Is Enterprise Bargaining Still a Better Way of Working?

ARTICLE

Journal of Industrial Relations� Australian Labour and Employment Relations Association (ALERA)

SAGE Publications Ltd,

Los Angeles, London, New Delhi, Singapore and Washington DC

ISSN 0022-1856, 55(1) 100–117

[DOI: 10.1177/0022185612465533]

Is Enterprise Bargaining Still a BetterWay of Working?

Keith Townsend and Adrian WilkinsonGriffith University, Australia

John BurgessCurtin Business School, Australia

Abstract: In 1989, the Business Council of Australia (BCA) produced a blueprint forchange titled ‘Enterprise based bargaining units: A better way of working’. To a greatextent, this document and the corresponding shifts in business, government and unionapproaches to wage and conditions determination meant that Australia shifted from acentralised to a workplace system of bargaining. After more than two decades of enterprisebargaining, though, we ask the question: Is it still a better way of working? While theBusiness Council of Australia pointed to a panoply of advantages, we look at the other sideof the argument. Decentralisation may be inefficient at a number of levels. First, there isthe procedure of bargaining and the resources, expertise and time that is required. Second,there are the outcomes of bargaining, where despite a more individual focus, in manycases, outcomes demonstrate very little variation across enterprises. Finally, there are thecollateral consequences of bargaining: conflict, reduced trust and disruption. Is enterprisebargaining still meeting the needs of the actors or has the model run its course? Weconsider two case studies of bargaining that demonstrate the limitations and advantagesof enterprise bargaining.

Keywords: Case studies; cooperation; enterprise bargaining; trade unions; trust; workplace

Contact address: Keith Townsend, Centre for Work, Organisation and Wellbeing,Griffith Business School, Griffith University, Kessells Road, Nathan 4111, Australia.[email: [email protected]]

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Introduction

Australia has gone through three decades of extensive reform to industrial rela-tions regulations, processes and institutions. In 1989, the Business Council ofAustralia produced a blueprint for change titled ‘Enterprise based bargainingunits: A better way of working’ (BCA, 1989). The reasons behind the introduc-tion of the enterprise bargaining (EB) principle in 1991 have been outlinedelsewhere (McDonald et al., 2001), but they include: economic and organisa-tional rationales around labour deployment and flexibility (Campbell, 1993);improvements in labour productivity (Curtin and Mathews, 1990); and politicalrationales for enhancing managerial prerogatives and diminishing trade unioninfluence (Fieldes and Bramble, 1992), reducing the influence of theCommission, and allowing some unions to break the controls over wages thatwere exercised through the Prices and Incomes Accord (Briggs, 2001). Therewere debates over the flexibility of the tribunal system (McDonald et al., 2001)and the potential for decentralised bargaining to facilitate high-performancework systems (Deery and Walsh, 1999). Since 1991, the industrial relationssystem has seen regular legislative changes, but EB has more or less becomeentrenched in the Australian system from this period. We acknowledge that theterm EB has been used in different contexts and has taken on different mean-ings at different times over the past two decades (Dabscheck, 1998; McDonaldet al., 2001). Also, it should be acknowledged that under the pre-1991 industrialrelations system, there were forms of EB that coexisted with the award system(McDonald et al., 2001).

This article uses two case studies to provide insight into the current debatearound the sustainability of EB. If EB was ever a better way of working, have thelast two decades proven this to be the case? With pressure building for anotherround of workplace reform, is it true that greater flexibility of bargaining isrequired to increase productivity or improve workplace relations? If centralisedbargaining is not flexible enough for enterprise needs, and EB is too disruptiveand provides little in return, what is next?

Over the past two decades, there have been many studies of EB. The majorityof published studies examine the outcomes and terms of bargaining, includingpay and non-wage conditions. It makes intuitive sense that studies would examinewage and conditions outcomes across enterprises in the same industry (Buultjensand Cairncross, 2001), the differences between enterprise agreements and awards(Knox, 2009), and the ability of EB to deliver innovative employment arrange-ments (Whitehouse, 2001). In the research, the process and consequences of EBhave been neglected, even though this was one of the issues raised by those whosuggested that the case for EB was oversold (Rimmer and Watts, 1994). Briggs(2001) highlights the role of the Australian Council of Trade Unions (ACTU) inpromoting the reform, but then indicates the danger of the new system for unionsthat lack the delegate structures or the workplace organisation to effectivelyparticipate in the bargaining process. Knox (2009) reviewed employer choicesabout bargaining in the luxury hotels sector. She found a preference for awardsbeing driven by the greater certainty of outcomes and lower transaction costs,

Townsend et al.: Is Enterprise Bargaining Still a Better Way of Working?

