Workplace delegates and worker power

21st Century Work:

High Road or Low Road

PROCEEDINGS OF THE 20TH CONFERENCE OF THE ASSOCIATION OF

INDUSTRIAL RELATIONS ACADEMICS OF AUSTRALIA AND NEW ZEALAND

VOLUME 2. NON-REFEREED PAPERS BARBARA POCOCK, CHRIS PROVIS AND EILEEN WILLIS EDITORS

Title: 21st Century Work - High Road or Low Road?: Proceedings of the 20th AIRAANZ Conference, Volume 2 First published February 2006 By the Association of Industrial Relations Academics of Australia and New Zealand (AIRAANZ) Additional copies may be purchased by contacting the Secretary of AIRAANZ. Author/Contributor: Pocock, Barbara (ed); Provis, Chris (ed); Willis, Eileen (ed) Publisher: University of South Australia: Division of Arts, Education & Social Science Collection copyright © AIRAANZ 2006 All rights reserved. Except under the conditions described in the Copyright Act 1968 of Australia and subsequent amendments, no part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner.

Cover design by Merrilyn Dayman & Team, All Occasions Management Internal volume design and layout by Jenny Czernezkyj ISBN 0-86803-545-9 (Non-Refereed Volume only)

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Contents

PART 1: ABSTRACTS Bailey, Loudoun, Peetz & Townsend

Beyond Dad's Tie: Pictorial Powerpoints with a Pedagogical purpose

1

Bailey, Oliver & Townsend Students’ Experiences of a Capstone Courses in Industrial Relations

1

Blackwood & Lafferty Deregulation and re-regulation: The New Zealand experience

1

Buchanan (1) From ‘skill shortages’ to decent work: - the role of better skill eco-systems

2

Buchanan & Briggs Workchoices: The new social engineering 2

Buttigieg, Cockfield, Jerrard & Rainnie

Community and Unions in Victoria: Some preliminary results

2

Carney, Ramia & Chapman Which is the High and Which is the Low Road? Comparing Workers with Family Responsibilities and Jobseekers

3

Czernezkyj Australian Youth, Skills and Government Policy: Misfit, Mismatch or Just Misguided

3

Douglas Absolute ethical principles in mediating employment disputes

4

Dunn New Zealand at the Crossroads – Heading for the High Road? (To McAllan’s or Johnnie Walker?)

4

Feinberg-Danieli & Lonti Union/non-union wage differential in the New Zealand Public Service

4

Grant Fitzner The Right to Request Flexible Working in the UK: How Effective?

5

Harcourt, Lam & Harcourt Discrimination against Immigrants and Ethnic Minorities in Hiring: The Effect of Unionisation

5

Healey Safety Net Wages and the Persistence of Earnings Inequality

6

Hodgkinson & Markey Assessing the Impact of the Workplace Relations Act from 1996 to 2004: Increasing Flexibility or Decreasing Collectivism?

6

ii

Micholotti & Nyland Regulating Coordinated Market Economies: The Evolution of Labour Standards in Italy 1979 to 2003

6

Mizuno Possible Way to Stable Industrial Relations in Indonesia: Strength and Weakness of Trade Unions under Weak Law Enforcement

8

Morris Performance Management of Academic Staff in Australian Universities

8

Muir Mobilising Through the Big and Little Screens: The National Day of Community Protest, Sky Channel and the ‘Work Choices’ Legislation

8

Peetz & Pocock

Workplace Delegates And Worker Power 9

Satrya Union Effectiveness and Union Strategy in Indonesia

9

Townsend Who has control in teams without teamwork? 9

Waring, de Ruyter & Burgess Work Choices And The Systematic Erosion Of Employment And Living Standards In Australia

10

Weller What can former Ansett flight attendants teach us about the labour market prospects of older workers?

10

Westcott The FEDFA and Worker Control: A Case of the primacy of property rights

11

White Provoking Building And Construction Workers 11

Whitehouse & Rooney The Queensland Dental Assistants’ Equal Remuneration Case: an Illustration of the Pay Equity Implications of Eroding the State System

11

Zhao, Zhang, Lansbury & Wright

Globalisation & its Impact on Employment Relations in the Chinese Automotive Industry

12

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PART 2: PAPERS

Bailey, Oliver & Townsend Students’ Experiences of a Capstone Courses in Industrial Relations

15

Harcourt, Lam & Harcourt Discrimination against Immigrants and Ethnic Minorities in Hiring: The Effect of Unionisation

27

Hodgkinson & Markey Assessing the Impact of the Workplace Relations Act from 1996 to 2004: Increasing Flexibility or Decreasing Collectivism?

37

Mizuno Possible Way to Stable Industrial Relations in Indonesia: Strength and Weakness of Trade Unions under Weak Law Enforcement

49

Peetz & Pocock

Workplace Delegates And Worker Power 59

Satrya Union Effectiveness and Union Strategy in Indonesia

69

Townsend Who has control in teams without teamwork? 79

Waring, de Ruyter & Burgess Work Choices And The Systematic Erosion Of Employment And Living Standards In Australia

89

White Provoking Building And Construction Workers 99

Whitehouse & Rooney The Queensland Dental Assistants’ Equal Remuneration Case: an Illustration of the Pay Equity Implications of Eroding the State System

111

Zhao, Zhang, Lansbury & Wright

Globalisation & its Impact on Employment Relations in the Chinese Automotive Industry

121

iv

PART 1

AIRAANZ 2006 NON-REFEREED

ABSTRACTS

Part 1 - AIRAANZ 2006 - Abstracts

1

Janis Bailey*, Rebecca Loudoun, David Peetz and Keith Townsend, Griffith University. Beyond Dad's Tie: Pictorial Powerpoints with a Pedagogical purpose

We live in an image-saturated age, particularly younger generations who are bombarded with images via computer games, broadcast media, and the World Wide Web. Lecturers, too, now have easy access to a plethora of visual material. This is an informal workshop in which the authors ‘show and tell’, displaying and discussing a number of uses of pictorial material in lectures. The ‘pedagogical purposes’ range from waking up and engaging large classes of torpid first year students; explaining why workers are not like tomatoes; using the material available on the LabourStart website in both occupational health and safety, and comparative industrial relations courses, to engage students and ‘model’ forms of student participation; and using digital photos of students to encourage recall and analysis of negotiation exercises. Some simple technical tricks for easily creating this material are given. We trust that our examples go beyond ‘infotainment’ for the young media-addicted university student, and truly do illustrate that pictorial powerpoints can have a pedagogical purpose.

___________________________________________________________________________

Janis Bailey*, Damian Oliver & Keith Townsend, Griffith University, QLD

Students’ Experiences of a Capstone Courses in Industrial Relations

This paper reports the first set of outcomes from a teaching and learning action research project at Griffith University centred on improving its third year capstone course in industrial relations. Capstone courses focus on critical analysis and the integration of previously acquired knowledge and skills, rather than on the acquisition of new content. They often eschew traditional ‘talk and chalk’ methods for a highly student-centred, often project-based, approach. In part, they are aimed at producing more able professional practitioners. The paper focuses on the affective responses of students to the course: how did students respond to the challenges of the course, and were they able to develop more confidence and self-efficacy as a result of completing the course?

The full version of this paper is provided in this volume at page 15.

___________________________________________________________________________

Leda Blackwood* and George Lafferty, Victoria University of Wellington, NZ

Deregulation and re-regulation: The New Zealand experience

This paper investigates the effects of deregulation and subsequent re-regulation on wages and conditions in unionised environments in New Zealand. Using longitudinal data from the years 1995, 2000 and 2005, we analyse the impacts firstly of the deregulatory regime initiated by the Employment Contracts Act (1991) and secondly, the modest re-regulation fostered by the Employment Relations Act (2000). Our analysis is focussed on certain key variables, including the public-private divide, the health, education, and manufacturing sectors, and the size of organisations. We look at the relationship between the legislative environments, these factors, and outcomes in wages and conditions. In conclusion we discuss these findings with reference to the potential impacts of current legislative changes in Australia.

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John Buchanan, acirrt University of Sydney.

From ‘skill shortages’ to decent work: - the role of better skill eco-systems

Overcoming current skills problems in Australia can only be achieved if workforce development is better linked with business/organisational development. This is essential for continued productivity growth and more decent work. Recent studies of work and skills in the future provide leads on how this can be done. They highlight the importance of engaging with skill ecosystems ie clusters of high, intermediate and low levels of competence in particular regions or industries which are shaped by interlocking networks of firms, markets and institutions. Practical lessons on how this can be done are provided by the Australian skill ecosystems pilots and US regional workforce development programs. A major barrier is a skills culture in which ‘employers whinge and governments react’. Equally important are current administrative and funding arrangements. These almost exclusively encourage processing of student and new apprentice numbers. Any new approach must build better businesses/organisations by building better skill eco-systems. This paper provides an outline and discussion of the role, key principles, design features and attributes of a new ‘Skill Eco-systems Program’.

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John Buchanan* and Chris Briggs, acirrt University of Sydney.

Workchoices: The new social engineering

‘Laissez faire has to be planned.’ Karl Polanyi’s aphorism about the emergence of market society in the late eighteenth century captures the essence of the Howard Government’s planned workplace relations law reforms - Workchoices. While the rhetoric of choice and freedom pervades the document, the reality, however, will be a profound state intervention mandating a very particular vision of working life. The changes proposed by Workchoices, inclusive of a unifying labour law; an enhancing of procedural rights by shrinking substantive rights; an Industrial Relations Commission to regulate unions, not the labour market, and a tilting of bargaining power thus weakening unions and empowering employers will each become part of the problem not part of the solution. As the shampoo advertisement puts it: it won’t happen overnight, but it will happen. This paper draws on recent comparative labour and IR history to elaborate on each of the key issues noted above and to identify the ideological and philosophical significance of the impending changes in Australian labour law. Results from similar changes made to both US and New Zealand industrial law reform and deregulation in the Australian industrial reform context will be drawn upon to illustrate these claims.

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Donna Buttigieg, Sandra Cockfield*, Marjorie Jerrard and Al Rainnie, Department of Management, Monash University, VIC

Community and Unions in Victoria: Some preliminary results

In this paper we explore union and community relationships in Victoria. An emerging literature recognises the growing importance of unions moving beyond the workplace and engaging with communities. There are several studies, mostly from the United States, which explore the linkages between unions and community groups. In a hostile economic and


3

political environment, increasingly dominated by the neo-liberal agenda, more unions are also recognising the need to build support beyond the narrow confines of a shrinking membership. In Australia our knowledge of these union and community relationships is limited, with the few studies to date focused on specific examples.

The paper reports on work in progress which is examining the various ways Australian unions interact with communities. The aim of our research is not to provide a comprehensive survey of union and community activity. Rather, our purpose is to uncover some of the diversity within the relationships and to explore the benefits and challenges confronting union and community cooperation. In this paper we report the preliminary results of research examining the experiences and attitudes of Victorian-based unions to community and union coalitions and alliances. The paper is based on interviews with union officials across eight Victorian unions, which are supplemented by interviews with community activists.

___________________________________________________________________________

Terry Carney, Gaby Ramia* and Anna Chapman, University of Sydney, Monash University and the University of Melbourne.

Which is the High and Which is the Low Road? Comparing Workers with Family Responsibilities and Jobseekers

Traditional conceptions of ‘high’ and ‘low’ roads to employment usually referred to overall levels of labour protection. With the emergence of more elaborate regulation regimes, however, notions of high and low roads have begun to consider when and how labour protections interact with social protections outside of the labour market, particularly in social security. The objective of this paper is to examine the effectiveness of labour-social protection interaction, utilising a comparative analysis of two Australian labour market groups: workers with family responsibilities (WFR) and jobseekers. Using insights from ‘regulation theory’, we argue that although WFR are more transparently subject to a combination of regulations in the labour and social security fields, jobseekers are governed by more integrated programmes. The primary lesson offered comparativists and policy makers is that conceptions of high and low road need to go beyond the assumption that more effective integration means better protection and less marketisation.

___________________________________________________________________________

Jenny Czernezkyj, School of Gender, Work and Social Inquiry University of Adelaide.

Australian Youth, Skills and Government Policy: Misfit, Mismatch or Just Misguided

This paper draws on recent US research on work skills and job requirements examining skills mismatch as a social problem and explore these issues within the Australian context. Particular emphasis is given to examining recent youth cohorts and the general claims made that many youth are disengaging from school, work and community expectations. As well as exploring general trends, this paper will seek to respond to the question: which groups and what skills or other labour force characteristics are at issue?


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Julie Douglas, Auckland University of Technology, NZ

Absolute ethical principles in mediating employment disputes

This paper looks at the work of mediators in the New Zealand Department of Labour, (DOL) Mediation Service. Currently these mediators do not work under any code of ethics or practice. While there are commonalities across all mediations and mediators there are also considerable differences and whether the ethical principles contained in non employment mediators’ Codes of Ethics would be useful or applicable needs to be considered when considering drafting a code for employment mediators in this Service. Principles commonly associated with mediation processes such as confidentiality, impartiality and neutrality are not necessarily always appropriate when dealing with employment disputes. Some discussion is given to the problems that may arise if these principles are adhered to or not, and also whether mediation required by legislation can act in the same autonomous way as voluntary mediations. This statutory nature of DOL mediators also raises the question of whether there is a state expectation of mediators acting as agents of social change.

___________________________________________________________________________

Chris Dunn, Victoria University of Wellington, NZ

New Zealand at the Crossroads – Heading for the High Road? (To McAllan’s or Johnnie Walker?)

This paper reviews the history of New Zealand’s industry training and skills development strategy and describes recent developments. For most of its history the strategy has focussed on growth to increase the numbers of trainees participating in workplace training programmes managed by Industry Training Organisations (ITOs). Two significant factors may shift this focus. The first is an amendment to the Industry Training Act (2002) that requires ITOs to provided leadership to industry by identifying current and future skill needs, developing strategic plans to meet these needs and to promote training appropriate to these needs. The second is the response by ITOs and the Industry Training Federation in cooperation with the government’s “Growth through Innovation” programme, to develop a “Strategic Leadership’ project. Through this project ITOs plan to shift their focus from short term growth to consider ways of cooperating and collectively contributing to enhance the skills capability of New Zealand industry. Is this a step on the road to the development of higher-skills?

___________________________________________________________________________

Goldie Feinberg-Danieli and Zsuzsanna Lonti, Victoria University of Wellington, NZ.

Union/non-union wage differential in the New Zealand Public Service

This paper examines the differences in average wages between Public Service employees who are employed on individual versus on collective agreements and identifies some of the contributing factors to those differences. It utilizes data from the New Zealand State Services Commission’s Human Resource Capability Survey of 2005, the only available source of individual level information in New Zealand on collective agreement coverage and union membership. Due to data limitations the union premium has previously not been calculated in New Zealand. While international studies uniformly conclude that union members receive higher wages then their non-union counterparts, we find that in the New Zealand Public Service employees on individual agreements earn significantly higher wages then those who


5

are covered by collective agreements. Looking for the contributing factors to this phenomenon, we carry out basic comparisons of the union/non-union wages by gender, employment type, occupations, ethnicity, age, employment size and tenure.

___________________________________________________________________________

Grant Fitzner, Department of Trade and Industry, London. The Right to Request Flexible Working in the UK: How Effective? Since coming to office, Labour has made work and family issues a key focus of employment relations policy. In April 2003 it gave working parents with young children the right to request flexible working. This paper provides a preliminary review of the evidence of its impact and efficacy.

The paper reviews the effects of the policy on employee attitudes and behaviour, including awareness, take-up, job satisfaction, and the extent of policy diffusion beyond the target group. The paper also reviews employer responses, including rates of refusal and the provision of flexible work arrangements. We then consider broader policy, economic and equity issues. What are the estimated costs and benefits? Are existing incentives and sanctions sufficient? What is the likely impact on the gendered distribution of domestic work and care? What constraints remain to the spread of flexible working arrangements? Finally, what lessons are there for Australian researchers and policy makers?

___________________________________________________________________________

Mark Harcourt, Helen Lam and Sondra Harcourt, University of Waikato and Athabasca University, NZ

Discrimination against Immigrants and Ethnic Minorities in Hiring: The Effect of Unionisation

Are unions exclusive or inclusive with respect to immigrants and ethnic minorities? In the exclusive view of unions, unionisation is expected to increase the likelihood of employers asking questions that discriminate against immigrants and ethnic minorities and decrease the likelihood of employers asking Equal Employment Opportunity (EEO) questions related to immigrant or ethnic minority status. The contrary is expected for the inclusive view. Our analysis, using New Zealand data for job applications, provides some support for the inclusive view of unions, as the higher the unionisation rate, the more likely EEO information is sought, but no relationship is found between unionisation rate and discriminatory questioning. This suggests that unions are probably helpful in promoting diversity but not yet in combating discrimination against immigrants and ethnic minorities in hiring.


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6

Josh Healy, Flinders University (NILS)

Safety Net Wages and the Persistence of Earnings Inequality

The paper explores several reasons for why the rate of award wage growth was allowed to lag behind average earnings growth in the ‘safety net’ era (1996-2005). It cannot be explained by the AIRC placing low priority on ‘community living standards’, since the Commission monitored general wage movements closely and struggled to reconcile its changing role with the inequalities of pay and bargaining power which decentralisation of pay-setting threatened to entrench. ‘Economic’ arguments against a parallel movement of award and average earnings hinged on the possible macro (inflation) and micro (employment) side-effects, but as reasons for persistently below-average award increases these factors were weakened by a declining significance of awards in the overall pay-setting scheme. An alternative explanation for the relative deterioration of safety net minima is advanced which focuses on interactions with broader social welfare policy and the implications for ‘the needs of the low-paid’ and ‘poverty’.

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Ann Hodgkinson† and Ray Markey, University of Wollongong† , NSW and Auckland University of Technology, NZ Assessing the Impact of the Workplace Relations Act from 1996 to 2004: Increasing Flexibility or Decreasing Collectivism?

The Australian industrial relations system changed dramatically as a result of re-regulation of the employment relationship by the federal Workplace Relations Act 1996. However, little is known about the impact of the new regulatory environment upon industrial relation patterns at a regional level, where there is often considerable variation from national trends. This paper fills this void to some extent by examining the Illawarra region, using extensive workplace surveys conducted in 1996 (prior to the impact of new Act) and 2004. It specifically examines the extent to which the objectives of the new Act have been fulfilled, in terms of the growth of federal jurisdiction and enterprise bargaining, and other impacts on the actors.


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Marco Micholotti and Chris Nyland, Department of Management, Monash University, VIC

Regulating Coordinated Market Economies: The Evolution of Labour Standards in Italy 1979 to 2003

The substance and procedural requirements governing mandatory labour conditions have for long been the focus of vigorous debate amongst academics and policy makers. This debate is anchored in the often repeated claim that highly regulated labour standards induce rigidities in the labour market that render the operation of firms sub-optimal by limiting their capacity to rapidly relocate their assets in response to environmental change (Hayek 1960; Stigler 1975; Salvanes 1997). The manner in which this claim has been received, across nations and communities, has been highly divergent but for heuristic purposes has been categorised in much of the regulatory literature as being located either within the liberal market or coordinated market paradigms (Freeman 2005; Hall and Soskice 2001). The policies


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characteristic of the first grouping are associated with regulatory developments that have unfolded in Anglo-Saxon countries where governments, employer bodies and sometimes unions have been directly involved in decentralising the locus of bargaining. By contrast, the second set of policies, common across continental Europe, are characterised by an emphasis on the need to sustain co-ordinated engagements between governments, business bodies and unions (Thelen and Wijnbergen 2003).

Until recently, the theoretical debate that links labour standards, productivity and regulation has not been accompanied by comprehensive studies that quantify the extent to which employment protection systems have been modified through the period in which the regulatory debate has raged (Grubb and Wells 1993; Block, Roberts and Clarke 2003; Michelotti 2003). However, researchers have begun to address this deficiency within the liberal market economies (see for example Block et Al. 2003 for the US and Canada; Michelotti 2003; Michelotti and Nyland forthcoming for Australia). By contrast, countries that have embraced coordinated industrial relations policies have not been subject to this form of analysis. Accordingly, this paper has two distinct dimensions: First, by applying a methodology devised by Block, Roberts and Clarke (2003) and modified by Michelotti (2003) we extend quantitative analysis of labour standards change to Italy, a country characterised by coordinated industrial relations arrangements (Regini 2000). Second, the numerical results are analysed against the broader Italian industrial relations policy context and briefly compared/contrasted with similar data collected for liberal market countries.

One of the most significant contributions of this study stems from the fact that the numerical results provide empirical evidence supporting broad theoretical propositions concerning the type of legal instruments, and nature of regulatory reforms, that are associated with policy developments in coordinated economies. In particular, the numerical data support two key observations. First, engagements between governments, unions and business agents tend to be accompanied, in coordinated institutional contexts, by mandatory procedural requirements that do not erode labour’s market and institutional capacity to bargain to the extent manifest in countries that have embraced liberal market policies (i.e. United States, Britain, Australia and New Zealand). Second, standards that protect both wage and job security are, in coordinated economies, an integral part of the social security and policy processes and will involve trade-offs in terms of exchange and composition of norms.

References

Block, R., Karen and Clarke, R.O. (2003) Labour Standards in the United States and Canada Kalamazoo, Michigan: W.E. Upjohn Institute for Employment Research.

Freeman, R. (2005) ‘Labour market institutions without binders: The debate over flexibility and labour market performance’, International Economic Journal 19 (2): 129-145.

Grubb, D. and Wells, W. (1993) ‘Employment Regulation and Patterns of Work in EC Countries’, OECD Economic Studies (21), Winter OECD, Paris.

Hall, P.A. and Soskice, D. (2001) Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. New York: Oxford University Press.

Hayek, F.A. (1960) The Constitution of Liberty. Chicago: University of Chicago Press. Michelotti, M. (2003) ‘Changing Employment Protection Systems: The Comparative Evolution of Labour Standards

in Australia and Italy 1979 to 2000’, PHD, Monash University, Department of Management. Michelotti, M. and Nyland, C. (2006) ‘Measuring Regulatory Changes in Employment Protection Labour Standards

in Australia 1979 to 2000’, The International Journal of Comparative Labour Law and Industrial Relations. Regini, M. (2000) ‘Between Regulation and Social Pacts: The Response of European Economies to Globalization’,

Politics and Society 28 (March): 5-33. Salvanes, K.G. (1997) ‘Market Rigidities and Labor Market Flexibility: An International Comparison’, Scandinavian

Journal of Economics 99 (2): 315-333. Steigler, G.J. (1975) The Citizen and the State: Essays on Regulation. Chicago: Chicago University Press. Thelen, K. and Wijnbergen, C. (2003) ‘The Paradox of Globalisation: Labor Relations in Germany and Beyond’,

Comparative Political Studies 36(8): 859-880. ___________________________________________________________________________


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Kosuke Mizuno, Kyoto University, Japan

Possible Way to Stable Industrial Relations in Indonesia: Strength and Weakness of Trade Unions under Weak Law Enforcement

A study of a weak trade union in Indonesia and the resolution of its labor dispute has revealed characteristics of the parties involved as relates to regulations and strategies. Weak law enforcement was found, particularly regarding Act No. 21 of 2000. One government regulation that was effective was No. Kep-150/Men/2000. Although the union respected the formal labor dispute system, the company did not. The union tended to adopt a collaborative strategy while the company persisted in adopting a hostile strategy. As a result, 82 union members, including four union representatives, were dismissed. In the end, the union eventually gave priority to ensuring the employment of 600 union members over protecting 82 members who had already been suspended. In this way, the union survived. Alternative paths to stable industrial relations would have emerged if the union had strengthened its solidarity or the company had been punished for violation of labor laws.


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Leanne Morris, Faculty of Business and Law, Deakin University, VIC

Performance Management of Academic Staff in Australian Universities

This paper is an examination of the issues surrounding performance management of academic staff in Australian universities. It identifies the stated purpose of performance management and explores the history, development and approaches to performance management of academic staff. In particular it focuses on performance appraisal and argues that there are conflicting purposes of performance appraisals; these include a judgemental purpose and a developmental purpose. These divergent functions have a direct link to the performance management of staff in a rich knowledge based industry. This paper is the preliminary work for a PhD thesis in which the author will explore performance management of academic staff in selected Australian universities.

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Kathie Muir, School of Gender, Work and Social Inquiry, University of Adelaide, SA

Mobilising Through the Big and Little Screens: The National Day of Community Protest, Sky Channel and the ‘Work Choices’ Legislation

The role of new media technologies in the strengthening of democratic communication and in particular as a foundation for social movement campaigning is now well understood. Eric Lee’s LabourStart website and Australia’s own Workers Online were early examples of the ways the labour movement adapted such technologies for their own purposes. It has been the ACTU’s recent ‘Your Rights at Work’ campaign against the Howard Government’s industrial relations legislation that has seen, arguably, the most dynamic use of new and traditional media technologies to create a strong sense of (virtual) community and mobilise opposition to the legislation. This paper examines the Sky Channel broadcast and other features of the Your Rights at Work campaign and analyses the way they have strategically deployed and


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reinvigorated the cultural and industrial traditions of the labour movement. It analyses the particular representations of fairness, rights, courage, values and nationalism that were presented through the campaign in an effort to invite the wider community to identify with and join the unions’ in a movement for fairness and justice including rights at work but also wider changes towards an improved work and family balance in the C21.

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David Peetz* and Barbara Pocock, Griffith University* and University of South Australia.

Workplace Delegates and Worker Power

In a survey of 2500 workplace union delegates in eight unions we examined the power of workers at the local, workplace level. We found local member power to be significantly related to a number of factors associated with the organising agenda. Local power was stronger where: unions were democratically organised; delegates were confident, active, had clear roles and had strong networks of support at the workplace and with the union office, particularly through the organiser; unions promoted common identity through inclusive policies than took seriously women's issues; the employer (and the delegates' supervisor) were supportive of the union delegate's role; and where job security was not declining. Training indirectly helped strengthen local power. Employer-related factors were only one eighth as important as union-related factors.


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Aryana Satrya, University of Queensland

Union Effectiveness and Union Strategy in Indonesia

This article develops a result and process-oriented concept of union effectiveness measurement at the workplace. It explores various explanations of union effectiveness in Indonesia. In particular, it examines the implementation of comprehensive union strategy (union aims, union methods, union tactics, and level of decision making) and the relevance of organisational factors (union and company characteristics). Empirical data are provided from a survey of 100 national union leaders from services industries. The findings of regression analysis reveal that three organising strategy variables: information and computer technology use, regular meeting with other union, and general innovation, and partnership tactic with management variable, are the most important determinants for union effectiveness.


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Keith Townsend, Department of Industrial Relations, Griffith University

Who has control in teams without teamwork?

A central aspect of labour process theory is the recognition that management must institute controls over the workforce to maximise levels of labour output. This paper explores this


10

notion of control in a medium-sized food processing plant. Importantly, the management of this workplace aimed to implement semi-autonomous work teams (SAWTs). This style of team is aimed to shift the locus of control from the hands of management to the employees. However, the failure to develop SAWTs left behind ‘teams without teamwork’. This paper analyses the manner in which control is manifest in these teams without teamwork.


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Peter Waring*, John Burgess, University of Newcastle and Alex de Ruyter Birmingham Business School, University of Birmingham.

Work Choices And The Systematic Erosion Of Employment And Living Standards In Australia

In this article we wish to demonstrate how Work Choices represents an attack on the living standards and employment conditions of the low paid in Australia. Specifically we examine the details and implications of the Australia Fair Pay and Conditions Standard (AFPCS) and the Australian Fair Pay Commission (AFPC). The discussion then turns to a consideration of industrial relations and pay determination developments in the United Kingdom, which is cited by the Coalition as a model for part of the legislation. Finally, we wish to place the Work Choice developments in the context of a punitive regime for those who are dependent on welfare support.

The full version of this paper is provided in this volume at page 89

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Sally Weller, School of Anthropology, Geography & Environmental Studies, University of Melbourne.

What can former Ansett flight attendants teach us about the labour market prospects of older workers?

As governments become increasing concerned about the fiscal implications of Australia’s ageing population, policy-makers are attracted to policies that will retain mature workers in the labour force and encourage older workers to return to the workplace. In media and policy discourses dominated by health professionals, awareness of the health and well-being benefits of fulfilling work have led to a universal and largely uncritical acceptance of the merits of older workers remaining in the labour force. Accordingly, changes in superannuation policy encourage a longer working life, while changes at the work welfare interface discipline recalcitrant baby-boomers. These new discourses rest on the assumption that mature age workers who leave the workforce do so as an (essentially selfish) personal lifestyle choice, while the practical discriminations, structural changes in the labour market and family care responsibilities that exclude older people from the labour market are ignored. This paper uses the experiences of former Ansett flight attendants – who were denied airline employment because of the age – to develop a critique of simplistic expectation that all older workers can continue to work in ‘fulfilling’ jobs. It concludes that the labour market implications of mature worker policy have not been adequately thought through.


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Mark Westcott, University of Sydney.

The FEDFA and Worker Control: A Case of the primacy of property rights

The New South Wales branch of the Federated Engine Drivers’ and Firemen’s Association (FEDFA) has a history of strong workplace representative structures and industrial militancy. The union employed, and tactically attempted to control, industrial action to further its industrial claims. This action was often effective due to the proximity of FEDFA members to the point of production. During the 1970s the FEDFA in NSW used the industrial tactic of ‘worker control’ in an effort to further the industrial interests of its members. The success of this tactic was contingent on a strong and active membership and the capacity of members to take control of the production process. This paper outlines how such a strategy was used at the Tooths breweries and the Shell Clyde refinery in NSW. The success of this industrial strategy was tempered by the response of company management and industrial tribunals. The case of the Shell refinery clearly illustrated the shortcomings of this strategy in the face of a concerted and militant management response. The Shell Company used their legal rights under employment law to terminate FEDFA members for refusing to work as directed. This successful company response underscores that the basis of employment is the purchase of a particular property right, which can then be mobilised to impose management authority.

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Chris White School of Law, Flinders University.

Provoking Building And Construction Workers

This paper reports on major problems with the Building and Construction Industry Improvement Act (2005), BCII Act (2005) focussing on the suppression of the right to strike. The new Australian Building and Construction Commission with wide-ranging powers ‘investigating’ building unionists who may have knowledge of so-called ‘unlawful industrial action’ with the threat of penal sanctions is explained. Building workers’ basic civil rights to silence and not to incriminate themselves have been removed. The government’s ‘law and order’ moves against unionists involved in so-called ‘ unlawful industrial action’ is described. Academic analysis shows this ‘command and control’ over-regulation is the wrong model. The ILO found this BCII Act (2005) breaches ILO Conventions for workers rights for freedom of association and the right to strike. Together with the Work Choices Act (2006) WC Act (2006) the building and construction industry is a major contested union battleground.


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Gillian Whitehouse and Tricia Rooney, School of Political Science & International Studies,

University of Queensland

The Queensland Dental Assistants’ Equal Remuneration Case: an Illustration of the Pay Equity Implications of Eroding the State System

The 2005 Dental Assistants’ Equal Remuneration case illustrates some of the strengths and limitations of measures currently available in Queensland to address the undervaluation of


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female-dominated work In this paper we use the case both to assess the capacity of the Queensland provisions to effectively address gender pay inequity and to highlight implications for pay equity of moving to a ‘national’ industrial relations system in Australia. While we draw out some limitations in the way undervaluation was assessed in this case, we also emphasise important advantages of the Queensland system that will be difficult or impossible to recreate under the new workplace relations system.


___________________________________________________________________________ Shuming Zhao, Jie Zhang, Russell Lansbury & Chris Wright*, (in order) Nanjing University, Nanjing University of Aeronautics and Astronautics, Work and Organisational School of Business Studies, University of Sydney.

Globalisation and its Impact on Employment Relations in the Chinese Automotive Industry

The Chinese automotive industry has experienced major restructuring over the past decade. An increasing number of foreign companies have established joint ventures in China, exposing local manufacturers to the pressures of global competition. Automotive production in China has been under increasing pressure to provide better products and services at higher levels of efficiency and lower cost. In the context of debates on the impact of global economic change on national systems of employment relations, this paper compares the experiences of two joint ventures in China, one between a local automotive producer and a European manufacturer, and the other between two Chinese companies and a large producer from East Asia. It seeks to analyse the extent to which employment relations at these companies has evolved as a result of the establishment of joint ventures and in the context of a booming Chinese economy and an increasingly competitive automotive market. A recent downturn in demand had a more negative impact on the ‘Eurasian Auto Co’, which employed numerical flexibility strategies such as reducing working hours and laying-off a number of workers, compared to the ‘East Asian Motor Co’, which was less adversely affected. The unions at both plants play a central role in company management, but consequently can be viewed as having a conflict of interest with their role of defending the interests of workers. With China’s membership of the WTO and its emergence as a significant auto producer, it is likely that there will be increasing pressure to regulate employment relations and protect the welfare of employees. While there has been some convergence in employment relations practices towards those characteristic of developed economies, many traditional Chinese practices remain widespread.


___________________________________________________________________________

PART 2

AIRAANZ 2006 NON-REFEREED

ABSTRACTS

AIRAANZ 2006

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Students’ Experiences of a Capstone Courses in Industrial Relations

Janis Bailey, Damian Oliver and Keith Townsend1 Griffith University

This paper reports the first set of outcomes from a teaching and learning action research project at Griffith University centred on improving its third year capstone course in industrial relations. Capstone courses focus on critical analysis and the integration of previously acquired knowledge and skills, rather than on the acquisition of new content. They often eschew traditional ‘talk and chalk’ methods for a highly student-centred, often project-based, approach. In part, they are aimed at producing more able professional practitioners. The paper focuses on the affective responses of students to the course: how did students respond to the challenges of the course, and were they able to develop more confidence and self-efficacy as a result of completing the course?

Introduction

This paper describes and analyses the first stage of an action research project to improve a capstone course in industrial relations. The course is Griffith University’s ‘Industrial Relations Strategies and Practice’, and is designed as the capstone course for an eight course major in Industrial Relations in the Bachelor of Business degree in the School of Business. Both the cognitive (what did students learn) and affective outcomes (how did they feel about the course) have been analysed. This paper focuses on the affective responses of students to the course: how did students respond to the challenges of the course, and were they able to develop more confidence and self-efficacy as a result of completing the course?

The course in question, 3038IRL Industrial Relations Strategies and Practice, is described in the University’s Course Catalogue as follows:

to give students a deeper understanding about the nature of strategies and policies of the main industrial relations players in selected industries. A key aim is to enhance students' ability to analyse industrial relations patterns and to make comparison of industrial relations strategies and practices within and between industries. The role of the law as an important resource for the parties is a particular focus of this course.2

A capstone is ‘a top or crowning stone of a wall’ or, more metaphorically, a ‘crowning touch’. Thus a capstone course at university is seen as the culmination of a student’s studies. In essence, capstone courses are designed to integrate previously acquired knowledge and skills, and are based on projects that are as authentic as possible with respect to the discipline and to the current needs of the organisations in which graduates will find themselves. Capstone courses, however, can vary one from another quite markedly; there is no single ‘model’ of a capstone. The issue of capstone courses is significant for higher education, as the relevance and applicability of university learning to students’ future careers is currently being emphasised by policy makers, industry and academics. Capstone courses can be seen as effective ways of preparing students for ‘a climate of continual change and innovation’

1 We dedicate this paper to the IRSP class of ’05. You go, gals and guys! We also thank Dr Cameron Allan, Dr Joo-Gim Heaney (Department of Marketing), Ms Margaret Buckridge (Griffith Institute of Higher Education) and respondents to a query on prir-l earlier this year, for their input. The valuable comments of Dr Liz Van Acker (Department of Politics and Public Policy) on this paper are acknowledged. A longer version of this paper, which includes the Appendices, is available from the authors. 2 The full structure of the degree and the major is given in Appendix A (see longer version of paper, available from authors).

Bailey, Oliver and Townsend

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(Dunlap 2005, 65), a phrase that is pertinent (some would say painfully so!) to the field of industrial relations at this moment.

We frame this study using the lens of ‘communities of practice’ (Brew 2003). Lave and Wenger define communities of practice as ‘a set of relations among persons, activity and world over time and in relation with other tangential and overlapping communities of practice’ (1993, 98).3 Capstone courses can be conceptualised as a means of developing communities of practice at undergraduate level between students, academic staff and practitioners in the discipline (and indeed even broader community members, policy makers, and other groups). ‘Community of practice’ has been used to describe a model of undergraduate education which results in more holistic understandings, where learning is connected to universities’ emphasis on research and scholarship (in one direction) and with the problems and issues confronting the world (in the other direction). Research and teaching are both conceptualised as a ‘meaning making’ process where knowledge is built not in a vacuum (or in an ‘ivory tower’) but in an authentic social context (Brew 1999, 12). In this process, students not only construct new understandings of reality for themselves, but also develop self-knowledge and engage in personal growth and development (Brew 1999, 14). At its very best, therefore, the capstone course can start breaking down the boundaries between teaching and learning, and developing a networked ‘community of practice’. The student’s role can be conceptualised as being about ‘knowledge and sense making’ as opposed to the passive reception of content.

The paper firstly describes the nature of capstone courses. We then describe the project and its methodology. Some of the results for Semester 2, 2005, the first iteration of improvement, are reported and discussed. Finally, the implications of these findings for this particular course, and for business capstone courses more generally, are explored.

Capstone Courses: Not a Single Animal

Capstone courses focus on critical analysis and the integration and consolidation of previously acquired knowledge and skills, rather than on the acquisition of new content. Students are usually required to have completed core curriculum, at least in their major, before they enrol in a capstone course. Students learn how to ‘put the pieces together’, and in the process develop ‘the ability to apply [a mastery of learning] to new, unusual and integrated project requirements’ (Moore, 2005, 2). Capstone courses often eschew traditional ‘talk and chalk’ methods for a highly student-centred, often project-based, approach. They (normally) require students to examine complex subject matter in a substantial piece of writing.

