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Labour Statistics: Concepts, Sources and Methods is being updated. The current paper publication (cat. no. 6102.0) will not be rereleased. However, the web version (cat. no. 6102.0.55.001) is being updated on an ongoing basis. This chapter was updated on 8 December, 2004.


INTRODUCTION

12.1 Industrial relations can be regarded as the relationships and interactions in the labour market between employers and employees (and their representatives), and the intervention in these relations by governments, government agencies and tribunals (e.g. the Australian Industrial Relations Commission).

12.2 The field of industrial relations is complex and diverse and, for statistical purposes, is not easily measured. The ABS collects information on a number of topics to provide an insight into the state of the industrial relations environment. This chapter discusses statistics on: the different methods that are used to set pay of employees in Australia (such as awards, collective agreements and individual arrangements); trade union membership; and industrial disputes. Where they exist and are relevant, international guidelines relating to these statistics are also outlined. The chapter starts with a historical overview of industrial relations in Australia.

HISTORICAL OVERVIEW OF INDUSTRIAL RELATIONS IN AUSTRALIA

12.3 Historically, governments have regulated the Australian labour market to varying degrees. Changes to the structure or processes underpinning the industrial relations environment have generally followed changes in governments, and periods of social or economic change. For most of the last century, employee-employer relationships were shaped by highly centralised Commonwealth and state tribunal-based systems of conciliation and arbitration. However, since the late-1980s, the industrial relations environment in Australia has undergone significant change and is now characterised by more decentralised arrangements.

12.4 Initially unions and employers opposed the establishment of a system of conciliation and arbitration. However, following a series of disastrous strikes in the 1890s, it was narrowly agreed at the Constitutional Conventions to include in the Australian Constitution powers of conciliation and arbitration for the prevention and settlement of industrial disputes that extended beyond the limits of any one State. The first legislation to put the Commonwealth's industrial power into effect was the Conciliation and Arbitration Act 1904, under which the Commonwealth Court of Conciliation and Arbitration (forerunner to the Australian Industrial Relations Commission) was established.

12.5 The Excise Tariff Act 1906, under which employers were granted tariff protection provided that a fair and reasonable wage was paid to their workers, proved attractive to both unions and employers. The first attempt to define a fair and reasonable wage was made in the Harvester case (1907). This case established the 'basic wage' and initiated an important principle of wage determination: that a fair and reasonable wage should be based on "the normal needs of the average employee, regarded as a human being living in a civilised community". The Harvester standard was used in making other awards; and the basic wage, with margin for skill, became the foundation wage rate.

12.6 The Federal system, with jurisdiction over matters extending beyond State borders, gradually became dominant over the individual State systems. By 1976 nearly 90% of the workforce had come under awards, of which nearly 40% came under Federal jurisdiction. By the mid 1980s there were over 9,000 separate awards with over 250,000 individual award classifications.

12.7 The nexus between tariff protection and the fair wage was weakened in 1973 when the then Labor government oversaw a reduction in overall tariff protection, in an attempt to open up the Australian economy to international competition.

12.8 The opening up of the Australian economy to international competition has continued since then. This in turn has resulted in a much greater emphasis being given to increases in productivity, improvements in work performance, the abolition of rules of demarcation, and workplace restructuring.

12.9 Coincident with these developments was an increased emphasis on agreement making and decentralised bargaining. Decentralisation related to movements away from centralised arbitration and conciliation arrangements (such as awards). These transformations have occurred in both the Commonwealth and State jurisdictions, although the timing and nature of industrial reforms have varied.

12.10 At the Federal level, the introduction of a series of bargaining principles (the Restructuring and Efficiency Principle, the Structural Efficiency Principle, and the Enterprise Bargaining Principle) by the Australian Industrial Relations Commission in 1991 provided a framework for decentralised bargaining and workplace reform. The Industrial Relations Reform Act 1993 encompassed provisions to better allow enterprise bargaining in non-unionised workplaces. The opening up of collective bargaining to workers not represented by unions meant that wages and employment conditions could be changed without unions being directly involved in negotiations. The Workplace Relations Act 1996 introduced further labour market reforms, enabling the development of individual worker agreements (Australian Workplace Agreements) as well as continuing collective worker agreements (Certified Agreements). The same legislation also facilitated the simplification of awards. At the same time, industrial reform also took place at the State level aimed at encouraging decentralised bargaining and workplace reform.

12.11 The level of trade union membership has been generally declining, coinciding the industrial changes noted above. For most of the last century the proportion of employees who were union members ranged between 42% and 62%. However, the 1990s witnessed significant reductions, to 26% in August 1999 and 23% in August 2003.

12.12 For most of the last century the combined effects of State and Federal industrial relations legislation encouraged unionism. One of the aims of the Conciliation and Arbitration Act 1904 was to facilitate and encourage the organisation of bodies of employers and of employees and the submission of industrial disputes to the Court by organisations. Unions played a critical role in the centralised tribunal based system - indeed the only parties that could request the settlement of a dispute by the Court under the Act were 'registered organisations', that is, unions of employers or employees. The granting of preference clauses in awards for engagement and retrenchment, to unionists over non-unionists, further promoted membership in unions.