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while EB was regarded as being uncertain in its outcomes and a relatively expen-sive option. We introduce two case studies to ask:

1 Are the EB processes performed in such a way that EB contributes toorganisational efficiency and productivity enhancement?

2 Does EB have positive or negative consequences in the workplace?

Bargaining and Productivity

There is a wider debate around the link between trade unions and economicperformance (Peetz, 2012) and industrial relations systems and economic per-formance (Calmfors and Driffill, 1988). In their discussion of the link betweenindustrial relations systems, Australian industrial relations reforms and prod-uctivity, Burgess and Waring (2006) noted that missing from the discussion wasan agreed concept of productivity and any unambiguous evidence linking prod-uctivity with industrial relations reforms, a notion further progressed byHancock (2012). It has been largely an article of faith in the media and bybusiness groups that productivity is an unambiguous concept with unambigu-ous estimates available and that it can be improved through decentralised (andindividual) bargaining arrangements (Australian Industry Group, 2005;Business Council of Australia, 2005). Peetz (2006, 2012) and Hancock (2012)have documented and dissected the evidence around the linkage, demonstratingit to be flawed and inconclusive.

In their review of the evidence of productivity gains and EB, Loundes et al.(2003) found not only that the outcomes were inconclusive, but also that theevidence itself was either incomplete or flawed. There are, in fact, many reasonswhy productivity grows (Hancock et al., 2007, 2012). These include: investmentin new plant and equipment; improvements in the quality of the workforcethrough knowledge and skills; growth in the economy (productivity grows asthe economy grows since businesses are more effectively using their inputs); andinfrastructure that supports production – roads, rail, communications (Parham,2003). Linked to these claims is the related assertion that wages should bedetermined by productivity, and this process will be facilitated by industrialrelations legislative changes (Costello, 2005). Once again, the evidence suggeststhat the link between wages and productivity growth at the sectoral level istenuous (Watts and Mitchell, 2004).

There has been a long debate around the impact of centralised versus decen-tralised bargaining arrangements on economic performance. The Organisationfor Economic Co-operation and Development (OECD) Jobs Study (2004) sug-gested that flexible labour market arrangements, including decentralised bar-gaining, would improve economic performance, notably, jobs growth andproductivity. Calmfors and Driffill (1988) suggested that it was either completecentralisation or complete decentralisation of wages determination that waslinked to improved economic performance, including productivity. Researchon the relationship between bargaining systems and macroeconomic perform-ance by the OECD (1997) indicated that the evidence was inconclusive and

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that, as Traxler (2003) suggests, there was a need to consider intermediatelinkages, including the degree of unionisation and the coordination of wage-setting. Peetz (2006) outlined the lack of any systematic evidence supporting thelink between industrial relations reforms and productivity in Australia and NewZealand, and, in particular, was very critical of the lack of evidence or the flawedevidence supplied by employer groups to justify such reforms (Peetz, 2006: 62–70). In their discussion of the impact of the Work Choices individual bargain-ing on productivity, Burgess and Waring (2006) argued that the legislation, bypermitting employers to reduce wages and conditions, especially for the rela-tively low paid, would encourage employers to pursue a cost-minimisationstrategy in which employers were unlikely to invest in firm-specific trainingor upgrade their capital stock. This particular cost-reduction approach providesincentives for low-wage and low-skill employment and an increase in the labourintensity of production, and may potentially reduce productivity growth in thelong term (Lowe, 1996).

In contrast to the 2000s, Australia’s productivity record was impressive forthe 1990s. Since this period coincided with the shift towards EB, it followedthat bargaining arrangements could have had an impact on productivity per-formance. Parham (2003) suggested that improved labour productivity growthcame as a result of firms using labour more intensively, rather than as a result ofincreased investment. This is also consistent with the analysis of Buchanan(2004), who suggested that the industrial relations reforms of the 1990s ledto ‘more intensive use of labour in the production process in a climate ofchronic understaffing’. These gains are largely one-off and are associatedwith work intensification, longer hours and the elimination of overtime andpenalty rates. This is because ‘productivity bargaining’ and the ‘flexible’ deploy-ment of labour permitted firms to utilise existing workers more intensively, forexample, by extending working time. Recent reviews of the evidence of therelationship between productivity changes and industrial relations over the1990s by Peetz (2012), Hancock et al. (2007) and Hancock (2012) found thatwhile there was evidence of productivity growth, there was no evidence that thiswas related to industrial relations changes or EB.