Capstone courses may focus on macro and very topical issues as they affect people, communities and organizations at the micro level. In the humanities and arts, in particular, courses may focus on issues and themes that affect the world community and broad cross-sections of humanity, and may involve the assignment of students as individuals or in groups to a community-based organization to work on a topical problem or issue.4

Broadly, capstone courses take one of two approaches. In one approach, there is reliance on written case study material, which is examined in class in light of the students’ previously

3 Communities of practice need to be developed in a variety of ways: by active participation by staff and students in industry bodies; by staff involvement in the management committees of relevant bodies; by active student associations; by organising work experience and publicising paid jobs; and other means. 4 Thus there is crossover between capstone courses and internship, and some experiences may be designed to suit the aims of both. However, the course under examination is not an internship. Examples of various capstone courses are given in Appendix B.


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acquired disciplinary knowledge.5 In the other, an ‘industry project’ is the focus, requiring the student to gather material about an industry, a practice or an organisation, and analyse that material in the light of disciplinary knowledge. The latter is probably the predominant approach, and is the one adopted by IR Strategies and Practice.

There may be distinctive pedagogical aspects to teaching a capstone course, although again there is great variation. Capstone courses may challenge lecturers to answer (for themselves) key questions such as ‘what do students already know and how can that knowledge be reviewed and extended?’, ‘what readings are really essential for students?’ and ‘what should students know as the building blocks of competing theoretical approaches’ (Myers and Richmond 1998) and ‘are the things we teach them in class what they really need to understand “the real world”?’ Capstone courses may focus on small group workshops and fieldwork. Thus formal class contact time may thus be much lower than for other courses. Project work is often designed in stages to allow students to assess their progress (with the help of other students and with formative feedback from the lecturer) and refine further stages of data collection and analysis. Group work is often used, to simulate collaboration in professional organisational settings. While teamwork and at least some group assessment are common, there is frequently some kind of individual component, such as an individual reflective or theoretical piece. Capstone courses also present opportunities to introduce practitioners from industry as guest lecturers, research informants, mentors and even assessors of students’ work. Finally, capstone courses may have more scope for team teaching, and for innovative teaching more generally, than other courses.

One of the key points of pedagogical philosophy is the role of capstone courses in bridging the gap between university learning (often called ‘theory’ although that term is often a misnomer) and the application of learning in the workplace. A capstone course will involve ‘something a bit meta, that focuses students on “the meaning of what they know”’. It might go so far as to create ‘an explicit awareness about the disciplinary structure of knowledge and the way in which different disciplines do and don’t construe problems in similar ways’ (Buckridge, personal communication, 2005).

This mention of ‘the disciplinary structure of knowledge’ suggests that there is a further significant dichotomy between two types of capstone courses. Firstly, but rarely, there are ‘general’ capstones that are available to a broad variety of students, with students working in cross-disciplinary (i.e. cross-major) groups to address a problem. Secondly, and more commonly, there are ‘major’ capstones that are open to students in a particular major only, and tend to focus on one discipline, or a group of related disciplines. The function of raising awareness about ‘the disciplinary structure of knowledge’ is more a feature of the former kind of capstone course than the latter.

In all, the relevance of capstone courses to the field of industrial relations is evident. It is a multi-disciplinary field of study in which students typically take courses from different disciplines (eg labour economics, labour law, workplace and organisational sociology, applied social psychology as in negotiation courses, and so on). A capstone course that draws these different experiences together at the end of the degree - like a magnet ‘pulling together the richness of content from the discipline in a summative manner’ (Rowles et al 2004, 13) - will reassure students that they have the ‘complete package’ to enter the workplace with confidence. A capstone may also assist with networking with professionals (vital for soon-to-be graduates), professional socialisation and the enculturation of students with the values and

5 The University of Western Ontario’s business school is one of a number of institutions which have expanded this approach beyond capstone courses and integrated it into every unit of study; see Ivey 2005.


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ethical standards of the discipline - which of course are diverse and contested. As Redmond puts it, capstone courses, by embedding the understanding, skills and appreciation that is the ‘mission’ of a particular discipline (Redmond 1998, 73) can foster a wide range of different learnings in students – affective as well as cognitive.

Industrial relations in particular provides challenges for near-graduates, who are soon to be unleashed on workplaces where the emphasis is on both forward strategic planning and trouble-shooting tasks involved in the extraction of labour power. While newly employed graduates will hopefully be mentored and guided by senior practitioners, industrial relations can still be a demanding profession. Both curricula and extra-curricular activity should be designed to provide as much preparation as possible. Hence capstones may perform a vital professional role above and beyond the outcomes that are measurable by assignments. They can promote holistic thinking, and may increase confidence and self-efficacy. Capstone courses will provide a challenge for students; especially, as in this case, when the question would challenge a seasoned practitioner. They ought to throw students into the deep end of the pool of knowledge - and often the lifebelts provided need to be quickly adapted to the task. Catchings notes that often students themselves express ‘disappointments and dissatisfactions with portfolios and presentations’ and that lecturers need ‘to honestly identify how well our students have learned what we think we have taught them’ (2004, 7). Thus we focus here on the first of these issues: students’ affective responses to the process, although we have also analysed the second issue, the cognitive outcomes (not reported).

The Project and the Methodology

Two of the team (Keith and Damian) taught the course in Semester 2, 2005 and the third (Janis) was a research team member, but not a teaching team member. Sixteen students (working in four groups) completed the course.6 The four groups examined the building and construction industry, food retailing, nursing and the public sector.

The task for the project in 2005 was the same for each group: Industry groups and trade unions are concerned with the impact of impending changes to industrial relations legislation. Your group has formed a consultancy company and has won a major contract to formulate an evaluation of industrial relations strategies and practices. What have the parties within your industry currently prepared in response to the legislative changes? What challenges and opportunities do the parties within your industry face with these proposed reforms?

The approach used in this research project was to (1) conduct a front end analysis by scanning course outlines of previous years, considering the content of other, prerequisite courses and obtaining some input from interested staff members; (2) review the 2004 course outline in the light of a preliminary scan of the capstones literature and using example of other capstone courses; (3) implement agreed changes; and (4) apply two methodologies: the first, adapted from Dunlap (2005), to document and analyse the students’ experiences of the course; and the second a content analysis of the four stages of each group’s written project to analyse how we had prepared them for the project, and how we could improve next time . A new cycle of implementing change and reflecting on outcomes will take place in 2006.

The scan of the literature on capstone courses and student evaluations of previous offerings of the course showed much of value that needed to be retained. The course

6 Three dropped out during the semester.


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• built on previous core curriculum and thus attempted to be truly integrative of students’ previous learnings;

• attempted to link theory and practice;

• used a large piece of complex writing, and a component of reflection, to assess the students; the components were a two-stage team research project (worth 50%), an exam (30%) and a reflective log (20%);

• encouraged students to research their industry by talking to industry players and looking at recent media stories (as well as using more academic sources);

• required the students to focus on a particular ‘hot issue’ in their industry;

• played off existing students’ contacts and knowledge where they were in full time employment (that is, a student could act as a gatekeeper to their industry);

• used a number of ‘academic experts’ to deliver much of the material (the lecturer might only actually deliver three lectures, and otherwise coordinated other staff and PhD students to deliver material); and

• although relying on a group assignment, had an individual ‘reflective log’ component. This required students to link theory and practice, rather than encouraging reflection on the process of doing the assignment and learning from it.

However, there seemed to be some areas of possible refinement:

• reduction of formal lecture content (there were 13 weeks of lecture content in 2004);

• having students present their findings orally as well as in writing, ideally in front of practitioners;

• developing further authenticity and challenge in the topic of the research project;

• clearly ‘staging’ the project, so that the early stages were to be clearly formative in nature, culminating in a summatively marked final report; and

• amending the reflective log to focus more on affective and process issues than on what might be called ‘academic’ tasks.

Thus the group project was maintained as a focus of assessment, but now had four stages rather than two, to allow for more feedback from the teaching team. Formal lectures on state, employer and union strategy were maintained (but only one week on each topic, as opposed to two), only one industry case study was used (rather than five),7 and more weeks were left free of structured content to allow the students to meet with a tutor, and each other, and to conduct and write up their research. Oral presentations were delivered in the final week.8

The outcomes were evaluated using a methodology devised by Dunlap (2005). We required students to complete three (assessable) Reflective Logs, to record their qualitative descriptions of their progress and learnings during the semester, with a particular focus on affective issues. These were completed at the beginning, middle and end of the semester. We also used Schwarzer and Jerusalem’s General Perceived Self Efficacy Scale (1995), based on the work of Bandura (1977, 1986), to quantitatively measure students’ perceived self-efficacy

7 But effectively, of course, students presented each other with another four case studies in the final week. 8 See Appendix C for the full assessment regime; the questions asked in one of the Reflective Logs (Part 1) are given in Appendix D.


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at the beginning and end of the course.9 The General Perceived Self-Efficacy Scale is a 10-item psychometric scale that assesses optimistic self-beliefs to cope with a variety of difficult demands in life. The scale is parsimonious, reliable and valid, ‘correlat[ing] positively with self-esteem and optimism, and negatively with anxiety, depression and physical symptoms’ (Schwarzer 1997; Dunlap 2005) and has been used in an action teaching and learning project similar to ours (Dunlap 2005).

Results and Discussion

Reflective Logs

The Reflective Logs indicate developing feelings of confidence throughout the semester. The student whose self-efficacy scores increased the most (seven points) indicated at the beginning of the semester a feeling of being ‘very unsure about my ability. I don’t think I could do it’ when asked about his/her current perceived ability to work as an industrial relations professional. By the end of semester s/he was able to say ‘I feel better about my ability, and part of that reason is because it’s over and done with. The fact that we were able to do that gives me confidence’. This student’s confidence was the lowest to begin with, but the same as other students’ by the end of semester. S/he felt confident that s/he ‘could adequately find information and resources’ and that s/he would ‘no longer laugh or break out in a sweat when I think of [taking up an IR job]’ although s/he still did not report 100% confidence at the prospect. Almost all students reported some increase in confidence. Even when a group experience was not positive, some students said things such as ‘I surprisingly feel much more confident to work as an IR professional than at the beginning of the course’ and go on to enumerate some very tangible gains from the experience.

All students were able to articulate gaps in their abilities. The student referred to above, for instance, reported that s/he had learnt that a gap in ability was ‘my ability to confidently communicate with other professionals’ and another more specifically identified ‘interviewing skills’. Nevertheless the first student said that, if persistent, s/he learnt that ‘I could communicate and eventually get a response from other professionals who could assist’. Gaps in knowledge and ability identified by other students included ‘the new legislation’ (they are not alone there!), gaps in conflict resolution skills, and gaps between theory and applying what they had learnt in the real world. Time management and procrastination were an issues (endorsed by the teaching team!), as was negotiating with other members of a team. Above all, having the capacity and confidence to communicate with other professionals was a very common theme for a number of students in this and other groups, particularly reflected in Part 2 of the Log in mid-semester, when students had tried with varying degrees of success to contact and interview informants. This was an area where students reported some skills, but often not sufficient confidence to follow up when potential informants did not respond immediately.

While students reported gaps in their abilities and knowledge, they discovered during the course of the semester than they had inner resources. All had previously done group projects of one kind or another, and so they were aware of some of the issues of group dynamics. However, they reported that this project challenged them further because of its complexity:

9 Completing the Scale was not of course assessable, and students could choose as to whether they completed it, and whether they allowed their Reflective Logs to be used for research purposes; all students did agree to participate in the research. However, four of the 16 students did not complete the per-test version of the Survey, and are not included in the results. A pre-test, post-test approach was followed: the students completed the same Scale in Week 1, and again in Week 13.


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the assessment question itself, the need to come to grips with the issues for an entire industry, and the multi-stage formative nature of most of the assessment, which required them to use lecturer feedback to continuously improve their work. So students learned new things about how they could handle group processes. The student already referred to discovered the capacity to ‘act as a balance between group members. If one member is agitated and taking it out on another, even subtly, I can calm the situation a bit, or take the focus off that’ (a useful skill in an IR professional!) S/he also discovered a capacity to keep the group on task: ‘I kept reminding myself and my group members of what we were supposed to be answering’. Other students had insights into group process issues, one reflecting that s/he had learnt that ‘I need to be stricter regarding those not pulling their weight in group situations; I will often sacrifice group performance in order to keep group cohesion’. S/he then went on to list steps s/he would take in future to avoid this. A high-achieving student noted that s/he ‘had learnt that sometimes compromises have to be made to ensure that the group works’. Another discovered that s/he had learnt that ‘I can carry a team. I am a competent leader, where I need to be’. Even where experiences were quite negative (due to key group members withdrawing from the course) students could say, as one did, that s/he had discovered an ‘ability to deal with unexpected events or problems that occur and overcome such problems’. Some were able to articulate how they would use this in reworking their CVs, with one student saying ‘I have used it as an example of a complex assignment in [addressing] selection criteria’. There are rich data and many subtle and reflective insights in these logs about the dynamics of group processes, and the ‘free rider’ problem. The researchers are in awe of many students’ capacities to analyse and take at least some action on problematic ‘process’ issues, and the logs reveal a tangible development over the semester in many students’ awareness and confidence in this area.

Students were able to identify prior curricular knowledge and assessment experiences that had prepared them to handle the project. The first year course Employment Relations was mentioned by several students, as was one of the assessment items in Management-Employee Relations.10 Study and assessment in Workplace Industrial Relations, Labour Market Issues and Employment Relations Law was also referred to. One student found their other major, Politics and Public Policy, to be useful, as it gave insights into ‘why or how the state does certain things’. A number of students identified that they had good skills at researching the literature; their GPAs reflected the validity of this belief.

Extra-curricular learning was identified as a very positive ‘plus’ by all students in preparing them both for the complex process of group work, and for understanding what they found as they researched their industry. All students were working and/or undertaking work experience, and indicated that previous and current paid work, and unpaid work experience, were very useful preparation for doing the capstone. One student mentioned being part of the University’s Mentoring program, in a placement with a union official, and said this had been useful preparation. . Students said that (even non-IR) work had, in the words of one, meant that s/he ‘had looked at a workplace in the light of the knowledge I’ve been gaining and seen and learnt from the problems and mistakes that I have seen within the workplace’. Thus students viewed previous work, work experience and mentoring relationships as very positively contributing to their capacity to undertake the course.

10 Employment Relation has a workplace-based group project on OHS, recruitment and selection, training, performance management or EEO. Management-Employee Relations requires students o analyse an issue of a union journal, its website, and the content of a talk from a guest speaker from the union, for what they reveal about the current preoccupations of the union movement, linking this to the analysis in the academic literature on union strategy.


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Overall, students reported positive outcomes in terms of their ability to ‘work with industrial relations problems’. One student said:

The assignment required us to delve deeply into the processes of IR as well as to familiarise ourselves with the new legislation which was not only fantastic for helping us identify issues within the industry but also gave us a leg up into the workforce by ensuring that we are better prepared.

Although this student’s measured self-efficacy did not change during the semester when measured quantitatively (see discussion below), s/he reported a marked increase in confidence in the Logs.

The Logs revealed useful information about the conduct of the course and useful hints for redesigning it. Firstly, they strongly reflect one of the preoccupations of the capstone literature: the ambiguous nature of capstone courses. Secondly, the Logs indicated significant problems at times with logistics, in particular if group members dropped out. ‘Problems with groups’ are a given, but key losses of personnel can be very unsettling (much as they would be in a work environment).

Students noted very strongly ‘the ambiguity of the project’, ‘dealing with the unknown’, and the need for ‘self direction’, as opposed to ‘most other subjects [which] you study from a text book and it has all been done before’. For a number of students initial frustration needed to be balanced against the fact that ‘although at times I felt I was drowning in information and other times I was frustrated that I couldn’t find any, in the end we produced something that we were happy with’. Being ‘thrown in the deep end’ more in university studies was recommended by one student. As one student insightfully said ‘one of the things that most encouraged me … was the fact that the professionals that we interviewed were also having issues with understanding the reforms and their consequences and these were people who had been working in the industry for a while. It made me feel better about actually working in IR’. A few noted some ambiguities in their programs of study; in the words of one, ‘I have conflicting ideas and perspectives instilled in me by other subjects (i.e. HRM) that if I were to work in industrial relations I would have to re-evaluate how I look at things and refine my thinking in this area’. A graduating student said the course was very useful in ‘providing an in-depth understanding of the issues and potential implications of the proposed IR reform’, as this was her final course – so there were gains with the pain.

Process issues were of great importance. ‘Unfortunate events’ plagued a couple of groups, in particular one which had two group members withdrew from the course, ‘leaving us to research an industry in which we had not interest, no contacts and no prior knowledge’. The student’s summation was: ‘I’ve kind of had enough of such projects for now. (Nothing to do with the actual course, assignment structure or staff)’ and a final comment from the same student was ‘I don’t feel I was able to fully understand or gauge the critical aspects and learning … because I didn’t have enough time to “digest” or reflect on our work’.

Self-Efficacy Scale

The results of the Self-Efficacy Scale differed from predicted results, and from another study, and are at variance with the qualitative results. We expected a significant improvement in self-efficacy, but that did not occur. The 10-item sum score of the Self Efficacy Scale had a theoretical range from 10 to 40, due to the 1-to-4 response format (see Appendix E). The pre-semester mean was 30, and the post-semester mean 32. A two-tailed, paired dependent t-test determined that the increase was not significant. Hence there was not a significant positive change in student perceptions of personal ability and preparedness for the industrial relations


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profession. The results differ markedly from the dramatic results of Dunlap’s study, in which a group of software engineering students in a capstone course increased in mean self-efficacy scores from 22 pre-semester to 38 post-semester. Our group commenced the semester with a very much higher baseline self-efficacy score than Dunlap’s group, but did not significantly increase that score. However, five students did increase their scores by three or more points, and these were the students who were initially less confident, so that the course seemed to have a more positive effect on the self-efficacy of initially less confident students. There are several possible reasons for the unexpected result of no (overall) increase in self-efficacy:

• our students clearly already had a much higher baseline self-efficacy than Dunlap’s software engineering students, so the dramatic increase noted by Dunlap was not possible (we speculate below on the reasons for this high baseline);

• the large increase in self-efficacy in the software engineering course may have been due to students being given a brief by a client firm, working to the client’s specifications and receiving extensive feedback from the client, i.e. a higher ‘authenticity’ in the assessment item; and/or

• the logistical difficulties experienced by some of the groups.

Bandura (1977, 1986) lists four sources of self-efficacy: vicarious experiences; persuasive statements; physiological states-arousal; and performance accomplishments. In this study, students’ physiological states arousal may have moved from a manageable level of stress (which can motivate and provide a challenge), to deleterious levels because of the logistical difficulties of group member dropouts, the difficulties in getting interviews, and the large size of some groups (two had five members). Other stresses were self-inflicted, for example failure to attend planning meetings and procrastination. Students acknowledged these self-inflicted stresses in the Logs. Bandura’s fourth factor – interference with performance accomplishment, which he says is the most important - was definitely in operation. The Logs show that in some cases a group’s final accomplishment was much lower than group members’ aspirations. Hence capstone courses need to attempt to create the best environment for students to accomplish their aims if they work hard – their aim being to produce a wide-ranging analysis that gives them a good mark in the course.

A positive result was of course the high pre-test self-efficacy scores, especially as compared to Dunlap’s cohort. Speculatively, this may be due to the high level of paid work and relevant work experience undertaken by this group of students. It may also be due to authentic and challenging assessment items in previous courses. It may be that with course design improvements, students next year will record a significant increase in self-efficacy. Time constraints did not permit the course to be exhaustively overhauled for this first iteration, and we have identified a range of improvements that are needed to ensure the course’s aims and outcomes are more fully realised. It should be noted that there is a variance between the results reported in the Reflective Logs, where students reported improvements in confidence not reflected in quantitative measurement of self-efficacy. Further research is needed to determine (a) why students’ pre-test scores are so high, and (b) whether a different design of the course can improve post-test scores.

Conclusions

Analysis of cognitive outcomes will reveal changes that need to be made in 2006. Analysis of affective outcomes in this paper indicates that some issues that need to be addressed during 2006 are:


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• asking 2005 students, interested colleagues in the Griffith Business School, and the Industrial Relations Society of Queensland, to become part of the ‘community of practice’ that will improve this course further;

• inviting interested AIRAANZ members to become part of the same community of practice; we would value your insights, comments and experiences;

• providing more information about the stages of the assessment, in the course outline, and models of good portfolios;

• having a 2005 student speak to 2006 students early in the course, to convey ‘tips and hints’ from personal experience;

• introducing an individual component of assessment, although it is at this stage difficult to see how to do this but avoid the risk of over-assessment, and maintain the useful aspects of the group assessment process;

• including a couple of skills-based training components - particularly in ‘gaining and maintaining access to workplaces’ and in interviewing - early in the semester;

• asking some practitioners prior to the semester if they will help students, so that each group has a couple of key informants committed to assisting them;

• requiring students to compile a full list of possible informants, with contact details, by Week 3, which will mitigate some of the problems if key group members drop out;

• organising more industry feedback on final projects and oral presentations, to give students extra input and thus a greater feeling of authenticity to the projects;11 and

• keeping group sizes at three or four. Latecomers may therefore be required to undertake projects alone or in pairs, rather than join existing groups.

This conference asks us to consider the theme: ‘20th Century Work: High Road or Low Road?’ It is essential that university education thoroughly engage students in activities that prepare them for the demanding profession of industrial relations in what may well be one of the most turbulent times in its history. Capstone courses that are well thought out and that integrate theory and application should markedly assist students to reflect on the relative merits of ‘high road’ and ‘low road’ approaches in the workplaces that they will soon enter as practitioners.

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Cliffs, NJ: Prentice-Hall. Brew, A. (1999) ‘Researching and teaching: Changing relationships in a changing context’, Studies in

Higher Education, 24(3), 291-301. Brew, A. (2003) “Teaching and Research: New relationships and their implications for inquiry-based

teaching and learning in higher education”, Higher Education Research and Development, 22 (1), 3-18.

11 The President of the IRSQ (who is a senior member of a large consulting firm) attended the oral presentations, and gave useful feedback. The convenor attempted to invite industry informants to the presentations; but few students provided the contact details and, where they did, the informants due to work pressures could not accept the invitations.


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Catchings, B. (2004) ‘Capstones and quality: The culminating experience as assessment’, Assessment Update, 16(1), 6-7.

Dunlap, J. ‘Problem-based learning and self-efficacy: How a capstone course prepares students for a profession”, Educational Technology, Research and Development, 53 (1), 65-85.

Ivey (Richard Ivey School of Business) (2005) The Case Method, at http://www.ivey.uwo.ca/hba/academics/case.htm, accessed 19/09/2005.

Lave, J. and Wenger, E. (1993) Situated learning: Legitimate peripheral participation, Cambridge: Cambridge University Press.

Moore, R.C. (2005 - pending). "The capstone course." In Christ, William G. (ed.) Assessing media education: A resource for educators and administrators, Hillsdale, NJ: Erlbaum, at http://users.etown.edu/m/moorerc/ch21capstonecourse91704.htm, accessed 20/09/2005.

Myers, S.A. and Richmond, V.P. (1998) ‘Developing the capstone course in communication: Nine essential questions’, The Southern Communication Journal, 64 (1), Fall, 59-64.

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Rowles, C.J., Koch, D.C., Hundley, S.P., and Hamilton, S.J. (2004) ‘Toward a model for capstone experiences: Mountaintops, magnets and mandates’, Assessment Update, 16(1), January-February, 1-2 & 13-15.

Schwarzer, R. (1997) ‘General perceived self-efficacy in 14 cultures’, at http://userpage.fu-berlin.de/~health/world14.htm, accessed 16/11/2005.

Schwarzer, R. and Jerusalem, M. (1995) ‘Generalized Self-Efficacy scale’, in J. Wienman, S. Wright and M. Johnston (eds.), Measures in health psychology: A user’s portfolio: Causal and control beliefs, Windsor, UK: nferNelson.

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AIRAANZ 2006

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Discrimination against Immigrants and Ethnic Minorities in Hiring: The Effect of Unionisation

Mark Harcourt, Helen Lam, and Sondra Harcourt

University of Waikato and Athabasca University

Are unions exclusive or inclusive with respect to immigrants and ethnic minorities? In the exclusive view of unions, unionisation is expected to increase the likelihood of employers asking questions that discriminate against immigrants and ethnic minorities and decrease the likelihood of employers asking Equal Employment Opportunity (EEO) questions related to immigrant or ethnic minority status. The contrary is expected for the inclusive view. Our analysis, using New Zealand data for job applications, provides some support for the inclusive view of unions, as the higher the unionisation rate, the more likely EEO information is sought, but no relationship is found between unionisation rate and discriminatory questioning. This suggests that unions are probably helpful in promoting diversity but not yet in combating discrimination against immigrants and ethnic minorities in hiring.

Although there is no lack of studies on discrimination against minorities, systematic empirical work specifically on unions’ stance and effect on ‘access discrimination’ against ethnic minorities is scant. The current study further explores this relationship, using data from New Zealand.

Union Role

What roles do unions play with respect to employer discrimination? Zeitlin and Weyher (2001: 456) summarize the union influence this way: ‘Who fills the job vacancies is decided by the employers, but within the kinds of constraints that unions are ready, willing, and able to impose: they can try either to exclude black workers or to ensure that employers treat them no differently than white workers in filling job vacancies.’ Do unions allay or accentuate employer discrimination? There are two opposing views on the union position: the exclusionary view and the inclusionary view.

Exclusionary Practices

Why would unions want to exclude minorities? If unions are primarily concerned with keeping members’ wages up, they will likely want to exercise some form of ‘monopoly control’ over the supply of labor, where possible (Ashenfelter, 1972). Immigrants are seen to take away jobs from existing union members, and by providing a ‘reserve army of low-wage workers,’ decrease the unions’ bargaining power and undermine the effectiveness of strike actions (Daniels and Von Der Ruhr, 2003; Olzak, 1989: 1307). An increase in labour supply inevitably drives down wages, assuming demand remains the same.

Unions also have few resources with which to serve the many and complex needs of a diverse membership. Reshef and Lam (1999: 125) outline three types of security goals for the union. These are organisational, institutional, and political security. Organisational security concerns the survival of the union; institutional security relates to a union’s ability to withstand pressures that may undermine its representational institutions (such as collective bargaining), while political security involves how positively union leaders are seen by their members in

Harcourt, Lam & Harcourt

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terms of their ability and integrity. Union leaders must prioritize their scarce resources to maximize these areas of security – to prevent losing ‘majority’ members, to advance their collective bargaining capabilities, and to promote a positive union image to their members. According to the median voter theory, union leaders are likely to promote the needs of the median member who would typically be a worker in the ‘majority’ category. Hence, naturally, the concerns of minority groups are likely to be neglected or given a lower priority than those of members representing a larger proportion of the membership.

Most of the evidence shows that, throughout history, unions have taken an antagonistic approach towards immigration and the inclusion of minority groups. Hunt and Rayside (2000: 401) conclude that ‘Canadian and American research finds that organized labor’s engagement with race, ethnicity, gender and sexual orientation until recently has been largely exclusionist.’ They cite a number of studies to support this position. For example, in the U.S., Foner (1974) found that trade unions were mainly exclusionary in policy and practice, at least as far as black workers were concerned, from the 1790s to the mid 1930s. In Asher and Stephenson’s (1990) edited book, which contains a collection of historical articles on the topic, the 1940s and 1950s were described as a period when no forward movement was made in unions’ stance on ethnic diversity. Hill (1985), looking at developments since the 1964 Civil Rights Act in the U.S., highlights union resistance to the legislation and their general defense of white male workers through support for discriminatory employer practices. More recently, Riccucci (1990) lamented that, while some unions embrace equal treatment of workers, there were many more which did not. In particular, the seniority system is seen as perpetuating systemic discrimination against minority groups who are likely to be newer entrants to the workforce. Studies have reported similar union positions for Canada, especially earlier in the 20th century when anti-Asian sentiment was high (Ward, 1978).

In sum, some arguments suggest that unions are ethnically exclusionary in their philosophy, policies and practices. If this is true, we would expect unions to not object to, or even to covertly support, employer discrimination against minorities. This would have some effect on the hiring practices of employers, with the effect being greater the higher the level of unionisation.

H1: The higher the unionisation rate of the workplace, the more likely it is for the employer to discriminate against ethnic and immigrant minorities in the hiring decision.

An exclusionary union position may also create a climate that hinders the promotion of proactive human resource practices related to diversity. Most developed nations have agencies or commissions that oversee fair treatment and employment representation of minority workers under equal employment opportunity (EEO) principles. In New Zealand, for instance, the EEO Trust is a non-profit organisation that promotes workplace diversity through partnership, research, education, and information. While only the public sector is required by legislation to abide by specific EEO requirements, private organisations can become voluntary members if they want to be seen as actively involved in EEO. As a result, these organisations may need to obtain EEO-related information in their hiring process for reporting and planning purposes. However, in line with the exclusionary view of unionism, we would expect the more unionized settings to be less likely to embrace EEO and so less concerned about obtaining information for EEO purposes.

H2: The higher the unionisation rate of the workplace, the less likely it is for the employer to seek EEO information in the hiring process.

Harcourt, Lam and Harcourt

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Inclusionary Practices

Although there are many arguments put forth in support of exclusionism, most of them have also been contradicted by researchers and unionists alike. One such argument involves the effect of immigration on unemployment. Contrary to traditional belief, Shan, Morris and Sun (1999), using Australian and New Zealand data from 1983 to 1995, found no evidence that immigration increases unemployment. Similar findings have been reported by Withers and Pope (1985) for Australia. Given that immigrants are traditionally confined to low-pay periphery jobs that do not appeal to natives, the immigrant threat to unemployment is likely to be negligible. Indeed, Daniels and Von der Ruhr (2003: 146) note that ‘most economic studies find small net gains in GDP per capita to host countries from increased immigration and that past immigration has no obvious impact on unemployment in the host country.’

As for the monopoly argument, limiting membership is not always, or even usually, an effective way to boost wages. With advances in technology, many jobs have been automated or deskilled and so employers are no longer as dependent on skilled craftsmanship. More than perhaps ever before, employers can also make creative use of nonunion people by, for example, hiring replacement workers in a strike, using temporary workers from a recruitment agency, or by contracting out to nonunion firms. Employers can also rely on market competition and the supply of cheaper nonunion labor to pressure unions into accepting lower wages or moderating their demands for wage increases. In contrast to exclusionism, it makes sense for unions to organize everyone, thereby removing non-union alternatives and ‘taking wages out of competition.’

Another recent reality of concern to unions is the drastic decline in union membership. For example, Farber and Western (2001: 460-461) report that the union density rate for non-agricultural employees in the U.S. dropped from a high of 33.5% in 1954 to 13.3% in 1998. Similarly, Crawford, Harbridge, and Walsh (2000: 294) report that the unionisation rate in New Zealand declined from 44.7% in 1989 to 17% in 1999. The union movement’s survival and growth (organisational security) thus depends on its ability to expand the membership base. One way to do so is to include so-called non-traditional workers who are largely comprised of minority groups. With the number of immigrants fast increasing in many developed countries, minorities seem to be a logical target for organizing efforts. As Hunt and Rayside (2000:402) point out, ‘a growing union recognition of diversity may be one of the ways the union movement is attempting to reinvent and reposition itself for the twenty-first century.’

As for the view that ethnic and immigrant minorities are unsupportive of unions or difficult to organize, again evidence has often been to the contrary. Cohen and Kirchmeyer (1994), comparing immigrants to the native-born in Israel, found that immigrants participated more actively in unions and were more committed as well. Defreitas (1993), using data from a survey of youths in the U.S., found that immigrants had higher average rates of unionisation, with blacks exhibiting a noticeably stronger preference for union representation. Funkhouser (1993: 259), analyzing a 1983 Current Population Survey, concluded that ‘recent immigrants to the U.S. did not act differently about unionisation than … natives and, therefore, are as likely as young natives to be organized.’ The rationale for this may well lie in the instrumentality and the self-protection concepts – that union jobs tend to pay a premium, that ‘disadvantaged’ workers with weak bargaining power tend to have better protection in union environments, and that they may benefit disproportionately from union attempts to equalize wages across different employee classes (Kim and Kim, 1997; Newton and Shore, 1992).

Furthermore, the social democratic political philosophy widely supported by unions provides an ideological justification for inclusive recruitment practices. Lynk (2000), in his Canadian


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study on union democracy, concludes that many unions venture beyond the narrow concerns and activities of collective bargaining to embrace a broader, social democratic focus on political and social causes. Social democracy ‘promotes reforms within both the economy and society, in general, such as an improved workers compensation system, reduced wage inequality within and across firms, and support for human rights concerns …’ (Godard, 2000:523). As such, one of the union movement’s most important missions is the reduction of economic and social inequality and corresponding alleviation of disadvantage. There is no room for exclusionary practices in such a union role.

Plenty of empirical research work indicates that inclusive policy has been gaining acceptance over time. Even as far back as the early 20th century, prominent events revealed just how much progress had already taken place in this direction. For example, the 1919 Winnipeg General Strike in Canada was a classic example in which workers coalesced against employers, despite their ethnic divisions. The formation of the CIO in the U.S. in 1937 signaled the emergence of a union philosophy radically different from the craft union philosophy held by the AFL (Godard, 2000: 97). The CIO called for the formation of industrial unions which adopt inclusive rather than exclusive practices. Ashenfelter (1972) suggests that industrial unions are less discriminatory towards minorities (or more egalitarian). His study indicates that the ratio of black to white male wages was, in the 1960s, four percent higher in the industrial union sector than that in non-union settings. During the period 1974 to 1980, Leonard (1985) found that the employment share of black males increased more rapidly in the union sector. This lends support to the argument that even though union seniority provisions disadvantage new entrants, unions have an overall positive effect on the employment prospects of minority workers.

With the shift in attitude towards inclusion, one could posit that unions would have a positive effect in combating hiring discrimination against immigrant and ethnic minorities by playing a watchdog role and by incorporating non-discriminatory employment provisions in collective agreements. As a result, the anti-discrimination effect would, contrary to that stated in H1, likely be greater the more unionized the workplace.

H3: The higher the unionisation rate of the workplace, the less likely it is for the employer to discriminate against ethnic and immigrant minorities in the hiring decision.

The inclusion stance of unions may not be limited to the deterrence of discriminatory practices. By raising workplace awareness of the value of inclusion and diversity, and helping foster a culture receptive to it, unions could have an important effect on the employers’ proactive embracement of EEO principles and practices. In line with this view, the more unionized employers, contrary to H2, are more likely to gather EEO-related information for better diversity planning and any necessary reporting.

H4: The higher the unionisation rate of the workplace, the more likely it is for the employer to seek EEO information in the hiring process.

Methods Data for our dependent variables were obtained by perusing job application forms for discriminatory questions regarding nationality. The forms were acquired from organisations that had advertised a job in September, October, or November, 1999, on the internet or in one of three major New Zealand newspapers: the New Zealand Herald, the Wellington Dominion, and the Wellington Post. Only the 174 organisations that had instructed interested job-seekers to complete a job application form were contacted. All 174 provided their form. Comparable data were further obtained from 55 organisations participating in a large-scale survey of


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human resource practices in small and medium-sized New Zealand enterprises. Together, these sources yielded a total of 229 employers, of which two did not reveal their identity to enable further data collection, and so were omitted from the sample. These 227 employers collectively employ approximately 200,000 staff, in excess of 10% of New Zealand’s workforce. Organisations in our sample were contacted directly to ascertain whether they had a human resource department. The State Services Commission supplied a complete list of all agencies and departments in the New Zealand civil service and covered by the 1988 State Sector Act. The Registrar of Unions at the Department of Labour provided a complete list of New Zealand trade unions and their contact details. All unions in existence at the end of 1999 were contacted for their membership numbers at each employer in the sample. All agreed to provide the required membership data.

There are three dichotomous, dependent variables. The first is EQUAL OPPORTUNITIES, the second is IMMIGRATION, and the third is DISCRIMINATION. Each of these variables indicates whether an employer asks a particular category of nationality / ethnicity question on its job application form.

EQUAL OPPORTUNITIES assumes the value of ‘1’ if the employer asked a question about the job applicant’s nationality or ethnicity for equal employment opportunities (EEO) purposes and assumes the value of ‘0’ otherwise. Fifty five (24.2%) employers in the sample asked one or more such questions. In line with hypotheses 2 and 4, we expect to see some relationship between the level of unionisation and the probability of an employer asking one or more of these types of questions.

IMMIGRATION assumes the value of ‘1’ if the employer asked a question about whether the job applicant had New Zealand citizenship, residency, or a valid work visa and assumes the value ‘0’ otherwise. One hundred and nine (48%) employers in the sample asked one or more such questions. It seems likely that most employers would ask questions about an applicant’s immigration status to determine whether he or she has a legal right to work in New Zealand. Although the answers to these questions can unnecessarily betray someone’s nationality or ethnicity, discrimination is unlikely to be their primary or sole underlying purpose. As a result, we do not expect the employer’s level of unionisation to have any effect on the likelihood of an immigration-oriented question.

DISCRIMINATION assumes the value of ‘1’ if an employer asks a question about the applicant’s nationality or ethnicity and assumes the value of ‘0’ otherwise. Thirty four (15%) employers in our sample asked one or more such questions. None of these involve immigration issues, such as New Zealand citizenship or residency, or an express EEO purpose. As a result, we would expect employers to obtain information from such questions for more invidious purposes related to discrimination. In line with hypothesis 1 and 3, we expect to see some relationship between the degree of unionisation and the likelihood of an employer asking at least one of these sorts of questions.

We use the variable UNION DENSITY to measure the level of unionisation, as referred to in hypotheses 1 through 4. It is expressed as the percentage of each employer’s workforce that is unionized. In New Zealand, union membership is completely voluntary and unions may only represent union members for collective bargaining purposes. As a result, we regard UNION DENSITY as a good measure of union presence and influence in the workplace.

