Solidarity

Labor’s new industrial relations policy, Forward with Fairness, includes a commitment to abolish AWAs in favour of collective agreements. The policy is very good:

Collective enterprise agreement making and democracy will be the heart of Labor’s industrial relations system. Collective bargaining allows balanced, cooperative arrangements that foster improved productivity across a business and provide the flexibility employers and employees want. Collective bargaining is the best way to ensure working arrangements are tailored to suit the needs of an individual business and its employees.

AWAs and statutory individual contracts will not be a part of Labor’s fair and balanced workplace laws. A Rudd Labor Government will focus on cooperative workplace relations, instead of the Government’s one sided system based on take it or leave it individual contracts.

Business, and especially the mining industry, is whinging loudly — but that is what we would expect. The evidence shows that AWAs are an ideological tool used by employers to cut pay, reduce conditions, and smash unions. There is no evidence that they provide flexibility or productivity that can not be achieved under collective agreements. What’s more, there is no evidence that a “no disadvantage test” can knock the rough edges off — AWAs are fundamentally unfair, and can’t be fixed by tinkering at the edges. They must be abolished.

This post is an attempt to bring together the facts about AWAs, so that you can bookmark one page and have access to the information you need to properly debate the issue.

1. AWAs cover a tiny fraction of workers
2. Mining AWAs are an even smaller fraction
3. AWA workers are worse off
4. AWAs are not really “individual” at all
5. AWAs undermine workers’ democratic voice
6. AWAs are an ideological obsession
7. A “no-disadvantage test” can’t fix AWAs
8. Collective agreements are the answer

AWAs cover a tiny fraction of workers

First, the fact is that AWAs cover a tiny fraction of Australia’s workers. While the Government continually talks up the number of AWAs in effect — Howard recently said Labor’s policy threatened “a million AWAs” — the real figures are much, much lower. The Australian Bureau of Statistics tracks industrial instruments, and the numbers are really small:

Professor Peetz said the study found recently released Australian Bureau of Statistics data showed only 3.1 per cent of employees, equivalent to 258,000 workers, were on AWAs in May 2006.

To help you put these figures into perspective, have a look at this graph:

The tiny proportion of workers covered by AWAs shows that the economy does not widely rely on them. There are far more workers covered by union agreements, non-union agreements, awards, and common law contracts — all of which will be available under Labor.

Mining AWAs are an even smaller fraction

The mining industry is leading the charge to defend AWAs, and is distorting the coverage. Of the small number of AWA workers in Australia, only 7% are mining workers. The focus on the mining industry risks creating a false impression that most AWAs are paying ore-boom wages. In reality, the vast bulk of AWAs are in low-paying industries:

Even within the mining industry, AWAs are not the most common form of industrial agreement. Again, the ABS statistics show the reality:

Recent ABS data (6306, Feb 2007) underlines that Australian mining does NOT rely on AWAs — just 31% of workers in metal ore mines, and only 16% of the mining industry’s workforce are on AWAs. Mining relies more on common law contracts (as provided for in ALP policy) rather than on AWAs. About 55% of metal ore miners are on common law contracts.

So even in the mining industry, non-AWA instruments (including EBAs and common law contracts) are the norm. When BHP launched its well-publicised attack on the ALP, it was reported that the company “did not have figures on the proportion of its australian workforce covered by AWAs”. It is more likely that the company was unwilling to admit that AWAs covered a minority of its staff. This would have undermined its scare campaign.

Employment expert Chris Briggs says the ABS data obtained by the CFMEU “shows, if correct, that there’s much lower numbers of employees on AWAs than being publicly claimed by the mining companies and the Coalition.”

AWA workers are worse off

The figures show that on average, AWAs are bad for workers compared to union-negotiated collective deals. Figures revealed to Parliament showed that AWAs are overwhelmingly used to strip conditions: 100% cut at least one “protected” award condition; 16% cut every “protected” award condition; 64% cut leave loading; 63% cut penalty rates for overtime and weekend work.