Wooden (2001) argued that EB could increase productivity by way of thefollowing processes: through firms being able to operate more efficiently; andthrough workplace relations becoming more cooperative. Whether bargainingimproves efficiency is debatable, and whether any gains could not be achievedunder other bargaining arrangements is also debatable. Finally, the rhetoric thathas surrounded industrial relations reforms and EB has tended to place anunrealistic expectation that workplace productivity will be improved as aresult of particular bargaining arrangements.

There is a lacuna around the bargaining process and consequences of EB.There are few studies that investigate the process of bargaining and examinestrategies and factors that influence the bargaining process. While Knox (2009)examined employer strategies and preferences, not much is known about unionstrategies and preferences. Agreements have a set life of usually three years, sothe bargaining process is a recurring one; of interest is the extent to which


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bargaining is built upon and developed, or whether it starts from a ‘clean slate’every three years. We use two case studies of bargaining in different industriesto examine these issues. Our research reveals a certain fatigue and some reluc-tance to participate with EB from managers, employees and delegates. Thestudy provides insights into the bargaining process, identifies the factorsbehind bargaining, and raises questions about the ability of the parties to main-tain the support and the resources for bargaining in its present form.

In the sections that follow, we provide a review of the case offered for EB andthe empirical research on bargaining. This is followed by an introduction of ourtwo case study sites: one manufacturing firm and one hotel. An explanation ofthe research methods follows. The article will then evaluate the processes andthe consequences of bargaining at our two case study sites. The final sectionprovides a discussion of our findings and draws some conclusions for the futureof EB in Australia.

The Case for Enterprise Bargaining

The path to EB and the various legislative developments associated with it haspreviously been catalogued by a number of authors, including McDonald et al.(2001), Bray et al. (2005), the Australian Centre for Industrial RelationsResearch and Training (ACIRRT) (1999) and Wailes and Lansbury (1997).The arguments in support came from employers (Thornthwaite andSheldon, 2012), trade unions, business and the government (Briggs, 2001).While the motivations and the arguments were very different (McDonaldet al., 2001), the message was clear: the actors felt that the Australian industrialrelations system was too centralised, was in need of modernisation and that adifferent (and more cooperative) approach to industrial relations was required(ACIRRT, 1999).

In the early 1990s, there were many critiques from business groups thatwere advocating more market-based policies across the economy (Blain,1993; Sloan, 1993) and the need to make bargaining more responsive to theneeds of business. However, the push was not all employer-led. Briggs (2001)shows how the tensions within the union movement and between the AustralianCouncil of Trade Unions (ACTU) and the Australian Industrial RelationsCommission (AIRC) were important in moving away from the centralisedPrices and Incomes Accord towards a system that allowed stronger affiliatesthe potential to claim higher wages.

Within the media, the BCA played a very active role in lobbying for a fun-damental restructuring of the industrial relations system. The BCA’s (1989)blueprint for change, ‘Enterprise based bargaining units: A better way of work-ing’, set the agenda, despite criticism over its research and assumptions (Frenkeland Peetz, 1990). Taylor (1990) presents their platform as the technocratic andcorporate option for a decentralised industrial relations system based on directbargaining and linked to productivity improvements at the workplace level.There was additional strong support from economists for direct and


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decentralised bargaining, with claims that it would lift productivityand growth at the enterprise level and across the economy (Sloan, 1993;Wooden, 2000).

Niland (1976, 1978, 1990) was another supporter of decentralised bargain-ing. He saw the process as an essential component of modernising the industrialrelations system and allocating more responsibility to workplace agents in thebargaining process. These principles were set out in the review of the NewSouth Wales (NSW) industrial relations system by Niland (1989). In his 1990

address at the University of Melbourne, Niland stated that there was a need todevelop the supporting infrastructure for what he called the devolution of theindustrial relations system: the recommendations included the provision ofenterprise-based bargaining units and a floor of minimum conditions. ForNiland, the shift to an enterprise focus was in tune with the modernising andeconomic reforms that were developed around the Accord. He opposed thederegulation of the system; indeed, he suggested new and better regulations.He also suggested that the enterprise-based focus would provide more respon-sibility for line managers to work effectively with employees and would removethe centrality of industrial relations/human resource managers and employerassociations from the bargaining process. This was an essential component ofthe devolution approach linked to enterprise bargaining.

In an early review of EB, ACIRRT (1999: 44) stated that: ‘It is clear that a lotof the early agreements set out an ambitious agenda for change. It was anagenda that many organisations soon realised could not be easily implemented.’ACIRRT then went on to demonstrate from the content of enterprise agree-ments that the scope and content of agreements appeared similar and coveredcore issues – wages and hours. They also noted that some issues were rarelymentioned in agreements, such as homeworking, Equal EmploymentOpportunity (EEO), quality assurance and profit-sharing.