Two other variables, HR DEPARTMENT and CIVIL SERVICE, are included as controls. HR DEPARTMENT is a dichotomous variable. A ‘1’ value indicates that an employer had a human resources department, whereas a value of ‘0’ indicates that it did not. Of the employers in our sample, 151 (66.5%) had a human resources department. Human resource departments ordinarily have professionally qualified and experienced staff. Their staff


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members are therefore more likely than most managers to know about the legal entitlements to work, as set out in the Immigration Act, and about the anti-discrimination provisions in the Human Rights Act. For these reasons, we would expect employers with human resource departments to be more likely to ask questions about an applicant’s immigration status (IMMIGRATION) and less likely to ask non-EEO questions about an applicant’s nationality or ethnicity (DISCRIMINATION).

CIVIL SERVICE is also a dichotomous variable. A ‘1’ value indicates that an employer is an agency or department of the New Zealand civil service, whereas a ‘0’ value suggests otherwise. Twenty nine (12.8%) of the employers in our sample belong to the New Zealand civil service. Under the 1988 State Sector Act, all employers in the New Zealand civil service are obliged to provide equal employment opportunities (EEO) as so-called ‘good employers’. The State Services Commission appraises each department’s progress towards EEO goals, and uses this as one of several criteria in determining whether to renew the chief executive’s fixed-term contract or provide him / her with an annual bonus. Accordingly, we would expect civil service employers to be more likely to ask EEO-related questions about an applicant’s nationality and ethnicity, but less likely to ask comparable questions for discriminatory purposes.

The questions that comprise EQUAL OPPORTUNITIES, IMMIGRATION, and DISCRIMINATION are also used as dichotomous control variables in those models where each is not part of the dependent variable. It is possible that the DISCRIMINATION questions are merely clumsily worded questions about immigration status. A seemingly discriminatory question about nationality, for instance, could be a poorly worded attempt to assess whether the applicant is a New Zealand citizen. Just as possibly, a seemingly discriminatory question about nationality could be asked alongside a more neutral IMMIGRATION question about whether the applicant has a work visa, both for the purposes of assessing the applicant’s legal right to work in New Zealand. In the former case, a DISCRIMINATION question would be a substitute for an IMMIGRATION question and therefore negatively related. In the latter case, a DISCRIMINATION question would be a complement to an IMMIGRATION question and therefore positively related. However, the absence of any relationship would suggest that DISCRIMINATION questions were not being asked for immigration-related reasons.

Much the same holds for the relationship between DISCRIMINATION and EQUAL OPPORTUNITIES. A DISCRIMINATION question could be a crude attempt to collect information for EEO purposes, in the absence of any explanation that this is being done. If so, DISCRIMINATION would be expected to be negatively (substitute) or positively (complement) related to EQUAL OPPORTUNITIES. However, the absence of such a relationship would suggest that DISCRIMINATION questions were being asked for reasons unrelated to EEO monitoring.

LEGAL RIGHT is also used as a control variable. LEGAL RIGHT assumes the value of ‘1’ if an employer asks whether an applicant has a legal right to work in New Zealand and ‘0’ otherwise. Though LEGAL RIGHT involves no query about the applicant’s nationality, we would nevertheless expect it to be negatively (substitute) or positively (complement) related to EQUAL OPPORTUNITIES, IMMIGRATION, and DISCRIMINATION to the extent that these questions are about determining the applicant’s immigration status.

We use binomial logistic regression to analyze the data. Logistic regression estimates a coefficient for each independent variable that best predicts the odds of an employer asking the applicant at least one of the three types of question (EQUAL OPPORTUNITIES, IMMIGRATION, and DISCRIMINATION) on a job application form.


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Results

Results for the binomial regressions without controls for the EQUAL OPPORTUNITIES, IMMIGRATION, and DISCRIMINATION questions are provided in Table 1. A positive parameter estimate suggests that a rise in the value of an independent variable brings about a corresponding rise in the odds of an EQUAL OPPORTUNITIES, IMMIGRATION, or DISCRIMINATION question. A negative parameter estimate suggests that a rise in the value of an independent variable brings about a fall in the odds of such a question.

TABLE 1. Binomial Logistic Regression Results Without Controls For Equal Opportunities, Immigration, or Discrimination (Standard Errors in Parentheses) Equal Immigration Discrimination Opportunities __________________________________________________________________________________ INTERCEPT -3.876*** -0.383 -1.299*** (0.656) (0.260) (0.318) UNION DENSITY 0.033*** 0.000 0.002 (0.007) (0.004) (0.006) HR DEPARTMENT 1.069** 0.272 -0.895** (0.525) (0.297) (0.404) CIVIL SERVICE 3.256*** 0.891** 0.265 (0.613) (0.445) (0.618) Cox & Snell R-square 0.328 0.030 0.022 Nagelkerke R-square 0.490 0.039 0.038 __________________________________________________________________________________ * Statistically significant at the .10 level; ** Statistically significant at the .05 level; *** Statistically significant at the .01 level (two-tailed tests)

The Cox-Snell R Square and the Nagelkerke R Square both indicate that the independent variables account for a lot of the uncertainty in the EQUAL OPPORTUNITIES data but not in the IMMIGRATION and DISCRIMINATION data.

The parameter estimates are all statistically significant in the EQUAL OPPORTUNITIES model. The INTERCEPT parameter indicates that the odds of a non-union employer, which has no human resources department and is outside the civil service, asking a nationality- or ethnicity-related EEO question on its job application form, to not asking any such question, are 1:50. Consistent with expectation, the UNION DENSITY parameter estimate indicates that the odds of an employer asking such a question rise 3% for each 1% rise in union density. The HR DEPARTMENT parameter suggests that the odds of such a question rise nearly three times, if an employer has a human resources department. Similarly, the CIVIL SERVICE parameter suggests that the odds of a civil service employer asking a nationality- or ethnicity-related EEO question are 26 times higher than for an employer outside the civil service.

In the IMMIGRATION model, the UNION DENSITY parameter estimate is statistically insignificant. Only the parameter estimate for CIVIL SERVICE is significant. It indicates


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that the odds of a civil service employer asking an immigration question are more than twice as high as for an employer outside the civil service.

In the DISCRIMINATION model, the UNION DENSITY parameter estimate is, contrary to expectation, statistically insignificant. However, the parameter estimates for the INTERCEPT and HR DEPARTMENT are both significant. The INTERCEPT parameter indicates that there are 4:1 odds against a non-union employer with no human resource department and outside the civil service asking a potentially discriminatory nationality or ethnicity question on the job application form. Conversely, the HR DEPARTMENT parameter suggests that having a human resource department more than halves the odds of asking such a question.

With individual immigration questions added to the EQUAL OPPORTUNITIES model as controls, only WORK PERMIT appears to have any statistically significant effect. Specifically, the odds of an employer asking an EEO question fall an estimated 80%, if an employer asks whether or not the applicant has a work permit on the job application form.

With the individual immigration questions added to the DISCRIMINATION model as controls, only RESIDENT appears to have a statistically significant effect. Specifically, the odds of an employer asking an EEO question rise an estimated three times, if an employer asks whether or not the applicant is a New Zealand resident.

When the equal employment opportunities questions are added as controls, none of the parameter estimates is significant in either the IMMIGRATION or DISCRIMINATION models.

With the potential discriminatory questions added to the EQUAL OPPORTUNITIES model as controls, only ETHNICITY is significant. The parameter estimate for ETHNICITY suggests that the odds of an employer asking an EEO question decline 95% if that employer asks a question about the applicant’s ethnicity.

With the potential discriminatory questions added to the IMMIGRATION model as controls, only BIRTHPLACE and LEGAL RIGHT are significant. The parameter estimate for BIRTHPLACE suggests that the odds of an employer asking an immigration-related question are four times higher, if that employer asks about the applicant’s birthplace. The parameter estimate for LEGAL RIGHT indicates that the odds of an employer asking an immigration-related question are more than 95% lower, if that employer asks whether the applicant has a legal right to work in New Zealand.

Discussion

We found some support for the view that unions are primarily inclusive in their treatment of immigrant and ethnic minorities. More specifically, we found that the more unionized employers were more likely, on their job application forms, to ask nationality and ethnicity-related questions for equal employment opportunity purposes, thereby supporting H4 instead of H2. This suggests that the more unionized employers are more aware of EEO issues, more concerned that their hiring practices might discriminate against minorities, and more prepared to take action to ameliorate such practices.

Unions may encourage employers to be more conscious of EEO issues for two principal reasons. First, with their increasing concerns about declining membership numbers, unions may be keen to recruit from among traditionally neglected minority groups, who together represent an increasing proportion of the workforce. Second, many unions adhere to a social democratic political philosophy which stresses the economic and social equality of all individuals, regardless of nationality or ethnicity.


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Not all of our results, however, support the inclusive view of unions. In particular, we found no evidence of any link between union density and the likelihood of discriminatory nationality- or ethnicity-related questions on job application forms. Hence, neither H1 nor H3 is supported. Likewise, we uncovered no connection between union density and the likelihood of what would normally be regarded as immigration-related questions about nationality. Our additional statistical models, where nationality, ethnicity, and EEO questions are used as control variables, may suggest why. Some of the ostensibly discriminatory questions may be complements to (positively associated), or substitutes (negative associated) for, more obviously legitimate questions about either EEO or immigration issues. As a result, what looks like an attempt to discriminate, on the surface, could instead be a poorly worded attempt to seek information for EEO or immigration reasons. For instance, ethnicity-related questions are usually asked when equal employment opportunity questions are not, suggesting that the former maybe being used as a crude substitute for the latter. Correspondingly, questions about the applicant’s birthplace and immigration status tend to get asked together, suggesting that the former maybe being used to clumsily assess applicants’ immigration status.

Alternatively, we must acknowledge that highly discriminating employers are unlikely to ask EEO questions, and it may be this that accounts for the negative association between ethnicity-related questions and EEO questions. Moreover, employers that discriminate against foreign-born workers may be more generally conscious of immigration issues, and it may be this that accounts for the positive association between birthplace questions and immigration questions. For instance, if certain employers hire a lot of immigrants, but are only interested in hiring those from some nations but not others, it is conceivable that they might ask lawful questions about general immigration matters and unlawful, more specific questions about background nationality.

Implications and Conclusions

Our findings suggest that unions are not exclusionary, in the sense that they do not seem to foster discriminatory hiring practices. Indeed, they even have a positive effect on employers’ adoption of EEO practices, which tends to support an inclusion stance. Yet, they do not seem to have a significant impact on reducing discriminatory questioning in hiring. As raising awareness on the value of diversity is probably the first step in the anti-discrimination crusade, the results revealed in this study are promising. It may mean that unions are doing a good job in promoting inclusion, but their efforts have yet to extend to combating discrimination against minorities in hiring. If this is the case, unions should be legislatively empowered and resourced to take a more active role in enforcing anti-discrimination legislation and in making employment decisions so that they have fewer discriminatory consequences.

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British Columbia. Montreal: McGill-Queen’s University Press. Wither S., & Pope, D. (1985) ‘Immigration and unemployment’, Economic Record, 61, 554-563. Zeitlin, M., & Weyher, L. F. (2001) ‘‘Black and White, Unite and Fight’: Interracial working-class

solidarity and racial employment equality’, The American Journal of Sociology, 107: 2, 430-467.

37

Assessing the Impact of the Workplace Relations Act from 1996 to 2004: Increasing Flexibility or Decreasing Collectivism?

Ann Hodgkinson and Ray Markey

University of Wollongong and Auckland University of Technology

The Australian industrial relations system changed dramatically as a result of re-regulation of the employment relationship by the federal Workplace Relations Act 1996. However, little is known about the impact of the new regulatory environment upon industrial relation patterns at a regional level, where there is often considerable variation from national trends. This paper fills this void to some extent by examining the Illawarra region, using extensive workplace surveys conducted in 1996 (prior to the impact of new Act) and 2004. It specifically examines the extent to which the objectives of the new Act have been fulfilled, in terms of the growth of federal jurisdiction and enterprise bargaining, and other impacts on the actors.

Introduction

The Workplace Relations Act 1996 (WRA), introduced by the incoming Coalition Government, became effective in 1997. Originally expected to involve a substantial shift in Australian industrial relations, Senate amendments greatly reduced the more radical elements in the new Act. Further attempts in 2000 and 2001 to amend the Act were also defeated in the Senate. Consequently, the industrial relations environment between 1997 and 2005 has only been a partial reflection of the directions intended by the Howard Coalition Government.

Perhaps because of this, there has been some debate as to the exact purpose of this Act. Vernon Winley from the Business Council of Australia writing in the Australian Bulletin of Labour (1997:82) saw it as a means of providing a more enterprise-focused approach to employee relations that would allow Australian businesses to respond more effectively to international competition, that is to foster increased and more innovative uses of enterprise bargaining. As well as this decentralisation of employee relations, it was to introduce decollectivisation in the form of individual contracts or Australian Workplace Agreements. Thirdly, it was hoped that it would enable workplaces to avoid the costs of operating in duplicate systems by moving entirely into either State or the Federal jurisdiction.

Lee and Peetz (1998:5) had a more critical view arguing that “the objective of the Act may be to provide a framework for cooperative workplace relations, but the purpose is to weaken unions ….”. Deery and Mitchell (1999) quoted in Riley (2003:151) reiterated this position arguing that the agenda since 1997 can be described as “individualism and union exclusion”.

It is now some eight years since the WRA became operative and the Coalition Government, now with control of the Senate, is at last in a position to introduce its preferred framework for industrial relations in Australia. New initiatives involving overriding State legislation to enforce a single Federal system, expand the use of individual agreements, and reduce the number of allowable conditions under Awards have been enacted under its WorkChoices legislation. This is thus an opportune time to examine to what extent the competing objectives of the original Act have been achieved before the environment is affected by new amendments. As no full scale industrial relations survey has been conducted since the

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Australian Workplace Industrial Relations Survey in 1995 (AWIRS95), a full testing of its impact is not possible.

However, in conjunction with AWIRS95, a regional study was conducted in the Illawarra region of NSW, the Illawarra Regional Workplace Industrial Relations Survey or IRWIRS96. A small scale follow up of that study was undertaken in 2004, which duplicated some of the original questions. Using that data, and particularly results from a subset of these firms that were included in both the 1996 and 2004 samples, some indications of the impact of the WRA can be made in terms of the spread of enterprise bargaining, use of non-union and individual bargaining, union density and jurisdictional choice. The results of that panel study are presented below. Changes in the National and Regional Industrial Relations Environment, 1996 -2004

Two main features of the industrial relations environment require consideration: the regulatory environment created through legislation, and the economic environment. The WRA provided a framework that could facilitate a shift of industrial power towards employers, by encouraging more direct negotiation between employees and employers, bypassing union intermediaries. The main features of the WRA included:

significant limitation of the matters about which the Australian Industrial Relations Commission may make awards to 20 ‘allowable matters’

collective certified agreements may be between a business and a union (S170LJ), or a non-union agreement between a corporation and its employees (170LK);

introduction of Australian Workplace Agreements (AWAs) between individual employers and individual employees, lodged with the new Employment Advocate;

no longer is there a need to be a federal award respondent to access any of the above agreements or otherwise participate in the Act ;

exclusion of unions from the processes of AWA ratification;

some increased restrictions on right of entry of union officials to workplaces; and

introduction of protected industrial action by employers or employees during bargaining periods, with penalties for ‘unprotected’ action during the period of agreements.

These aspects of the WRA have been responsible for, or at least complemented, a major restructuring of the industrial relations system in Australia. Almost 40 per cent of the workforce now have their wages and conditions determined principally by collective enterprise agreements, with awards providing a minimum set of standards, which are the basis for the ‘no disadvantage test’ applied by the AIRC for certifying collective agreements. Awards also provide a ‘social safety net’ more broadly, as the sole basis of wages and conditions for about a fifth of the workforce, principally the low-paid and non-unionised (Watts and Mitchell 2004). On this basis, the ACTU periodically submits applications to the AIRC for increases in award minimum wages. AWAs have been vigorously promoted by the federal government and Employment Advocate. In some cases they have been used by employers as a means of undercutting union collective agreements, but they have only been taken up by employers employing 2 per cent of the workforce, with about 38 per cent of the workforce covered by unregistered individual agreements (ABS 2002; Sheldon and Thornthwaite 2001; Watts and Mitchell 2004). In terms of industrial relations processes, there has been a growth in litigation of disputes through ordinary courts (Frazer 1997, 1998 and 1999; Catanzariti and Shariff 2001 and 2002; Catanzariti, Shariff and Brown 2003; Sheldon

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and Thornthwaite 2001), and a rapid increase in employers’ use of the lockout (Briggs 2004; Sheldon and Thornthwaite 2001, 2002).

The industrial relations actors also have been affected significantly by the WRA. Trade union membership, which was over 50 per cent of the workforce in the mid 1970s and still 40 per cent in the early 1990s (Sadler and Fagan 2004), has continued to decline since 1996, to 23 per cent of the Australian workforce in 2004, and only 18 per cent of the private sector workforce (ABS 2004). Although this decline has been the result of a number of structural factors, Peetz (1998) has demonstrated that the restrictions imposed by the WRA have contributed significantly to the continuing decline of union membership post-1996. Recent statistics for membership of employer associations are less readily available. However, employer association membership fell between 1990 and 1995, particularly in the private sector, from 82 to 74 per cent of workplaces, according to AWIRS (Morehead et al. 1999: 89). Membership might be expected to have declined further because of the new regime of enterprise bargaining, based on British and New Zealand experience. (Sheldon and Thornthwaite 1999: 213). Some Australian organisations, such as the Association of Employers of Waterfront Labour, have disappeared altogether. There also is evidence that the services employer associations provide members have changed since 1996. Many associations now offer enterprise bargaining support and a greater range of technical services to their members, often on a fee for service basis (Sheldon and Thornthwaite 1999: 73, 201, 218; Bell 1994).

At the same time, the NSW industrial relations legislation moved in the opposite direction to the federal WRA, in confirming the roles of awards, the NSW Industrial Relations Commission and unions. This system, which retains significant coverage in NSW, does not restrict industrial action in the way that the WRA does, and has no equivalent of AWAs. It might be expected that unions would favour remaining in the State system, whereas some employers would favour the WRA. This may impact upon the distribution of State and federal award and agreement coverage in the Illawarra.

The other major determinant of the industrial relations environment is the state of the economy, and particularly the labour market. At a national level the economic environment has not changed significantly since AWIRS95. Growth in national GDP slowed marginally while employment increased. However, there was a significant fall in interest rates whilst inflation and unemployment rates declined (Treasury 2004a, 2004b; Reserve Bank 2004). Generally this indicated a buoyant economy. At the regional level, the Illawarra economy was performing poorly compared to national conditions in 1996/7, when IRWIRS96 was conducted, with higher unemployment, falling trade conditions for many firms, stagnation in key sectors, and declining employment and consumer spending (Markey et al. 2001: 11-12),. Since 1997 the regional economy has become far more buoyant and unemployment has declined, although it remains higher than the national average (IRIS Research 2004: 7-8).

Improvements in economic conditions at the national and regional level might be expected to lead to increased industrial action, but working days lost to industrial action are at historically low levels. Therefore, it is clear that changes in the regulatory environment seem to have produced the greatest impacts upon the pattern of industrial relations in the current era (Hodgkinson and Perera 2004). Methodology

In order to identify elements of regional industrial relations change, a survey of Illawarra workplaces was conducted in May/June 2004, IRWIRS 2004, to compare with the earlier IRWIRS96. A range of questions were selected that could identify the impact of the

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regulatory system upon the nature of the industrial relations system and the state of the parties to it. The survey data sought for comparison between 1996 and 2004 related to the following issues:

employer association membership and types of services used;

trade union membership, number of unions, and delegate presence;

incidence of direct forms of employee participation (such as teamwork and quality circles);

incidence of indirect or representative forms of employee participation other than unions;

payment systems, including incidence of awards, certified enterprise agreements, AWAs, and informal agreements;

workforce reductions; and

industrial action.

The 2004 questionnaire was directed towards employee relations managers, as with the main component of IRWIRS96, and the specific questions concerning the issues listed above were identical between the two surveys. However, the 2004 survey was shorter than IRWIRS96, and unlike the original survey the 2004 version was conducted by telephone rather than face-to-face interview.

The 2004 survey covered 212 workplaces drawn from the same population as the 1996 survey, which covered 194 workplaces representing 25 per cent of all workplaces in the region with 20 or more employees. The 2004 workplaces employed just under 20,000 people, with an average employment size of 92. Firms in the database from which the sample was drawn all employed 20 or more employees in 1996. However, some of the firms had downsized or restructured into separate units in the intervening eight years, such that 17 per cent are now classified as small (less than 20 employees). In addition the 2004 sample had a higher proportion of manufacturing firms than the 1996 sample. As a consequence, the 2004 sample contained more of the larger firms than in 1996.

These differences in the structures of the two samples raised some concerns that the reported changes in behaviour in the initial comparison might be due to sample characteristics rather than true responses to the elements of the Workplace Relations Act. Consequently, a panel data set of 89 firms was extracted from the two surveys comprising firms which were included in both surveys. A similar analysis of changes in behaviour since the introduction of this Act was conducted. In this case we can be confident that we are recording true changes, rather than structural sample differences. However, the behaviour changes shown by the panel dataset were in most cases similar to those found between the two whole samples, confirming the results originally presented. The only significant difference was that the firms in the panel dataset had a higher proportion of union presence in 2004, and a higher proportion of workplaces with union delegates in both 1996 and 2004, than the full sample dataset. Results

Based on the foregoing discussion of the intentions of the Workplace Relations Act 1996, a number of hypotheses regarding expected firm behaviour have been developed. These were tested using statistical tests including a test of significant differences in proportions for matched variables, prior to and after the introduction of the WRA (two related samples McNemar Test or Matched samples T-test), and the Kolmogorov-Smirov z – test or the

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Mann-Whitney test, which tests whether the panel dataset has similar characteristics to the full sample database. The results are discussed below. Hypothesis 1: that the use of Awards declined after the introduction of the WRA.

There has been no significant decline in the number of panel workplaces with Awards since the introduction of the WRA. Further, the z-test indicates that this result is typical of the sample as a whole. The proportion of panel firms with Awards was 96.6 per cent in 1996 and 95.7 per cent in 2004. In the sample as a whole, the proportion fell from 98 per cent to 94 per cent over the same time period. Awards remained the basis of the industrial relations system in the Illawarra under the WRA. Hypothesis 2: that there has been a growth in the use of (a) certified collective enterprise agreements, and (b) non-certified enterprise agreements since the introduction of the WRA.

Both these hypotheses can be rejected. There has been no increase in the proportion of workplaces with collective enterprise agreements since the WRA. The percentage of workplaces with certified enterprise agreements in the panel dataset fell slightly from 43.8 per cent to 43.0 per cent. Thus it appears that by 1996, those firms which wanted enterprise agreements had already established them under the provisions of the earlier Industrial Relations Reform Act of 1993. The changes to encourage enterprise bargaining in the WRA had no impact on the decision of firms to move to these agreements. Further, there was only a marginal increase in the proportion of workplaces in the panel dataset with non-certified collective agreements from 24 per cent to 26 percent. Neither of these changes were statistically significant, indicating that the WRA had no impact on the decision to move to enterprise agreements as a means of determining wages and conditions. The z – test results indicate that this was true of the sample as a whole. However, the average number of certified agreements in these workplaces rose from 2.9 to 5.7, although the high variability in the data indicated that this change was not significant.

The WRA encouraged firms to bargain directly with their employers, rather than through a union (Buchanan et al. 1998). There was some evidence that this ploy had been successful. In 1996, there was a significant difference between having a certified enterprise agreement if there was a union in the workplace (37% of all firms) and having one if there was no union (7% of all firms). By 2004, there was no significant difference with the proportion of unionised workplaces with enterprise agreements dropping to 29 per cent and the proportion of non-union workplaces with enterprise agreements rising to 14 per cent. There was no significant difference between having a non-certified collective agreement or not by union status of the workplace in either year. Hypothesis 3: Increased use of Australian Workplace Agreements (AWAs).

AWAs were intended to be the main mechanism within the WRA to achieve non-union agreements (Rimmer 1997). This hypothesis cannot be tested statistically as there were no provisions for individual registered agreements prior to the WRA. However, only 1.1 per cent of workplaces in the panel dataset had AWAs in 2004. This is below the national average of 2 per cent (ABS 2002). Thus this proposition can be rejected; in the eight years after the operation of the WRA, little use was being made of AWAs in the Illawarra. The z – test results indicate that this finding was true of the sample as a whole.

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Hypothesis 4: That there has been a decline in (a) number of unionised workplaces and in (b) union density.

It has been argued that the real purpose of the WRA was to weaken unions through a range of provisions that lessened their powers to operate and effect their financial viability (Lee and Peetz 1998). However, another perspective is that the decline in membership is a response to members’ dissatisfaction with the performance of unions (Costa 1997). Whatever the reason, the decline in union membership within the Australian workforce has been repeated in the Illawarra. Thus, both these hypotheses are accepted.

There was a decline in union density in the workforces of firms in the panel dataset from 66 per cent in 1996 to 43 per cent in 2004, compared with a decline to 39 per cent for the total sample, although average employment in these firms remained relatively constant This decline in union density, which reflects the trend throughout the Australian workforce, was associated with a decline in the proportion of unionised workplaces from 74 per cent in 1996 to 61 per cent in 2004. Moreover, an even larger decline occurred in the sample as a whole from 74 per cent in 1996 to 51 per cent in 2004. These differences indicate that the panel dataset firms were significantly different from the others in the sample, containing a higher proportion of union workplaces and members. The relevance of this finding is discussed below.

Further analysis of this fall in union density demonstrates that the majority of the decline in union membership occurred in the private sector. In the total sample, average union membership fell from 65 per cent to 31 in private workplaces, and from 66 to 56 per cent in public workplaces. Hypothesis 5: That there has been a decline in union delegate presence.

The proportion of workplaces with a union delegate presence decreased very marginally from 53 per cent to 52 per cent in the panel dataset firms. For the sample as a whole, it dropped from 47 per cent to 39 per cent of workplaces. However, the average number of delegates in workplaces that did have delegates rose from 2.5 in 1996 to 3.3 in 2004, although this change was not statistically significant. Thus this hypothesis is rejected.

The drop in union presence was paralleled by a drop in union delegate presence in the full sample. This observation generates a further hypothesis that union presence did not decline in workplaces which had delegates in 1996. This hypothesis can be accepted, with a highly significant relationship between having a delegate in the workplace in 1996 and still having a trade union in that workplace in 2004. Of those workplaces that did have a trade union in 1996, 86 per cent that also had delegates in 1996 still had a trade union in 2004 in the panel dataset. Of workplaces which had a union in 1996 but no delegate, only 59 per cent still had a union, while 41 per cent no longer had a union. Thus the decline in union presence in the firms in the panel dataset is clearly more prevalent in workplaces with no delegate structure in place. This result clearly supports the ‘organising strategy’ approach of the trade union movement to the pressures against unionism in the WRA.

Hypothesis 6: That there has been a decline in industrial action.

This hypothesis is accepted. The proportion of workplaces in the panel dataset that had industrial action in the twelve months prior to each survey fell from 27 per cent in 1996 to 19 per cent in 2004. For the complete survey database, the decline was very similar being from 26 per cent to 17 per cent. Declines occurred in strikes, stop-work meetings and picketing. However, there was an increased incidence of over-time bans, work-to-rule and go-slow

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actions. Thus, the decline in industrial disputes may reflect the influence of the provisions in the WRA constraining standard strike action to ‘protected periods’ during enterprise bargaining. However, an analysis of types of industrial action by whether or not the workplace had a certified enterprise agreement, did not show significant differences in the incidence of each type of industrial action. This indicates that industrial action can occur regardless of the type of payments system in place. No industrial action occurred in any non-unionised workplace in the 2004 panel dataset firms. The WRA also allowed firms to lock-out workers during protected bargaining periods. However, no lock-outs occurred in the panel dataset workplaces in the twelve months before the 2004 survey, nor were any recorded in the 1996 survey. Thus this hypothesis is rejected indicating that lock-outs are not a normal negotiating mechanism in the Illawarra. The z – test indicates that this finding was also true of the full survey database. Nevertheless, they have been used in the past, the Joy Manufacturing case being a celebrated early use of this device in the Illawarra (Ellem 2001). Hypothesis 7: That membership of employer associations declined.

This hypothesis is accepted. The proportion of workplaces that were members of employer associations was 76 per cent in 1996, and this dropped to 59 per cent by 2004. For the sample as a whole, membership dropped from 73 per cent to 59 per cent in these years. This drop in membership was statistically significant, but does not seem to be associated with trade union presence in the workplace. In 1996, firms were significantly more likely to be a member of an employer association if there was no union in their workplace. In 2004, no significant relationship existed between the two. The z – test result indicates that the drop in employer association membership was also found in the sample as a whole.

The only employer association service to experience a relative drop in usage was advice on awards and agreements, although this change was not statistically significant. Usage of other services increased, indicating that employer association services are being used relatively more often for complex union negotiations and regulated matters. Hypothesis 8: That there has been a movement towards Federal jurisdiction for Awards and collective agreements.

The introduction of enterprise bargaining, which was argued in terms of the need to provide flexibility to meet the pressures of global competition, was associated with an increase in the role of federal bargaining structures (Sadler and Fagan 2004, Winley 1997). Over time, therefore, a shift from state to federal jurisdiction for both awards and collective agreements could be expected. There was a drop from 1996 to 2004 in the proportion of workplaces that only had State awards from 60 per cent to 54 per cent in the panel dataset firms. The corresponding drop for the sample as a whole was from 63 per cent to 51 per cent. This change was statistically significant. There was no change in the proportion of panel dataset firms having awards only in the federal jurisdiction. The proportion of workplaces with only federal awards in the sample as a whole declined from 22 per cent in 1996 to 15 per cent in 2004. However, there was a significant increase in the proportion of firms in the panel dataset with awards in both jurisdictions, rising from 17 per cent in 1996 to 27 per cent in 2004. The corresponding movement in the sample as a whole was from 13 per cent to 35 per cent over these years. Thus, while the state jurisdiction remained the dominant area for registration of awards, a movement to also register awards in the federal jurisdiction can be seen, indicating that the WRA has had an influence in this area, and the hypothesis can be accepted.

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However, there was an increase in the proportion of firms which had their certified collective agreements only registered in the State jurisdiction, rising from 36 per cent in 1996 to 58 per cent in 2004. This change was statistically significant. There was also a substantial drop in the proportion of firms who had their certified agreements only registered in the federal jurisdiction, from 46 per cent to18 per cent in 2004. Again, this change was statistically significant. The proportion of firms which had agreements registered in both jurisdictions rose from 18 per cent to 25 per cent. However, this change was not statistically significant. All these results are applicable to both sets of firms. Thus, not only has the WRA not been associated with a change of jurisdiction in the registration of agreements towards the federal system, but there has actually been a significant movement away from the federal jurisdiction to the NSW State system. Thus this hypothesis is rejected.

Hypothesis 9: that there has been an increase in the use of direct participation methods.

Direct involvement or participation entails the employee in job or task-orientated decision making in the production process or other business activities. These techniques have been associated with increased flexibility and organisational efficiency, and consequently they have become popular in recent years (Markey 2001). Teamwork is the most rudimentary form of direct participation. Semi or fully autonomous work groups refer to the degree of decision-making undertaken by teams, and total quality management (TQM) for our purposes refers to workplaces organised entirely on a team basis. Quality circles are problem-solving groups. IRWIRS96 found that the incidence of these techniques was similar to Australia generally, except that semi or fully autonomous work groups were less common in the Illawarra than for Australia as a whole (Markey, et al. 2001: 211-12; Morehead, et al. 1997: 187-90).

Indirect involvement relates to mechanisms where employees participate in decision making through elected or appointed representatives on committees or boards. Generally, consultative committees do not bargain over wages, but may have jurisdiction over a wide range of conditions. Committees tend to be more common in public sector workplaces, those that are unionised, larger workplaces and those in the manufacturing, transport and storage and education sectors (Markey, et al. 2001: 215).

There was increased use of all direct participation methods in the panel dataset firms. This was paralleled by similar increases in all methods in the samples as a whole between 1996 and 2004. These changes were strongly significant for team building, semi-autonomous working groups and quality circles. The change was not significant for Total Quality Management. However, the use of indirect participation methods also increased over 1996–2004. These changes were equally as significant as those occurring in the direct methods. Thus, while there has been an increased usage of participation methods in the Illawarra, there is no evidence of a movement towards direct methods away from indirect methods, which are more often associated with union participation. Further, the z – test results indicate that these findings are also applicable to the full survey database firms.

Broader Application of Panel Results

The results from the Kolmogorov-Smirov Z – tests indicate that the panel dataset firms only differed from the rest of the sample in one particular set of characteristics. They had a higher proportion of workplaces with a union presence, higher union density and higher union delegate presence in their workplaces than the rest of the sample. This stronger union presence may have eventuated from the situation where the panel firms are possibly older

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than those in the full sample, having all been in existence in 1996. As such, they may be more representative of the ‘old’ industrial environment of the Illawarra (Markey, et al. 2001:9).

This stronger union presence in the panel dataset could result in these firms being less able to move in the ways intended by the WRA due to organised workforce resistance. Thus, for example, the increase in enterprise agreements registered in the State jurisdiction, and the decline in registration in the federal jurisdiction may be the result of union power forcing employers to agree to move into a judicial system that is considered to be more supportive of union negotiations. The low take-up of AWAs could be similarly explained. However, the z – test results indicate that these findings are common for the rest of the sample database firms, which have lower union presence, lower union density and lower delegate presence in their workplaces. Thus, the choice of State jurisdiction for the registration of enterprise agreements does not seem to be influenced by union presence in the workplace. This result is confirmed through cross-tabulation analysis. For both the panel dataset and the full survey database firms, there was no significant difference on whether firms used only the state jurisdiction for enterprise agreements as to whether they had a trade union or not. Indeed, those firms with no union in both sets had a higher propensity to use only the State system, while those with unions had a slightly higher use of either the federal only or registration in both systems.

Overall, it has been demonstrated that the trends shown in the panel dataset firms are typical of those of the 2004 survey firms as a whole, and by inference of the population of Illawarra medium and large sized firms as a whole. The question of whether the Illawarra findings can be extended to the rest of New South Wales and Australia can only be speculated upon, as no comparable database of post-AWIRS behaviours are available for these larger geographic areas. Markey, et al. (2001:394-397) concluded that the Illawarra had a distinctive regional industrial relations environment in 1996. However, Hodgkinson and Markey (2005) argued, based on a comparison of the full 2004 survey database outcomes with those of IRWIRS96 and AWIRS95, that much of this distinctiveness had now diminished. If this is the case, then these results at least provide some indications of how state and national behaviours have moved in response to the Workplace Relations Act.

Conclusion

These results tend to support the hypothesis that the main impact of the Workplace Relations Act 1996 to date has been on union presence and density rather than on any change in the payments systems towards either enterprise bargaining or individual contracts or a movement to single jurisdictions for the registration of awards or agreements.

Substantial declines in the proportion of unionised workplaces and union workforce density were recorded in the Illawarra, which parallels declines in the rest of Australia. This occurred even though the Illawarra can be considered a traditional industrial region and hence a stronghold for union activity. Much of this decline occurred in private service sector workplaces. Encouragingly for unions perhaps, the results support their ‘organising strategy’ approach with workplaces that had a delegate presence in 1996 much less likely to lose their union presence than those that did not.

There was no significant move towards enterprise bargaining and away from Award based systems to determine pay and conditions with the operation of the WRA. This suggests that with further reduction of the number of issues that can be covered by awards, a large proportion of workers in the Illawarra now predominantly reliant on awards to determine working conditions would be significantly more vulnerable than under the current regime. There was only a small increase in the use of non-union agreements and virtually no uptake of AWAs. Thus, if the intention of the 1996 Act was to encourage enterprise or individual

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bargaining, it was ineffective in this objective. These results could be used either to argue that there was no need to introduce such provisions beyond those already incorporated in the previous Labor Government’s Industrial Relations Reform Act 1993, or alternatively that they demonstrate the need to strengthen the WRA as proposed in the current legislation.

Finally, the results show that the intention to encourage businesses to move into a single jurisdiction and specifically the Federal jurisdiction for awards and collective agreements has not been achieved. Rather, the movement has been towards multiple jurisdictions and, in the case of agreements, towards the NSW State jurisdiction. The current proposals to override the State jurisdiction and force workplaces into a single Federal system would thus appear to be contrary to the choices currently being made by workplaces, regardless of union status.

Note: JIR for Journal of Industrial Relations; ABL for Australian Bulletin of Labour.

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Potential Paths to Stable Industrial Relations in Indonesia: Strengths and Weaknesses of Trade Unions with Weak Law Enforcement

Kosuke Mizuno

Kyoto University A study of a weak trade union in Indonesia and the resolution of its labor dispute has revealed characteristics of the parties involved as relates to regulations and strategies. Weak law enforcement was found, particularly regarding Act No. 21 of 2000. One government regulation that was effective was No. Kep-150/Men/2000. Although the union respected the formal labor dispute system, the company did not. The union tended to adopt a collaborative strategy while the company persisted in adopting a hostile strategy. As a result, 82 union members, including four union representatives, were dismissed. In the end, the union eventually gave priority to ensuring the employment of 600 union members over protecting 82 members who had already been suspended. In this way, the union survived. Alternative paths to stable industrial relations would have emerged if the union had strengthened its solidarity or the company had been punished for violation of labor laws.

Introduction

Indonesian industrial relations have undergone a great transformation since President Soeharto stepped down in 1998. Many new labor unions have emerged at the plant and national level. Important labor laws have been passed, such as Act No. 21 of 2000 on Labor Unions/Trade Unions, Act No. 13 of 2003 on Employment, and Act No. 2 of 2004 on Industrial Relations Dispute Settlement.