After this revelation, the Government stopped releasing statistics, but when they were leaked to the media in April, it was discovered the situation had deteriorated:

Secret figures reveal that 45 per cent of Australian workplace agreements have stripped away all of the award conditions that the Federal Government promised would be “protected by law” under Work Choices.

The statistics, which the Government has been refusing to release for months, also show a third of the individual employment contracts lodged during the first six months of Work Choices provided no wage rises during the life of the agreements.

Data compiled by the Australian Bureau of Statistics also reveals that AWA workers are worse off than those on either non-union or union collective agreements. This was true even before WorkChoices — in other words, when the “no-disadvantage test” supposedly protected them, and when the loss of conditions was supposedly made up for by pay rises. According to Prof David Peetz:

In May 2004, non-managerial workers on registered individual contracts received an average of $23.40 per hour, which was 2 per cent less than workers on registered collective agreements ($23.90 per hour). As 99 per cent of workers on registered individual contracts were on AWAs in 2004 (the state systems of individual contracting having virtually withered away), we can say that AWAs paid about 2 per cent less than registered collective agreements.

The evidence is clear: AWAs not only strip working conditions, they also deliver lower pay. This data includes the boom-time wages of the mining sector, which means that workers in other industries — like hospitality and retail — are even worse off than the statistics reveal.

AWAs are not really “individual” at all

It is important to remember that while the business lobby talks in terms of developing a one-on-one relationship between employers and employees, the reality is the opposite. A review of the academic studies of individual agreements found (pdf):

While it is possible for employers to utilise individual contracts to foster closer ties with individual employees, the literature widely notes that, in practice, there is generally not much that is “individual” about individual agreements. In fact, individual contracts are often referred to “…as standard packages, individually wrapped”. … [T]he widespread rhetoric of “individualisation” has, in the practical sense, been accompanied with a general trend towards greater standardisation of the employment contract”.

Josh Bornstein gives the example of “Telstra, one of Australia’s largest employers”: “the fact is that all 9000 AWAs at Telstra are exactly the same. It is a pro forma document.” There is no reason why these 9000 identical AWAs could not be replaced by one collective agreement for Telstra’s staff.

What’s more, the idea of a one-on-one relationship between a company and an employee is a furphy, as the company will usually have a range of people involved.

On one side of the bargaining table sits an individual employee. On the other there might be a chain of managers, a human resources department, industrial relations consultants, a team of lawyers, and peak employer bodies. The way to balance the scales is to use a collective agreement, so that the workers can consult each other, talk through the issues, take advice from their union, and finally vote on whether to accept or reject the company’s offer.

AWAs undermine workers’ democratic voice

The reason employers prefer to use 3000 AWAs instead of one collective agreement is that it can, over time, dictate the terms and conditions of employment without giving workers a genuine say. As Peetz explains,

AWAs can be imposed upon all new employees as a condition of getting a job, meaning that, through attrition, the employer can put most of the workforce on to AWAs. But if a majority of workers don’t like a proposed [collective agreement], it does not get up.

By removing the collective voice from the workplace, and by forcing workers to negotiate as individuals against the wealth and legal expertise of the employer, AWAs undermine people’s bargaining power and therefore lead to lower pay and worse conditions.

AWAs are an ideological obsession

A recent episode of ABC Radio’s PM revealed that leading industrial relations experts believe employers’ support for AWAs is driven by ideology rather than economics.

RON MCCALLUM: In a practical sense, mining companies could achieve the same productivity without using AWAs. … They don’t want to do this. They’ve spent a lot of money individualising the workforce by using AWAs. They want to achieve this individualisation. That’s their philosophy.

…

GREG PATMORE: In other words, the ideological or political, in some ways, despite their language, outweighs the economic benefits.

The real reason for introducing AWAs is to eliminate the possibility of union involvement or even non-union collective bargaining. As Ron McCallum told PM, “Once you are on an AWA, you can’t go back to collective arrangements. The law is very clear. When the AWA is over, you sign another one”. While the rhetoric surrounding AWAs involves “choice”, the move to an AWA removes forever the choice of making a collective agreement.