Given the sporadic research on EB over the last decade, it is opportune torevisit bargaining and the experiences of workplaces where bargaining is takingplace. Since the formalisation of a decentralised bargaining agenda, albeit withpermutations and different regulatory contexts (Sappey et al., 2006), the case forEB has been questioned at a number of levels. The outcomes were differentfrom those promised, with an absence of innovation and high-performancework practices (Morris, 1996); the absence of equity clauses (Strachan et al.,2007); an absence of detail around clauses linked to training and staff develop-ment (Teicher and Grauze, 1996); and the diminution in terms and conditionsof employment for some workers, especially though the individual bargaining(Van Barnveld, 2006).

This highlighted a concern that the bargaining stream effectively deliveredfor those with market power, yet for those without market power there was areliance on award and safety net conditions (ACIRRT, 1999) to access improve-ments in pay and benefits. Moreover, there is an implied expectation that thegap between those inside and outside of the bargaining system would widen.This may simply be inevitable with EB – if awards remain a safety net based onwhat the weakest can afford, EB allows the strongest to thrive.


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The issues of resource and time costs, and the lack of expertise, are problemsthat have been identified by both employers (Knox, 2009) and unions (Burgessand Waring, 2006). Awards and industry bargaining allow for economies ofscale and lower transaction costs in bargaining for all parties (Knox, 2009). Inthe early days of EB, Rimmer and Watts (1994) highlighted the absence ofactive bargaining; the large presence of ‘add-ons’ in enterprise agreements(using awards as the basis of an agreement and modifying these); the lack oftime and expertise of union delegates; and the absence of workplace managerswith the skills and experience to bargain.

This leads to the issue of trade union relevance in a bargaining framework.Briggs (2001) suggested that unions underestimated the resources and infra-structure required for effective bargaining, with the result that bargainingbecame an employer-led exercise in reducing labour costs. In theory, bargain-ing brings unions in direct contact with their membership and heightens theirpotential presence and relevance. However, apart from the resource costs,unions may be forced to defend conditions (concession bargaining) and thestatus quo (ACIRRT, 1999). A key question is whether the bargaining frame-work enhances managerial prerogatives and forces unions to defend conditions,as opposed to developing innovative employment conditions (Fells, 1993;Knox, 2009; Peetz, 2012).

There has also been a tendency to review bargaining from the macro evi-dence (Loundes et al., 2003) and to examine the details of enterprise agreements(ACIRRT, 1999; Mortimer and O’Neill, 2007; White et al., 2003), looking atthe outcomes as opposed to examining the process or other consequences. Casestudies that examine the process of bargaining and the views of the participantsin the bargaining process are relatively rare (for notable exceptions, see Fells,1993; Knox, 2009; Rimmer and Watts, 1994; Scott Ladd, 2003), although suchstudies can allow us to examine some of the key dimensions of bargaining thatare inevitably missed in macro studies (Bray et al., 2005: 267).

The Case Studies and the Research Methods

The research examines the experience of managers and employees with EB attwo workplaces. The case studies are of a regional manufacturing plant we referto as ‘The Manufacturer’ and a luxury hotel we refer to as ‘The Hotel’. TheManufacturer employs over 450 workers, largely in the trades occupations. TheHotel employs over 300 workers (150 Full Time Equivalent) across a numberof traditional service occupations. The employees at The Manufacturer aremale and full-time ongoing employees. The employment numbers are linkedto contract cycles: if tenders are secured, then there is employment continuityand increasing employment numbers; if tenders are not secured, then employ-ment declines. At The Hotel, the majority of employees are part-time andcasual, and employment numbers are seasonal. Each form part of a largerorganisation with sites both within Australia and internationally.

The bargaining is performed at the workplace level, rather than at the organ-isational level. These are selective cases and not representative of the experience


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of other workplaces in the same organisation or sector. However, the casestudies allow us to gather data linked to views, experience and interpretationsof bargaining by the key actors. We are not looking at the content or outcomesof bargaining in material terms, but rather, the process and consequences ofbargaining. This provides the opportunity to consider issues around the processleading up to and following an agreement. The Manufacturer has a high tradeunion density of around 80% in three unions, while The Hotel has a muchlower density of around 15%.

The Manufacturer was heading into its fifth round of enterprise bargaining,and The Hotel had recently ratified its second agreement. In both workplaces,previous bargaining experiences had cast a shadow over the current process, forexample: at The Manufacturer, there was a three-week-long strike associatedwith bargaining in 2003; and at The Hotel, employees rejected the 2007 agree-ment and it took nearly 24 months to have a new agreement accepted andratified.

