in enhanced productivity, but has left the labour market with high levels of overqualified workers. Large numbers of highly educated people in their twenties are still employed as casuals in retail or hospitality, or working for free on internships. Numbers of senior executives without significant levels of higher education have skewed income distribution deciles through receiving enormous salaries bearing no relationship with beneficial workplace outcomes.³⁶ Pathways into permanent full-time employment for unskilled youth disappeared in the 1980s and 1990s; pathways into such jobs for skilled youth in the 21st century are now beginning to shrink as the growth in full-time employment stalls and as older highly educated workers stay longer in the workforce. Concepts of transitional labour markets have helped researchers think about the right kinds of policies to grapple with these problems, but there is scant evidence that policy makers have grappled with them. As for industrial relations policy, that lags a long way behind when it comes to addressing issues of life cycle transitions.³⁷ Finally, if many problems cannot be solved at the level of the workplace, are there other locations—such as industry-based solutions—which are more appropriate? Portability of superannuation and long service leave in the building industry , long service leave in the building, community services, security and cleaning industry in the ACT³⁸ and the long service leave scheme in QLD in the contract cleaning industry covering trainees ,casual, part-time or full-time employees operating as a sole trader subcontractor and employees employed by labour hire companies³⁹.come to mind as examples of policy innovations which aim to transcend the workplace while group training schemes are another example of a multi-employer solution.

The traditional 20th century notion of the worker—embodied in male full-time permanent employment—no longer rings true in the 21st century as a universal touchstone for industrial relations regulation.⁴⁰ Not only must it be updated to register the gender dimension, but the various forms of non-standard employment must also be accommodated. In a similar fashion, the 19th century notion of the employer—the ‘firm’ so routinely analysed in labour economics—is also obsolete in the 21st century as a definitive archetype. Many multinational companies now buy and sell within their own divisions; contract out their labour supply to related and unrelated companies; manage complex supply chains spanning multiple continents; lend and borrow from themselves for taxation purposes; and relocate not only their production, but their head offices to different countries at different times. If the industrial relations framework of the 20th century does not adjust to encompass these new realities, then the world of work in the 21st century will eventually slip beyond the grasp of policy makers. Further labour market deregulation, with a view to coping with globalisation, is likely to miss the boat altogether, disproportionally advantage capital and could only be accepted if first principles were abandoned. Solutions to the challenges posed by globalisation require industrial relations reforms to stay true to first principles, however other solutions lie outside the labour market and its industrial relations arrangements.