Major changes have occurred in the labor system since it was implemented during the Soeharto regime, which had been characterized by an exclusionary corporatism (Hadiz 1997). Nevertheless, note has been made of the weakness of labor organizations and unfavorable industrial relations for labor. Examples of this are the fragmentation of labor organizations, the persistence of state repression under unfavorable conditions of unemployment and underemployment (Hadiz 2001), weak law enforcement, and harsh management strategies, which sometimes employ gangsters and violence (Mizuno 2003, 2005).

Many new unions have been organized, including those formed at companies where only government-supported unions had been found during the Soeharto era. The number of union members has also increased. In 1999 and 2000, many unions were organized and gained the recognition of management. Many demands, such as those for wage hikes and improved fringe benefits, were accepted by employers through strikes. The consecutive increases in minimum wages seen in Jakarta since 1999 are also to some extent related to the upsurge in the labor movement there.

How are present industrial relations different from Pancasila Industrial Relations under the Soeharto regime? What are the positive and negative aspects of the present situation? What are the strengths and weaknesses of organized labor? What institutions are being formed? And what are the strategies of the agents to make the institutions sustainable?

In order to answer these questions, we need empirical studies on labor organizations, industrial relations, and labor conditions, particularly at the plant level. Although some empirical studies were done during the Soeharto regime, few studies have been conducted on

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industrial relations today, particularly at the plant level taking account of new factors that have emerged since the departure of President Soeharto.

The author has presented two previous case studies. One focused on a fierce labor dispute at a metal manufacturer in West Jakarta that resulted in the dismissal of 667 workers and the breakup of a union (Mizuno 2003). The other involved a dispute at a garment manufacturer in Bogor District in which stable industrial relations were successfully established that promoted communication between trade unions and the company (Mizuno 2005).

This study will analyze a labor dispute that resulted in the mass dismissal of workers but also maintained the existence of a newly formed union. Modest strategies adopted by the newly formed union enabled it to survive despite the aggressive strategies taken by the company, which involved infringement of labor laws. This study demonstrates the weakness of organized labor when confronted with a company’s strategy of curbing the power of the union through infringement of labor laws. However, it was not as extreme a case as that in West Jakarta, where the dispute resulted in the breakup of the labor union.

This study will show how and why the union was weak, as well as what rules were effective and which strategies sustained the rules. It will explore possible paths to stable industrial relations by analyzing this case using game theory. The field research was conducted by the author in 2001 and 2002 through interviews and questionnaire surveys of union members, as well as the collection of documents from various sources. Chronology of the dispute

Company A (PT.A) is located in the Tangerang District of Banteng Province. It produces sweaters using an OEM production system. The company was taken over by Chinese Singaporean interests in 1996, so it is categorized as a foreign company. All products are exported, mostly to the US but partially to European countries, as well. The company had around 800 employees as of January 2002. About 700 are women.

In April 1999, a plant-level union, SBTP, was formed, which joined Jabotabek Trade Union (SBJ). In the same month, a branch of SPSI (All Indonesian Trade Union) and another plant-level union, SPTP, were formed. The majority of the employees joined SBJ. As of December 2001, SBJ had 630 members, SPSI had 30 members, and SPTP had 20 members. One hundred and twenty workers belonged to no trade unions at all.1

At the end of May 1999, a two-day strike was staged, and union demands were accepted by the company such that detailed statements of wages would be given to workers, the company would not interfere with the unions as long as union activities were in accord with government regulations, the company’s piecework system would be changed to a fixed salary system, and so on.2 The company promised not to dismiss workers and not to threaten workers who joined the demonstration during the strikes.3

In September 2001, the representatives of a US company that had contracted OEM production visited PT.A and recommended that the company and unions make a comprehensive collective labor agreement. In October 2001, the company asked the unions to submit a draft of the CLA. The SBJ representatives at PT.A submitted it on October 29, 2001.

While the SBJ representatives at PT.A demanded a start to negotiations on the CLA, PT.A called the unions to explain that it planned a mass dismissal of workers on January 17, 2002 because of declining orders and production adjustments. On January 23, the company 1 Letter from SBJ representatives at PT.A addressed to the Manpower Section at Tangerang District Government dated Jan 30, 2002. 2 Collective labor agreement between the representatives of workers and PT.A dated Jun 2, 1999. 3 Letter of statement made by the personnel manager of PT.A dated May 31, 1999.

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suspended 78 employees and offered them severance pay. During three days starting January 24, 42 employees accepted the offer and received severance payments that were twice the amount stipulated by government regulations in Article 23 of the Decision of the Minister of Manpower No. Kep-150/Men/20004. On January 28, many workers who had not been suspended began a strike to demand that the company allow the suspended employees to work again. On the same day, the company suspended four of the five SBJ representatives at PT.A. Beforehand, on January 22, the company had applied to the Central Committee for Labor Dispute Settlement (P4P) asking for permission to dismiss 82 employees, explaining that orders had decreased and the company had selected 82 employees who had bad employment records. Almost all of the 82 employees who were suspended belonged to SBJ.

On February 4, 2002, SBJ and PT.A reached an agreement that the company would not dismiss the workers who joined the strike and would not intimidate workers. The agreement also stipulated that the workers who had not been suspended should start to work on February 5, 2002.5 On February 5, 2002, mediators of the Manpower Section of Tangerang District recommended that the company should reemploy 41 workers who had been suspended and had not received severance payments since January 2002.6 Although the workers accepted this recommendation, the company rejected it.7

After the agreement on February 4, 2002, the union took no action, neither striking nor demonstrating. Deliberation on the settlement of the dispute continued at P4P, with SBJ eventually submitting a plan of compromise to the effect that SBJ would accept the mass dismissal as long as the four SBJ representatives at the company were excluded from the list of workers to be dismissed.8 SBJ also agreed to other planned mass dismissals on the condition that severance pay would be five times that stipulated by government regulations. The company, however, rejected these proposals.9

On April 15, 2002, P4P decided to give permission for the dismissal of 82 workers. At the time that P4P made this final decision, 51 of the 82 workers had received severance payments and accepted the dismissal. P4P gave permission for the dismissal of 31 workers who had not received the severance payments so far on the condition that the company would pay twice the severance pay stipulated in Article 22 of No. Kep-150/Men/2000.10 The 31 members of SBJ finally accepted the decision and received severance payments.11

On February 20, 2002, the company resumed collective labor agreement negotiations with the three unions after the suspension of the four SBJ representatives at PT.A, who could not enter the company because of the suspension. Rules and strategies

Rules in the dispute

1. Government regulations that were not effective

When the dispute broke out in 2001 and 2002, Act No.13 of 2003 was not yet in force, and the procedure for staging a strike was subject to Act No. 22 of 1957. In this case study the union did not comply with the articles of the Act regarding the procedure for staging a strike

4 Decision of Minister of Manpower No. Kep-150/Men/2000 on the Termination of Employment in Private Undertaking and Decision of Severance Pay, Service Pay, and Compensation. 5 CLA between SBJ representatives and PT.A witnessed by the head of manpower section, Tangerang District government dated Feb 4, 2002. 6 Report of mediation No. 01/II/64/2002 by labor mediator dated Feb 11, 2002. 7 Letter of PT.A No. 12/PERS/II/2002 addressed to the head of P4P committee dated Feb 7, 2002. 8 Letter of SBJ representatives at PT.A No. 0240/Sekjen-SBJ/IV/2002 addressed to the head of committee of P4P dated Apr 15, 2002. 9 Decision of P4P No.571/363/58-9/X/PHK/4-2002 between PT.A and Mr. B and others (82 workers) dated Apr 15, 2002. 10 Ibid. 11 Author’s interview with former representatives of SBJ at PT.A on Sep 22, 2002.

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because the union did not send a letter to the Local Commission for Labor Dispute Settlement (P4D). This was also the case with the other two cases studied by the author (Mizuno 2003, 2005).

Article 28 of Act No. 21 of 2000 on Trade Unions/Labor Unions is another important article for trade unions. The company nominated four representatives of SBJ at PT.A as workers who should be suspended/dismissed because of their evaluations as workers based on criteria, number of workers, work output, initiatives, responsibility, and the corporation. P4P recognized these criteria for evaluating employees and gave permission for the dismissal based on the evaluations and criteria.12 Act No. 22 of 1957 and Act No. 12 of 1964 orders employers and trade unions to engage in negotiations and deliberations, through which they are expected to foster industrial relations. During labor disputes, conflict and debate may occur in such a way that negotiations can be expected to resolve the dispute. Therefore, union representatives and activists are supposed to be tough negotiators who sometimes adopt hostile positions during negotiations. This means that criteria for cooperativeness cannot be applied to union representatives and activists. On January 28, 2002, four union representatives were suspended and not allowed to enter the company after January 29, 2002.13 This announcement was closely related to the strike that started on January 28, 2002.

It seemed very likely that the dismissal violated Article 28 of Act No. 21 of 2000, which stipulates that no one may interfere with unions through termination, suspension, demotion or transfer of those who implement union activities. Major infringement of this article was shown in the author’s case study of the metal manufacturer in West Jakarta. 2. Government regulations that were effective

One regulation that was effective for the purpose of the dismissal was No. Kep-150/Men/2000. The parties in this case study were completely aware of the stipulation that five days absence was a legitimate reason for dismissal. The stipulation states that a company may terminate employment in cases where an employee has been absent for five consecutive days without due cause provided in written form despite a written summons by the company having been issued twice during this time.

Asked why the workers stopped the strike on February 4, 2002, a leader of the SBJ representatives at PT.A answered that they could not endanger the employment of 600 union members who were not suspended at that time by carrying out the union’s strategy of continuing the strike over five days.14 3. Public institution for Labor Dispute Settlement was main arena of negotiation

The stipulation on the amount of severance pay proved valid as a rule, in that many members who were suspended received the amount of severance pay stipulated by No. Kep-150 /Men/2000, although the union rejected the company’s proposal to dismiss its members.

In this case study, the parties concerned made use of and respected the institutional framework for labor dispute settlement. Immediately after the suspension of workers by the company on January 23, 2002, mediators from the District Office got involved. After going on strike on January 28, 2002, workers went to the District Office on January 30, 2002 in order to avoid gangster intimidation.15 The parties continued to negotiate there and reached

12 See 9. 13 Announcement of PT.A No.04/PERS/I/2002 dated Jan 28, 2002. 14 Author’s interview with a SBJ representative at PT.A on Sep 22, 2002. 15 Letter of SBJ representatives addressed to C, the representatives of Bayer U.S. dated Feb 1, 2002.

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agreement on February 4, 2002. They compromised. The company would not dismiss or intimidate workers who joined the strike, and the workers would start to work on February 5, 2002. On this day, mediators recommended that the company reemploy suspended workers.

After the company rejected the recommendation, the case was brought to P4P on February 11, 2002 and registered with the P4P committee on March 5. SBJ asked P4P to hasten the process. SBJ said the suspended workers faced economic difficulty because they were given only 75% of their wages.16 After the resumption of factory operations on February 5, the dispute was mainly discussed at P4P. Suspended workers, including the four union representatives, could not enter the company. The other SBJ members who were not suspended continued to work.

The suspended workers respected the P4P decision on April 15, 2002, and did not appeal to the Administrative Court. Public institutions related to labor dispute settlement, such as the mediators and P4P, were the main arena for negotiations. This is quite different from the other cases studied by the author.

In the case of the metal manufacturer in West Jakarta, not only did third parties get involved, but Parliament as well became an important arena for negotiation. The District Court as well as the Prosecutor’s Office became deeply involved. The union affiliated with SBMSK (Setia Kawan Free Trade Union) applied pressure on the Manpower Section of local government as well as P4P, to the point of destroying buildings (Mizuno 2003).

In the case of the garment company in Bogor District, bilateral negotiations were given priority, and the union affiliated with PPMI (Indonesian Muslim Workers’ Association) succeeded in mobilizing the Minister of Manpower to influence the company. The parties did not make use of P4P or P4D as an arena for negotiation (Mizuno 2005).

Strategies

1. Strategies of the company and trade union

Chart 1 shows the strategies employed by the company and union using game theory in extensive form. The arrows indicate the strategy of each player in the negotiations. The apex of the chart indicates the start of the labor dispute, while the bottom represents its end. Each point in the negotiations is indicated by two arrows pointing downwards from a central node. This node is the point at which alternative moves are available to the player. The nodes where the company is required to make a move are shown as OC1, OC2, etc., and those where the workers must decide are shown as OL1, OL2, and so forth. Arrows pointing downwards and to the right represent hostile strategies. Those pointing downwards and to the left indicate collaborative strategies. Bolded arrows represent the strategies that were actually taken.

As shown at OC2, the hostile flow begins with the company starting the dismissal process by suspending 78 workers. The workers respond by striking at node OL2. The company responds again with a hostile strategy by suspending four SBJ representatives at PT.A. The hostile flow of both parties’ strategies changes at node OL4 when the union stops the strike after 6 days and reaches an agreement with the company not to dismiss union members who joined the strike. The collaboration flow comes to a stop at node OC5, however, where the company rejects the mediator’s recommendation to reemploy the 40 suspended workers.

The union then adopts a collaborative strategy, attempting to negotiate at node OL5. The company continues to take a hostile approach at OC4, OC5, and OC6. Eventually, the union

16 Letter of SBJ representatives at PT.A No.0193/Sekjen-SBJ/II/2002 dated Feb 25, 2002.

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accepts P4P’s decision to agree to the dismissal of 82 workers, including the four SBJ representatives, without appealing to the Administrative Court for a review of the decision.

The chart shows that the company adopted a systematic, hostile strategy towards union members and succeeded in removing the four SBJ representatives at PT.A. This enabled it to negotiate with the unions in order to reach a collective labor agreement (CLA) that was favorable to the company, because most of the SBJ representatives at PT.A who had made the draft CLA had been dismissed and could not participate in negotiations.

Chart 1. Company and labor union strategies in the case study

Source: Author’s field survey in 2001 and 2002.

Ask union to submit draft CLA Neglect to make CLA

Direct action Submit draft CLA

Negotiate CLA Start dismissal process by suspending 78 workers

Accept the suspension Strike

Stop suspension Suspend 4 union representatives

Negotiate conditions of dismissal Continue strike

Stop strike and negotiate with mediator Strike Mediator’s recommendation to reemploy 40 workers OC5 Company

Reject recommendation Agree to recommendation to reemploy 40 workers

Protest Negotiate at P4P to exclude 4 union representatives from dismissal

Reject union’s offer Accept the union’s offer

Appeal to court

P4P agrees with mass dismissal

Accept P4P's decision to agree with dismissal of 82 union members

OL6

OL1

OL2

OL3

OL4 Continue dismissal process Stop dismissal process

OL5

OC1 Company

OC2

OC3

OC4

OC6

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The union was not in a position to take a tough stance in this dispute due to some obvious weaknesses. For example, 42 of the 78 union members who were suspended on January 23 had accepted severance pay until the end of that month. Also, the strike that started on January 28 was not actually formulated by the SBJ representatives at PT.A. Workers who had not been suspended and had worked at the factory thus far began the strike on their own, without informing SBJ representatives. The representatives who learned of the strike started protecting the workers only after the strike had begun. Those workers who were suspended could not enter the factory, so it was the workers who had not been suspended who began the strike 'spontaneously'.1 The company used this to suspend the four SBJ representatives.2

2. Strategies of weak and strong unions

Chart 1 shows that the union attempted to adopt a collaborative strategy at node OL4, but the company did not respond to this, opting instead to continue a hostile strategy at node OC5. This pattern was repeated at node OL5 and OC6. Chart 2 shows the strategies available to the union at node OL4, and to the company at node OC5. The strategies available to the players in Chart 2 can be given codes according to Chart 3.

Chart 2. Payoff matrix for labor dispute at PT.A at OL4 and OC5

Company

Collaboration Hostility

Collaboration

40 workers reemployed Workers’ representatives strengthened

CLA favors workers Factory reopens

82 workers dismissed Union survives

Factory reopens CLA favors company

Workers

Hostility

40 workers reemployed Workers’ representatives strengthened

CLA favors workers

Massive dismissal of more than 82 workers Union disbanded

Union disbanded CLA favors company Dispute prolonged

Chart 3. Payoff matrix for labor dispute at PT.A

Company

Collaboration Hostility

Collaboration a1 b1 a3 b3

Workers Hostility a2 b2 a4 b4

1 Author’s interview with a member of the then representatives of JBJ at PT.A on Sep 22, 2002. 2 Letter of announcement No.04/PERS/I/2002 by Head of Personnel Department, PT.A dated on Jan 28, 2002.

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Considering the strategies available to the union assuming a hostile stance by the company, strategy a3 is far better than a4, because a4 would produce a massive dismissal of SBJ members who had not been suspended. Considering the strategies b1 and b3 that are available to the company, b3 is preferable because it eliminates most of the SBJ representatives at PT.A and results in a CLA favorable to the company.

Regarding strategies a1 and a2, a2 is preferable to the workers. However, with regard to strategies b2 and b4, b4 is preferable to the company because the resulting CLA would favor it, and it is far more advantageous to the company. There would be few downsides to a prolonged dispute because once a large number of SBJ members were dismissed, the company would not meet stiff resistance with many workers receiving severance pay.

So the payoff matrix in Chart 2 shows that the Nash equilibrium is located at column a3 and b3, which involve a hostile company strategy and collaborate union strategy.

This calculation is supported by an interview with an SBJ representative at PT.A. He said, ‘(Regarding the agreement on February 4, 2002 to stop the strike) when we striked at the office of the Manpower Section of the District Government, we realized that if we decided to continue the strike, 600 other union members, in addition to the original 82 workers, would lose their jobs. After careful consideration, we concluded that it would be acceptable for 82 members to take legal procedures and allow the others to work again.'3

These strategies are completely different from those taken in the garment company dispute (Mizuno 2005). In that dispute, the workers tried to continue their strike. If the company had intervened using gangsters, it would have faced fierce resistance from workers as well as resistance from the community. Countering a strike staged by several thousand employees would require the hiring of a substantial number of gangsters. The use of gangsters would have resulted in many victims of violence and damage to the reputation of the company (Mizuno 2005, p. 203-205). The solidarity of the workers in that case study was far stronger than that in this case study.

3. A possible path to stable industrial relations

With this in mind, it is possible to consider potential paths to stable industrial relations so that unions and companies can reach a win-win solution.

In this case study, strategies a2 (workers) and b2 (company) result in a win scenario for the union. When the union is in a generally weak position, these are probably the best first options. In this case study, the company would choose b4 because the payoff/benefit (CLA favoring the company) outweighs the disadvantages of a prolonged dispute. If, however, the payoff/benefit (CLA favoring the company) were not large enough, or if the disadvantages of a prolonged dispute were large, the company would choose strategy b2.

If the company had improved its skills in negotiating with unions in order to produce a CLA that was neutral, or if the solidarity of the workers had been strengthened, or if the violation of Article 28 of Act No. 21 of Trade Union/Labor Union had been prosecuted, the company would have chosen strategy b2 and accepted the recommendation of the mediators to reemploy 40 workers. Also, had the foreign representatives asked the company not to dismiss the workers related to the drafting of the CLA, the situation would have been quite different.

Strategies a1 and b1 are collaborative for both parties. Once the equilibrium moved to a2 and b2, it would not be difficult to move to a1 and b1 because that would allow the union to avoid

3 Author’s interview with former representative of JBJ at PT.A on Sep 22, 2002.

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the risks entailed in the case of a hostile strategy, which would involve a prolonged strike. To actually strike for more than five days would lead to major risks for the union.

Conclusion

Analyzing a weak trade union and the resolution of its labor dispute, this study has shown the following characteristics relating to rules and strategies among the parties.

Regarding rules, weak law enforcement was found particularly in relation to Article 28 of Act No. 21 of 2000. One government regulation that proved effective was No. Kep-150/Men/2000, both in regard to the termination of employment and the amount of severance pay.

One characteristic of this case is that the union was quite dependent on the formal system for labor disputes, such as the role of mediators, the office of the Manpower Section at the District Government, and P4P. The union respected the system. The company did not.

In the dispute, the union tended to adopt a collaborative strategy, but the company persisted in taking a hostile strategy. As a result, 82 union members, including four union representatives, were dismissed. At the climax of the dispute, the union gave priority to the employment of 600 members rather than protect the jobs of 82 members who had already been suspended.

There are many paths to stable industrial relations. Alternate paths would have emerged if a) the company had not feared negotiating a CLA with the union or b) the union had strengthened its solidarity or c) the company had been punished for violation of labor laws.

The union made the difficult choice of prioritizing the employment of 600 union members over the jobs of 82 members. In the end, however, it managed to survive. The solidarity among union members that prevailed in the end may someday develop into a stronger union that will enjoy power on a par with the company. When that happens, stable industrial relations will have been achieved at the company. References

Hadiz, V., 1997, Workers and the State in New Order Indonesia, Routledge, London.

Hadiz, V., 2001, 'New organising vehicles in Indonesia: Origins and prospects', in Jane Hutchison and Andrew Brown eds. Organising Labour in Globalising Asia, Routledge, London and New York, pp. 108- 126.

Mizuno, K., 2003, 'Indoneshia ni okeru rō-shi funsō-shori seido to sono funsō jirei -- Gōgi no gensoku (mushawarā) no moto ni okeru rōshi-funsō shori' [The industrial conflict resolution system in Indonesia and a case study on conflict resolution: Industrial conflict resolution based on the principle of Musyawarah], Ajia keizai, vol. 44, nos. 5-6, pp. 167-198.

Mizuno, K., 2005, 'The rise of labor movements and the evolution of the Indonesian system of industrial relations: A case study', The Developing Economies, vol. 43, no. 1, pp. 190-211.

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Workplace Delegates and Worker Power

David Peetz and Barbara Pocock Griffith University and University of Adelaide1

In a survey of 2500 workplace union delegates in eight unions we examined the power of workers at the local, workplace level. We found local member power to be significantly related to a number of factors associated with the organising agenda. Local power was stronger where: unions were democratically organised; delegates were confident, active, had clear roles and had strong networks of support at the workplace and with the union office, particularly through the organiser; unions promoted common identity through inclusive policies than took seriously women's issues; the employer (and the delegates' supervisor) were supportive of the union delegate's role; and where job security was not declining. Training indirectly helped strengthen local power. Employer-related factors were only one eighth as important as union-related factors.

The employment relationship involves two direct parties: the employee and employer. The employer is typically a collective of capital – individual capitalists (shareholders) pool their resources to create a corporation with substantial resources but limited liability. The nature of the employment relationship is one of imbalance in power between the individual employee and corporation. This arises from the differential level of resources available to employee and employer, and the fact that the employer has the capacity to hire, determine the hours of and fire the employee. Employees seek to offset his imbalance through collective organisation, thereby pooling their resources and bargaining power. The central goal of trade union organisation is to increase worker power. The power of employees, as evidenced by wage levels, increases in workplaces as union density increases (Baarth, Raaum and Naylor 1998; Wooden 2000). Australian unions’ response to union decline has focused on attempting to build union power trough an ‘organising’ approach that focuses on the role of workplace union delegates, one that has gained currency amongst a number of unions in North America and the UK (Bronfenbrenner and et al 1998; Carter and Cooper 2002; Ellem 2002; Erickson, et al. 2002; Findlay and McKinlay 2003).

This paper examines workplace union delegates in Australia and their relationship to worker power. In particular, it focuses on the factors that influence the power of members at the workplace as perceived by workplace delegates. Data sources

Data presented here come from a survey of 2506 current and former workplace delegates undertaken in late 2003 and 2004. Of those, 2350 were current workplace delegates, the remaining 156 were former delegates. The data reported here come from the 2350 current delegates (hence N=2350, minus "don't knows", in the charts). Delegates were surveyed in eight unions: the Australian Education Union (AEU), Australian Manufacturing Workers Union (AMWU), Australian Services Union (ASU), Community and Public Sector Union (CPSU), Independent Education Union (IEU), Liquor Hospitality and Miscellaneous Workers Union (LHMU), National Tertiary Education Union (NTEU) and Rail, Tram and Bus Union (RTBU). Approximately 325 current delegates were surveyed in each of seven of the eight unions, with a smaller number coming from the RTBU because of its smaller membership base. Delegates were selected using systematic random sampling from lists provided by

1 Our thanks go to Chris Houghton for extensive research assistance on this project, Damian Oliver for generating some of the figures and of course to the officials and delegates in the participating unions.

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unions (mostly state branches). Interviews were conducted by telephone by the ACTU Call Centre, Member Connect. Interviewers were briefed by the researchers before hand on the survey instrument. The refusal rate was low, generally below 10 per cent. Further details are contained in an earlier paper (Peetz and Pocock 2005). We generally phrased questions about the union in terms of their (state) branch or division of the union, as this was the key operational level of the union with which delegates had interaction. Local power

On average, delegates reported that union density was about two thirds amongst employees in their part of the workplace, though for about a third density was less than fifty per cent. Some 58 per cent of delegates agreed that the union had power in the workplace (20 percent disagreed), and likewise 62 per cent agreed that the last round of enterprise bargaining here produced outcomes that members were happy with (19 per cent disagreed). These items were strongly correlated (r=.35). Again, there was a general view that these things were improving for unions, but with some setbacks. On another measure, 46 per cent reported an improvement in the success rate of their union on issues at their workplace, and just 11 per cent reported a decline. Two thirds had a sense of self-efficacy, and felt that by being a delegate, they can really make a difference to what happens to people where they work (Table 1). Thirty five per cent estimated that the level of unionisation in the workplace had increased over the preceding two years, while 19 per cent perceived a decrease.

We constructed an index of local member power at the workplace, based on the first four of those items (α = .62). The index had 18 potential values. For analytical purposes in regression equations we used the full range of this index, but for descriptive purposes, in crosstabulations that follow we divide the sample into three groups: those with high local power (comprising about 51 per cent of the sample); those with medium power (33 per cent); and those with low power (17 per cent).

We then used OLS regression to predict local power (based on the full index), using a range of variables depicting various elements of collectivism and union behaviour as explanatory variables. The results are summarised in Table 1, which omits those variables which were not significant in the final equation. The entered variables explained 43 per cent of the variance in local power, which is respectably high for a cross-sectional dataset.

One of the strongest predictors of local power was the level of activism amongst delegates, based on an index of activism that divided delegates into three roughly similarly sized groups based on how many activities they had undertaken in the preceding six months. Figure 1 shows the strength of this relationship in a crosstabulation: high activism meant high power, and low activism meant low power.

Another key ingredient in local power was delegate confidence. We asked delegates how confident they felt in undertaking three activities (answering queries from members, participating in a meeting of [delegate / representative]s, and being involved in a workplace campaign) and summed responses from these questions to create an index of confidence (α = .79). The more confident they felt about undertaking various activities, the greater was local power.

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Table 1. Predictors of local member power

Unstandardized

Coefficients t Sig.

B Std. Error

(Constant) 6.287 .543 11.587 .000

In an enterprise bargaining campaign, members here have a lot of say in determining the content of the claim

.548 .050 11.012 .000

Delegates have a lot of influence in this branch .439 .058 7.625 .000

(change over last 2 years in) the amount of influence that members have within the union branch -.638 .099 -6.434 .000

your organisation's attitude to your activities as a delegate – (hostile/neutral/supportive) .332 .074 4.503 .000

not enough support from members (obstacle to being more involved in the union) .474 .109 4.364 .000

index of activism .148 .040 3.740 .000

It is clear to me what is expected of me as a delegate .205 .066 3.132 .002

(change over last 2 years in) the support you get from the union office -.282 .093 -3.043 .002

My organiser has taught me many valuable things about being a delegate .148 .051 2.886 .004

(change over last 2 years in) the security of employment in your part of the workplace -.212 .075 -2.824 .005

(index of) confidence .072 .027 2.628 .009

boss is obstacle (to being more involved in the union) .316 .128 2.472 .014

This branch of the union pays a lot of attention to women's issues amongst its members .124 .055 2.257 .024

(effectiveness of union support in) showing me how to develop networks of people who can help me .110 .055 2.007 .045

I am allowed to take paid time off work to do union activities .056 .037 1.522 .128

R squared .437

adjusted R squared .432

F 83.606 .000

N 1631

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Role clarity was also important in explaining power. While 59 per cent of those who were clear about their role (that is, they agreed that it was clear what was expected of them as a delegate) were in workplaces with high local power, only 27 per cent of those who were unclear about their role were in workplaces with high local power.

Figure 1. Delegate activism and its effect on union power

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Local power was higher where the union was seen as paying attention to women's issues. Local power was high for 58 per cent of delegates who agreed with this proposition, but only for 30 per cent of those who disagreed. Interestingly, while this relationship was stronger for female than for male delegates, it was still significant for both genders. Power and democracy

The most powerful set if influences on local power concerned measures of democratisation within the union. As shown in Table 1, the three strongest explanatory variables were all related to this concept: whether members had a lot of say in determining the content of claims made in collective bargaining ('enterprise bargaining'); whether delegates have a lot of influence in the union branch; and whether the influence of members in the branch has been increasing over the past two years. The strength of these relationships in crosstabulations can also be seen in Figures 2 and 3. Clearly, the more power that members and delegates have in the union, the more power they have in the workplace as well.

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Figure 2. Member involvement and its effect on union power

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Power and networks of support

An important source of support for delegates is the networks they develop – with union staff, other delegates and members. Several variables related to these networks were significant independent explanators of local power (Table 1). Local worker power was significantly lower where delegates reported that lack of support from their fellow members was an obstacle to their being more involved in the union. Local power was significantly higher where delegates reported an increase in the level of support that they received from the union office. It was higher where they agreed that their organiser had taught them many valuable things about being a delegate. And it was higher where they scored the union as being effective in showing them how to develop networks of people who can help them.

Figure 3. Delegate influence and its effect on union power

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Union offices provide a variety of support to their delegates. We asked delegates to rate, on a scale of 1 to 5, how effective several types of support were for them: supporting industrial action; providing news and information ; providing advice and expertise; directly dealing with individual grievances; speedily responding to an issue; keeping in contact with me; making training available; and showing me how to develop networks of people who can help me. In total, 24 percent of respondents described the overall level of support the union gave them as being ‘very effective’, and 8 per cent gave one of the lowest two ratings.

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We also entered each of the forms of support into a regression equation to see which were the most important influences (Table 2). Given the high degree of collinearity between these measures, it was notable that all but three retained independent significance when entered together. Notably, the most important form of support was the one on which unions performed worst – their support in showing delegates how to develop networks of people who can help them. Table 2. Types of support and their influence in predicting local power

Unstandardized

Coefficients t Sig.

B Std. Error

(Constant) 7.071 .326 21.717 .000show how to network .374 .064 5.821 .000support industrial action .403 .072 5.613 .000dealing with grievances .296 .076 3.914 .000advice & expertise .303 .082 3.671 .000keeping in contact .173 .065 2.669 .008speedily respond .088 .079 1.113 .266making training available .049 .058 .844 .399news & information .003 .077 .043 .966R squared .223 adjusted R squared .220 F 63.197 .000N 1766

Within-workplace links

As shown in the overall regression equation (Table 1), internal networks of support were important in predicting local power. We have already seen how a significant role is played by the union office's support in showing delegates in how to develop local networks. Figure 4 shows two other similar relationships in cross-tabulation format. The laft hand part of the figure shows that local power is higher when delegates report that it is easy to get other members to help share in union tasks. The right hand part of the table shows that local power is lower where members report that they do not get enough support from members and this is an obstacle to their being more involved in the union. Community links

We asked delegates whether they held an activist position outside the workplace, either in the union or elsewhere, such as delegate to a union branch council or an activist in a social group or community association. Some 13 per cent had a position in a social group or community association, including 3 per cent who also had an external union position. We called this 13 per cent 'community activists'.

Amongst delegates, community activists were better networked – they were more likely to report having a lot of contact with delegates in other workplaces or from other unions. They were more often in contact with their organiser, and more often in contact with someone else from the union office. They felt more involved in the union, were more confident, and were less likely to perceive opposition from their boss as something preventing their becoming more involved in the union. They were more likely to have mobilised their colleagues. The felt higher efficacy as a delegate and, principally because of this, scored slightly higher on local power.

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Figure 4. Involvement & support of union members and their effects on union power

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Managerial opposition

While managerial opposition to unions is important to explaining union outcomes, few data have been collected on what level of management is most hostile or matters most. We asked respondents how they would categorise their supervisor’s attitude, and their company’s or organisation’s attitude towards them. The overall regression equation (Table 1) showed the greater importance of the company's position to that of the delegate's boss in explaining union power. Both were significant, but the company's position was more so. Interestingly, when we look at the former relationship in crosstabulation format (Figure 5), we see that, compared to employer neutrality, employer support made a bigger difference to local power than did employer hostility. This probably reflects a complex relationship between managerial attitude and activism. Bad managers created issues that led to union activism, while they seek to oppose unionism. Higher activism in response to employer misbehaviour can in turn lead to higher power, partly (but not fully) offsetting the negative direct impact of employer hostility on local power. Job insecurity also reduced local power.

While managerial opposition to unions is important, it is important to put this in context. In total, union-related variables explained eight times as much of the variance in local power than did management-related variables.

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Figure 5. Employer opposition and its effect on union power

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Training Training did not appear as a separate explanatory variable when we entered it into the overall regression equation explaining local power, hence it does not appear in Table 1. This is because training affects the variables that in turn directly influence local power. That is, training's influence is strong but 'indirect'. Some 57 per cent of delegates who had received training were in workplaces with high local member power, compared to only 42 per cent of delegates who had not received any training.

We entered several training related variables – concerning the content of their training, when it had been undertaken, and the perceived usefulness of it – into a regression equation to identify the most important factors (Table 3). As you would expect, there was a high degree of multicollinearity, so many of the forms of training became non-significant in the presence of other content variables and so are not entered into the equation shown in Table 3. The non-significance of these signs should not be interpreted as meaning that these forms of training had no impact; rather, it just signifies the relative ranking of the importance of those particular forms of training. The most significant predictor of union power was the overall quality or usefulness of their training, as rated by the delegates. The most valuable forms of training, for promoting local power, were training in collective bargaining and in campaigning skills.

The currency of training was also important. Local power was highest in workplace where delegates' training had been most recent (Figure 6). This might be because of a general decaying of some skills over time. However, it probably also reflects changes in the quality of training over time, as union training has taken on more of the principles of organising and learnt from the successes and failures of the past.

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Table 3. Training predictors of local power

Unstandardized

Coefficients t Sig.

B Std. Error

(Constant) -70.531 32.008 -2.204 .028Overall rating of usefulness of training .717 .086 8.290 .000trained in enterprise bargaining .755 .147 5.148 .000trained in campaigning skills .558 .144 3.883 .000Year of last training .042 .016 2.600 .009R squared .106 adjusted R squared .103 F 39.097 .000N 1328

Figure 6. Year delegate last received training and its effect on union power

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Conclusions

We found local member power to be significantly related to a number of factors associated with the organising agenda. Local power was stronger when unions were democratically organised, with power increasingly in the hands of members and delegates. It should be emphasised that democratic organisation did not refer to particular structures in place; rather it referred to a situation where delegates and members had influence in the decisions of the union, including those that directly affected them (such as the content of claims against the employer) and their influence was increasing. Local power was also stronger where delegates were confident, active, had clear roles and had strong networks of support at the workplace and with the union office, particularly through the organiser. Local power was stronger where unions promoted common identity through inclusive policies than took seriously women's issues. Training indirectly helped strengthen local power, as did broad solidaristic orientations amongst delegates.

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Local power was stronger where the employer (and the delegates' supervisor) were supportive of the union delegate's role, and where job security was not declining, but employer-related factors were only one eighth as important as union-related factors. The fate of unions is thus not in employers’ hands: it is in unions’ own hands.

References Baarth, E., Raaum, O. and Naylor, R. (1998). Union wage effects: does membership matter. Warwick

Economics Research Paper Series No 500. Warwick, University of Warwick. Bronfenbrenner, K. et al, Eds. (1998). Organising to Win. Ithaca NY, ILR Press. Carter, B. and Cooper, R. (2002). "The organizing model and the management of change: A comparative

study of unions in Australia and Britain." Relations Industrielles 57(4): 712-42. Ellem, B. (2002). The power of place and scale: union renewal in the Pilbara. Celebrating Excellence,

Queenstown, Association of Industrial Relations Academics of Australia and New Zealand. Erickson, C. L., Fisk, C. L., Milkman, R., Mitchell, D. J. B. and Wong, K. (2002). "Justice for janitors in

Los Angeles: Lessons from three rounds of negotiations." British Journal of Industrial Relations 40(3): 543-67.

Findlay, P. and McKinlay, A. (2003). "Union organising in 'big blue's' backyard." Industrial Relations Journal 34(1): 52-66.

Lee, K. (2004). Opportunities for Building Power Amongst Working People and Disadvantaged Communities in Australia. Report, Winston Churchill Memorial Trust. Sydney.

Peetz, D., Houghton, C. and Pocock, B. (2004). Community activists, coalitions and unionism. Labour and Community conference, Melbourne, Monash University.

Peetz, D. and Pocock, B. (2005). Organising and delegates: An overview, Sydney, Association of Industrial Relations Academics of Australia and New Zealand.

Tattersall, A. (2004). Union-community coalitions and community unionism. paper to International Colloquium on Union Renewal, Montréal.

Wooden, M. (2000). Union Wage Effects in the Presence of Enterprise Bargaining. Melbourne Institute Working Paper No 7/00. Melbourne, Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

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Union Effectiveness and Union Strategy in Indonesia

Aryana Satrya


This article develops a result and process-oriented concept of union effectiveness measurement at the workplace. It explores various explanations of union effectiveness in Indonesia. In particular, it examines the implementation of comprehensive union strategy (union aims, union methods, union tactics, and level of decision making) and the relevance of organisational factors (union and company characteristics). Empirical data are provided from a survey of 100 national union leaders from services industries. The findings of regression analysis reveal that three organising strategy variables: information and computer technology use, regular meeting with other union, and general innovation, and partnership tactic with management variable, are the most important determinants for union effectiveness.