At each workplace there were interviews with senior managers, middle man-agers (including HR), union delegates and operational-level employees. Theinterviews lasted for between 50 minutes and an hour and were recorded,transcribed and coded in NVivo. Coding was based on a number of a priorinodes that related to EB, partnerships and participation in decision-making. Asinterviews were being coded, the coding nodes were iteratively expanded toinclude sector- and case-specific matters and developing theoretical threads.In total, 19 interviews were conducted at The Manufacturer and 18 interviewsat The Hotel. Interviews were semi-structured and linked to issues aroundworkplace participation and communication, and to personal experiences withEB. Each interview was conducted by the same researcher throughout 2010.When EB was explicitly discussed, the respondents were asked to talk abouttheir experience with EB. Consequently, much of the data from TheManufacturer refers to the upcoming round of bargaining in addition to experi-ences in recent rounds. At The Hotel, the data refers to the round of EB thatwas recently completed.

To supplement the interviews, the research team were observers in a numberof various meetings held within the workplaces. These included team briefs,supervisor meetings, Head of Department meetings and staff focus groups.Finally, a range of corporate documents and records were provided by themanagement of each workplace to support the data collection and analysis.These documents included minutes of previous meetings, including JointConsultative Committees and presentations to staff.

Evaluating Enterprise Bargaining: Processes andConsequences

When we consider our research questions, there are two key factors to inves-tigate: the process of bargaining and the consequences of bargaining. Whilesome of our data refer to measures of productivity, we do not suggest that wehave performed an economic analysis to allow definitive measures of


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productivity within this study. Rather, when our participants have perceptionsor data on productivity performance, we report as thus.

In both organisations, EB was viewed as a ritual; as a process that was to beundertaken every three years, which entailed a flurry of activity that wouldoccur over a number of months. At The Manufacturer, the union representa-tives and management held two ‘pre-bargaining meetings’ in the two monthsleading up to the formal bargaining process that set out the ‘rules of engage-ment’. Throughout the formal bargaining process, weekly meetings were helduntil such time as an agreement had been reached. At The Hotel, meetingswere intended to be held on a monthly basis, although this became a point ofcontention for the management team. The problem with monthly meetingsbegan when there was a change in union organiser and the managers felt thatthey were forced to start the process from the beginning. According to man-agers and staff, there were three union organisers involved throughout thebargaining process.

The working relationships between senior management and employeeswould deteriorate leading up to and throughout the period:

. . .we are getting on good at the moment, but I can see that getting worse

over the next few months, because we’ve got an EBA [Enterprise Bargaining

Agreement] coming up. So the whole attitude of everyone will change now over the

next six months . . . It will be a split soon and then it will be us and them and we will

be all arguing and, that’ll happen, it happens every time. Whenever the EBA pops

up. (Employee, The Manufacturer)

Senior managers felt that the costs associated with reaching an agreement andeliciting productivity gains were not achievable through negotiations:

. . .we’ve done the cost calculations, being a manufacturing facility we measure

time . . . we know how much time is lost and the productivity gains we get out of the

EBAs in my opinion, this is my personal opinion not the company’s position, is that

it is not that easy to get productivity gains out of EBAs. (Manager, The

Manufacturer)

. . .the increase in productivity, that’s a fallacy, there’s no increase in productivity,

everyone talks about increase in productivity, even the union talked about it, but

when you say ‘Alright what are you going to give me?’, does that mean housekeeping

is going to do an extra room, or we are going to go from 32 minutes a room to 31

minutes a room, oh no. You know when you actually put it on the table they are not

interested. (Manager, The Hotel)

All parties suggested that bargaining involved substantial resources, a majortime commitment and preparation. For employees, this often involved attend-ing special training programmes and being involved in consultation with man-agers and other employees. The participants saw it as a long and protractedprocess, but one that was necessary in order to achieve an acceptable degree ofconsultation and an agreement:

We [the union delegates] give out information sheets and inform everybody what is

going on and ask for participation in forming a log of claims. We give out survey


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sheets, anybody got any ideas, we basically know what we are going to go for but you

go through the motions and keep conditions etcetera so we have already started that

as well as asking for nominations for the Committee . . . The last EBA was something

like 10 months before it was finalised. Eight months before we actually agreed and

then it went to the Commission for ratification and that took another two months.

(Delegate, The Manufacturer)

Because I had never been involved in any Enterprise Agreements before, you felt

‘Well, no, this is what we want’ and then you go back to your team members and

explain to them, and ask them ‘What do you want?’ and are they happy with this or

that, it was nearly a whole year. Every week at first and then once a fortnight.