Industrial relations consultants are quite open regarding the aims of AWAs, even in case studies prepared for the Office of the Employment Advocate:

Clearly, at the heart of a sophisticated decollectivist strategy, particularly in Australia, the U.K. and New Zealand, is the offering of individual contracts—in the Australian case formalized through AWAs or similar state instruments. As explained by management consultants World Competitive Practices, while reporting a case study, “AWAs are an important element in achieving management’s aim of a non-union workforce”.

Workers have a fundamental right to join and be represented in collective bargaining by their union. AWAs are simply an ideological weapon used to deny workers that right.

A “no-disadvantage test” can’t fix AWAs

The Government’s recent announcement of a so-called “fairness test” is an admission that AWAs are used to strip pay and conditions, but it doesn’t really do anything to protect workers. Experts say it is “more rhetoric than substance”, and the man in charge of enforcing it says it is a bureaucratic nightmare.

On top of that, it has more holes than a sieve: the ACTU has identified escape clauses (pdf) for “struggling” businesses, young workers, disabled workers, the unemployed, sole parents, country workplaces, companies in competitive industries, and more besides. Companies could offer video rental vouchers or leftover food to satisfy the test.

The old no-disadvantage test (NDT) was much stronger than the new WorkChoices figleaf, but the evidence was that despite that greater strength, it still failed to protect workers. Seven academics writing in the Journal of Industrial Relations in 2005 concluded that:

When one looks at the NDT “on balance” or “in the round” it is difficult to avoid the conclusion that many employees are suffering a significant deterioration in the quality of their working lives in several respects. … [T]he point is that, for many workers, enterprise bargaining has brought about a deterioration in the quality of working life of substantial proportions, compensated for, in many instances, by small or non-existent pay increases.

Likewise, in a 2000 article for the Australian Journal of Labour Law, Omar Merlo found:

[I]t appears that the NDT has enabled employers to introduce agreements in order to circumvent the award system (and in some cases the public scrutiny which it involves) and obtain gains in terms of working time arrangements and work intensification. In return, workers have received limited wage increases and experienced the erosion of many entitlements and conditions of employment.

While in theory the NDT should protect workers, the ten-year experience of its implementation shows that it does not prevent AWAs removing working conditions without adequately compensating workers for them.

Collective agreements are the answer

When the problems of AWAs are considered, it is clear that collective agreements should be encouraged. AWAs are an ideological tool used by employers to smash unions, weaken their employees’ bargaining position, and cut pay and conditions. They can’t be saved by a no-disadvantage test, because the non-monetary components are very difficult to measure without a costly and intrusive bureaucratic process, and in any case the evidence of 10 years of the NDT proves it doesn’t stop workers being ripped off.

On the other hand, the experts say that the supposed benefits to companies are also available through collective deals. McCallum says employers “could achieve the same productivity without using AWAs”, and Peetz says, “Everything in terms of flexibility that you can do under an AWA, you can do under an [Employee Collective Agreement].” As Paul Keating pointed out recently, real productivity gains are made by getting the workforce together as a collective, so that they can work together to increase their outputs in exchange for better wages: “the key to it is the collective and that’s what Howard hates.”

Of course abolishing AWAs will cause some friction, but it will be relatively minor — only a tiny fraction of the workforce is covered by AWAs, and far less than the Government and business lobbyists are letting on. Business will squawk because their ideological victory under Howard has been challenged, but Labor needs to hold firm to its policy and abolish AWAs in favour of collective bargaining. There is no room to replace them with another statutory individual agreement; this is one time I’ll agree with Peter Hendy: “An AWA by any other name is still an AWA.”

The best protection of employees is respecting their right to stand together when they negotiate their contracts. It is the fairest arrangement, and it is the democratic arrangement. There is no room for AWAs in a fair and decent industrial relations system.