Since the collapse of Soeharto’s presidency 1965 to 1998 period, which had been known as the New Order Era, Indonesia has entered a new stage in union life. The June 1998 ratification of International Labour Organisation (ILO) convention no. 87 which defined the Freedom of Association and Protection of the Right to Organise, and the introduction of the Trade Union/ Labour Union Law no. 21 in the year 2000 has introduced a democratic climate to Indonesia’s industrial relations.

A sharp increase in the number of unions, from 6,211 in October 1999 to 11,030 in May 2001, indicates that workers have attempted to utilise their new rights to join and establish unions. In July 1998, there was only one union federation registered with the Indonesian Ministry of Manpower and Transmigration (Departemen Tenaga Kerja dan Transmigrasi - Depnakertrans) but the figure jumped to 32 by December 2000, 64 by December 2002 (Quinn, 2003: 5), and 86 federations by January 2005 (Depnakertrans, 2005).

As yet, union membership as a proportion of those eligible to join has remained the same for the past 10 years. The UNDP 2002 Human Development Report (Quinn, 2003: 5) gave figures of 3% union membership in Indonesia as a percentage of non-agricultural workforces. This figure has not changed since, and it was a lower rate in comparison to other Asian countries: Singapore 20%, South Korea 17%, and Malaysia 15% (Manning, 1998: 210).

After the end of the Sukarno period in 1965, Indonesia has experienced a tradition of weak unions. During the New Order government, union movements were tightly controlled to give emphasis to economic stability (Hadiz, 1997: 132, Manning, 1998: 204). This was because of the Indonesian government’s policy that actively encouraged foreign investment since 1966. Under regulations introduced in 1992, 100% foreign equity ownership is permitted in most sectors.

The strategies that unions in Indonesia adopt are critical to their effectiveness in achieving members’ needs. However, the literature on unions in developing countries does not provide any consensus on the effectiveness on unions strategies in the context of economic globalisation. This thesis will contribute both to the academic literature, and to the strategic practices of unions in developing an evaluation of union strategy and union effectiveness in Indonesia.

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Strategy

The match between an organisation’s environment and its strategy will improve organisation performance with benefits such as: to make clear and focus on vision and objective of the organisations, and to understand the environment (Wheelen and Hunger, 2004: 4). In non-profit organisations, the use of strategy will ensure stakeholder satisfaction, growth in participation, and even better financial performance (Courtney, 2002: 144-145).

Gardner (1989: 54, Gardner and Palmer, 1997: 112-114) observes that union strategy in the industrial relations area is not commonly associated with conscious, rational, systematic, planned, and long-term planning characteristics, since union activity is usually characterised as defensive and reactive. Reshef and Strattondevine (1993 cited in Gardner and Palmer, 1997: 113) note that only about 24 per cent of the large ‘business’ unions of North America engage in long-term planning; that they are mostly concerned with budget, education, and political campaigns, rather than their core industrial activities.

Decisions made in unions are often collective, made by different interest groups at varying times. A union strategy would then be adaptive, inertial and incremental through ‘an accumulation of decisions about tactics and goals, which gradually consolidates into a strategy for union activities and programs to pursue goals’ (Gardner and Palmer, 1997: 113).

Union Strategy in Developed Countries

Based on her observation of research results on Australian trade unions, Gardner (Gardner and Palmer, 1997: 114) offers a broad range of dimensions as a framework for analysing trade union strategy, including: policy arenas in which unions act (industrial – political), level of negotiations (centralised – decentralised), membership and leadership involvement in policy formulation (concentrated – diffused), union methods to form job regulation (autonomous – collective bargaining – arbitration – political), the range of industrial tactics used (narrow – broad), relationship to other unions (isolated – integrated – conflictual – cooperative), sequence of activity (follower – leader), and union values or ideology (leadership – united action – autonomous action). The choice is made to maximise union power within organisational constraints.

The result is quite comparable to other research results. In the USA, Fiorito and Jarley’s innovative strategy variable (1995), and Bronfenbrenner’s rank-and-file intensive strategy variables (1997: 211) – developing union commitment, rank-and-file representative committees, long-run campaign, pressure tactics, new labour issues, and developing a culture of organising – can be viewed as the components of Gardner’s industrial tactics dimension. Likewise, Gahan’s (1999: 14) traditional and innovative union’s strategic choice, partnerships or organising strategies in the UK (Heery, 2002: 32), and the dimensions of relationship between union and workers or employers in New Zealand (Boxall and Haynes, 1997: 576) are the elaboration of union industrial tactics indicators. As Boreham and Hall (1994: 314, 345-346) reveals union political tactics called as ‘political unionism’ to measure the role of peak organisation of trade unions in the formulation of public policy in OECD countries. The variable involved such as: union participation in economic policy-making and the involvement of union in national or industry collective wage bargaining.

Union Strategy in Developing Countries

Most countries in East Asia play a close monitoring to the labour movement in pursuit of export-oriented industrialisation (Deyo, 1987: 233, Hutchison and Brown, 2001: 11, Verma et

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al., 1995: 351), through by the implementation of ‘corporatist’ and/ or ‘exclusionary’ strategies (Frenkel, 1993: 312). The governments in China and Singapore implement ‘state-corporatism’ patterns to control the unions, by placing members of the ruling parties into union structures, where the unions are involved in decision making institutions at the macro and micro level (Frenkel, 1993: 312).

Collaborative relationships with political parties are practised in India, Bangladesh (Hutchison and Brown, 2001: 6), and in Latin America. However, unions in Latin America have suffered set backs in the political domain because of anti-democratic developments during 1960s-1970s, and a debt crisis in the 1980s (Thomas, 1995: 238). Organising activities are growing, especially at grassroots level, in Thailand (Brown, 2001: 141), Philippines (Hutchison and Brown, 2001: 86, Rowley and Benson, 2000: 304), Taiwan (Chen-Yen, 2003: 30), Sri Lanka and Bangladesh (Caspersz and Ford, 2003: 4, Rock, 2001: 43). Unions in Korea used strikes in the late 1970s until 1997 to oppose the state’s authority over the unions (Rowley and Benson, 2000: 143). Unions in Africa have strengthened their legitimacy by reducing their dependency with the government (Kester and Sidibe, 1997: 15, Webster et al., 2003: 54-55). They start to re-organise, such as unions in Zambia and Mali (Kester and Sidibe, 1997: 16).

Some authors (cited in Caspersz and Ford, 2003: 6) suggest that unions have to broaden their focus to organise in sectors traditionally considered difficult to unionise, to collaborate with Non-Government Organisations (NGO) that have proven more effective in organising within export oriented production environments (e.g. cases in Indonesia, Malaysia, and Sri Lanka), to raise broader socio-economic issue in the form of ‘social movement unionism’, and to pursue international cooperation among unions regionally and worldwide (Rowley and Benson, 2000: 307, Cahill, 2001: 181).

Research on Union Effectiveness

The concept of union effectiveness is translated into various operational variables to indicate how well unions perform in achieving their goals; examples include: the unions’ capacity to sustain its presence (Boxall and Haynes, 1997: 568), to retain members (Fiorito and Jarley, 1995: 614, Gahan and Bell, 1999: 3), or to win the election (Bronfenbrenner, 1997: 197).

We can classify the variables that are used to measure union effectiveness into two categories: (a) subjective variables based on self-report rating, such as union leader perception of union effectiveness (Fiorito and Jarley, 1995, Gahan and Bell, 1999), and (b) objective variables such as the results of NLRB election, membership growth, and union density change (Bronfenbrenner, 1997: 205, Fiorito and Jarley, 1995, Gahan and Bell, 1999, Scott and Simpson, 1993). The subjective indicator is used to measure the concept that is not captured by any available indicators. Fiorito (1995: 629) suggests using composite scales to offer greater reliability and conceptual validity of multi-item scales rather than of single-item measures. The composite scale combines all subjective and objective indicators.

SMERU (2002: 48-49) and Sutanto (1998: 191-194) reveal that respondents in Indonesia believe that a union is said to be effective if they are able: (a) to defend the worker’s rights and interests; (b) to negotiate the collective bargaining agreement or disputes; (c) to communicate with the members; and (d) to empower their member.

Apparently, researchers prefer to use goals model indicators instead of the systems models approach that emphasises processes and operations. Bronfenbrenner (1997: 205) and Gahan (1999: 12) use membership growth and union density change, Boreham and Hall (1994: 345) use unemployment level in a country, and Fiorito et al. (1995: 622) use merely three of

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sixteen indicators of union effectiveness that can be classified as system oriented variables, namely: relative gains and organizing activity.

Relationship between Union Strategy and Union Effectiveness

The result of various research (e.g. : Bronfenbrenner, 1997, Boreham and Hall, 1994, Fiorito and Jarley, 1995, Gahan and Bell, 1999) confirm that union strategy variables, both individual and as a group, are among the most important determinants of union organising success. They explain a greater part of the variance of the dependent variable than any other elements of the model.

If unions use a comprehensive union-building campaign rather than using individual tactics of rank-and-file campaigns, they will significantly influence union effectiveness. For instance: solidarity days, bargaining committees, and a focus on new issues (e.g. dignity, justice, and fairness), representative committees, house-calls, small group meetings, and membership orientation (Bronfenbrenner, 1998: 33, Gahan and Bell, 1999: 15, Bronfenbrenner, 1997: 211, Fiorito and Jarley, 1995: 631). However, Gahan (1999: 15) argues that traditional strategy such as strikes remain effective tools for improving wages and conditions.

To support the implementation of the strategy, unions must develop better communication with members, for example, through contact and consultation with members, developing internal democracy, and creating membership involvement in union affairs consciousness (Gahan and Bell, 1999: 15).

At the enterprise level, as suggested by Heery (2002: 33), in order to enhance the strength of the ‘organising unionism strategy’, unions can establish partnerships with management that are constructed on the collective power of workers, as a result of organising activity. However, the adoption of the strategy is contingent, as it presents the unions with a series of choices. Strategy that relies on both solid organising and partnership apparently requires adjustment, since it produces controversy in issues concerning dual commitment toward management and union members (Boxall and Haynes, 1997: 586).

At the national level, unions have to establish strong relationships with governments to involve them in the provision and administration of labour policies. Besides, national unions should provide a central support to their affiliates, such as training and information centres, but leave to its affiliates the decisions as to how to gain the benefit of the facilities (Gahan and Bell, 1999: 15).

All are then combined to build a Composite Scale, which is implementing goal and system model approach, both objective and subjective measurements, to offer greater reliability and conceptual validity of multi-item scales rather than of single-item measures.

Data and Methods

Independent Variables This research is based on theoretical model that seeks union effectiveness in achieving its aims as a function of interacting elements, including union strategy, union characteristics, company characteristics and anti-union tactics. The main purpose is to investigate whether union effectiveness depends on union strategy that has the following dimensions: goals, methods, tactics, and level of decision-making. Figure 1 illustrates the relationship among union strategy and organisational characteristics with union effectiveness in achieving its aims.

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The first set of predictors – union goals – asks the respondent to indicate the importance of each type of goals: (1) wages and benefits goals, a five-item scale indicating the interest of union in improving wages, fringe benefits, pension and separation entitlement, and employee stock ownership (alpha = 0.751); (2) employment goals that consist of employment security, a two-item scale that measures the importance of employment security and preventing workforce reduction (alpha = 0.603); capability enhancement goal, a two-item scale related to the improvement of worker’s skill and productivity (alpha = 0.779); and working condition goal, a four-item scale for improving all aspects at workplace, such as job fairness, job satisfaction, and workplace safety and conditions (alpha = 0.905); (3) organisation goals, a four-item scale regarding union empowerment by gaining recognition and facilities, and increasing recruitment and member’s involvement (alpha = 0.805); and (5) political goals, a three-item scale indicating the respondent’s assessment for political-related goals, such as union’s influence on government or company policy making (alpha = 0.794). All predictors use four point Likert-type scales, with responses ranging from ‘not at all important’ to ‘very important’. The scale with alpha cronbach of at least 0.600 is still considered has a ‘good’ reliability (Seale, 2004).

The second set of predictors identifies which strategy method has been pursued by unions. The measurements are using dichotomous variable (1 = has done stated behaviour; 0 = has not done stated behaviour), focus on whether a union has relied on collective bargaining, arbitration, or political action.

The third set of predictors consists of the respondent’s strategy tactics, which comprises of traditional, organising, services, and social movement tactics. All but one questions asked yes or no questions regarding union’s behaviour on a particular tactic. The score of each variable for each union was a simple sum of yes answers.

The traditional tactics ask the use of regular meeting, and petition and industrial actions toward the management. The organising tactics measure how union develops organising culture through the following programs: (1) recruitment, a three-item scale related to the activities of recruiting new members (alpha = 0.643); (2) commitment, a three-item scale of union commitment in developing a culture of organising indicated by allocating budget and officers, and setting a targeted number of members (alpha = 0.648); (3) participation, the union’s assessment of informal (meeting attendance, volunteers available to help, discuss with union officials) and formal participation (at least 50% members vote in union election); (4) new issue, a three-item scale that shows the use of justice, discrimination, and quality issues in union campaign (alpha = 0.724); (5) innovation, the union’s use of general innovative tactics, namely training and polling; (6) information and computer technology, a six-item scale that measures the regularity - ranging from ‘never’ to ‘quite frequently’ - that union used telephone, fax machine, word processor, spreadsheets, data base, and electronic mail (alpha = 0.814); (7) relation to other union, the indicators of how the union related to other union by joining to a peak union federation, or conducting a cooperation with other union (three-item scale with alpha = 0.614); and (8) partnership, a three-item scale regarding the cooperation activities made by the union and management (alpha = 0.737).

The services strategy consists of indicators of the union’s tactical strategy by providing various services to meet with its members’ requirements, such as legal aid, financial counselling, health care, recreational, and consumer benefit services. The social movement strategy indicators show the cooperation made by union with other social movement groups.

The fourth set of predictors identifies which strategic level of union has the most influence on the creation of strategy in particular union activities, such as collective bargaining, industrial

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action, organizing, political, and community services. The measurement ranging from the level of ‘national leaders’ (=1), ‘regional/ workplace leaders’ (=2), to ‘union members’ (=3).

The fifth set of predictors is organisational characteristics that might influence union effectiveness, that are union characteristic. There are six indicators of union characteristic: (1) demographic background, indicated by number of union members, age of union, and location of national headquarter (Sumatra, Jakarta and surroundings, Western Java, Central Java, Eastern Java, and the rest of Indonesia); (2) process of strategy formation, whether it is made by formal plan effort (five-item scale with alpha = 0.681), or by emergent process through the negotiation or following past decision; (3) resources, the resources available for supporting union activities, such as dues collection system, support from employer/ other organisation, and the availability of full-time officers; (4) centralised control, the involvement of members and officers in decision-making process; (5) rationalisation, the effort for coordinating activities by rationalising processes such as standardisation, formalisation, and specialisation; and (6) democratic structure, the presence of formal mechanisms which provide members with influence over union policy: election mechanism, and the frequency of national election;

The last set of predictors is environmental characteristics that might influence union effectiveness, that are company characteristic and anti-union tactic. The specific company characteristics examined here are the number of employees, ownership (state owned, foreign, joint venture, domestic, or public listed), service sector (financial, tourism, commerce, media, graphical, courier, telecommunication, property, security, transportation, health, and education), and the presence of employee-involvement program, profitable company, competitive wage, and other union. The anti-union tactic is indicated by the following conditions: discrimination against union members, anti-union committee, alternative consultative mechanism, illegal employer behaviour, unfair treatment, wage or benefit increase initiated by management, and using outside management consultant. Dependent Variable The dependent variable, as well as part of particular theoretical interest, consists of some indicators of the respondent’s union effectiveness. Union effectiveness is a composite scale produced by taking the average of the sum of the values of the respondent’s responses to both the impact of formal and planned union behaviour (rational model), and the adaptation of union behaviour in coping the change (natural system model). Responses of the items in the questionnaire have been converted into yes (=1) and no (=0) questions.

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Figure 1. Union Strategy and Union Effectiveness Framework UNION STRATEGY Union Aim - Wages and benefits - Employment - Political goals - Organisational goals

Union Method - Collective bargaining

- Arbitration

- Political action

Union Tactic - Traditional tactics

- Organising tactics * Recruitment & retention * Commitment * New issues * General innovation * Information technology (IT)

* Relation with other unions

- Partnership - Servicing tactics - Social Movement tactics Level of Decision Making

UNION CHARACTERISTICS - Resources

- Rationalisation

- Centralisation

- Democratic structure - Strategy formation process

- Demographic

COMPANY CHARACTERISTICS - Profitability - Employee involvement program - Competitive wage - Other union - Demographic

ANTI-UNION TACTICS - Audience meeting - Anti-union activities - Illegal behavior - External consultant

UNION EFFECTIVENESS Rational model

- Efficiency - Distribution of income

- Organizing effectiveness - Control

- Communication

Natural system model

- Growth - Resource acquisition - Member development

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The rational model is indicated by: (1) instrumental or economic achievement: efficiency (establish collective bargaining, preventing lay-off, winning dispute cases), distribution of income (increase of wage or benefits, employee share ownership policy); (2) audit process, the presence of formal control of union performance; (3) self-rating, the subjective perception of union leader in the union’s performances in achieving its recruiting, servicing, and overall objectives; and (4) communication channel, the presence of mechanisms for disseminating the information. The natural system model is measured by: (1) membership growth between year 2002 and early 2005; (2) resource acquisition, the support provided by employer and external parties, and the implementation of union’s suggestions by the company; and (3) member-improvement, measured by the presence of member satisfaction survey, and at least 5% of members have followed formal training on union issues.

Sample and Statistical Methods

The data reported in this article is taken from a survey to examine the relationship between strategies that has been chosen by the Indonesian workplace unions in services industry, and its effectiveness in achieving union aims. The broader study also included case studies in selected unions. Data from 2001 National Labour Force Survey (Badan Pusat Statistik, 2004) showed that workers in Indonesian services industry was quite dominant, accounted for 32.6% of total workforce, compared to 23.6% in manufacturing, and 43.8% in agriculture.

A convenience sample of 166 unions is taken in a wide range of services industry including unions in financial, tourism, commerce, media, graphical, courier, telecommunication, property, security, transportation, health, and education companies. Surveys were sent to national union leaders (Presidents, Secretaries, or high-rank officers), since they were most likely to be able to provide the requested information, and were returned for 100 unions, for a response rate of 60%. I used mean replacement for missing data to avoid further data reduce.

While the sample was not intended to be representative of population of service-sector unions, it was performed to include unions in most of key areas of service industries in Indonesia. The survey involved major union federations that have union affiliates in service-sector, such as KSPSI (Confederation of All-Indonesia Workers’ Union - formerly FSPSI, the incumbent largest union grouping), KSBSI (Confederation of Indonesian Prosperous Workers’ Union – the leading free union in New Order era), KSPI (Confederation of Indonesian Workers’ Union – the reformist union, most of them were broke away from FSPSI in 1998), and FSP BUMN (Federation of State-owned Company Worker’s Union). They were estimated to cover more than 8,500 unions, or accounted for 46% of all-industry unions in Indonesia (Depnakertrans, 2005), and represent in excess of 30% of the formal sector workforce (Quinn, 2003: 33). However, the proportion of the sample was not representing this condition. For instance, unions affiliated to KSPI were far over-represented. It was accounted for 70% in the sample, as statistically KSPI possesses merely 2% of service-sector unions.

I used ordinary least squares (OLS) results for searching which union strategy and organisational characteristics to be important determinants in explaining union effectiveness composite scale. Table 3 presents the means, standard deviations, and Cronbach’s alpha (where appropriates) of my measures for the N = 100 sample.

Results

Table 2 presents OLS regression results with standardised betas and tolerance value for the regression coefficients. The R for regression was significantly different from zero, F (4, 79) = 28.628, p<0.001. There are four independent variables contributed significantly (p<0.10) to

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prediction of union effectiveness. Altogether, they explain 59% (57% adjusted) of the variability in union effectiveness. None of the tolerances listed in Table 1 approaches zero, indicating the variables do not highly correlate to each other. Therefore, the regression works well using four variables, since each variable assesses distinct contribution to the model. Table 2. Standardised Regression Results for Union Effectiveness Study Measure Standardised Beta Tolerance Information and computer technology use 0.324 0.669 Partnership with management 0.350 0.757 Regular meeting with other union 0.205 0.869 General innovation 0.169 0.727 Constant 2.072 Sample size (N) 100 R-square 0.592 Adjusted R-square 0.571 F (4,79) 28.628

The results indicate that union tactics are the most important determinants of union effectiveness in this sample. Neither the other union strategy dimensions (union aims, union methods, and level of decision-making) nor the control variables (union and company characteristics) yield any significant impact on the measure of effectiveness.

The organising strategy variables have dominated the strong predictor variables. Of the four indicators that contribute significantly, three of them are the individual organising strategy variables, namely (in order of importance) information and computer technology use, regular meeting with other union, and general innovation. The other variable is partnership tactic. All of them show positive signs. Therefore, a union would be more likely to achieve higher effectiveness in accomplishing its aims if the union more frequently uses information and computer technology, uses general innovation for dealing with union matters, regularly meets with other unions, and implements a partnership tactic with management. None of indicators of the other union tactics (traditional, services, or social movement tactics) shows clear effects in the model.

The control variables reveal virtually no significant results. Demographic variables such as ownership, sector, number of employees, number of union members, age of union, or union’s headquarter location dummy do not affect the measure of effectiveness.

References

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and Macroeconomic Implications of Political Unionism Economic and Industrial Democracy, 15, 313-353.

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Bronfenbrenner, K. (1997), The role of union strategies in NLRB certification elections. Industrial & Labor Relations Review, 50, 195.

Bronfenbrenner, K. (1998), Organizing to win : new research on union strategies, ILR Press, Ithaca. Brown, A. (2001), In Organising labour in globalising Asia (Ed, (Eds, Hutchison, J. and Brown, A.)

Routledge,, London : New York :, pp. 228 p. :. Cahill, P. (2001), In Organising labour in globalising Asia (Ed, (Eds, Hutchison, J. and Brown, A.)

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Caspersz, D. and Ford, M. (2003), Introduction The Economic and labour relations review., 14. Chen-Yen, K. (2003), The prospects of employee participation in state-owned enterprises: lessons from

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Depnakertrans (2005) (Ed, Depnakertrans (Departemen Tenaga Kerja dan Transmigrasi) Departemen Tenaga Kerja dan Transmigrasi,, Jakarta.

Deyo, F. C. (1987), The Political economy of the new Asian industrialism, Cornell University Press,, Ithaca, N.Y. :.

Fiorito, J. and Jarley, P. (1995), National union effectiveness in organizing: Measures and influences. Industrial & Labor Relations Review, 48, 613.

Frenkel, S. J. (1993), Organized labor in the Asia-Pacific region : a comparative study of trade unionism in nine countries, ILR Press,, Ithaca, N.Y. :.

Gahan, P. and Bell, S. (1999), Union Strategy, Membership Orientation and Union Effectiveness: An Exploratory Analysis Labour & Industry, 9, p5(1).

Gardner, M. (1989), In Australian unions : an industrial relations perspective (Ed, (Eds, Ford, G. W. and Plowman, D.) Macmillan,, South Melbourne, Vic. :, pp. 323p ;.

Gardner, M. and Palmer, G. (1997), Employment relations : industrial relations and human resource management in Australia, Macmillan Education Australia,, South Melbourne :.

Hadiz, V. R. (1997), Workers and the state in new order Indonesia, Routledge, London ; New York ; Perth.

Heery, E. (2002), Partnership versus organising: alternative futures for British trade unionism. Industrial Relations Journal, 33, 20.

Hutchison, J. and Brown, A. (2001), Organising labour in globalising Asia, Routledge,, London : New York :.

Kester, G. and Sidibe, O. O. (1997), Trade unions and sustainable democracy in Africa, Ashgate,, Aldershot ; Brookfield :.

Manning, C. (1998), Indonesian labour in transition : an East Asian success story?, Cambridge University Press,, Cambridge, U.K. ; New York :.

Quinn, P. (2003) ILO's InFocus Programme on Promoting the Declaration, Jakarta, pp. 74. Rock, M. (2001), In Organising labour in globalising Asia (Ed, (Eds, Hutchison, J. and Brown, A.)

Routledge,, London : New York :, pp. 228 p. :. Rowley, C. and Benson, J. (2000), Globalization and labour in the Asia Pacific region, Frank Cass,,

London ; Portland, OR :. Scott, C. and Simpson, J. (1993), An empirical analysis of union election outcomes in the electric utility

industry. Journal of Labor Research, 14, 355. Seale, C. (2004), Social research methods : a reader, Routledge, London ; New York :. SMERU (2002) SMERU Research Team, Jakarta, pp. 112. Sutanto (1998) In Business SchoolUniversity of Glamorgan, Glamorgan. Thomas, H. (1995), Globalization and Third World trade unions : the challenge of rapid economic

change, Zed Books,, London ; Atlantic Highlands, N.J. :. Verma, A., Kochan, T. A. and Lansbury, R. D. (1995), Employment relations in the growing Asian

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Press,, Oxford :. Wheelen, T. L. and Hunger, J. D. (2004), Strategic management and business policy, Pearson/Prentice

Hall,, Upper Saddle River, N.J.

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Who has control in teams without teamwork?

Keith Townsend

Griffith University

A central aspect of labour process theory is the recognition that management must institute controls over the workforce to maximise levels of labour output. This paper explores this notion of control in a medium-sized food processing plant. Importantly, the management of this workplace aimed to implement semi-autonomous work teams (SAWTs). This style of team is aimed to shift the locus of control from the hands of management to the employees. However, the failure to develop SAWTs left behind ‘teams without teamwork’. This paper analyses the manner in which control is manifest in these teams without teamwork.

Introduction

A central aspect of labour process theory is the recognition that management must institute controls over the workforce to maximise levels of labour output (Edwards 1979). Yet, these controls are never complete and employees maintain some ability to actively determine the level of engagement in their work (Thompson 2003). Accepting the notion that it is one of management’s primary roles to ‘control’ the labour process, this paper will examine how teams are used to influence the level of control within a food-processing case study (FoodsCo). The central concept of this paper ‘work teams and control’ must be understood and developed for a clear comprehension of issues discussed in the upcoming pages. There are multiple issues considered under the broad heading of ‘control’. Work teams provide management with the potential to utilise peer surveillance as a form of controlling the actions of employees (Sewell 1998; Willmott 1993). However, work teams might also provide employees with a greater opportunity to control the processes of work, therefore having a potentially humanising experience on the nature of work (Mueller 1994). While these two aspects of control are not mutually exclusive, the ‘frontier of control’ can be fluid and is primarily determined on the basis of managerial strategy in conjunction with issues such as product markets and labour markets. Researchers present a spectrum of control regimes that have been the subject of much debate: from managers providing employees with greater levels of freedom through the notion of responsible autonomy (Friedmann 1977), through to management developing panoptic regimes of control (see for example: Sewell 1998). Importantly the interests of management and employees can have some degree of congruency, hence employees may not always view controls in a negative manner (Burawoy 1979; Rosenthal 2002). This paper considers the two aforementioned areas of control in the workplace. Firstly, whether teams are instituted to provide employees with a greater level of control and autonomy over the tasks that they are performing in the workplace; and secondly, whether teams are used as a means of peer surveillance to develop a level of normative control over the actions of employees in the workplace. This paper supports the argument that teams can provide management with a range of possible outcomes, for example, peer control, labour output gains, improved social relations.

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These outcomes are not mutually exclusive and can include both an increased level of peer surveillance and increased levels of employee control over the labour process. It has been established elsewhere that employees have different reactions to the experience of working in teams (Knights and McCabe 2000; McCabe 2000). This paper will demonstrate that within this case study organisation, one team stands apart from the other teams. This is due primarily to the processes in which the atypical team is engaged. The different processes result in the atypical team having greater level of control over their primary processes and, in addition, greater control over what they do when the employees are not engaged in their primary task. This paper will be divided into three key sections. The first section will introduce the case study organisation and outline this paper’s methodology. This will be followed by a consideration of control as a means to devolve decision-making control to the team members. The third section of this paper will consider teams as a means of peer surveillance in the case study organisation. Finally, a discussion will consider how control is manifest in the organisation that is based around work teams with limited levels of teamwork.

The Organisation

This research investigates the notion of control in a food processing plant (FoodsCo). The organisation is a subsidiary of a large Australian organisation. The organisation is a greenfield site with a staff just short of 150 workers The employees are organised into teams and importantly there are differences between teams within the worksite. It is on the basis of these differences that the teams are compared. This paper is based around research that was performed throughout 2003 and 2004. It was an ethnographic project that included approximately eight months of participant and non-participant observation. Furthermore, 13 interviews were undertaken with a range of people investigating a range of issues more broad than detailed in this paper. These people included managers, team leaders, HR representatives, and union officials.

Control and Decision Making

Central to the suggestion that teams have a positive impact on organisations is the devolution of decision-making. That is to say, in contrast to Taylor’s notion of separating the planning and execution of tasks, employees are ‘empowered’ with the ability to make process and planning decisions within the team. Thompson and Wallace (1996) refer to teams having a degree of control over governance, technical and normative aspects of the work. Governance issues refer to the extent of delegated powers over the distribution of work, allocation of team members, the selection and function of team leaders; technical issues includes delegated responsibilities for resourcing, scheduling and discipline, expanded competencies and continuous improvement processes; and normative issues focus on the changes of attitudes and behaviour necessary to make teamworking operate effectively. The nature of teams means that they “emerge in different forms, in different places, and at different times” (Proctor and Mueller 2000: 12). These ‘differences’ means employees are provided with a range of responsibilities (Doorewaard, Van Hootegem and Huys 2003). While comparisons to previous research on teamworking is useful, this research considers teams that are reflective of van den Broek et al’s (2004) suggestion that it is possible to have teams in the workplace without high levels of teamwork. Typical of manufacturing and processing worksites, employees at FoodsCo are only involved in part of the complete production process, in this case, assembling a meal. That is to say,

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depending on an employee’s station they may face one of many small tasks. Some examples of the small tasks include: feeding the uncooked food through the cookers; catching and refrigerating the prepared food; placing one portion of the meal (e.g. a fish patty) in to single-serve containers; or taking the frozen meals and storing them for dispatch. There is a long line of industrial sociology literature that informs us of the alienating factors of such monotonous work processes (see for examples: Beynon 1973; Blauner 1964; Lupton 1963). Acknowledging the monotonous work processes, the management of FoodsCo determined that a more active approach would be required to stimulate and maintain job satisfaction and, as a result, high levels of commitment to the organisation. Part of this approach was to provide the teams with a high level of responsibility in determining their tasks and minor strategic decisions within the organisation. The structure of the FoodsCo organisation was to be non-hierarchical, with input and decision-making to come from all employees within the organisation. As such, the teams would appear to resemble the socio-technical team structure as encountered in the seminal works of Trist et al (Trist and Bamforth 1951) and further developed in Scandinavian countries (Beggren 1992). Teams at FoodsCo would have a great deal of control over determining things like the timing of meal breaks; programming (the order in which work would be completed); problem solving; recruitment; and to an extent, which team members will perform which tasks. The teams at FoodsCo could be viewed within the Thompson and Wallace (1996) framework as an attempt to reintegrate the technical aspects of teamworking, that is, integrating the team into the systems of the organisation; allowing employees heightened levels of control or the governance dimension of teamworking; along with promoting changes in attitudes and behaviours, the normative dimension of teams. However, coupled with other aspects of the FoodsCo production process, it must be acknowledged that the system held many similarities to the lean production system defined by Womack et al (1990). Lean production is based on the principles of communication, efficient use of resources, elimination of waste, and teamwork (Womack, Jones et al. 1990). However, critics of teamworking programmes argue that they lead to an increased level of managerial control and work intensification (Barker 1993; Garrahan and Stewart 1992; Parker and Slaughter 1988). Soon after the beginning of production at FoodsCo the two Production Managers recognised that they were facing too great a workload to fully develop the skills of the employees. In fact, the workload was such that one Production Manager sought opportunities elsewhere, leading to a reconsideration of the organisation’s structure, and importantly for this case study, a reorganisation of the structure of the teams within FoodsCo. When one Production Manager did resign, rather than hiring an equivalent replacement, four team leaders were employed to assist the Production Manager. As the remaining Production Manager suggests:

“…we need(ed) to put in a (team leader)… What they (the team leaders) know and understand is that in five years we would like their position to be obsolete and they take up other project work (within the PARENT COMPANY). We are only half way down the road to self managed teams and part of the team leader’s job is to educate the staff as to how they make the decisions they need to make.”

It was widely acknowledged by both management and operators that the high workload was an indication that management “weren’t sharing the learning well.” In other words, production demands were interfering with employee training and development and the maintenance of the organisational culture.

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Teams without ‘freedoms and responsibilities’ has been noted as a common cause of team-based work to fail (West and Markiewicz 2003). Furthermore, Basler and Breslin (1991 cited in Mueller, 1994) state that inexperience of working in teams as a common problem for organisations that shift to SAWTs. A failure on the part of management in their study to provide adequate team skills training meant a substantial practical change. The insertion of another level within the hierarchy confirms the shift of the teams from the intended structure with the pedigree of SAWT, closer to those described as lean teams where many of the responsibilities that had been devolved to teams lay in the hands of team leaders. Importantly for this case study, the initial intentions of management were unable to be realised and the unintended outcomes were significant for the organisation. The determination of production schedules was kept in the hands of management, however it is widely acknowledged by operators and manager alike that schedules must be fluid to react to the common problems associated with JIT production. The main problems occur when the “perfect symmetry between supply and demand” (Delbridge, Turnbull and Wilkinson 1992) fails and products may not arrive when expected. Traditionally, teamworking is focussed at lower levels of the organisation involving workers undertaking day-to-day aspects of their work (Marchington 2000). That is to suggest that strategic organisational decisions are rarely, if ever under the purview of work teams. At FoodsCo where the structure of the teams changed, one unintended outcome was the level of day-to-day control over decision-making for employees was limited. Hence, management viewed the maintenance of a level of employee involvement as vital in developing the expected corporate culture. As such, the ‘culture’ that sought “self-responsibility” and “open and honest communication” amongst employees, would also rely upon managers forgoing some decisions that would traditionally be seen as managerial prerogative. Indeed, passing some decision-making into the hands of the employees is something that managers found somewhat difficult. One of the first significant transfers of decision-making was in the lead-up to the Easter holidays in April 2003. In Australia, many organisations close down for the four days of Easter, from Good Friday through to Easter Monday. The FoodsCo leadership team offered the workforce the opportunity to vote about whether the site would be closed for the remainder of the week following Easter. A ‘yes’ vote would mean an additional four days of unpaid leave, but a total of ten days break all together. A majority ‘no’ vote would mean that production would continue and the plant would only have the four days of Easter shutdown. The result of the vote was as follows: YES – 69% NO – 6% DID NOT VOTE – 25% While the vast majority of employees indicated that they were happy with having a say on the shutdown, there were a few sceptical employees. Given one quarter of the employees chose not to vote at all this scepticism should not be ignored. What this level of voting abstinence tells us is that the intention of employee involvement initiatives may be well placed (Marchington 1992), employees may not necessarily want, appreciate or accept being involved in decision-making. Or worse, such arrangements may actually uncover an underlying distrust of management. For example, operators offer the following vignettes explaining why they did not vote in the Easter decision:

“They’ll do what they want to do anyway, won’t they? It all depends on production, let’s not kid ourselves.”

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“Big deal eh? Look at our choices, work for shit or have a few days off and get nothing. There isn’t a good option in there anywhere is there?”

“I guess it’s alright, but it’s not a big deal is it. They make it out to be, but if they don’t like the way we vote they just won’t let us vote next year.”

Perhaps unsurprisingly, the leadership team indicated that they were challenged when giving up such decision-making prerogatives, and they were indeed troubled by the fact that employees may not vote the way the management would like. Nevertheless, management viewed the voting process as important as it contributed to repairing the failing development of the governance dimension of teams and employee decision-making in the organisation. The following section of this paper considers the other aspect of control in this paper, teams as a means of implementing or increasing peer control in the workplace.

Teams as Peer Control

It is argued by some (see for examples: Barker 1993; Sewell 1998; Willmott 1993) that teams promote a coercive element that leads to at the very least, work intensification. The key to this argument is the notion that placing employees into teams leads to peer surveillance. That is to say that employees are implicitly and explicitly expected to adopt the traditional responsibility of management in supervising their fellow workers. Participants in van den Broek’s study provide fabulous examples of team members enforcing the rules of the workplace in lieu of management:

“…an employee was playing a computer game instead of receiving customer calls when another employee, who noticed that he was not taking calls made a ‘joke’ that they could both play the game. The attention generated from other workers was enough to encourage this person to resume taking calls.” (1997: 347).

Edwards (1979) identified what he referred to as simple control. If the argument of team structures providing a coercive peer pressure is true, then the team effectively is a shift of simple control from the hands of the supervisor directly, to the manager by proxy of every single member of the work team. With the previously mentioned change in team structure at FoodsCo there is an increased focus on the normative dimension of the workplace. Management’s interpretation of the normative dimension of the team structure would appear to be an attempt to develop and maintain a culture where the employees are committed to the organisation and their team mates, have pride in their work and enjoy a relationship with management based on respect and equality. This section considers whether this ‘culture’ impacts upon the dimensions of peer control. Furthermore, this section considers whether the teams at FoodsCo differ in terms of their ability or inclination to ‘control’ their peers. The immediate absence of the third party (customers) means that the FoodsCo employees do not have the constant external pressure to conform and to engage in a ‘professional manner’. Hence, the FoodsCo employees engage in their work processes motivated by their managers, their team members and their individual work ethic. The expectation of management is that those who progress successfully through the recruitment process will have a positive impact on the organisation. This is an attempt to capitalise on the potential for peer surveillance and the employees are not just under the “tutelary eye” of the team (Barker 1993: 432), but to recruit people who would be more likely to provide a level of peer surveillance in favour of management.