(Delegate, The Hotel)

In both cases, the key role of managers and the need for systematic prepar-ation and consultation was highlighted as being important components of theprocess. In both cases, managers spoke to staff in large group meetings and atsmaller department- or work group-level meetings about the agreement. Therewas written communication from managers to all staff and minutes of bargain-ing meetings left in canteen areas for staff to peruse. At The Hotel, the per-ception was that the middle managers ‘failed to sell’ the corporate message tothe staff – the message to accept and vote for the agreement. However, at TheManufacturer, employees and delegates clearly saw the general manager as akey mediator in the conflict that arises throughout the bargaining process:

Probably one person here as far as being approachable, is [the manager] . . . if you had

a manager here that wasn’t prepared to see you at fairly short notice and discuss

things, like I believe things could probably escalate and start getting out of hand. I

think myself and most of the delegates on the floor you can feel that it has got the

potential to grow a bit you know. ‘Let’s go and have a talk about it and see what can

be done’, and most times we come out with a pretty good result. Everyone walks

away happy and you’ve nipped it in the bud before it all happens. That comes down

to the approach of the manager making his time available. (Delegate, The

Manufacturer)

I wouldn’t replace [the manager] to start with, he is actually a very good

mediator . . . and is probably one that stops a lot of conflict before it

happens . . . there’s going to be some butting heads, there’s got to be some give, and I

know [the manager] does give, he bends over backwards on a lot of issues to try and

make people happy. (Employee, The Manufacturer)

When speaking of the failure of the first vote (in 2007) on the EBA at TheHotel, one manager stated:

. . . it wasn’t even close, it was an overwhelming thing . . . I have been through this

many, many times and the first mistake we made was when we were presenting, you

know, our proposal to the staff, it was myself and the previous Director of HR, and

um the reason we did that we thought it was important that people heard it from the

top, terms and conditions, we wanted them to know that this was serious, actually in

hindsight that was a real mistake. They want to hear it from, if you are a room

attendant, they wanted to hear it from the head housekeeper, who they work for, who

they trust, who is going to tell them this is a good idea guys. (Manager, The Hotel)


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Importantly, this indicates some problems with representation if managersare seen to be the source of the information for employees about a new agree-ment, not the union. This will be discussed later when we consider the conse-quences of bargaining at The Hotel. Returning to the flawed strategy of seniormanagement communicating the message, employees concur that this strategywas flawed, for example:

That also put the emphasis on the managers having to know and understand it,

whereas the first time round, a few of them were a bit lazy and ‘Oh I’m not going to

worry about it, it is the GM [General Manager] and HR role, I don’t need to know’,

and then since they don’t know it, they don’t then push and encourage their team,

but when they do know it, they are always talking to their team about it. (Employee

rep, The Hotel)

The managers see their role as informing the employees of what the agree-ment contains and persuading them to vote for it. As we will see in the nextsection, the union also plays a role in informing employees. Throughout thissection, we have seen that the processes involved in EB remain costly and time-consuming. We must turn our attention to the consequences of bargaining tosee if the process failings are compensated.

The Consequences of Bargaining

Both employees and managers in each organisation noted that there were gen-erally good, trusting relationships between the parties on an ongoing basis;however, this was punctured by a breakdown in trust and a disruption in work-place relationships leading up to and throughout the bargaining periods. Thiswas particularly heightened if the bargaining led to industrial action, wasunsettled or was prolonged:

[In an earlier EB period] we ended up out on the footpath over here for nearly three

weeks, thrashing it out and I can’t see if that can do very good for relationships.

No, the guys go back to work and knew that they had lost about $2500 in pay, just

to squeeze an extra 1% pay rise out in the end or something. (Employee,

The Manufacturer)

There’s this, ‘Now I’m not really sure whether I will trust you’s again’, that sort of

thing and it takes a while to die back down again. (Line manager, The Manufacturer)

. . . it definitely takes a few months to get that level of trust and communication lines

back in place again. (Line manager, The Manufacturer)

The history of previous agreements lingers in the minds of the parties when the timecomes for negotiating new agreements. There was also an admission that absen-teeism and leave increased around the time of bargaining at The Manufacturer:

You will find there is more sick leave, you know, there is more reportable injuries,

there will be reports for all little innocuous types of injuries, now whether they are

actually physically there or not you don’t know, but they are reported as . . . After the

bargaining period, things generally take up to two or three months to settle back


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down as well, because everyone has still got their hangover from the agreement.