12.13 In more recent times the roles of unions under State and Federal industrial relations legislation have been less pivotal. The emphasis on decentralised bargaining and the opening up of both collective and individual bargaining to workers not represented by unions have reduced the role of unions in the wage negotiation process. Restriction of the content of Federal awards to certain allowable matters has further encouraged workers to bargain for wages and other employment conditions outside of award provisions. Other reasons for the decline in union membership include the exclusion of union preference clauses from awards, changing public sentiment towards unions, declines in employment in industries that traditionally were highly unionised, and the emergence of new industries that are not unionised.

12.14 The level of industrial disputation in Australia has also decreased in recent years, with significant declines in strike and lockout activity since the 1980s. Traditionally, awards were the mechanism used by industrial tribunals to settle and prevent disputes, with unions bringing disputes (both 'actual disputes' and 'paper disputes') to the tribunals to improve the wages and other conditions of employment of their members. However, few disputes are now brought before the industrial tribunals for resolution. Those disputes that are brought before the tribunals tend to be of a longer duration and involve fewer workers. The majority of disputes tend to be short (one day or less in duration) and involve many workers.

12.15 Under decentralised bargaining systems, disputes are generally allowable (legal) only during the period in which employees and employers bargain on wages and other conditions of employment and only so long as the action is supporting or advancing claims in relation to the enterprise bargaining. During the periods for which agreements are in place neither party may legally engage in industrial action (except over Occupational Health and Safety issues). However, disputes sometimes occur outside these periods.


HOW PAY IS SET

12.16 Statistical measures relating to how employees' pay is set (such as awards and agreements) are used to monitor the effects of industrial and workplace relations reforms and wages policy.


CONCEPTS AND INTERNATIONAL GUIDELINES

12.17 International guidelines on the production of statistical measures on how pay is set concern collective agreements (ICLS 1926) and relate to the numbers of, contents of, and employee coverage of collective agreements. A collective agreement is defined as "a written agreement concluded between one or more employers or an employers' organisation on the one hand, and one or more workers' organisations of any kind on the other, with a view to determining the conditions of individual employment, and in certain cases, to the regulation of other questions relative to employment".


DEFINITIONS USED IN ABS SURVEYS

12.18 The ABS does not collect statistics on the numbers or contents of collective agreements as defined by ICLS guidelines described above. However, data about pay setting methods are collected in the ABS Survey of Employee Earnings and Hours (footnote 1). The definitions associated with these methods are outlined below.


12.19 The survey identifies the main method used to set pay for employees in Australia, and estimates the proportion of employees who had their pay set using each method. The methods used to set pay identified in the survey are:

• award only;
• collective agreement; and
• individual arrangement.

• the definition of collective agreements outlined in the international guidelines is broader than the definition used in the survey. The international definition encompasses both collective agreements and awards as defined in the ABS survey; and

• the definition of collective agreements outlined in the international guidelines is restricted to written agreements, whereas the survey definition includes both written and oral agreements.

• Cause of dispute - relates to the main cause of stoppages of work and not necessarily all causes that may have been responsible for work stoppages. Initially, the classification of 'Cause of dispute' identifies whether a dispute occurred during a process of workplace/enterprise bargaining. Disputes are then further classified according to the main cause of the dispute. Causes include: remuneration; employment conditions; health and safety; job security; managerial policy; and union issues.

• Working days lost per employee involved - for an individual dispute, defined as the average number of working days lost per employee involved in the dispute. It is calculated by dividing the number of working days lost in the dispute by the number of employees involved (both directly and indirectly).

• Employees directly involved in a dispute - those who actually participated in the dispute in order to enforce or resist a demand or to express a grievance.

• Employees indirectly involved in a dispute - those who were stood down at the location where the dispute occurred, but who were not themselves parties to the dispute. Employees who were stood down at locations other than those where the dispute occurred are excluded.

• Employees newly involved in a dispute - for a new dispute, comprises all employees involved and, for an ongoing dispute, those involved for the first time.

• Total employees involved - comprises employees newly involved and, for an ongoing dispute, those who continue to be involved. Total employees involved for any period of time is obtained by adding together the number of employees involved in each dispute for the period.

• Reason work resumed - relates to the reason(s) for ending the stoppage of work and not necessarily to the reason(s) for settling all matters in the dispute. Reasons include: negotiation without intervention of a third party; State legislation; Federal legislation; pre-determined return to work; resumption without negotiation; and mediation.

• Working days lost - refers to working days lost by employees directly and indirectly involved in the dispute. Estimates of working days lost per thousand employees are calculated for a quarterly period by dividing the total number of working days lost in the period by the total number of employees in the Australian workforce in the period (obtained from the ABS Labour Force Survey) and multiplying by 1,000.