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Central to the JIT production system is the elimination of waste in terms of processes, goods and human effort (2000; Womack, Jones et al. 1990). To a certain extent, peer surveillance is necessary for such a regime to survive successfully. In addition, without the employee’s willingness to share their tacit knowledge over what is occurring to them and their peers on the shopfloor, the process of eliminating waste will be less successful. The use of quality circles and team meetings has traditionally been the avenue for management to gather the tacit knowledge of the shopfloor operators to ‘refine’ the end-to-end processes in search of value-adding efficiencies. The management group at FoodsCo made a determined effort to instil in the workforce the acceptance of improving quality and reducing waste as an everyday occurrence, rather than a process that should wait for a team meeting. In essence, incorporating quality into everyday team actions is similar to previous studies, for example Mallon and Kearney (2001). Knights and McCabe (2000; McCabe 2000) suggest that employees have different responses to the ‘teams’ experience. Hence, it could be expected that not all employees are willing to watch over their fellow team members in an attempt to maintain a heightened level of production. Undeniably, there is a mixed response from operators:

“The worst thing about the so-called flat structure is that we could be working flat out, you know, 100 percent and a few people could be slackening off so someone has to pick up the slack. So the choice is either work at 130 percent or tell these guys to get their shit together. So what do you think? How would you like to have to tell people to get moving all the time. It's not good mate.”

“I’m not really interested in giving people a hard time if they slacken off. What benefit is there to me? Sure, maybe they’ll work a bit harder, but they’ll also be pissed off at me and when you work with these people every day, that’s not fun. I’d rather just do my job, take the good parts of the ‘teams’ and ‘culture’ and leave the crap.”

“You have to get on to them. It’s just not fair if most of us are slaving away and a couple people, or one in particular is a lazy whatever. It might make me unpopular sometimes, but it’s the right thing to do. We’re all in this together and to pretend any different means your not really a team player and probably don’t fit our culture.”

Importantly, by recruiting employees who are willing to adopt the normative dimensions of the organisation, management are limiting the opportunities for employees to develop what is described as the worker “counter pressure” of constantly “negotiating and renegotiating” the frontier of control (Hyman 1975: 197). Although there are many employees who are keen to actively develop the processes that are utilised in an attempt to be an integral part of a successful organisation, there are also many employees who make rationalisations about the information that they will share, and the level of peer surveillance they will engage in. These rationalisations are determined by the employees’ perceptions of what will be the outcome of sharing that information. A handful of employees indicated that if they were to find any ways of beating the system that will make their life easier then that information is something they will keep to themselves. Even within a workplace with a significant focus on the normative aspects of team working, it must be acknowledged that employees do not confine themselves to a particular course of action. An employee who may share with fellow team members an idea in improving one

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process, may indeed be the employee who withholds details about a potential fiddle in another area. In another context, this employee will actively share details with other employees, and form a group bond to keep the information from management. Interestingly, the comments that indicate a level of resistance to peer surveillance notions and ‘giving up’ tacit knowledge all come from employees who work in one area, the cooking area. These are the production employees at FoodsCo who have a greater level of control of the labour process. While they can face substantial pressure to reach production targets, they are not obliged to keep up with the machine. In some sense, these employees develop a different notion of what it means to be in a team. The other teams, those employees within the ‘hell-pit’ see the benefits of the team as recognising that “we’re all in it together”, “although my job is bad, so is everyone else’s in here” and that “everyone needs to do their job for it (the assembly process) to work.” Many employees in the cooking section see their jobs as largely task specific, that is to say, one person cooks the pasta, one person cooks the chicken on the belt grill, and so on. However, if the team members have some time between processes (for example, all the pasta is cooking and there will be ten minutes before another batch is required), then the expectation is that the employees assist other team members. That is unless, there is another activity they choose to do, for example, have an extended meal break, chat with other people or hide in the freezer or toilet as some employees admit to doing occasionally. The point is that this is the only group within the organisation that has the luxury of deciding what they will do from one moment to the next, and they savour this freedom. This demonstrates that in this workplace one team is quite different based on the processes that they perform, and this requires management to take a different approach to the employees within this section. This difference has implications for the issue of peer surveillance activities within the teams. The processes of the assembly teams mean that 20 employees are divided between the workstations of two conveyor belts. The pace of the machine controls the pace of the work the team members must perform. Employees are faced with the decision to leave or conform by keeping pace with the machine. Again, the recruitment process is central in attracting employees that are more likely to conform. This pressure to conform is not as strong in the cooking teams as the processes are based on individualised work stations and the employee’s determination to control their pace of work. Not all processes allow employees full control as some tasks are computerised. However, those tasks that are computerised allow the employees with large portions of off-task time. This off-task time provides employees with high levels of control over their non-primary tasks. Provided employees are completing their own workload there is little pressure from their fellow team members. Discussion

The introduction of teams at FoodsCo is an example of the managerial intention of shifting control to the employees with the integration of technical, governance and normative dimensions (Thompson and Wallace 1996) of the teams. The outcome would be work teams that would resemble what is commonly referred to as SAWT. However, a lack of adequate training and resources was compensated for by a commitment from senior management to maintain a team structure. The introduction of teams into organisations can often be a failed exercises with low commitment from senior management or a failure to provide sufficient training as commonly cited reasons for such initiatives to fold (Saporito 1986; Walton 1985). The result was a ‘different’ type of team developed, more in line with the notion of ‘lean

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teams’ presented by Womack et al (1990) and discussed at length by authors such as Delbridge et al (1992), Garrahan and Stewart (1992) and Parker and Slaughter (1988). As mentioned, control can be viewed as two different but related concepts within the context of this paper. Some employees suggest that they feel the pressures to conform and improve their performance for the benefits of the team, while other employees suggest that they resist, or do not feel any pressure in this regard. Furthermore, no performance bonuses are paid based on team performance. If team-based pay systems are used to motivate team performance, There is no distinct pattern in terms of peer surveillance at FoodsCo. Certainly, employees recognise the pressures placed upon them by other employees, or indeed the pressure that employees must place upon others. However, there are numerous employees who reject the notion of coercive pressure from teammates. While these finding both partially support and partially reject the notion of peer surveillance in teams, this is total support for the argument offered by Knights and McCabe (2000; McCabe 2000) that employees have different experiences of teams. Conclusion

In this paper, control was considered as two separate issues; firstly, the notion of who controls the decision-making processes within work teams; and secondly, teams as a means of management controlling the workforce through peer control. FoodsCo provides us with an example of a worksite where teams are intended to be the same, employees are intended to be equal, and yet one team has developed into a clearly different structure, based upon the work processes in which these team members engage. This research has examined in detail the manifestation of control in two organisations that are based around work teams. There is little question that teams can provide employees with greater levels of control over governance, technical and normative aspects of the work. However, this is not uniform throughout the teams. Within each of the workplaces teams differ. Teams with greater control over decision-making have the potential to improve the working lives of employees but to also develop an increased comparative level of power within the workplace. Reflecting the work of Knights and McCabe, employees have different experiences within teams. The response to increase pressure to conform to team expectations is different for employees. Consequently, the peer control aspect of the team debate does hold some credibility, however with the important caveat of difference. That is, different teams present different levels of peer control and different employees respond differently.

References:

Barker, J. (1993). "Tightening the Iron Cage: Concertive Control in Self-Managing Teams." Administrative Science Quarterly 38: 408-437. Basler, F. and Breslin, A. (1991). "Using Simulation to Assure Fit and Avoid Resistance." Journal for Quality and Participation(December): 58-61. Beggren, C. (1992). Alternatives to Lean Production. Ithaca, ILR Press. Beynon, H. (1973). Working for Ford. Wakefield, Allen Lane and Penguin Education. Blauner, R. (1964). Alienation and Freedom: The Factory Worker and his Industry. Chicago, University of Chicago Press. Burawoy, M. (1979). Manufacturing Consent: Changes in the Labor Process under Monopoly Capitalism. Chicago, University of Chicago Press. Delbridge, R., Lowe, J. and Oliver, N. (2000). Worker Autonomy in lean teams: Evidence from the world Automotive Components Industry. Teamworking. S. Proctor and F. Mueller. New York, St Martin's Press.

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AIRAANZ 2006

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Work Choices And The Systematic Erosion Of Employment And Living Standards In Australia

Peter Waring*, Alex de Ruyter and John Burgess*

University of Newcastle and University of Birmingham In this article we wish to demonstrate how Work Choices represents an attack on the living standards and employment conditions of the low paid in Australia. Specifically we examine the details and implications of the Australia Fair Pay and Conditions Standard (AFPCS) and the Australian Fair Pay Commission (AFPC). The discussion then turns to a consideration of industrial relations and pay determination developments in the United Kingdom, which is cited by the Coalition as a model for part of the legislation. Finally, we wish to place the Work Choice developments in the context of a punitive regime for those who are dependent on welfare support.

Introduction

The Work Choices legislation was not part of the Coalition’s electoral platform, it was not the consequence of the recommendations of a prior review into the Australian industrial relations legislation and it was not subject to an extensive process of review and examination by the Australian parliament. The justification for the legislation rests largely on rhetoric and an appeal to the record of the government. The legislation is complex and it affords more discretionary powers to employers while offering very little in the way of choice for employees. The twin evils of trade unions and the Australian Industrial Relations Commission continue to be further marginalised within the new system. In this article we examine two key components of the legislation – the AFPCS and the AFPC. Our reading of the legislation and the limited rationale behind it suggests these components of the legislation are designed to further erode employment conditions and standards, and in the longer term reduce wage increases for the low paid. We compare what is happening in Australia with what is happening in the UK (favoured as a model for some of the legislation), where recent legislative and institutional changes attempt to improve employment conditions, develop consultative mechanisms and improve the real wage of the low paid.

The Australian Fair Pay and Conditions Standard

This represents another attempt to reduce basic employment conditions that has been a feature of industrial relations reforms in Australia over the past decade (Waring, de Ruyter and Burgess, 2005). Prior to the Work Choices legislation, the coalition had engaged in a watering down of the no disadvantage test (NDT) applying to new agreements. The effects of the gradual weakening of the NDT have been compounded by the procedural complexities involved in its application. Waring and Lewer (2001) and Mitchell et al (2003), for instance, have noted the practical difficulties associating with valuing non-monetary conditions and the subjectivity involved in judging whether, on balance, a proposed agreement is better than or equal to a relevant award.

Considering these difficulties and the deliberate erosion of the strength of the NDT, it seems most unlikely that Prime Minister Howard’s 1996 pledge that ‘no worker will be worse off’

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(see Williams, 1997) has been sustained in reality. In a study of the content of AWAs in the hospitality industry, van Barneveld (2005) found that that the AWAs diluted the terms and conditions of employment, relative to awards, and generated gains to employers largely at the expense of employee entitlements. This demonstrable failure might have been cause for policy makers (concerned that employees not be disadvantaged) to revisit and repair the NDT. Instead, the government is replacing it by an even weaker standard – the AFPCS.

The AFPCS is justified on the grounds that the NDT was unduly complex and that it hindered agreement making (Howard, 2005). The government, as with virtually all its claims of justification, provides no supporting evidence. The pretense of no worker being worse off as a result of the changes seems to have disappeared. These legislative changes will disadvantage many employees. With the removal of the NDT it will be much easier to supplant awards with agreements, and to supplant collective agreements with individual agreements. Through reference to its corporation’s powers, the Federal government wishes to supplant the States’ based award system with a Federal agreements system and to effectively marginalise the Australian Industrial Relations Commission. As Skulley (2005) commented, ‘the framework is heavily skewed towards having workers covered by individual and enterprise agreements rather than the award system…’

The AFPCs is the latest and most drastic weakening of protective regulation in Australian decentralised bargaining. It will incorporate just five minimum conditions of employment into legislation, including parental leave, maximum ordinary hours of work, annual and carer’s leave, and wages provisions. These minimum conditions, together with the minimum wage and minimum award wages as adjusted by the Australian Fair Pay Commission, will form the Australian Fair Pay and Conditions Standard. Importantly, this standard will replace the ‘no disadvantage test’ as the standard which collective agreements and Australian Workplace Agreements are to meet. In other words, agreements will only be registered if they provide wages and conditions of employment the same as or superior to the new standard.

The WorkChoices document indicates that the AFPCS will enshrine a maximum ordinary hours of work of 38. However, these hours may be averaged over a twelve-month period. WorkChoices goes on to clarify that hours above the maximum will be subject to awards and agreements and that penalty rates associated with hours worked above 38 may be changed, or indeed removed, by express provisions in agreements and contracts. This means that hours of work can easily exceed the 38 figure contained within the AFPCS, subject to a ‘reasonable additional hours’ provision that reflects the criteria laid down by the AIRC in its test case on reasonable working hours. Moreover, overtime and penalty rates can be removed on any hours, effectively making all hours ‘ordinary’. Some collective agreements and AWAs already provide an annualised rate for all hours worked in which penalty rates are rolled into a single wage but these were made in the context of a ‘no disadvantage test’. Hence, employees had to be appropriately compensated to ensure that they were no worse off. New agreements will be subject to the lesser standard – the AFPCS – so that penalty rates can be rolled into a single hourly rate which may be less than what employees might receive under the relevant award.

Under the ‘no disadvantage test’, employees could expect that proposed agreements would be compared with the totality of award pay and conditions. Under the AFPCS, agreements will be measured only against a minimum ordinary pay rate and a few leave provisions. This creates the real possibility that new agreements will be registered even when they push total earnings for employees below award levels. Details of workers being worse off under AWAs relative to awards are listed on the NSW government’s “fair go” campaign (www.fairgo.nswgov.au).


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Employees might not wish to agree to the erosion of pay and conditions under the AFPCS, but they might not have a choice. If they are working in a business with 100 employees or less, they will not have access to a remedy for unfair dismissal. This gives their employer a free hand to dismiss employees for any or no particular reason. While there are provisions in the Workplace Relations Act 1996 which makes coercion in the making of an agreement illegal, employees will have a hard time proving that their employer terminated their employment because of their refusal to accept a bad bargain. This ‘employment at will’ context clearly creates a new bargaining dynamic in which employees will be reluctant to oppose new agreements that involve degrees of disadvantage for fear of being dismissed.

In circumstances where employment is offered contingent on the acceptance of an AWA, the prospective employee’s choices are extremely limited. They can accept an AWA that may provide only the minimum award rate or minimum wage (without any penalty rates or bonuses or loadings) or reject employment. This is the ‘Billy’ example contained in the Government advertising, whereby an unemployed man (Billy) accepts an AWA that provides total wages and conditions less than the relevant award in order to gain employment. The privileging of AWAs over collective agreements and awards will also mean that it will be quite possible for Billy to be working for far less pay then his colleagues performing the same work. Over time, an employer may decide to dismiss workers under collective agreements and re-hire new employees on AWAs providing less pay.

A further reason why employees may accept an agreement that provides total wages and conditions less than the relevant award is due to asymmetric information. Employers have an information advantage over individual employees and are more easily able to model wage costs for various shift and occupational arrangements over extended periods of time. For individual employees, it is a difficult and complex exercise to compare current wages and conditions against those offered in an AWA which may involve subtle degrees of disadvantage.

WorkChoices also makes no account for the award-free sector, where employees are not covered by an award or unsure of whether a relevant award covers them. Agreements for these employees will presumably be compared not against minimum award wages but, rather, with the minimum wage contained with the AFPCS. The AFPCS will also provide for four weeks annual leave, but up to two weeks of this may be cashed out with the agreement of employees. Again, WorkChoices paints a portrait of an employee who willingly enters such arrangements but, in doing so, ignores the deleterious effects the unfair dismissal law exemption will have on the bargaining context. Aside from annual leave, the AFPCS provides for ten days of personal leave (sick leave and carer’s leave) per annum and up to two days of compassionate leave. The final provision in the new standard is 52 weeks unpaid parental leave.

The detail of the WorkChoices bill identifies an additional application of the AFPCS. Under the proposed s.103K and s. 103R, an employer may unilaterally terminate an expired certified agreement or AWA after giving requisite notice and transfer its workforce on to the AFPCS. This would immediately result in a significant reduction in earnings but also significantly shifts bargaining power in favour of employers. The impact of the AFPCS must be measured by examining the new standard in the context of a bargaining environment where there is no or reduced access to unfair dismissal remedies, where there is a right for employers to unilaterally replace agreements with the AFPCS after the former has expired and where AWAs can prevail over collective agreements and awards. In this context wages are likely to fall subject to the condition of labour markets in various industries, the morality of employers


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and their willingness to incur turnover costs. In industries and workplaces where labour is plentiful and turnover costs negligible, it is likely that wages and conditions will fall below award standards. In effect the safety net is being watered down. Through the process of accretion, standards and conditions will be gradually diminished, more workers will migrate from awards to agreements – from collective to individual arrangements – and along the way the conditions of employment will be eroded. While the safety net minimum wage is to be maintained through the auspices of the Australian Fair Pay Commission, the AFPCS will ensure that many workers will be worse off under the proposed legislation. ACCER (2005) comments that ‘the proposed changes to the no disadvantage test has the potential to erode the benefits that are present in the award system safety net, but which are not included in the government’s proposed safety net…’

There is also the possibilities offered by the “Qantas option” reported by the media (Humphries, 2005). The provisions in the legislation for the transfer of a business in combination with the AFPCS provide for the possibility of eroding the pay and conditions of an entire workforce. The legislation would enable companies to transfer staff after one year to other companies they control but under an employment arrangement with lower pay and conditions as set by the AFPCS. Industrial action by affected staff would be proscribed by the government’s ability to proclaim certain activities as essential services and declare industrial action illegal.

The Australian Fair Pay Commission

The AFPC is a new institution that consists of a chair and four commissioners, and is in turn supported by a secretariat. Under the legislation the functions of the AFPC are to review wages, notably the federal minimum wage, the minimum wage for juniors and for workers with disabilities, casual loadings and other base rates of pay (eg awards). In setting wages the AFPC is to have regards to the capacity of the unemployed and low paid to obtain work, a safety net for the low paid, and employment and competitiveness in the economy. In terms of its operations the AFPC can determine the timing, frequency, scope and process of wage reviews. Its decisions must be published in writing and include the reasons for its decisions.

Here we have a new institution and a new bureaucracy. The AIRC is not supplanted, only marginalised, since one of its traditional functions has been assigned to the AFPC. This continues the process of increasing complexity associated with industrial relations reforms in Australia (Bray and Waring, 2005). It is not clear what is behind the new institution, nor is it clear why the existing legislation could not be amended that establishes the criteria for safety net wage cases conducted by the AIRC. A ministerial press release indicated that the AFPC will move away from an adversarial and legalistic approach to wage determination; not involve ambit and arbitrary wage claims by unions; and consider different criteria, of primacy being the employment of the low paid and the unemployed (Andrews, 2005).

A review of recent safety net wage decisions by the AIRC reveals decisions that have been well above those supported by the Federal government and the main employer groups (O’Neill, 2005). There is the suggestion that the decisions have been excessive and have not considered their potential to erode employment. Submissions to the Senate hearing into WorkChoices by employer associations are more explicit about the failings of the AIRC safety net adjustments. The Australian Chamber of Commerce and Industry (ACCI, 2005) indicates that minimum wage levels in Australia are the highest in the world in purchasing power and relative terms; that the coverage of the safety net extends beyond those on minimum wages; that recent increases are extravagent relative to changes in the cost of living; and that the AIRC is not considering criteria that is relevant to job generation and


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competitiveness. In its submission it stated that national wage cases have “become highly confused in regard to the importance of wage fixing taking into account the needs of the unemployed … they have also yielded an unsatisfactory, unduly legalistic, and economically unsound treatment of economic materials ‘ (ACCI, 2005, 35).

The operation of the AFPC remains a mystery. It is not required to undertake any reviews, it has the power of initiation, and the procedures are to be determined by the AFPC. It could selectively draw on evidence or invite submissions from selected parties. These procedures remove the advocacy rights of the ACTU and, as with the AIRC, further marginalise it in the new industrial relations landscape. The powers of the AFPC are not set out in the legislation, by implication it can make recommendations to the government who in turn would have the right to veto or amend the recommendations. If this is the case the AFPC does not act as an “umpire” but as an advisor.

In the light of the submissions of employer groups to the Senate inquiry and from the statements from the government, we could suggest that the government hopes that the AFPC should:

a. deliver minimum wage increases that would be below those of the AIRC – somewhere closer to the claims of the Federal government and employment groups – this would be the consequence of a greater emphasis on economic criteria and the insistence that the chair be a practicing economist or business person (lawyers and union officials are therefore rendered ineligible)

b. limit the coverage of those in receipt of minimum wage increases – this would only apply to those classified on the Federal minimum wage rate

c. from (b) reduce the pay relativities for the relatively low paid – without flow ons to other award workers there is the expectation that the relativity will diminish through time

Implicitly the reasoning behind the AFPC accepts that there is a pool of low paid and low skilled jobs just waiting to be filled if the supporting legislation is right. Similar reasoning lay behind claims for removing unfair dismissal protection. There is an implied high employment elasticity with respect to wages, a recognition of this fact will generate lower wage increases (as compared to the ill informed AIRC) and generate many more jobs. This remains a largely contested area of economic analysis (Freeman, 2005) and can be seen in the submissions to safety net wage cases.

The United Kingdom as a Comparator for the Legislative Changes

In ‘selling’ its industrial relations reforms, the Howard Government has suggested that the proposals are moderate in the international context. In particular, the Prime Minister has asserted on a number of occasions that the passage of the reforms will still leave the Australian labour market more regulated than those of the United Kingdom and New Zealand (Howard, 2005). In turn, the UK Low Pay Commission (LPC) has been taken as a model for the AFPC. In this section we demonstrate that Australia is diverging from the UK in terms of the direction of its legislation and that the AFPC is in many ways very different from the UK’s LPC. Similar claims can be made about the comparison with New Zealand (Waring, De Ruyter and Burgess, 2005).

The UK has no equivalent to the AIRC in evaluating and setting the terms and conditions of employment codified in collective agreements, and collective agreements are not legally enforceable (though their terms and conditions may flow into the contract of employment).


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Rather, role of the Advisory Conciliation and Arbitration Service (ACAS) is largely confined to mediating in disputes, and that of the Central Arbitration Committee (CAC) confined to matters of union recognition and de-recognition and to information disclosure pertaining to the bargaining process (Lewis et al 2003). Both Australia and the UK have similar trade union densities, at 25-30 per cent of the workforce. However, collective bargaining coverage in the UK is low, at approximately only one third of the workforce in 2000, as opposed to over 80 per cent for Australia (OECD, 2004: 145).

Against this, in the absence of national bargaining benchmarks, the UK over the last 10 years has experienced an increasing role for statute law in shaping the employment relationship. It is here that the role of the European Union (EU) has taken precedence over national legislation, with UK governments increasingly transcribing EU directives into national law. Under the former Conservative government this was done begrudgingly – usually as a result of judgements brought down by the European Court of Human Justice, or the House of Lords (Morgan et al, 2000: 97). An example here is the 1977 Transfer of Undertakings Directive: protecting employee rights upon a change of ownership and employer, being incorporated into UK law in 1991 and extended to public sector workers in 1993 (Morgan et al, 2000).

However, this process accelerated under the Labour government. The Social Chapter of the EU’s 1992 Maastricht treaty establishing a single market for goods and services was ratified and enshrined in UK law (the previous Conservative government had refused to endorse the social measures outlined in this treaty). The Social Chapter provided for 12 basic rights for workers: including freedom of association, gender equality, improvement of working conditions and adequate protection of employment and remuneration (Lewis et al, 2003: 197, emphasis added). These measures were put forward by the EU in order to allay worker fears about the adoption of a single market across the EU. Indeed, the EU’s championing of international labour standards – now endorsed by the UK - represents an invaluable countermeasure to the increased mobility of capital brought about by the steady dismantling of trade barriers. In addition, a national minimum wage has been introduced for the first time in the UK (Addison and Siebert, 2002), and there has been ratification of EU directives on working time, consultation and information provision in the workplace and an end to multiple contract renewals for fixed-term employees.

In addition, in the lead up to the 2005 general election, the UK government and the trade union movement agreed on a set of policies and reforms (EIRO 2004) expected to feature in upcoming legislation, under the so-called ‘Warwick Agreement.’ This would entail legislation providing for:

• ratification of the proposed EU Directive granting agency workers equal rights to regular employees;

• bank (public) holidays no longer counting towards employees’ 4 weeks’ statutory annual leave entitlement;

• increasing family-friendly measures in the workplace, including flexible working for parents and carers;

• widening protection under the Transfer of Undertakings Regulations to pensions; and • more employee representatives on the boards of trustees managing pension funds.

Furthermore, in contrast to the Howard government’s proposals, all employees in the UK with a minimum of 12 months’ continuous service may claim for unfair dismissal at an employment tribunal. This was reduced from 2 years by the Blair government during 1999. Indeed, the 1999 Act specifically raised the maximum penalty awarded by a tribunal for unfair dismissal from £12,000 to £50,000, and in certain cases up to £68,000 (Addison and


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Siebert, 2002: 23). This is particularly prescient in the Australian context because the majority of tribunal claims in the UK are filed by employees who have worked in small businesses: 33 per cent of applications were received from those who worked in firms with less than 10 employees. In contrast, only 20 per cent of employment tribunal applications in the late 1990s were from those working in establishments with more than 100 employees (DTI, 2002: 7). In this context, all UK employees who perceive that they are subject to a bad bargain have ready recourse to having their grievances addressed through a formal, fair, process: internally through a grievance resolution procedure and externally through tribunals.

Thus, contrasting with the Australian trend towards exclusion, the UK since 1996 has embarked on extending the platform of employment rights, incorporating conditions into the contract of employment. Also in sharp contrast to Australia, where casual and temporary workers are largely excluded from statutory entitlements, the UK’s adherence to EU directives on part-time and temporary work grants a minimum range of employment rights, regardless of employment status. Underpinning this tentative shift in industrial relations culture have been notions of ‘rights and responsibilities’ and ‘partnership’ (i.e., cooperative employer/union relationships) in the workplace, as emphasized in the Blair government’s 1998 Fairness at Work paper. The Government’s commitment to extending the statutory framework and supporting consultative and participatory mechanisms with employees in the workplace points to a reversal of the unbridled managerial prerogative that characterised the UK in the 1980s and 1990s. Hence, it is apparent that ‘fairness’ and ‘fairness at work’ in the UK is consistent with the Social Chapter’s emphasis on basic human rights.

Whilst considerations of “fairness” and “equity” formed an important plank of the Blair government’s espousal of a LPC, the dominant arguments centered on the manifest failure of the low-wage, low-skill UK economy to generate productivity dividends during the 1980s and 1990s (Thornley and Coffey 1999: 528). The LPC is a statutory (non-departmental) body and its role is to advise the UK Government (i.e., the Prime Minister and the Secretary of State for Trade and Industry) on the implementation of the NMW (Metcalf 2002). This is conducted through research and consultation with employers, workers, unions and employer representatives. As such, the LPC takes written and oral evidence from a wide range of organisations and regularly conducts fact-finding missions. The nine members of the Commission constitute a mix of members from employer, union and academic backgrounds. The LPC can thus be regarded as a corporatist, or “social partnership” body (ibid.) that typically seeks to make recommendations to government on the basis of a consensus (or compromise) position, after having taken into consideration the effects of the NMW on employment, productivity, living standards and profitability.

The NMW was introduced in April 1999 and was initially set at an adult rate of £3.60 per hour (LPC 2005: vi). It currently stands at £5.05 per hour, following an LPC recommendation in October 2005. Separate sub-minimums were set for those between 18-21 years of age and those between 16-17 years of age inclusive. Individuals in training for the first 6 months of their job, and those who receive accommodation from their employer, were also paid a lesser rate (Dickens and Manning 2004: 624). In part, the establishment of a NMW can be seen as compensating for the decline of traditional mechanisms for promoting fair pay and reducing wage inequality, namely the decline in collective bargaining coverage and the erosion of the real value of welfare benefits (indexed to prices rather than wages since 1983) (Dickens and Manning 2004: 614). As such, it has been particularly prescient for workers who lack bargaining power, with females comprising over three quarters of those benefiting by the initial imposition, and employees in the wholesale/retail and hospitality sectors comprising over half (LPC 2003; cited in Metcalf 2002: 568).


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The LPC is a tripartite organisation, the AFPC is not. Both organisations have no statutory authority in terms of the implementation of its decisions. The LPC is a new body that arose out of a situation where there was no statutory minimum rates of pay and the presence of external obligations to the EU social charter. Will Brown (2005) states that the LPC “is a belated acknowledgement that largely unregulated collective bargaining has failed to protect the wages of those in greatest need of protection”. The ALPC replaces an existing body and a context of long history of national minimum wages. Finally, the LPC minimum wage is enforcebale, linked to the revenue and customs collections (Brown, 2005). In comparison, the enforcement of the AFPC decisions appears feeble. The Context of Work Choices

The Work Choices legislation has to be placed in a context in which there is a simultaneous change in welfare provision and access that tightens up on access and entitlements. At the same time there is a workfare type regime (Burgess et al, 2000) that includes “work for the dole” programs and forces job seekers into accepting work under threat of benefit exclusion. The government has indicated that unemployed people on benefits must accept available job offers, regardless of the lack of conditions, entitlements or choice over working hours – or lose welfare benefits (Seccombe, 2005). If as, we suspect, the legislation will effectively reduce conditions through the AFPCS and real wages through time by the AFPC for the low paid, there needs to be in place a process that ensures that welfare is neither an attractive or accessible option for the low paid. The current welfare reforms will create a pool of single parent and disabled job seekers who will be forced to seek part-time work (State and Territories Submission, 2005). The industrial relations legislation will presumably be the catalyst for creating the pool of required jobs. By creating a context of a low pay underclass there will be pressure on welfare groups to meet the needs of the working poor (Morris, 2005) and there will be problems in sustaining productivity growth across the economy in the context of low wage employment. We view the Work Choices legislation as an attack not only on the low paid, but also on all employees through the potential for employment terms and conditions to be changed unilaterally by employers through the various mechanisms provided by the AFPCS.

Notes

Peter Waring. Employment Studies Centre, University of Newcastle. Alex de Ruyter. Birmingham Business School, University of Birmingham. John Burgess. Employment Studies Centre, University of Newcastle. References

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Society, 13 (3): 525-38. Van Barveld (2005), What’s in Australian Workplace Agreements in the Hospitality Industry,

Unpublished paper. Waring, P. and Lewer, J. (2001) ‘The No Disadvantage Test: Failing Workers?’, Labour & Industry, Vol.

11, No. 4, pp.65-86. Waring, P., De Ruyter, A. and Burgess, J. (2005) ‘Advancing Australia Fair: The Australian Fair Pay and

Conditions Standard’ Journal of Australian Political Economy, forthcoming. Williams, P. (1997), The Victory, Allen and Unwin, Sydney.

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Provoking Building and Construction Workers

Chris White

This paper reports on major problems with the Building and Construction Industry Improvement Act (2005), BCII Act (2005) focussing on the suppression of the right to strike. The new Australian Building and Construction Commission with wide-ranging powers ‘investigating’ building unionists who may have knowledge of so-called ‘unlawful industrial action’ with the threat of penal sanctions is explained. Building workers’ basic civil rights to silence and not to incriminate themselves have been removed. The government’s ‘law and order’ moves against unionists involved in so-called ‘ unlawful industrial action’ is described. Academic analysis shows this ‘command and control’ over-regulation is the wrong model. The ILO found this BCII Act (2005) breaches ILO Conventions for workers rights for freedom of association and the right to strike. Together with the Work Choices Act (2006) WC Act (2006) the building and construction industry is a major contested union battleground.

Labour law issues for the building and construction industry ‘WE WON’T take away the right to strike’ Emphasis in Australian Government advertisements.

Unlawful industrial action

Minister Abbott in 2001 initiated the government specific targeting of building unions with the Cole Royal Commission into the Building and Construction Industry (Monash 2002, O’Neil 2003, Prince 2005). Drawing on Lewis Carroll's ‘sentence first - verdict afterwards’ Marr (2003) exposes the Cole Royal Commission process as the exact opposite of a court - an upside-down world where the verdict came first and the trial followed. Dabscheck (2003) named Cole as ‘an inquisition into union heresy’, that cost $60 million. Minister Andrew’s legislative attempt was defeated on the merits in the Senate, Report 2004 Beyond Cole – The Future of the Construction Industry: Confrontation or Cooperation?

The new BCII Act (2005) regime that came into law on 12 September 2005 was according to Minister Andrews’ Explanatory Memoranda ‘clarifying the regulation of industrial action’. This paper argues this ingenious rationalisation amounts to a politically motivated provocation by targeting militant building union industrial action and by making ‘unlawful’ what was formerly lawful union conduct. Some indication of the scope of the legal ‘command and control’ model is first seen in the definitions. ‘Building industrial action’ covers all stoppages, bans and any activity changing the performance of work. A new statutory concept of ‘unlawful industrial action’, which is ‘industrially motivated’, is created and all such conduct is prohibited. ‘Industrially-motivated’ is: ‘supporting or advancing claims by or against an employer in relation to the employment of employees: This includes action by one group of employees in support of claims by another group against a different employer; advancing industrial objectives of an industrial association or disrupting the performance of work.’ Its breadth extends to those who are ‘involved in a contravention’ by ‘aiding, abetting, counselling or procuring the contravention; inducing the contravention whether by threats or promises or otherwise; being directly or indirectly

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knowingly concerned in or party to the contravention, or conspiring with others to effect the contravention’ of the ‘building agreement, building award and any award or agreement that has application to 'building work, whether or not they also apply to any other kind of work.’ ‘Building employee’ includes when the employee performs other work as well as building work. The prohibited ‘unlawful industrial action’ that is ‘likely to arise’ allows any person to apply for an injunction, where it is not only when it is ‘occurring or impending’ but ‘probable’. This catches what was legitimate union organising and collective bargaining. Improved penalties Penalties are increased to $110,000 for unions and $22,000 for individuals, and applied retrospectively from March 9 to catch any ‘unlawful industrial action’ in the building industry. In WA Senior Commissioner Gregor, saying the BCII Act changed the rules, granted contractor Leighton Kumagai a lifetime ban on the Perth to Mandurah railway line (Leighton Kumagai Joint Venture PR966077 6 December 2005). Under former labour law, only a few provisions made industrial action itself attract a penalty. Little justification exists to make building union industrial action penalisable. Furthermore, with the WC Act (2006), a new penal power exists, section 111, where the AIRC is compelled to halt any unprotected industrial action, with no discretion to assess the merits or fairness of the dispute. The interaction between civil penalties and criminal penalties has complex details of enforcement. Orders can be made to pay substantial uncapped compensation to ‘persons affected’ by ‘unlawful industrial action’, ‘third parties’ not directly involved in the dispute. There is the sequestration of union assets that can bankrupt unions. Increased penalties for contravention of the prohibition on ‘strike-pay’ show evidence of the crackdown. Employers are prohibited from making and employees from accepting pay for any periods of industrial action.

Together with WC Act (2006), these are very heavy-handed sanctions. Law abiding unionists raising grievances and caught up in building industrial action can be penalised. Corporate legal firms are armed with powerful legal sanctions. As it is inevitable that union ‘illegalisms’ will occur, the force of the government’s ‘law and order’ campaign threatens building unions. But past experience shows excessive recourse to the courts for sanctions against strike action creates more problems than they solve. Suppression of strikes has not always worked. Inappropriate industrial action made unlawful The government produced no compelling evidence that legitimate building union conduct is a problem of such significance that warrants these severe restrictions. The Minister has repeatedly made allegations (unjustifiably) seeing ‘industrial action’ as ‘inappropriate’ behavior and to be made ‘unlawful’. But the number of ‘inappropriate union incidents’ in the findings was small. The ‘inappropriateness’ involved stoppages of a few hours, mainly grievances with site working conditions. Disputes about managerial policy, poor work conditions, roster complaints, retrenchments, safety issues and amenities, the non-payment of wages and entitlements, superannuation and redundancy occur, but at historically low levels. Dabscheck (2003:8) named Cole’s reasoning like Orwell’s 1984 ‘doublethink’ that is incitefully dissected:

Behaviour which is not ‘unlawful’ or to be more specific which is lawful - can be deemed ‘inappropriate’. Legislative changes can be recommended which will transform that which is ‘inappropriate’ into that which is “unlawful”. Through the interplay of “unlawful” and

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‘inappropriate’ in the Royal Commission, the vice of doublethink can be played out. That which is lawful is unlawful.