(Line manager, The Manufacturer)

In The Hotel, managers were at a loss to understand why employees did notsimply vote for the first agreement in the last EB round:

We had to really analyse what went wrong, we did focus groups, we did all kinds of

stuff to understand what went wrong and a lot of it wasn’t, ah you know the mostcommon theme was they didn’t want to commit, they didn’t want the change and all

[the union] said was ‘No we will get you something better’, and that is all they ever

say, so anyway then we spend nine months communicating ad nauseum, we went to

Fair Work Australia on four occasions and the best part about it was that actually the

guys who were involved saw the incompetence of the union, they saw the revolving

door of representatives, they saw the, ah, ridiculous tactics that were tried. However,it took us 11 months. (Manager, The Hotel)

The annual employee engagement survey results at The Hotel suffered as aresult of the EB process according to the HR manager:

. . . a lot had to do with our EA [Enterprise Agreement] not going through and people

not getting an increase for more than two years, you know it is a long time and they

were fed up with the EA bargaining process that it stalled, and where we did our

engagement survey, we did that early this year, the results were not engaging, but . . .

for two years, nothing was happening, all gets to you. (HR manager, The Hotel)

There is little question from the employees’ perspective that the long drawn-out process of bargaining left many of them jaded, not just with the bargaining,but with their employment in more general terms.

One of the positives from the bargaining process was that it spawned a pro-cess of consultation and participation that was largely absent away from thebargaining period. It also developed employee involvement and cooperation.This is an important contradiction in the bargaining process: there is evidenceof deteriorating relationships at the same time as evidence of improvedemployee involvement:

[You] are working and then you stop and you rely on other people as well to do your

job rather than at the table, and that is one thing if you don’t have that support

system with your team members and other supervisors and that then you are not

going to be able to do it properly, because you’re just thinking ‘I’m here and I’ve gotall this work to do’ but in that sense I had the support. People just taking over my

job while I am in there for the hour. (Employee rep, The Hotel)

It’s good because, like, each department have their own representative and people arelike, I represent the laundry department and I report to them what is going on every

meeting and then I ask them for feedback, what they want changed, and we discuss it

in the meeting. So the agreement has been changed, because at first the agreement

was like, nobody likes the first agreement because they just gave us on the table that

this is the conditions, right, and nobody liked the conditions, so we had this

representative who asked the people what they want. (Employee rep, The Hotel)

You [the employees] probably read it [minutes of the bargaining meeting], well I

don’t say they read it all, definitely at EBA time you would definitely be reading it


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because at EBA time there is feedback and all that, on how things are going. But that

is probably the only time. (Employee, The Manufacturer)

For trade unions, there were mixed messages emerging from the interviews.The management of The Hotel had a lingering hostility to the union as a resultof a previous agreement having been rejected by employees. This agreementwas largely written by management and involved limited consultation with theunion representatives. The perception was that unions were active around thetime of bargaining, but largely absent in the times in between agreements. Inthe previous section, we discussed the role of the union in the process of bar-gaining. A small number of employees saw the unions positively in terms oftheir participation, representation and training activities; others saw them asdisruptive and opportunistic:

I think the union, I have got a whole view of the union in terms of incompetence ah,

just some of their tactics were a disgrace, they have absolutely no interest in the team

members in this hotel, and in terms of a representative, they are a disgrace.

(Manager, The Hotel)

. . . all of a sudden they [the union rep] would be gone, and he would be off

somewhere else and they would get somebody else in, and then the last person we

had in didn’t have enough of an idea of what was happening . . . because he hadn’t

been to any of the meetings, and then he is sort of thrown in the deep end, he has

one meeting and this is what the union is looking at what they are suggesting in the

agreement and then more or less he was there and it was more or less over, so it was

a bit unstable in that way, in the sense that we were having too many different people

from the union, they would stay ‘So long’ and then they would send somebody else

in. (Employee, The Hotel)

The union didn’t contribute that much to solving some of the issues . . . our team of

the committee that formed, I think they did quite a lot of the bargaining and things

like that more so than the union I think. (Employee, The Hotel)

I’ve spoken to other people since the enterprise agreement has finished, some actually

sort of joined the union I think it was on the proviso that if the union got us what

we wanted, then they would start paying union fees, but I know a couple of people

that sort of signed that, have decided no they haven’t done anything for them and so

no they are not going to keep paying the union. (Employee, The Hotel)

