Industrial relations: choice cuts

March 29, 2007

On the grass outside an abattoir on the Western Plains of New South Wales, in the dark, cool air, a few workers are forming the late-night shift of a picket. Some journalists are hanging around, talking to them. It is less than a week after the federal government's new industrial relations legislation, known as Work Choices, has taken effect. The men are outside the Cowra abattoir, not inside, because they have received termination notices. Twenty-nine have been sacked from their jobs for "operational reasons".

They have been offered re-employment — to be precise, an unidentified 20 of them will be offered re-employment — if they go back to work for substantially less than what they had been earning before the new law came into force. The drop in pay is typically around $180 a week, nearly a quarter of their wage. For some shift workers, it is as much as $300 a week. The men are angry. Some do not know how they will meet their mortgage repayments on the lower rate of pay.

What is happening on this April night in Cowra tells us much about the Work Choices legislation.

I met Brad at a local meeting that had been organised by a Brisbane community group to talk about Work Choices. He was an EFTPOS technician — well-dressed, tall and quietly spoken. He told how his workplace life had been getting harder. He had been harassed, mainly by his supervisor. Eventually he lodged a complaint. A top manager came to Brisbane, met with Brad, his supervisor and others, sorted it out and went away. Mission accomplished.

Except it wasn't. The harassment started again. And it got worse. So Brad lodged another complaint, to someone else at the top. On his first day of holidays, Brad got an SMS from his general manager, asking for his home address; he was told they had some important "confidential documents" to send him. When he got back, there was a registered letter waiting for him. It said that he had been made redundant with the offer of a few weeks' redundancy pay.

His firm had more than 100 employees. But Brad had been dismissed for "operational reasons", just like the Cowra workers. And under this provision, even if you have been unfairly and capriciously targeted for dismissal — whether you have been singled out because you ask too many questions or do not share the corporate culture — the reason you were selected for redundancy is "irrelevant". An operational reason — that is, something of a technical, economic or structural nature — does not have to be the main reason why you lost your job. It just has to be part of the reason.

Cuts

I do not wish to overstate the problems with Work Choices. Whatever the negatives Work Choices holds for Australian workers, exaggerating them only serves to disempower the already weakened, making it harder to move forward.

That said, there are many examples of cuts in pay and conditions — particularly through the use of AWAs (Australian Workplace Agreements — individual contracts) — that have become widely known. The examples mount, yet the advocates of Work Choices tell us that it is bringing higher wages: real wages (that is, the purchasing power of your wage after allowing for price rises) have risen by 16% since 1996. But that is barely the long-term growth rate in real wages anyway. Most of the increase has been obtained by managers and professionals with the top 10% of incomes. For the median worker or the low paid, real wages have increased at barely 0.4% a year in recent years.

Most recently, in the first six months of Work Choices, average real wages (measured by the wage price index) fell by 0.6%. At the same time, in Queensland and Western Australia, there are major labour shortages. Employers are offering huge wages to get people to work in the resources sector. Yet, on average, real wages fell. It would be surprising if this situation continued, but nonetheless it is remarkable that this should have been the case in an economy with the tightest labour market in three decades. Something strange is going on, especially in the part of the labour market where workers do not have strong bargaining power.

In part, this is because the protections that used to exist for those signing AWAs are no longer there. Under the old system, agreements were meant to leave employees no worse off than they would be under the award. If you lost your penalty rates or another entitlement, you were meant to be compensated — most probably through an increase in the base hourly rate of pay. Now you can lose any or all award conditions and not receive a cent in compensation.

The trouble is that it is hard to know what is happening in that less prosperous part of the labour market, because the government does not publish data letting us see into it properly. We know that average real wages fell most markedly in retailing and hospitality — where penalty rates are most at risk — in the first six months of Work Choices. But that does not tell us the specifics of AWAs in those industries.

We know that, before Work Choices, wage increases under AWAs nationally were typically only 2-2.5% — barely half the 4-4.5% that workers obtained under union collective agreements. But nothing has been, or will be, published about wage increases under Work Choices AWAs — except that 22% of Work Choices AWAs provide for no wage increase during the whole period of the AWA, which may last up to five years.

This glimpse came when the employment advocate, Peter McIlwain, answered questions asked by the Senate estimates committee last year. His office had examined a sample of 250 AWAs registered in the first month after Work Choices took effect. It also showed that just over half had abolished overtime pay. This was interesting because it meant that overtime was being abolished much faster than previously.

A further one-third of AWAs reduced overtime pay. This meant that, in total, 82% of AWAs either reduced or abolished overtime pay. The story was no better for other conditions of employment. Most AWAs abolished penalty rates, shift loadings and annual leave loading — all representing notable acceleration of the pre-Work Choices patterns. Large proportions also abolished rest breaks, public holiday pay and allowances.

All these disappearing conditions, government commercials told us in 2005, were "protected by law".

These numbers only tell a small part of the story. They do not tell us about the differences between industries where workers are strong and where they are not. After all, AWAs are also used extensively in mining, where there is a severe labour shortage, and those AWAs — like the collective agreements they try to outbid — are very generous.

Yet, instead of publishing more detailed information, the government is now publishing no information at all.

Abuse of law?

When the Cowra abattoir workers were sacked, they had few options. The most effective industrial weapon — going on strike — is impossible to implement if you have already been sacked. They could not seek reinstatement from the industrial tribunal because they had been sacked for "operational" reasons, and under Work Choices that disqualified any claim for reinstatement, no matter how unjust, harsh or unreasonable the dismissal. But they, and their union, had one major weapon at their disposal: the media. Within hours, press and TV camera operators were outside the abattoir. The workers' plight was beamed into homes across the country.

The minister realised he faced a problem. This was just one of several cases in the national media of workers being sacked or abused under the new laws. He went on television to say that some employers, like the Cowra abattoir, had "jumped the gun". It seemed "quite possible" that the employer there had acted "contrary to the provisions of the law itself". The Office of Workplace Services (OWS) was told to investigate and speak to the company. The unions negotiated with management. Under media and political pres­sure, the company reinstated the workers. The minister was triumphant: "This shows that the law works."

Except that the company had not broken the law at all in sacking the workers as it did. An OWS report to the minister eight weeks later cleared it of wrongdoing. Fortunately, through judicious use of the media, the workers had got their jobs back for the time being.

As with Cowra, much of the battle over Work Choices is fought out in this symbolic domain. For the unions, the ability to mobilise media and create images of workers being disadvantaged has become a key tool in preventing employers from exploiting opportunities the law now gives them.

No doubt many employers have decided that the cost to their reputation of adopting an aggressive approach would not, at the moment, be worth it. At least, that is the case for unionised workers who have the resources of a politically savvy union movement behind them.

But those who do not belong to a union, lacking media access, remain largely invisible and much more easily exploitable.

[David Peetz is the author of Brave New Workplace (Allen & Unwin, 2006) and professor of industrial relations at Griffith University. This is an edited excerpt from Griffith Review 15: Divided Nation (ABC Books). Visit http://www.griffith.edu.au/griffithreview.]

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