Cole found much ‘inappropriate union behaviour’ 91.2% but little ‘inappropriate employer behaviour’ 8.8%. Employers, financiers, developers, global construction corporations and government are not subject to any penal crackdown, despite much allegation of companies not paying workers’ entitlements, phoenix companies, tax evasion and breaching OHS standards. The ‘unlawful’ behaviour was minor breaches of dispute resolution clauses and so-called common law ‘interferences with contractual relations’. Cole’s perceptions were informed by conservative common law master and servant values of union ‘inappropriateness’ and where strikes are unlawful and tortious by very definition. They led to Cole’s recommendations to make normal building union bargaining ‘unlawful’, which led to the BCII Act (2005). Minister Andrews used the cover of allegations of ‘union corruption’, made (but not found) when campaigning in support of the Master Builders Association (2005) in a confrontational anti-union offensive during the 2005 building bargaining rounds. One example, repeated often, was on 2/3/05 at the MBA Conference in Queensland, where the Minister asserted that retrospective legislation was necessary due to ‘excessive strikes’, ‘coercion, threats, intimidation or violence’, and ‘unlawful and inappropriate behaviour identified by the Royal Commission’. Minister Andrews was targeting the Victorian CFMEU agreement campaign. But industrial relations reality prevailed, as key Victorian building companies (and not the MBA) reportedly made a statewide agreement with the CFMEU. The Age, 18/3/2005 reported ‘Building Unions take 3-year pay deal’. One builder cited ‘15% productivity benefits for subcontractors’. Victorian CFMEU Secretary Kingham hailed the agreement, without industrial action, as ‘a great breakthrough for industry stability and prosperity’. The Minister then targeted the Queensland union campaign: then moved to suppress strikes in WA, where there have been bitter contests. The smaller states, where Cole found little ‘inappropriate’ conduct, are next. Protected action extinguished Building union industrial action during enterprise bargaining is supposed to be protected from statutory and common law sanctions, but is now even more severely constrained under Work Choices (2006). Protected industrial action is restricted to a very narrow category of ‘acceptable conduct’, all but extinguished and in practice largely illusory (Peetz 2005). A critical point that follows is that any industrial action outside this very narrow protected action exposes unions and workers to increased penalties, both statutory and at common law. All action during an agreement is prohibited. Employers can make adverse work changes, but it is illegal for unions to respond with industrial pressure. Further, union ‘protected action’ loses its protection when taking action with other unions to more than one agreement or inadvertently with non-unionists. Even with lawful protected action, third parties affected can stop it. Under the WR Act (1996) protected action was not subject to the prohibition against coercion, but in the BCII Act (2005) there is no exception for protected action. Building unions are to be prohibited from organising any action that coerces an employer. Restricting protected action is far removed from the industrial relations system allowing hard union bargaining and economic pressure by protected industrial action without liability. Further, an employer is not to be subject to the notion of ‘undue pressure’, such as to make superannuation payments to a particular fund. The Minister clings to his narrow ‘protected action’ when saying he ‘won’t remove the right to strike’. But in practice, with the legal restrictions in WorkChoices, the right to protected action is ineffective.

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Project agreements unenforceable

Traditional Construction Project Agreements for industrial standards agreed to by employers, employees and contractors across the construction site are made unenforceable. But the construction site is the enterprise. Project Agreements provide certainty and stability and protect legal entitlements of building workers. Such a provision against what the parties agree to undermines the rule of contract law. But how are the new legal norms to be enforced? Australian Building and Construction Commission

The BCII Act (2005) establishes an institutional enforcer to police any ‘unlawful industrial action’, the new Australian Building and Construction Commission (ABCC), funded with $96 million. The ABCC has unprecedented powers interrogate workers and union officials suspected of engaging in ‘unlawful industrial action’. The ABCC can get an injunction to stop ‘unlawful industrial action’ by intervening in the AIRC and Federal Court. ABCC Inspectors, many recruited from agencies investigating crime, can enforce a penalty of imprisonment for 6 months against any worker summonsed to attend for questioning at ABCC offices and who does not answer questions or who obstructs an investigation or fails to hand over documents in a ‘building industry investigation’. This is an unprecedented intrusion into internal union affairs. In an earlier Bill, the first offence was a penalty and second jail, now the threat is go straight to jail. Further, to enforce secrecy, ABCC staff can be jailed for 12 months if they divulge confidential information. Undermining civil liberties Roberts (2005) produced an indictment of the BCII strategy that undermines basic civil liberties, such as the human right to silence and from self-incrimination. Workers involved in union stop work meetings have been faced with a harsh choice: answer the questions or face six months jail – hardly proportional to the ‘offence’. Workers are under pressure to dob in their work mates. CFMEU newspaper advertisements, 28/11/2005, warned of penal sanctions underway: ‘In what country can you be interrogated about a routine union meeting, and jailed if you don’t comply?’ The worker can have a lawyer attend, but this is no help as ‘witnesses’ cannot avoid answering questions on the basis they will incriminate themselves or breach other laws. Their lawyers are frustrated by the ABCC and workers denied their rights to legal representation. The Australian Financial Review, 14/11/2005, is one report of the intimidation against individuals who have not done anything wrong nor alleged to have done anything wrong. One effect is that workers who stop work in response to their employer unilaterally cutting conditions could be pursued for years for penalties even though the stoppage led to an immediate resolution of the dispute.

ABCC inspectors acting on National Crime Authority lines are tagged by the CFMEU as industrial secret police. Civil libertarians and the labour movement are opposed to the false and alarmist premise that ordinary building workers should be singled out and intimidated by building secret police removing basic civil rights. This policing of workplaces has no counterpart in the democratic world and goes further than the powers of the police and arguably ASIO. The ALP argued these coercive investigations are worse than for suspected terrorists (Senate debate on Building Industry Regulations, 6/12/2005). Here Senate revelations by WA Greens Siewert documented intimidation on innocent family members at home by burly ABCC Inspectors, characterized as ‘un-Australian’. There is more at stake than building workers if such basic human rights can be legislated against. This denial of civil liberties pushes state power against the individual building worker or

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union official. It is an abuse of the rule of law. Protection for basic human rights from an Australian Police State is now part of the campaign against these repressive workplace laws. Independent from employers

The ABCC can act irrespective of the views of employers. Employers can try to hide behind the fact they are not prosecuting. The ABCC is an external third party interfering between building employers and their workforce, and does not address the merits of the industrial action. Employers, as well as unions, are involved in legal proceedings that do nothing to resolve the issues in dispute. The dominance of employer legal firms is more likely to inflame industrial relations, provoking unnecessary disputes. Employers can be prosecuted for not reporting ‘unlawful industrial action’. The level of mandatory reporting is excessive on sub-contractors and overly bureaucratic. The interim Building Industry Taskforce prosecuted an employer, but the court did not impose a penalty. Similarly with an employer who was not aware that ‘illegal’ strike pay had been paid. In another case, the court said the inspectors were undertaking roving inquiries foreign to industrial relations, pursuing hopeless cases and prosecuting matters that were much ado about nothing. The actions were intimidating workers not to be involved in unions. One concern from employer associations, but ignored, is the broad scope of ‘building work’ extending into related but separate industries. The Minister can also make regulations including or excluding activities from the definition of 'building work', that may ‘clarify’ whether or not activity falls within the definition. Safety

Union safety campaigns are legally made much more difficult. In an industry with 50 deaths annually, and ongoing safety issues, the priority for the health and safety and lives of workers should prevail over management prerogative. But the BCII Act (2005) excludes action by an employee based on a ‘reasonable concern...about an imminent risk to his or her health or safety’, provided the employee ‘did not unreasonably fail to comply with a direction to perform other work 'that was safe for the employee to perform’. This is a narrowing of the exclusion and the onus is on the employee to prove a reasonable concern about safety. No evidence for this reversal is given. This is inconsistent with the common law and statute law right to refuse to comply with an instruction from an employer that exposes them to unreasonable danger of injury or disease. The entitlement to be paid for OHS action is more restricted in this hazardous industry than in other workplaces. There is a real concern that the lives and the safety of workers are at greater risk. So the unions will keep protesting with industrial action against unsafe work, as they feel deeply about the shattered lives of building workers families, such as teenager Joel Exner (2002). The ACTU had militant support from building unions in the successful asbestos campaign against James Hardie. A new Federal Commissioner for Safety is also established, but far from an adequate response. A key reason is that the best enforcers of OHS standards are excluded, the union worker safety reps trained for prevention and compliance. For effective building industry OHS strategies, they have to be with the commitment of the unions. Green bans outlawed

The BCII Act (2005) outlaws socially responsible union campaigns, such as the world-leading environmental green bans. With community support, green bans have public acknowledgement for protecting the environment and for socially responsible building

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development. Such community accepted values had their origin in the 1970s. The NSW Builders Labourers Federation embarked upon ‘green bans’ industrial action to protect the environment by refusing to take jobs constructing a luxury complex on undeveloped bushland, on the Greenbelt Sydney, supporting community opposition to this project (Thomas 1973). This environmental industrial action is justified as a means by which a community allows the values of their ‘life world’ for conserving the environment to permeate the capitalist development system. The Sydney green bans balanced the short-term profit drive of developers with a form of civic democracy on how to develop Sydney. Socially responsible industrial action allows unions with community support to substitute a conscious social decision for a market determination. Novitz (2003:60) shows how international labour law justifies green bans as a legitimate right to strike. Furthermore, industrial action political protest is in a democracy an important civic freedom of political communication and under the ILO a right to strike (White 2005a), but now outlawed. Ministerial powers

Minister Andrews has (unwarranted) powers to regulate the industry (and not subject to parliamentary scrutiny), to direct the ABC Commissioner (thus questioning political independence) and to enforce the Building Code of Practice (without any agreement by the employers or unions involved). The Minister’s Code is enforced by the ABCC backing the financial power of the Commonwealth government on building contracts to coerce any contractor who may want to choose to agree and work in cooperation with unions. When construction companies want government work, they have to be Code-compliant in their privately funded projects. Workplace Express reported the guideline in force from 1/10/2005:

• Bars any restrictions in registered or unregistered agreements on offering AWAs; • Prohibits provisions allowing access to sites that go beyond entry provisions in the

Workplace Relations Act or state legislation; • Outlaws restrictions on the type of agreement employers or employees are able to

sign, or the parties with whom an agreement can be made; • Bans provisions requiring, group apprenticeship schemes to make over-award

payments; • Requires any site allowances to be prescribed in an agreement or AWA; • Allows project agreements, but only for "major contracts"; • Forbids provisions in agreements that provide for third parties, except for

government regulatory agencies, to "monitor" the operation of agreements; • Precludes requiring union-nominated non-working delegates to be employed on a

site; • Rules out provisions in agreements and awards requiring employers to put union

logos on employer-supplied equipment, including clothing; • Outlaws redundancy selection criteria in industrial instruments such as "last-on,

first-off" arrangements that "ignore" employers' operational requirements; • Bars clauses restricting employers' "short- or long-term labour requirements",

provisions stipulating terms and conditions for third parties and requirements to consult unions about engagement of on-hire or contract labour; and excludes

• any restrictions on making all-in payments in lieu of annual leave, overtime or other entitlements. (Workplace Express 30/8/2005).

These are extraordinary workplace interventions and over-regulation where the industrial parties are supposed to be freed up to reach agreement.

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BCII together with Work Choices

The BCII Bill was to outlaw union ‘pattern bargaining’ but this is now done in the WC Act (2006). In the building industry, pattern or industry bargaining has a 150-year history, is prevalent, practical and supported by employers and contractors. The outlawing of union industry strikes is provocative and flies in the face of industrial relations reality where there is always a mixture of enterprise and industry bargaining (ACIRRT 2002; Dabscheck 2003). Employers recognise industry claims and agree to the practicality of such industry arrangements, but insist on no industry strikes. The BCII Act (2005) was also to impose compulsory secret pre-strike ballots. But these now apply to all workers, in 45 sections in the WC Act (2005) making protected action almost impractical. Rapidly changing dynamics on building sites means any delays for industrial action are not practicable and can only assist the employers’ power. If however, the secret ballot proposals are regarded only as an irritant and followed, then building employers do not have to accept any strongly supported ballot. It is likely then there will be longer stoppages. If the legalities cannot be followed, unions may decide that all out strikes are the best. The ACCC prosecutes secondary boycotts under the Trade Practices Act (1974). Any fines imposed may not be paid Combet (2005). Restrictions on union right of entry are tightened under Work Choices. Political campaign

The politics behind making union strikes ‘unlawful’ is a ‘law and order’ campaign supporting construction companies and through the ABCC to enforce sanctions against militant unions. The interim Building Industry Taskforce had only a few prosecutions Maitland (2005). The policing was not working, other than to cause fear and concern for building workers and their families, but the was ABCC still instituted. Stewart (2005) asked at a 2005 building industry conference: ‘can the ABCC succeed where the BIT apparently failed? Will employers decide (or be forced) to take a stand? Will employers be able to stand by and let the ABCC do their work for them? Who (if anyone) will be the next Clarrie O’Shea?’ Outlawed the building unions may become, but building unions have survived periods of outlaw. The ‘party political wedge’ is to label political opposition with so-called ‘unlawfulness’. This was the politics by Minister Abbott; and now Minister Andrews.

Take perceptions that Beazley is a weak or indecisive leader or the captive of powerful interest group like the trade union movement. Mix those perceptions with images of thuggish unionists. Add a few facts about the influence the trade unions exert over the ALP's policy process and pre-elections and point out that union membership has been declining steadily over the past decade. Create a firm impression in the eyes of voters that Beazley won't stand up to the union movement and hopefully inflict serious political damage (Australian Financial Review July 28th 2001).

Command and control model

Howe (2005) analysed the BCII Bill as a highly centralised ‘command and control’ and legally prescriptive model. He argues it is an ‘excessively legalistic and sanctions-based strategy’; designed to seriously curb unjustifiably the legal rights of workers and the power of their unions. The ABCC is not to resolve disputes ‘but to monitor compliance with mainly prescriptive laws and to impose penalties and sanctions for breaches of those laws. …This regime has been subject to extensive criticism…for being so heavily reliant

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on prescriptive rules.’ The model has inherent weaknesses such as ‘unnecessarily complex rules, and overly prescriptive, legalistic and inflexible design and implementation which has undermined compliance.’ It is not, as in the spin, ‘deregulatory’ but over-regulation. The ABCC is a third party interfering in the construction labour market different from the up until now legitimate role of unions in enforcing workers’ entitlements and the AIRC in assisting the reaching of agreements. The BCII will be more adversarial, litigious and subject to costly legal challenge on technicalities. Howe stresses the need for balance in labour law of policies and interests, where collectivity and fairness have a role with productivity. Howe argues for cooperative and industrial democratic models for a voice for workers, to enhance trust and cooperativeness that can lead to productivity; and that best practice includes project alliances with the unions. The unions won improvements in wages and conditions on the Olympic Games, while helping bring them in under budget. The Olympic Games was a collaborative model where government, unions and employers worked together as partners to achieve a world class socially and environmentally responsible outcome (Webb: 2001). Howe concludes the BCII is not a smart regulatory system, but a ‘disturbing precedent for the future of state regulation of labour regulations in Australia’. More on Productivity

The BCII Act (2005) is designed to assist powerful corporations to increase profits, but is not necessarily a good model to improve productivity. Dabscheck (2003) shows the ‘doublethink’ with ‘productivity’. Cole commissioned two Economic Reports that warned that ’tackling industrial disputes is not a panacea for improving productivity’ and that Australia’s building and construction industry productivity is rated highly by international comparisons. Cole acknowledged this. ‘He then indulges in the lawyer’s trick of finding an alternative term for productivity, and using this distinction to deny the evidence of research that he in fact commissioned. He says that: “The studies do not show that the industry is operating efficiently”, …but efficiency and productivity are synonyms not antonyms.’ Dabscheck further criticises Cole for his ideological bias against ‘pattern bargaining’ and shows that industry bargaining has contributed to productivity, more so than individual bargaining. Another doublethink is ‘that which is important is unimportant e.g. OHS and that which is unimportant is important, e.g. union behaviour.’ Cole’s conclusion against ‘unwanted’ intrusion by third parties, the unions, is ’doublethink’ in an industry where the rank and file are the union. Unions are replaced with the intervention of the third party state, the ABCC. Cole’s conservative common law background viewed the strength of union militancy as so ‘inappropriate’ that he in effect urged it should be criminalized. This takes labour law back to the 18th century, the UK Combination Acts of 1799-1800, where workers combining were ‘criminals’ and that led to the Toll Puddle Martyrs. This is an unprecedented disciplinary intrusion by the state into workplaces. No strike waves

In the last decade the downward trend of strikes continues, with less disputes and days lost for 45 years. The targeting of strikes with increased penalties is in stark contrast with this industrial relations reality. Despite a higher percentage of strikes in the building industry. there is not ‘endemic lawlessness’ as in the ‘spin’. Indeed, Dabscheck, in his Senate submission, noted the overall minimal trend: ’ABS Data 1981-2002 found that, on average, each worker spent 0.481 of a day, each year, on strike. Alternatively, 99.76% of total working time was devoted to activities other than industrial disputes.’ As well, employer lockouts as protected employer action when negotiating union agreements and to

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enforce individual contracts has been on an upsurge (Briggs 2004, 2005). The BCII Act (2005) retains the legal power of building employers to lockout. Furthermore, building corporations engaged in new projects can now access under Work Choices ‘greenfields employer agreements’, to fix wages and conditions in agreement with themselves and not employees and unions (White 2005d). One conclusion is that the strike suppression is ideological, fuelled by the New Right HR Nicholls Society, Costello (1988), Evans (2002) and powerful building corporate interests and their political associations, the MBA Harnisch (2003). This is to avenge the 1960’s, when the then penal powers, the bans clauses, were defeated by unions (Hutson 1983, Cameron 1970). Winning a strike does show the power of organised workers, especially with is a shortage of skilled labour, as in some building sectors. In response, there will be more intensified disputes defying penal sanctions. Building unions have a militant history leading political protests against government policies. These unions should have the ILO right for political protest strikes to defend their industrial interests, but such strikes are now unlawful White (2005a). Building unions stared down the ABCC threats to fine workers attending the half a million strong ACTU rallies on November 15th 2005. Crosby (2005) shows how the union movement is rebuilding in the workplace and community and far from defeated. ILO: BCII Act (2005) breaches fundamental workers’ rights

The ICTUR (2004) argued the BCII fell well short of ILO standards. ACTU President Burrow at the ILO warned it was a backwards step for Australian workers, 9/6/2005. The ILO (2005) found the BCII in breach of freedom of association and the right to strike that is one of the essential means through which workers and unions may promote and defend their economic and social interests. On 21/11/2005, Workplace Express reported:

The International Labour Organisation has upheld an ACTU complaint that the Building and Construction Industry Improvement Act breaches ILO Conventions 87 and 98 on freedom of association and collective bargaining. The ILO Governing Body endorsed recommendations from its Committee on Freedom of Association asking the Howard Government to amend the laws.

ACTU president Burrow, who is a member of the ILO Governing Body, welcomed the decision as a vindication of union objections. CFMEU construction national secretary Sutton warned that major Australian construction companies such as Multiplex, Lend Lease and Baulderstone Hornibrook could miss out on overseas tenders because Australia was developing a reputation as a “pariah nation” regarding workers’ rights under international law. “More and more we are seeing compliance with global labour standards as one of the criteria in the global trade process. In putting forward laws designed to shift the balance to employers, the government could well be cutting off their nose to spite their face.” The ILO recommended the Government:

• amend sections to ensure that any reference to unlawful industrial action conforms with freedom of association principles;

• change sections to eliminate any excessive impediments, penalties or sanctions against industrial action in the building and construction industry;

• review sections to ensure the determination of the bargaining level is left to the discretion of the parties and is not imposed by law;

• introduce sufficient safeguards to ensure that the functioning of the ABC Commissioner and inspectors does not interfere in the internal affairs of trade unions, especially regarding serious penalties (6 months imprisonment) for failures to produce documents or provide information to the ABCC, including the possibility of lodging an appeal before the courts

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against the ABCC’s notices prior to the handing over of documents; • initiate consultations with the representative employers’ and workers’ organisations in the

building and construction industry.

Conclusion

US Republican President Eisenhower asserted (cited in Cameron 1970):

The right of workers to leave their jobs is a test of freedom. Hitler suppressed strikes. Stalin suppressed strikes. But each also suppressed freedom. There are some things worse than strikes, much worse than strikes – one of them is the loss of freedom.

Eisenhower was pointing out that one hallmark of the Police State is the loss of the right to strike. The right to withdraw labour distinguishes a free person from a slave. Human rights advocates argue for the right to strike as a human right (Ewing 2004). The legal freedom for the right to strike may lead to less strikes, workplace peace, improved industrial relations and bargaining based on fair play and cooperation as in the Olympic Games. Chris White is a PhD student School of Law Flinders University [email protected]

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Industrial Relations Research and Training, Sydney University, www.acirrt.com Andrews K speeches www.dewrsb.gov.au/ministersAndMediaCentre/andrews/default.asp. Building and Construction Industry Improvement Act (2005) Go to http://www.aph.gov.au/index.htm

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ICTUR (2004, 2005) International Committee on Trade Union Rights. Submissions to Senate Inquiries http:// parlinofoweb.aph.gov.au.

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Construction Industry. (Melbourne: Commonwealth of Australia.) Novitz T (2003) International and European Protection of the Right to Strike, A Comparative Study of

Standards Set by the International Labour Organization, the Council of Europe and the European Union. (Oxford: Oxford University Press).

O’Neill S (2003) “Building Industry Royal Commission: Background, Findings and Recommendations” Department of the Parliamentary Library Bills Digest No. 30 26/5/2003 www.aph.gov.au/library/

Peetz D (2005) “Senate submission into the Work Choices Bill (2005)” 151 Australian Industrial Relations, Labour Market and Legal Academics.” No 175. http://www.aph.gov.au/Senate/committee/eet_ctte/wr_workchoices05/submissions/sublist.hm

Prince P (2005) “Building and Construction Industry Improvement Bill” Parliamentary Library Bills No. 139.

Roberts T (2005) “Civil Disturbance” Workers Online June 2005; ‘Into the Industrial Dark Ages: the civil liberties implications of the Federal Government’s Industrial Laws for the Australian Construction Industry’. Published in Civil Liberty, the Journal of the NSW Council for Civil Liberties Inc. June 2005

Stewart A (2005) ‘Striking the Right Balance? The New Laws on Industrial Action’ BCI Conference 14/7/05.

Thomas P (1973) Taming the Corporate Jungle (NSW Branch of the Building Construction Employees and Builders’ Labourers’ Federation, Sydney).

White C (2005a) “The Right to Politically Strike?” AIRAANZ 2005 Sydney University. White C (2005b) “Inside the ILO Tent” Evatt Foundation http://evatt.org.au/news/336.html White C (2005c) “Senate Submission on the Building and Construction Improvement Bill (2005)” White C (2005d) “WorkChoices: Removing the Choice to Strike” Journal of Australian Political

Economy 56. Webb T (2001) The Collaborative Games The story behind the spectacle (Pluto Press, Australia.) Work Choices (2005) Senate Committee’s submissions, evidence, Report.

http://www.aph.gov.au/Senate/committee/eet_ctte/wr_workchoices05/index.htm

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The Queensland Dental Assistants’ Equal Remuneration Case: an Illustration of the Pay Equity Implications of Eroding the State System

Gillian Whitehouse and Tricia Rooney


The 2005 Dental Assistants’ Equal Remuneration case illustrates some of the strengths and limitations of measures currently available in Queensland to address the undervaluation of female-dominated work In this paper we use the case both to assess the capacity of the Queensland provisions to effectively address gender pay inequity and to highlight implications for pay equity of moving to a ‘national’ industrial relations system in Australia. While we draw out some limitations in the way undervaluation was assessed in this case, we also emphasise important advantages of the Queensland system that will be difficult or impossible to recreate under the new workplace relations system.

Concerns over the impact on gender pay equity of the changes prescribed in the Workplace Relations Amendment (Work Choices) Bill 2005 range from the potential of the new system to increase overall wage dispersion (which indirectly affects gender outcomes), to more direct implications for the prosecution of pay equity cases through industrial tribunals. Pressures towards wider wage dispersion are effectively factored into the system through the new mechanisms for adjudicating minimum rates – the government’s justification for its ‘Fair Pay Commission’ (that increases in minimum rates threaten the availability of jobs) makes it clear that at least one goal of the new system is to restrain the growth of minimum rates. In the absence of an effective process of gender mainstreaming (see Rubery, Grimshaw and Figueiredo 2003), the gendered implications of these institutional changes have not gained a high profile, and the extent to which they contribute to further wage dispersion, and the impact of this on gender pay inequity, will only be empirically assessable in the longer term.

In this paper we are concerned more with the implications of the new system for the capacity to prosecute pay equity cases, and focus in particular on the costs of eliminating methods of addressing pay inequity that have recently evolved at State level. Specifically, we examine the first pay equity case to be brought under the Equal Remuneration Principle adopted in Queensland in 2002 following the report of the Queensland Pay Equity Inquiry conducted by Commissioner Fisher in 2000 (Queensland Industrial Relations Commission [QIRC] 2001). The case illustrates application of the Equal Remuneration Principle in the context of the Queensland Industrial Relations Act 1999, which identifies pay equity as an object that must be furthered by the Commission in the performance of its functions (see Hunter et al 2000) and includes a range of provisions that can be utilised to this purpose. The strength of the Equal Remuneration Principle (which is based on the principle developed in NSW in 2000) lies in the capacity it provides to address the undervaluation of female-dominated work without requirements for a male comparator or proof of overt discrimination – factors that have hindered the progress of equal pay cases at federal level in recent years (see Hunter 2000; Whitehouse et al 2001).

We begin the paper with a synopsis of the claims made by the parties to the Dental Assistants’ (DAs) case, then turn to an analysis of the decision, highlighting in particular the recognition of certified agreement rates for comparator occupations in the re-assessment of DAs’ award rates. Information for the analysis was collected by attendance and observation at all days of the hearing, participation as witnesses at the hearing (including the provision of evidence from unpublished Australian Bureau of Statistics (ABS) data and a commissioned survey of

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Queensland Dental Assistants), and through various related case documents including case applications, affidavits, official transcripts of the case, written summations (where possible) and the case decision (Liquor Hospitality and Miscellaneous Union, Queensland Branch, Union of Employees AND The Australian Dental Association (Queensland branch) Union of Employers, B/2003/2082, 7 September 2005, Decision – hereinafter referred to as ‘the Decision’).1 The Queensland Dental Assistants’ Case: Claim and Counter Claim

The DAs’ case was initiated in December 2003 by the Liquor, Hospitality and Miscellaneous Union (LHMU) Queensland Branch2, with an application seeking pay equity for DAs employed under the Dental Assistants (Private Practice) Award – State. The choice of DAs for an initial test of the Equal Remuneration Principle was an obvious one, as the Pay Equity Inquiry conducted in 2000 had undertaken a trial case of DAs to provide the parties with an opportunity to engage in the assessment of skills in a female-dominated occupation and comment on what should be included in a pay equity principle. Although the trial was not designed to deliver a substantive outcome, it did highlight a number of issues that potentially contributed to the undervaluation of the work of DAs (see QIRC 2001: 124-134). These included lack of recognition and valuing of ‘softer skills’, lack of employer support and award recognition for qualifications, lack of monetary recognition for a range of disabilities and work conditions that are paid under other awards, and an absence of work value and equal pay decisions in the award history. Several other items on a list of indicators likely to contribute to undervaluation (following the NSW Pay Equity Inquiry) were identified, including low levels of unionisation, limited agreement coverage and high levels of casualisation. There was, however, a lack of certainty about the extent of casual employment, and about the prevalence of overaward payments. The need for further information on these issues and the identification of probable contributors to undervaluation shaped the subsequent claim by the LHMU.

The first stage of the LHMU claim sought an order under s.326 of the Industrial Relations Act 1999 (the Act) to set up arrangements for a survey of wages and working conditions of DAs employed in private sector dental practices. Although co-operation of the respondent industrial organisation of employers – the Australian Dental Association (Queensland branch) (ADAQ) – was not forthcoming, the Full Bench of the Commission provided support for the survey by directing that it would be distributed and returned to the Registry of the Queensland Industrial Relations Commission and that a follow-up postcard would also be distributed by the Registry. A further element of the first stage of the claim, that employers be directed by the Commission to allow DAs to complete the surveys ‘in paid time, confidentially and without influence of the employers or others’, was not upheld on the grounds that the Commission did not have the power under the Act to require employers to comply. The Bench did, however, state that ‘the survey is a necessary and relevant ingredient to the Commission’s understanding of the work and working conditions of dental assistants’ (Decision [5]) and that ‘(w)herever the survey is completed, it should be done so confidentially and without the influence of others’ [ibid].

The second stage of the claim sought an order under s.60 of the Act to increase the remuneration of DAs employed under the award, in conjunction with an order under s.125 of the Act to provide for an extended career path, increased remuneration and additional allowances. The LHMU sought to establish first, that a case for undervaluation of the work of DAs existed and then, by use of comparator male occupations, to establish appropriate levels or remuneration for DAs. In essence, the LHMU claim sought work value assessments which recognised soft skills, qualifications, training and professional development, and the


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‘disabilities’ associated with the conditions under which DAs worked. Although not necessary in an equal remuneration case, the LHMU also sought to have considered work value changes for DAs. The claim also identified the need for corrections to compensate for poor outcomes from minimum rates adjustment, award restructuring, second tier and structural efficiency principle processes, and – perhaps most controversially – asked for an award increase to compensate for DAs’ lack of ability to negotiate certified agreements and substantial overaward payments (LHMU 2005). The resultant classification and wage rates proposed included an additional level for DAs, shorter time periods at lower ‘inexperienced’ levels, the inclusion of additional pay points, a clearer specification of duties, and the inclusion of two Practice Manager (PM) levels at the top of the classification. Significantly, the proposed rates of pay, which represented increases in the vicinity of 40 percent, were based on the enterprise bargaining outcomes of comparator occupations rather than the award rates of pay for those occupations.

The counter claim sought to retain the five-level classification system for DAs, lengthen the time periods for the inexperienced, make the Certificate III a requirement of Level 3, specify expanded duties at Level 5, and include three levels of Practice Manager (PM) at the top of the classification. The increases in rates of pay in the counter claim were in the vicinity of five percent.

The second stage of the case was conducted over nine days during April 2005 with one day for final submissions in May. The first day of hearings heard the opening submissions of the LHMU and considered a late claim by the ADAQ to exclude coverage of the Clerical Award – State for DAs. Although the Bench noted that there was an obvious rationale in the ADAQ position, the lateness of the claim and its lack of relatedness to the equal remuneration case made it difficult to consider in the current hearings. The ADAQ subsequently withdrew that aspect of their counter claim. On the second and third days of the hearing, evidence was heard from Dentists and DA witnesses of the LHMU in relation to various aspects of the claim. On the fourth day, evidence was mainly heard from two Dentist academics, one in relation to the training of DAs and one in relation to aspects of infection control and occupational health and safety in dental surgeries. On the fifth day, evidence was heard from the Chief Executive Officer ADAQ, and from the Manager (Education and Training) and an Education and a Training officer of the ADAQ. Further evidence was heard on the sixth and seventh days from additional Dentist witnesses of the ADAQ, one of whom was also a professor of general practice dentistry at the University of Queensland. At an additional half day of the hearing, evidence was heard with respect to ABS data that had been requested by the LHMU detailing the earnings of DAs and drawing out comparisons with selected groups of tradespersons, including mechanical engineering tradespersons, metal fitters and machinists, electricians, carpenters, and chemical plant workers. Additional evidence was also heard on the last day in relation to the equivalence of Certificate III qualifications from a compliance officer with the Department of Employment and Training who confirmed the equivalence of Certificate III qualifications and their relativity to the C10 rate of the Engineering Award –State. As well, evidence was heard from the Chair of the Dental Board of Queensland who attempted to provide further clarification in relation to aspects of recent changes to the Dental Act in Queensland and the potential impact on the duties able to be performed by DAs. Considerable time over the course of the hearing was thus devoted to matters of a more technical nature and related to the disability allowance and to the extended duties aspect of the revised Dental Act. Relatively less time was devoted to consideration of the relevance and significance of actual rather than award rates of pay in establishing equal remuneration for DAs.


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Summations were heard over one day in May. In their oral submissions, the LHMU reiterated the factors which demonstrated that DAs fitted the profile of undervaluation as set out in Worth Valuing (QIRC 2001) and argued that the best way to value soft skills was through traditional work value practices. The LHMU also reminded the Commission of s.266 and Schedule 5 of the Act which states that ‘where pay inequity is found it must be rectified’. Concluding comments from the LHMU drew attention to precedents in considering certified agreement wage rates in determining work value and argued that such a consideration was imperative to ensuring equal remuneration.

In response to the union summations, a number of questions arose from the Bench, two of which raised issues with respect to the achievement of equal remuneration. The first of these was how it would be possible to maintain pay relativities under the union claim. The second question, from the Vice President, was concerned with how, if the union application was awarded in full (and supposing that this corrected undervaluation), the award would remain relevant with subsequent rounds of Certified Agreements (Transcripts B/2003/2082).

The ADAQ’s response to the LHMU summations rested on urging an adherence to the long established approach to work value in the Commission and by highlighting what they saw as a number of anomalies in the union claim. The ADAQ argued that their claim rested on the Engineering Award – State relativities and reminded the Bench that ‘this Commission makes awards, it does not make Certified Agreements’ (Transcripts B/2003/2082). The ADAQ also drew attention to the distortion in relativities and the potential for leapfrogging created by the union claim. The representative of the ADAQ also observed that he ‘had trouble understanding the fifteen per cent pay gap between male and female earning’ and that he ‘did not really understand the equal remuneration sections of the Act’ (Transcripts B/2003/2082).

The Decision

The Full Bench of the Commission released its decision in relation to the case in September 2005. The decision noted the newness of the issues in the case and acknowledged some of the difficulties arising from this in saying that ‘(t)he absence of precedents in this or other jurisdictions has made it difficult for the parties to determine how to conduct their respective cases’ [40]. In contrast to the hearings, much of the discussion in the decision was related to the relevance and appropriateness of the inclusion of enterprise agreement rates of pay in establishing equal remuneration for DAs. We argue that the Bench’s response to this issue is the most significant aspect of the case, and focus on it in our analysis as a clear example of a strategy for the redress of undervaluation that would not be possible to recreate at federal level under the new industrial relations arrangements. Initially, however, we outline the main aspects of new classification structure arrived at in the decision.

In its decision, the Bench accepted, on the basis of evidence from the LHMU survey and from an examination of the Award history, that a prima facie case existed that the work of DAs was undervalued [64]. The first award covering DAs (the 1952 Dental Attendants’ Award – State (Exclusive of Public Hospitals) clearly depicted the work as ‘female’, with the main task support for (male) dentists: ‘Dental Attendant shall mean a female employee who is required to attend to and waits on a Dentist in his surgery or any other place in which work is performed’ (cited in the Decision [56]). In combination with lack of previous equal pay determinations (there were no male dental assistants on which to base a case), the absence of work value cases, poorly applied wage adjustment processes and a prevalence of consent awards, the picture was consistent with a typical undervaluation profile as identified in the NSW Pay Equity Inquiry.


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In determining an appropriate valuation of the work of DAs it was accepted that ‘the work value of DAs who possess the Certificate III, irrespective of it not being a mandatory qualification, is equal or comparable to that of tradespersons’ [84]. In this vein, the Commission determined to establish a classification structure for DAs and set relativities consistent with the Engineering Award - State. As such, the Commission did not accept a reduction in the 100 per cent relativity for DAs who possess a Certificate III without experience (as advocated by both sides) and instead determined that there should be one entry level, Level 1, with a relativity of 87.4 per cent. Level 2 in the classification structure was set with a relativity to C10 of 92.4 per cent – this level requires twelve months (full-time) experience or a Certificate II in Dental Assisting. Level 3 was to be set at 100 per cent relativity to C10 and requires a Certificate III in Dental Assisting. The fourth level was to be set at 115 per cent relativity to C10 and requires a relevant Certificate IV qualification. This new classification structure represented increases in pay for those DAs who would be translated to Levels 1, 2 and 4, but no change for those at Level 3.

The Bench also determined that the classification structure should be extended to include Practice Managers (PMs). In making this determination the Bench noted the agreement between the parties with regard to this matter but also noted that little evidence had been adduced in relation to this aspect of the application [113]. The Bench largely accepted the ADAQ position in relation to the extension of the classification structure and determined three levels of PMs with relativities of 115, 125 and 130 per cent respectively. Transitional arrangements were specified to allow DAs currently performing PM duties to enrol in relevant Certificate IV courses and PM courses for Levels 2 and 3. Controversially, the decision also accepted the ADAQ position that a Level 3 PM be exempt from the hours of work and overtime clause in the award [298].

Increases based on certified agreement rates

It was the view of the Commission that the new classification structure ‘ensured that relativities for DAs have been properly set in relation to the DAs Award and between the DAs Award and other awards’ [182] and, as such, the wage rates specified would be the same as those found for comparable classifications in the Engineering Award. ‘Prima facie then pay equity has been achieved’ [182]. The LHMU claim, however, asserted that in accepting that the male occupations performed work of comparable value to DAs, it followed that it was ‘the actual earnings of those male occupations [that] should be used as a benchmark in fixing rates of pay for DAs’ [138]. Data from the ABS Employee Earnings and Hours survey were presented to show the marked difference between seeking equity on the basis of award rates and seeking equity once enterprise agreements rates were taken in to account. As Table 1 shows, the difference between DAs’ average earnings and those of the comparator occupations selected by the LHMU is considerably wider in the final column, which includes the benefits of bargained increases, than in the ‘award only’ column.


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Table 1: Average hourly total earnings ($)1 for full-time non-managerial employees, by pay setting method for selected occupations, Australia 2004 Award

only Registered collective

Registered individual

Total

Dental Assistants (6391)

14.51 17.11 (16.38)3

_2

(18.15) 16.68

General mechanical engineering tradespersons (4111)

_ 29.67 (28.92)

32.51 (29.87)

29.41

Metal fitters and machinists (4112)

23.47 26.21 (26.41)

26.64 (22.82)

24.63

Electricians (4311)

14.20 27.58 (27.50)

21.90 (21.72)

24.03

Carpentry & joinery tradespersons (4411)

14.25 26.38 (26.27)

21.48 (22.09)

23.04

Chemical, Petroleum & Gas Plant Operators (4987)

36.66 36.05 (36.04)

28.36 (27.57)

32.91

TOTAL - All occupations

17.09 24.78 (24.59)

25.54 (23.51)

23.16

Notes: 1. Based on average weekly total hours paid for. 2. ‘_’ indicates that a cell size is too small to produce publishable data. 3. Figures in parenthesis in this column refer to average earnings for the total of registered and

unregistered collective agreements, and in the next column for the total of registered and unregistered individual agreements

Source: ABS Employee Earnings and Hours, May 2004, unpublished data. From this evidence the LHMU argued for the Commission to consider certified agreements in determining appropriate rates for DAs, claiming that ‘to do anything less would allow the pay inequity to be perpetuated’ (LHMU 2005). In its decision, the Commission accepted the overwhelming evidence that DAs did not benefit from enterprise bargaining and went further to state that ‘(i)t is this lack of access to, or participation in, enterprise bargaining that we consider the single biggest contributing factor to pay inequity for DAs’ [183]. In determining to consider Certified Agreement rates, the Bench made reference to NSW Pay Equity Inquiry, relevant provisions of the Queensland Industrial Relations Act 1999 and relevant cases.