Not surprisingly, though, given the nature of manufacturing being a moreunionised sector, many employees hold a more positive perception of therole the union plays, even if some do feel the union is only present at EBtime. This is despite a well-established delegate system of the shop floor:

it makes people happy to be part of a union and they feel safer in their job, they are

going to work better and I guess that is something that has actually helped them out

a little bit too. They’ve got with the agreements of the unions that have been made

over the years with the EB and redundancies and things like that, and payments, it

has actually made their job a little more secure . . . [then] they are more likely to be a

bit more content and happy and more productive. (Employee, The Manufacturer)


112

I can’t remember when we had the last union meeting. That’s probably a good sign

that everything is going well in the works, because a few years ago, the guys would

want to go out on strike every time some silly incident occurred. You don’t get that

anymore. Those days are pretty well gone. Between our EB Agreements and that, we

don’t have many union meetings as a group anymore, no very few. (Employee,

The Manufacturer)

Discussion, Limitations and Conclusions

In each of our cases, bargaining was viewed as a necessary and inevitable pro-cess. By the time this research was performed, senior management had changedin each organisation at least twice since EB has begun. Consequently, viewingbargaining as necessary and inevitable was simply because it was part of whatoccurred within the organisation. There was a resigned inevitability about anapproaching round of bargaining mixed with some anxiety over the process andthe consequences. EB was seen as a chore, time-consuming and costly in eachworkplace. However, on the positive side, it was associated with increased par-ticipation, consultation and communication at each workplace. Trade unionswere seen to be more active and engaged around bargaining time; however, ifthe bargaining was prolonged or the process resulted in strikes and disruption,it tended to undermine trust and cooperation, which was sustained forsubsequent bargaining rounds.

Delegates and employee representatives mostly enjoyed their participationand their contribution, with the additional responsibility and the supportthey received from fellow employees and line managers being important.Importantly, the management of both organisations did not perceive anypositive productivity effects flowing from bargaining.

In terms of our first research question, our two case studies reveal that EB islong and costly – certainly not efficient – and, furthermore, perceptions are thatit does not lead to productivity gains. Our second question asks whether EB haspositive or negative consequences, and we find an interesting contradiction.The process is potentially damaging of relationships between employers andemployees; however, there are also positive aspects of bargaining aroundengagement, participation and communication. This is worthy of further inves-tigation. The temporal dimension of case study research, however, fails to allowcomment about the extent to which these benefits remain once an agreement isnegotiated. What we can say in these cases, though, is that for trade unions,bargaining gives them relevance and presence; however, this also diminishes inbetween bargaining rounds.

We are modest in the conclusions that can be drawn from the two casestudies and would suggest further research to uncover whether similar patternsemerge among a broader sample of organisations. These patterns might be offrustrations with what the process of EB requires, and the unintended conse-quences of the bargaining experience. Legislative changes throughout the dec-ades have provided employers with more choice over their wage-fixationstrategies and unions are facing increasing pressures on their bargaining


113

resources, similar to that noted by Rimmer and Watts (1994) almost 20 yearsprior and far from the mutual understanding and cooperative benefits that wereespoused by the early advocates (e.g. Niland, 1989, 1990). Should the evidencepresented from our two cases be reflective of a wider experience of Australianworkplaces, we would argue that the system of EB is not sustainable. Withinthe neoliberal context of modern capitalism, employers will grow increasinglyhesitant to engage in a process that demonstrates little ‘value-added’. This mustbe considered in light of the Fair Work Act’s introduction of ‘good faith bar-gaining’, as discussed recently by Caspersz et al. (2011). Good faith bargainingis not tantamount to positive results for all involved parties.

Another limitation of this study is that we have not included data from inter-views with the relevant union officials – that is, those employed by the unionrather than employees in delegate roles. While we interviewed senior unionofficials for each relevant union, we felt that the distance that these officials heldfrom our case study sites means that their views on EB were at a more macrolevel and less concerned with individual case outcomes, so we have set asidetheir data. We do acknowledge that the various possible views from unionswould be a critical component of any debate about EB and encourage furtherresearch specifically targeted at this area.

We are sure that research can uncover cases where EB operates effectively forall parties involved. Our evidence, tempered with the limitations of a two casestudy project, raises an important policy question for the industrial relationssector within Australia: Is there adequate training and resources to prepare theindividuals involved in EB? Again, further research is required to understandwhat role training and skill development can play in the ongoing sustainabilityof this system.

Acknowledgements

We would like to thank Dr John Lewer for his helpful comments and suggestions in develop-

ing this article, in addition to the editors and two referees of The Journal of Industrial Relations.

Funding

This research has been funded under the Australian Research Council Linkage Grant Scheme(LP0989151) with the support of the Queensland government’s Private Sector IndustrialRelations Group.

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Is Enterprise Bargaining Still a Better Way of Working?