The Bench noted in the NSW Pay Equity Inquiry that Justice Glynn J concluded that there were ‘significant reasons why the Commission would wish to have regard to enterprise agreements in undertaking any appropriate work value comparison under any principle designed to consider equal remuneration or pay equity’ (Volume II, p. 102) and respectfully agreed with Her Honour [188]. In relation to the provisions of the Act, the Bench noted its powers pursuant to s.125(i) to ‘make, amend or repeal an award to provide, among other things, fair and just employment conditions’ and its duty pursuant to s.126 of the Act to ‘ensure that an award, amongst other things, provides for secure, relevant and consistent wages and employment conditions and provides for equal remuneration for men and women employees for work of equal or comparable value’.

It was also noted, however, that these powers and duties were constrained under s.129 of the Act which limits the inclusion of CA provisions to those that are consistent with principles established by the Full Bench for deciding wages and employment conditions and which are not contrary to the public interest [176]. Certainly, the ADAQ was concerned that the use of CA rates for comparison risked distorting relativities and threatened the ‘public interest’ by having the potential to lead to further work value cases. In an earlier case (The Margarine Case [2001], 168 QGIG 233) the Full Bench had decided against the practice on these


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grounds; however in another instance (16 QGIG 359) the Commission rejected arguments that powers to include CA provisions be limited to ‘special circumstances’, seeing this as an unduly restricting the power at s.125(i). Rather, it was the Commission’s view in this instance that the public interest was to ‘ensure that the Award provided for equal remuneration by having regard to a number of factors including … consideration of rates paid to comparable occupations under awards and enterprise bargaining’ [181]. Similarly, in the DAs’ case, the Bench held the view that the lack of access of DAs to enterprise bargaining was instrumental in the pay inequity uncovered in the case and that the Act imposed a duty on the Bench to rectify this inequity. Consequently, consideration of CA rates was deemed to be integral to the decision. However, the Commission was not prepared to award the amounts requested by the LHMU, viewing the magnitude of the request as potentially damaging to dental practices and the community, and likely to stimulate leapfrogging [191]. The Commissioners turned instead to the Queensland Department of Industrial Relations Enterprise Agreements database for an indication of the premiums above award rates achieved though enterprise bargaining in different industry sectors in the State from 1997-2004. Disregarding Construction (where the premium was of the order of 40 per cent), the Commission arrived at a figure of 11 per cent as an appropriate estimate of the premium that DAs were denied by their lack of access to enterprise bargaining.

A one-off increase of 11 per cent (equivalent to $63.60 per week at the C10 rate) was thus included in the decision. In determining this rate, the Commission was mindful that one of the main arguments against taking into account certified agreement rates is that they are rates negotiated by the parties to the bargain. As such, the commission considered that if wages rates struck under such agreements were to be considered in determining wage rates of DAs then care must be taken to ensure the rates awarded are specified in such a way as to clearly establish the relativity with the Engineering Award and any separate equal remuneration component. Such an approach, it was argued, would then avoid disturbances of relativities and minimise the prospect of leapfrogging [181].

In addition to the 11 per cent increase, the Commission awarded an ongoing percentage amount to compensate for future inequities as new enterprise agreements are made. This was termed the Equal Remuneration Component (ERC) [194]. It was also determined by taking into account the difference between enterprise bargaining outcomes and State Wage increases and was set at 1.25 per cent. The total award rate then was determined according to the following formula: Total Award Rate = (Base Rate x ERC) + Actual Rate [198]. The Base Rate is that prescribed in the Engineering Award for the revised DA classifications, while the Actual Rate is the award rate inclusive of the phased in component of the 11 per cent increase. The new rates were deemed to be significant increases and as such were to be phased in, in five instalments over a period of two years commencing 5 December 2005. Increases were also allowed to be absorbed into any over award payments [202], into rates prescribed by the Teachers Union Health Fund Certified Agreement and any unregistered agreements [203] and the ongoing ERC is also absorbable into any formal or informal overaward payments [206].

While the decision to raise the DAs’ award rate in recognition of enterprise bargaining increases for comparator groups was indeed a ‘bold’ step [155], the Bench was thus cautious in some ways. Apart from adopting a lesser increase based on the more modest premiums gained through enterprise bargaining in the State, and providing for absorption into overaward payments, they also concluded that future gains of this nature were unlikely – ‘very few other occupations will be able to establish such a strong case for the granting of an Equal Remuneration Component to award rates of pay’ [269].


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Other aspects of the case Additional elements of the decision included considerations of the claims for professional development and disability allowances. The Bench did not support the application for professional development allowance but accepted that compensation for participation in skill acquisition and development activities is an issue for DAs in the private sector. It was considered by the bench that the term ‘professional development’ is best reserved for those occupations that can be accurately characterised as professions [211]. As such, the Commission was concerned with assistance for DAs to obtain qualifications and imposed an obligation on employers to pay 50 per cent of the cost of obtaining a Certificate 3. An obligation was also imposed on employers to pay 100 per cent of the cost of a qualification at the Certificate 4 level, if the employer required the DA to perform the work of a Level 4 DA or to be appointed as a Practice Manager Level 2 or 3. In addition, where an employer requires a DA to undertake additional training to increase skills such as a course in infection control or computer skills or to attend a conference, then the employer will be required to meet the full costs associated with that course. Such provisions were considered to be consistent with the payment of training costs in trades occupations.

With respect to the disability allowance, the Bench was not persuaded on the evidence to award a disability allowance but considered that there was merit in the argument regarding providing compensation in recognition of the unsavoury duties that are required to be performed periodically by DAs [260]. Given the small size of many of the workplaces where DAs are employed, it was considered that the payment of a discrete disability allowance when any of the specified conditions are present or duties performed was too costly and difficult to administer. Instead the Bench decided to include in the ERC a small amount in recognition of disabilities.

Discussion and Conclusion As a consequence of the decision, a DA employed in a private practice in Queensland at the new Level 3 would be entitled to an 11 per cent increase in pay plus a further 1.25 per cent equal remuneration component to be paid annually (in addition to any state wage case increases). This will amount to a total of 13.5 per cent increase of the two year phase in period. The final rate for DAs who hold a Certificate III (subject to any adjustment of the ERC during the two year phase in period) is $649.80 per week (Decision [267]). DAs employed at lower levels will be entitled to greater percentage increased due to the new relativities which were established and those DAs employed as practice managers will also be entitled to greater percentage increases due to the extension of the classification to include those additional levels.

These rates of pay place the earnings of DAs still well below the actual earnings of many male-dominated trades occupations but more in line with the average earnings of all those occupations. The Bench also noted that ‘on current figures, even with an 11% increase, the wages for DAs in the private sector will be less than those payable in the public sector’ [197]. With further rounds of bargaining, it is likely that before the phasing in is completed in the DAs Award, public sector DAs will have received further increases.

Nevertheless, the increases delivered were significant and provide an illustration of one of the most effective strategies to address gender pay inequity under a system of enterprise bargaining – that is, to recognise potential gender-bias in enterprise bargaining premiums and make appropriate corrections to awards covering female-dominated occupational groups vulnerable to undervaluation. It was indeed a bold move, and may not be replicated even in Queensland. Significantly, it can’t be transposed to the new federal arrangements under which


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the AIRC is precluded from making rulings that would affect rates set by the Australian ‘Fair Pay’ Commission.

Looking more broadly at the issue of undervaluation, it is also clear that the case has set important precedents, particularly in recognising the award history and missed opportunities for work value assessments. The recognition and remuneration of ‘soft skills’ was also an important aspect of the case – the earlier trial case had highlighted the issue and signalled the Commission’s willingness to consider this as a key aspect of undervaluation of work that has traditionally been performed by women. However, there is less evidence that clear guidelines for future cases have been established on this matter; nor is it apparent that the technical skills required by DAs have been fully recognised. The term ‘dental assistant’ itself implies limited autonomy or requirement for independent technical skills, and the Commission’s view was that the work involved limited responsibility – ‘[w]e acknowledge that at all times DAs work under the supervision of a Dentist’ (Decision [79]) – although their delegated responsibilities were recognised [80]. Some similarities could be drawn with nursing, where the history is also of a female ‘assistant’ to a male professional; yet nurses have arguably moved further towards recognition of their technical skills and responsibility. While there are clearly some limits to the extent to which undervaluation of DAs’ work has been addressed in this case, we recognise that eradicating gender-bias in work value is a complex and difficult task that has long been the subject of analysis (see, for example, Burton et al 1987; Steinberg 1992).

It is this very difficulty that highlights another significant problem associated with erosion of the State systems. It is conceivable that improved principles to address undervaluation could be developed at federal level under a substantially unified industrial relations system, but the accumulated expertise and experience developed through State level Pay Equity Inquiries and subsequent cases would have to be recreated. As yet, State systems may not have perfected the means to eradicate undervaluation, but significant advances have been made. The Queensland DAs’ case benefited in particular from the resources and guidance provided by the Commission, which (for the trial case) included award histories for DAs and information to assist the parties in identifying undervaluation, and (for the case itself) included assistance with a survey of DAs. The Commission also raised the issue of how to maintain pay equity gains into the future, and included a percentage increase in the decision to address this issue. For all parties the case has been a learning experience, and the first case precedent could have been an important contribution to an ongoing process. It is a significant loss to the pay equity project that these gains may be short-lived, and that the most effective platforms for pay equity are being eroded in favour of the least effective.

Notes 1. Research for this paper has been supported in part through Australian Research Council Discovery grant DP0209261. 2. At the time of the application, the union’s title was Australian Liquor Hospitality and Miscellaneous Workers Union, Queensland Branch. 3. The Bench had noted the finding by the Australian Industrial Relations Commission (AIRC), in its review of Safety Net Wages in its June 2005 decision (Print PR00205) that despite safety net increases that the minimum wage had fallen behind other bargained wage outcomes.

References Burton, Claire, with R. Hag and G. Thompson (1987) Women’s Worth: Pay Equity and Job Evaluation in

Australia. Australian Government Publishing Service: Canberra. Hunter, Rosemary (2000) The Beauty Therapist, the Mechanic, the Geoscientist and the Librarian:

Addressing Undervaluation of Women’s Work. Sydney: ATN WEXDEV.


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Hunter, Rosemary, Gillian Whitehouse and Di Zetlin (2000) Submission to the Queensland Pay Equity Inquiry, Brisbane, December.

LHMU (2005) Final Submission Queensland Industrial Relations Commission, Liquor Hospitality and Miscellaneous Union, Queensland Branch, Union of Employees AND The Australian Dental Association (Queensland branch) Union of Employers, B/2003/2082, 7 September 2005.

Queensland Industrial Relations Commission (2001) Worth Valuing: a Report of the Pay Equity Inquiry, Brisbane, QIRC.

Queensland Industrial Relations Commission (2005) Liquor Hospitality and Miscellaneous Union, Queensland Branch, Union of Employees AND The Australian Dental Association (Queensland branch) Union of Employers, B/2003/2082, 7 September 2005, Decision.

Rubery, J., Grimshaw, D. and Figueiredo, H. (2003) The Gender Pay Gap and Gender Mainstreaming Pay Policy in the EU Member States,, European Expert Group on Gender and Employment Report to the Equal Opportunities Unit, DG Employment, http://www.umist.ac.uk/management/ewerc/egge/egge.html

Steinberg, R (1992) ‘Gendered Instructions: Cultural Lag and Gender Bias in the Hay System of Job Evaluation.’ Work and Occupations, 19, 4, 387-423.

Whitehouse, Gillian, Di Zetlin and Jill Earnshaw (2001) ‘Prosecuting pay equity: evolving strategies in Britain and Australia’. Gender, Work and Organization, 8(4): 365-386.

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Globalisation and its Impact on Employment Relations in the Chinese Automotive Industry

Shuming Zhao, Jie Zhang, Russell D. Lansbury† and Chris F. Wright†

Nanjing University, China;

Nanjing University of Aeronautics and Astronautics, China; University of Sydney, Australia

The Chinese automotive industry has experienced major restructuring over the past decade. An increasing number of foreign companies have established joint ventures in China, exposing local manufacturers to the pressures of global competition. Automotive production in China has been under increasing pressure to provide better products and services at higher levels of efficiency and lower cost. In the context of debates on the impact of global economic change on national systems of employment relations, this paper compares the experiences of two joint ventures in China, one between a local automotive producer and a European manufacturer, and the other between two Chinese companies and a large producer from East Asia. It seeks to analyse the extent to which employment relations at these companies has evolved as a result of the establishment of joint ventures and in the context of a booming Chinese economy and an increasingly competitive automotive market. A recent downturn in demand had a more negative impact on the ‘Eurasian Auto Co’, which employed numerical flexibility strategies such as reducing working hours and laying-off a number of workers, compared to the ‘East Asian Motor Co’, which was less adversely affected. The unions at both plants play a central role in company management, but consequently can be viewed as having a conflict of interest with their role of defending the interests of workers. With China’s membership of the WTO and its emergence as a significant auto producer, it is likely that there will be increasing pressure to regulate employment relations and protect the welfare of employees. While there has been some convergence in employment relations practices towards those characteristic of developed economies, many traditional Chinese practices remain widespread.

Introduction

The establishment of an increasing number of joint ventures by multinational producers in China is further evidence of the increasingly globalised nature of automotive manufacturing. Over the past three decades, China has undergone a remarkable transition, from having a centralized command with only a handful of communist nations as trading partners, to one most rapidly expanding economies in the world. In light of these developments, China is a prime case study for testing the hypothesis that employment relations systems are subject to convergence resulting from pressures associated with international economic change. Since the mid-1980s, when the Chinese Communist Party began to pursue a policy of ‘market socialism’, the Chinese economy has gone from strength to strength. The market potential of China’s overwhelming large population and its comparatively cheap labour attracted increasing numbers of multinational companies. In recent years, many domestic and foreign enterprises have established operations in China. The gradual liberalization of the Chinese economy has prompted calls from greater democratistion, which has given rise to interesting developments in Chinese employment relations. This paper examines the state of employment relations in the automotive industry, a significant contributor to China’s economic growth over the last two decades. It will seek to examine the extent to which the entry of foreign

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firms into the local automotive manufacturing industry has placed long-established Chinese labour management practices under pressure. The concept of globalisation has gained increasing currency as global economic activity has become significantly greater and impinged more directly on national economies (Perraton and Goldblatt, 1997). Yet within popular debate and the academic literature there are two broadly opposed views about the relationship between globalisation and national patterns of employment relations. The first, which could be called the ‘globalisation’ approach, argues that pressures associated with globalisation are producing a convergence of national patterns. The second, which could be termed the ‘institutionalist’ approach, suggest that national level institutional arrangements continue to play an important role in mediating and refracting common pressures. As a consequence, the institutionalists argue that globalisation is unlikely to lead to universal convergence of national patterns of employment relations (Wailes, 2002). Using the Chinese automotive sector as a case study, this paper seeks to analyse whether the impact of globalisation has resulted in a convergence of employment relations practices in China towards those commonly found in developed economies. Two joint ventures between Chinese automotive producers and multinational companies have been examined as part of this study. At both companies, numerous in-depth interviews were conducted with managers, unions and workers, which were complemented by an extensive analysis of company documentation. This paper has three components. First, it provides an overview of the growth of the Chinese auto industry in the context of economic and political change. Second, it describes how Chinese employment relations have evolved in the periods before and after the introduction of ‘market socialism’ as the country’s economic policies. Third, the paper analyses how these developments have shaped the employment practices of the two Chinese automotive joint ventures operating in China.

The Growth of Chinese Automotive Manufacturing

In the space of a decade, the once highly fragmented Chinese auto industry has been transformed into one of the major vehicle producing nations. The widespread establishment of joint ventures (JVs) between foreign automotive producers and local state-owned enterprises (SOEs), under policies aimed at the marketisation of the Chinese economy, has placed the automotive sector behind only the United States and Japan in terms of overall sales. China’s growth in automotive manufacturing is made even more remarkable given that a closed, command economy was in place until a quarter of a century ago (Huang, 2002; IMF, 2004).

Although China first began to produce cars in 1953 with assistance from the Soviet Union, for many decades vehicles were only produced for the use of Communist Party leaders and government officials. Under the ‘Open Door’ policy initiated by Deng Xiaoping in 1978, the government began to allow foreign companies access to the local market, signaling a break away from China’s reliance on Communist nations as its primary trading partners. This soon prompted an influx of imported vehicles, to which the government responded by significantly increasing investment in the automotive industry. From 1984, local manufacturers were encouraged to establish JVs with multinational companies, in which the latter could not own more than a 50 per cent share. The widespread collaboration between foreign and local firms was a catalyst for significant change in the Chinese economy, facilitating an influx of foreign investment and technology transfer. China’s shift from a centrally-planned economy to one of ‘market socialism’ resulted in increased demand for vehicles in response to the growth of international tourism and foreign business, and imports continued to rise throughout the 1980s despite the maintenance of very high import duties (Ding, et al. 2000; Harwit, 2001; Kuruvilla and Erickson, 2002; Warner, 2002).


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While production capacity increased and the quality of locally made cars improved, domestic production continued to remain expensive and limited in terms of output. Nonetheless, a range of factors, including increased urbanization, population growth and the perpetual expansion of the Chinese economy resulted in continuous growth in automotive production. From 1983 to 1993, the average growth rate was 16 per cent in terms of units produced and 27 per cent in terms of value. This trend continued through the 1990s and into the new millennium. One of the most important factors contributing to this growth, but one which has largely been understated, is government policy (Gao, 2002; Riley, 2002).

In 1994, the Chinese government began to promote the private purchase of passenger vehicles through its first automotive industry policy. The initial results were far from satisfactory, primarily due to the lack of large-scale production, inefficiency and high production costs and prices. In terms of production, however, the local producers began to gain large profit margins within several years. Since China’s admission to the World Trade Organisation (WTO) in 2001, the domestic auto industry has undergone significant changes. The removal of import quotas and the relaxation of trade barriers have gradually lowered the entry threshold for foreign manufacturers. A significant decline in staffing levels is possibly a consequence of these policies. Despite the production output of the Chinese auto industry increasingly almost three-fold over the past five years, employment in the industry fell by just under 25 per cent (CAAM, 2003).

A new automotive industry policy was enacted in 2004 to facilitate the local industry’s compliance with the terms of China’s WTO membership. The consequences of the automotive industry policy include a likely acceleration of industry consolidation through a reduction in the number of auto producers; increased production scale to enhance the overall competitiveness of the Chinese auto sector; and raising the standard of Chinese vehicle production technology. Competition has intensified among local producers, Sino-foreign JVs and imports due to the granting of greater market access for foreign manufacturers, which is likely to push many of the smaller Chinese producers out of the market. These developments have had significant implications for employment relations in the industry.

The Evolution of Chinese Employment Relations

Before discussing contemporary employment relations in the Chinese automotive industry, it is necessary to provide an overview of developments in the country’s labour law and employment relations. China has undergone great economic and social change over the past two decades with the transition from a planned to a quasi-market economy. However, the development of institutional mechanisms for the effective regulation of employment relations has been lacking. With the transition to a market economy, reconciling the rights and interests of employees with the prosperity of the enterprise became more problematic. Before the establishment of the ‘Open Door’ policy, employment relations in many ways supported the social and economic infrastructure of Communist China. The ‘iron rice bowl’ system ensured that workers had a high degree of protection through ‘organisational dependency’, which provided lifetime employment, ‘cradle-to-grave’ welfare, as well as housing, welfare and retirement benefits (Ding, et al. 2000). Under this system, workers could only be dismissed from their job if they were convicted of engaging in criminal activities. Through the system of household registration, workers could only get permanent employment in the geographical area that they lived, and when they retired, it was expected that their children would inherit their job. This system facilitated employment stability for workers but effectively prevented any flexibility for managers.


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Trade unions were based on the Soviet model, acting as ‘transmission belts’ between the Communist Party and Chinese workers. They had the responsibility for educating workers and dealing with their grievances, ensuring that the enterprise was successful, and supposedly making sure that workers were not exploited by management (Ding and Warner, 1999, Warner, 1996). The government determined wages, benefits and working conditions, effectively leaving unions without any capacity to bargain on behalf of employees. The primary responsibility of unions was to motivate employees and foster their commitment to the company. Because their interests were seen as being in harmony with management, unions gave priority to the development of the enterprise rather than the representation of their members and performed many functions typically associated with the human resources departments of companies in developed economies (Kuruvilla and Erickson, 2002). Helburn and Shearer (1984, 12) shed some light as to the nature of union ‘representation’ under this system, recounting how a Chinese union official described their role in managing employee-employer conflicts: “We would educate the worker until he saw the error of his ways and confessed his crime”.

After 1983, changes in economic policy resulted in a greater decentralisation of the SOEs, which were able to manage themselves more independently. Decentralisation also resulted in greater numerical, functional and wage flexibility, increased managerial prerogative over employment relations, and the gradual phasing out of lifetime employment. The shift from state-owned to private-owned firms and the widespread establishment of joint ventures meant that many foreign invested enterprises (FIEs) began to import employment relations and human resource management practices and led to extensive enterprise restructuring. One consequence of these changes was the dramatic reshaping of employment relations and the loss of many jobs (Bamber and Leggett, 2001; Cooke, 2002; Kuruvilla and Erickson, 2002).

The transition from a planned economy to a more market-oriented economy was accompanied reforms to the ‘iron rice bowl system’ in the mid-1980s, aimed at giving employers greater flexibility. The significant components of these reforms included the replacement of lifetime employment with a system of contract employment, the relaxation of dismissal laws and the encouragement of performance-based rewards (Ding and Warner, 1999; Frenkel and Kuruvilla, 2002). This resulted in employers gaining greater bargaining power, with trade unions continuing to be a mere extension of the state. New labour laws were introduced in 1994, prescribing that employment relations in FIEs must be formalized and regulated. The enforcement of these laws is weak and in some instances, the increase in legal regulation worked in favour of employers, granting them further numerical flexibility. The statutory provision that employers are not obliged to renew employment contracts after their expiration has given rise to considerable labour market insecurity, especially among older workers. However, there is also evidence that relics of the old system, such as the relative standardisation of wages and bonus payments and the reluctance of managers to dismiss employees, remain widespread (Benson, et al. 2000; Warner, 1996; Zhu, 2002).

It could have been expected that the booming economy, the emergence of ‘market socialism’ as an economic policy and the replacement of lifetime employment with contract-based employment regulation would facilitate the establishment of more independent trade unions. Under the command economy, workers and management were expected to hold common objectives under the overarching banner of communism. With the adoption of an economic system based on market competition, employment relations have become more conflictual. Trade unions have been accorded a stronger and more independent role under the new labour laws, but are still required to assist managers in promoting the interests of the state. Various writers have highlighted this tension, arguing that any newfound strength and autonomy among unions has not emerged (Benson, 1996; Cooke, 2002; Zhu, 1995 Zhu, 2004), thus


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highlighting a significant discrepancy between Chinese and Western or democratic concepts of employment relations (Benson, et al. 2000). As Zhu and Fahey (1999, 185) explain, ‘on the one hand, [unions] are expected to represent the workers’ interests in the enterprise; on the other hand, they have to work for the collective welfare of the enterprise, as well as for the general interests of workers and the state’. Furthermore, the requirement of all unions to be affiliated to the national peak union body, the All-China Federation of Trade Unions, means that they continue to be subordinated to the Communist Party, an arrangement compounded by the institutionalisation of union officials. Zhu (2004) argues that these factors have resulted in Chinese unions fulfilling their ‘monopoly face’ role of trade unionism, consistent with Freeman and Medoff’s theory, but not their ‘collective voice/response’ face. However, Ding, et al. (2002, 447) claim that the weakness of unions has been overemphasised. They argue that while ‘Chinese unions function more as an offshoot of the HR department’, there are many instances where unions have been able to effectively protect the interests of their members, and positively influence industrial disputes. The role of unions is one area to which particular attention will be paid in the following discussion of employment relations at two automotive companies in China.

A Comparison of Two Auto Companies in China

In recent years, significant change has occurred in the Chinese automotive sector across a number of dimensions. Changes in corporate ownership, the fusion of different managerial traditions, and the varying influence of shareholder pressure on management decision-making has shaped change in a number of areas, including employment relations. This paper seeks to explain how these changes can impact on Chinese automotive employment relations by examining the experience of two automotive JVs.

The first, ‘Eurasian Auto Co’, is a Nanjing-based JV between a Chinese manufacturer and a European-based automotive producer (each of which hold a 50 per cent share). Eurasian Auto Co was established in 1999, and currently employs 2,400 employees, with an annual production output of 60,000 units. The company predicts that its ‘rolling development’ strategy will result in its annual production increasing to 150,000 units within the next few years. The European partner in the JV has introduced advanced manufacturing management practices, but the company continues to have a centralised management structure.

The second case study, ‘East Asian Motor Co’ is a JV between a Chinese automotive company (25 per cent ownership), a state-owned Chinese finance company (25 per cent), and an East Asian automotive manufacturer (50 per cent). East Asian Motor Co Auto was established in 2000 and is situated in Jiangsu Province. The JV has developed very quickly, employing over 2,200 workers with an annual production capacity of 130,000 units. East Asian Motor Co occupies a competitive position in the Chinese vehicle market, ranking amongst the top 10 national sedan manufacturers among those products priced below 100,000 Yuan. It plans to establish a new plant with a production capacity of 300,000 units by 2010 to cover all levels of the passenger car market in China.

Since their establishment as JVs, the foreign partners at both the Eurasian Auto Co Auto and the East Asian Motor Co have assumed control over production and technology, while the Chinese partners have focused on internal administration and liaison with government. Advanced production techniques have been introduced in both companies by their foreign parent companies, which have improved quality and efficiency. Areas such as marketing, accounting, human resources and public relations have been restructured in order to accommodate both Chinese and foreign managerial practices. However, a number of departments in both JVs have also been abolished in order to make the organisation more


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flexible and competitive. The organisational structure of both JVs has become flatter and more simplified since their establishment, with employees’ responsibilities becoming much more defined. Both companies have introduced teamwork in an attempt to facilitate changes in work practices on the assembly line as well as to improve communication between management and employees. Aside from these developments, interesting changes have occurred in the employment relations of both the Eurasian Auto Co Auto and the East Asian Motor Co since they were established. This paper will examine these developments around the themes of work organisation, skill formation, pay and remuneration, staffing arrangements and union arrangements.

Work Organisation

There have been significant changes in work organisation at Eurasian Auto Co over the past eight years. The introduction of a new manufacturing system from the European parent company into the JVs assembly operations has improved technical flow and created more defined job functions and specifications. However, this has also involved the outsourcing of many non-competitive divisions, such as equipment repair and chemicals management, and flattened management structure. Communication between manufacturing units within Eurasian Auto Co is much more prevalent than it once was. This has come about not only as the result of organisational restructuring, but also due to the introduction of modern information technology introduced by the foreign parent company. According to Chinese labour law, employees are not supposed to work more than eight hours per day and 44 hours per week (Benson, 1996; Zhu, 1999). However, in order to accommodate shift work, the Eurasian Auto Co has made working time ‘flexible’, and the working day of many workers often exceeds statutory limitations.

By contrast, the working time of employees at the East Asian Motor Co is within the regulation of Chinese labour law. Some workers are given the opportunity to work overtime in order to increase their earnings. In recent years, East Asian Motor Co’s organisational structure has been simplified and job responsibility has become more defined. Before the entry of its East Asian partner in 2000, the Chinese auto company had a very large and bureaucratic organisational structure. To accommodate an increase of output and sales, the foreign parent company gradually began to recognise China’s market potential and exported more managers and specialists to the JV. In addition to the use of new technology and continuous improvement, the introduction of stricter management methods by the foreign parent company requires the exertion of stronger discipline over the workforce, contributing to improvements in organisational efficiency. However, such methods have also resulted in the diminution of workers’ status and independence.

Skill Formation

Eurasian Auto Co Auto has a cooperative relationship with a number of vocational schools which provide training in technical skills. The company’s promotion of continuous skill development equates to an annual investment in training of several million Yuan. It is compulsory for the new employees to go through orientation training, but many employees also undertake voluntary training outside of working hours in order to improve their skills. In the past, workers were only required to be competent in their own job, but now they are expected to be more flexible and perform a variety of functions. There is also an annual training program for all staff, after which they must undergo a competency assessment. Those who cannot meet their job requirements must undergo further training or face dismissal. An


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employee’s performance, as determined by these assessments, will be reflected in the levels of wages and bonuses, as well as in future promotions. Workers who complete a specific technical, skill-based certificate are also awarded an additional salary margin in recognition of their skills. Around 70 per cent of employees of Eurasian Auto Co are below 30 years of age, and the company has targeted younger workers in its recruitment process partly to improve its skills base. This has resulted in older workers feeling under adverse pressure to perform well in training evaluations.

Most of the new workers at East Asian Motor Co are recruited from vocational schools and are expected to have sufficient technical training and be able to pass a physical examination. Compulsory orientation and technical training is provided, and workers with good technical competence are sent to the foreign parent company’s headquarters for further training. Workers who cannot reach the appropriate skill requirements are first given the opportunity of further training and, if this fails, they are transferred to another job. If workers still fail to perform at a satisfactory level, they are dismissed. East Asian Motor Co encourages employees to study in their own time, reimbursing employees for up to half of their tuition fees if they satisfactorily complete their studies. This scheme is also applies to both foreign language courses and masters degrees.

Pay and remuneration

Eurasian Auto Co operates under the umbrella of a group company, and consequently its ability to alter wage and salary levels is limited. While its human resources department is supposed to revise compensation every year, restrictions imposed by the group company means that little improvement has been made. This has resulted in the salary levels of Eurasian Auto Co workers being quite low in comparison with other companies. Pay at both companies appears to be structured in accordance with the ‘structural wage’ system (a three tiered wage structure comprising a standardised basic wage, a functional or status wage based on skills or job classification and a performance based wage) that was first introduced by the Chinese government in 1985 (Ding and Warner, 1999; Zhu and Fahey, 1999). Base level salaries are determined according to occupational grades, which are evaluated according to work intensity, skill requirements and work environment. In 2004, the average total salary at the Eurasian Auto Co was around 30,600 Yuan (A$4,900) per year, ranging from 26,000 Yuan (A$4,175) for blue-collar workers, to 36,000 Yuan (A$5,775) per year for white-collar workers, to around 80,000 Yuan (A$12,500) for managers. However, there are significant disparities between senior managers in the various divisions of the company. Blue-collar workers are remunerated in terms of piecework, assessed according to company output, and merit pay, based on efficiency and cost personal performance. Employees can earn between 100 Yuan (A$16) and 800 Yuan (A$128) per month from piecework and merit pay components. An employee’s annual bonus has no direct relation to their output, but is based on the overall performance of each work unit. The average annual bonus of blue-collar workers is around 1700 Yuan (A$270), white collar workers receive a bonus of double this amount, while directors’ bonuses are triple what a blue-collar worker receives. Eurasian Auto Co provides extensive welfare benefits to its employees, including housing to those who began to work before 1998. Those who joined after 1998 are given a housing allowance when they purchase a house.

East Asian Motor Co evaluates employees according to their skills, attitudes, output and quality when assessing pay increases. The wage levels at East Asian Motor Co have increased since the establishment of the JV. They are higher than most other companies in their surrounding area but are around the average for the national auto industry. Workers’ wages


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are determined according to their job they perform, and unlike at Eurasian Auto Co, their seniority. Maintenance workers get paid overtime if they work beyond normal working hours, which is common. This means that their standard monthly income of 1000 Yuan (A$160) can easily double or triple with overtime pay. This results in a typical annual income for senior managers of around 120,000 Yuan (A$19,275), excluding allowances. Chinese departmental directors typically receive annual salaries of up to US$65,000 (A$84,500), while senior directors of the foreign JV partner typically receive between US$70,000 (A$91,000) and US$80,000 (A$104,000). However, these amounts are paid to the Chinese finance company, which then distributes a portion of it back to the directors. Hence, there is some ambiguity as to how much of their official salary is actually received by the directors. Bonuses for all non-managerial employees are determined according to East Asian Motor Co’s annual performance.

Staffing arrangements

The shift by many Chinese companies from a system of lifetime employment to employment based on contract has had ramifications for the automotive industry. Around 80 per cent of the workers at Eurasian Auto Co are engaged by a labour hire company, an arrangement which is underpinned by one-year employment contracts. This means that Eurasian Auto Co does not have any legal responsibility or obligations to workers who are retrenched during market downturns. These workers are given the same rights as those directly engaged by the company in terms of training, evaluation, and welfare, but their wages are lower. The booming Chinese auto market over the past three years had caused Eurasian Auto Co to increase employment, add shifts and lengthen working hours in order to meet market demand. However, since the market downturn of late 2004, many workers have been stood down with compensation until the market recovers, while some employees have accepted voluntary redundancy packages. Despite these market fluctuations, there have not been any large-scale lay-offs at East Asian Motor Co.

Union representation

As with most, if not all, Chinese trade unions, the role of the union in both JVs appears to be fundamentally compromised. The union at Eurasian Auto Co also acts as the Communist Party branch. The head of the union is also the Chairman of Party affairs and a member of senior management. When the JV was first established, the European partner expressed concern about the power of the union. It soon became apparent that these concerns were ill founded, for although around 95 per cent of workers at Eurasian Auto Co are union members, the union closely cooperates with management. While any policies involving workers’ interests, such as employee dismissals, are technically not operative unless they have approval from the union, the divided loyalties of the union make it difficult to understand how this arrangement can work effectively from the employees’ point of view.

Before the establishment of the East Asian Motor Co JV in 2000, the Communist Party controlled the union, whose main functions revolved around organising entertainment for employees. The union has been given more authority since the establishment of the JV, but as with the Eurasian Auto Co, the chairperson of the union holds a senior position in the company. Therefore, although the union can supposedly affect decision-making in various ways, such as the coordinating of disputes over dismissals, collective bargaining and workplace safety, its influence is limited in practice. The company can adjust salary levels with agreement from the union and can unilaterally retrench workers without the permission


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of the union. Indeed, one manager claimed that ‘no worker is irreplaceable’. However, according to workers, the union is genuinely able to speak for the workers if their interests are harmed and in some situations, the union has been able to persuade management from dismissing workers. This gives credence to Ding et al.’s argument that there are some circumstances where unions are able to assert some independence and defend their members. However, if the role of unions has been strengthened at the East Asian Motor Co and beyond, any increase in their authority has only been marginal, especially in the context of the increasingly precarious nature of employment in the Chinese automotive industry.

Discussion and Conclusion

The increasingly competitive and globalised nature of the Chinese auto industry has resulted in dramatic changes in recent years, forcing producers to provide better products and services at higher efficiency and lower cost. This has in turn impacted the managerial approach of Chinese auto companies and led to internal restructuring. The use of new technology by both the Eurasian Auto Co and the East Asian Motor Co has resulted in changes to work organisation. The most profound change in this regard has been the increase in numerical flexibility, specifically through changes to working time. Working time arrangements have been made more flexible, so that shifts can be introduced and hours lengthened when the market is booming, and shortened during downturns. Greater numerical flexibility is also evidenced by the impact of market fluctuations during the latter half of 2004, prompting the Eurasian Auto Co to lay off a number of employees over a six-month period. East Asian Motor Co, however, was not as badly affected and maintained its two-shift arrangement.

The demonstration of a different, arguably more positive consequence of global pressures on the Chinese automotive industry can be seen in skill formation arrangements, as there has been an increase by both joint ventures in their investment in human capital. Employees are expected to be multi-skilled and training has been improved. On-the-job training has been intensified over the past five years for staff in both companies in order to keep up with changes in the industry. This has contributed to an overall improvement in the skills and competency levels of employees at both companies. Conversely, these initiatives have placed employees under greater pressure, as the expectations of continuous skill development can result in some workers losing their jobs if they do not meet the company standards.

The two-tiered system of employment used by the Eurasian Auto Co – with a minority of workers engaged directly by the company and the majority by a labour hire firm – has given the company more flexibility to reduce its workforce when required. The introduction of such a system is an example of the shift from lifetime employment to employment by contract. Whereas workers had considerable job security under the command economy system, they are now more easily disposable, signaling a convergence towards a more Western model of employment status and security.

One area where local institutions have remained resilient against the pressures of globalisation is trade unionism. The head of the union at both companies is also a member of senior management, and at the Eurasian Auto Co, is also the chair of Party affairs. Such arrangements are common in Chinese automotive companies, as the shift to a more market-oriented economy has not resulted in a more independent role for trade unions. The ability of the union at the East Asian Motor Co to defend the interests of workers in certain circumstances shows that there are some signs of change. However, it appears that the opening up of the Chinese automotive industry has not yet resulted in any democratisation of employment relations. The workplace is increasingly becoming an arena of competition between employees and employers, but trade unions continue to be an extension of


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management and the Communist Party. If employers continue to push for greater labour flexibility, the demands for genuine employee representation will undoubtedly grow louder.

Neither the ‘globalisation’ approach nor the ‘institutionalist’ approach can adequately account for the impact of global pressures on employment relations in the Chinese automotive industry. While there has been some convergence towards the practices commonly found in developed economies in terms of numerical flexibility and skill formation, local institutional factors have allowed the Chinese model of trade unionism to remain virtually intact. These findings give credence to the arguments put forward by Benson et al. (2000) that Chinese employment relations is still halfway between systems in place under communist regimes of the past, and those that characterise contemporary developed economies. This perhaps suggests that, as argued by Farley et al. (2004), the companies poised to benefit most from the modern Chinese economy are those able to apply effective global management practices to the specifics of local Chinese institutions.

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